What will our new Government mean for older Kiwis?
After a closely fought election campaign and 12 long days of negotiation, the coalition deal between Labour and NZ First has finally been laid out.
The agreement contains over 70 policy commitments not including Labour’s own initiatives.
Major policies include a re-entry to the Pike River mine, a boost to the minimum wage to $20 per hour by 2020, and free doctor's visits for under-14s.
Regions will be developed with an annual budget of $1 billion dollars. Regional rail will be developed and power pricing will be reviewed.
There are also gains for SuperGold Card holders, such as an annual free health check for seniors as well as an eye check.
And eligibility for national superannuation will remain at 65 years old.
We talk to new Minister for Seniors, Tracey Martin; well-known Financial Commentator, Martin Hawes; President of Grey Power, Tom O’Connor; and ex-Retirement Commissioner Diana Crossan to get their take on what this new Government means for older Kiwis.
NZ First MP, Tracey Martin is the coalition Government’s new Minister for Seniors.
“I’m incredibly honoured that Winston Peters has offered me this role. He’s very passionate about this portfolio, and NZ First has become synonymous with it.
In the coming months we’ll be turning the SuperGold card into a ‘smartcard’, which means it will be connected to a bank and have purchasing benefits. Our preference at this stage is Kiwibank but of course that’s something we need to work out.
We originally campaigned for 3 free doctor visits a year but in the negotiations could only secure 1. Of course you can’t always get what you want and we’re pleased that subsequent visits will at least now only cost $8.”
Martin says the free eye check is aimed at tackling age related macular degeneration, a growing problem in New Zealand.
She also wants to look at raising the income level at which you can access rates rebates and address the chronic need for more social housing.
“I want more recognition of the housing crisis among older people – many of whom can no longer live at home but can’t afford to live in a retirement village. We’ll also be looking closely at elder abuse and particularly the funding around that.”
Martin believes older people should be recognized for the voluntary work they do and how much they contribute to our economy.
“There needs to be more of a distinction made between ‘work’ and ‘jobs’. There is lots of part-time work that a family couldn’t live on but our seniors would be perfect for. It would help top up their superannuation, and protect our younger people from being exploited.”
Finally, Martin is looking forward to working closely with advocacy groups Age Concern and Grey Power to dispel a common myth.
“I would like to break up this negative conversation that our older citizens are somehow selfish, because they worked through a time where they were able to earn their own homes. They might be asset rich but that doesn’t mean they’re not struggling on a day to day level.”
Regarding housing, Lifetime director and financial commentator, Martin Hawes has a warning for property investors...
“We know the Labour government is hoping to build 100,000 new houses in the next 10 years. This is likely to push down prices and when there’s an expectation of low prices it means people tend to not be as panicky to buy.”
Hawes say although we won’t see a capital gains tax introduced this term, the expectation that it’s coming could push the market down even further.
“In the meantime we do know the ‘bright-line test’ will be extended so that investors will need to hang onto their property investments for at least five years to avoid being taxed on any gain instead of the current two years, and any losses on rental properties will be ring-fenced meaning they will no longer be able to be used to reduce the tax that speculators owe on other income.”
Given these risks, Hawes says older property investors need to be thinking about lowering their exposure to that risk and diversifying their portfolio.
In case things don’t go well, they should also be thinking about investing some money off shore. And ensuring that they have the income they’re going to need going forward.
“The investment strategy where you own 4 rental properties, and on retirement sell 2, repay your debt and live off the rent of the remaining 2 has always been a bit risky because there’s no diversification across asset classes, essentially you’ve got everything in the property basket. With this change in government it just got even riskier.”
The other thing that retirees should think about is that the new government has said it’s going to review and reform the Reserve Bank Act. Hawes says Winston Peters has made it very clear that he wants to lower the exchange rate.
“Those things together might bring interest rates even lower than they otherwise would have been. And in doing so may result in a lower NZ dollar, something Winston Peters wants for our manufacturers and exporters. On the other hand, the coalition deal also contains quite a lot of promises involving quite a lot of money – that would tend to mean more government debt, which could lead to higher interest rates.
We really don’t know what’s going to happen. There’s a lot of uncertainty. My guess is that the next 3 months will tell an important story.”
Grey Power National President, Tom O'Connor is delighted that NZ First will now be able to advocate for older people from inside Cabinet.
"We spent a long time in detailed discussions with senior Labour and Green MPs on the format of their policies on aged care and housing and it is very encouraging to see those people given the appropriate ministerial appointments to put those policies into action."
He says his federation worked tirelessly to oppose the proposed superannuation move to 67.
“The steady campaign of misinformation and scare tactics about the long term affordability of national superannuation, coupled with ill-founded suggestions that the so called baby Boomer generation were “greedy oldies” didn’t work.
“National superannuation is not a benefit or a charity and amounts to less than 4% of GDP. To even suggest that those people in physically demanding occupations should carry on working until 67 was simply unacceptable in a country as wealthy as New Zealand. The proposed new age of entitlement of 67 would only have affected people currently younger than 45 and it is these people, our children and grandchildren we were concerned about, not ourselves.”
Lifetime director and former Retirement Commissioner, Diana Crossan believes the coalition has a strong and well-aligned agenda for change.
“In the lead up to the coalition announcement, there was a lot of talk that NZ First policies would be more suited to a coalition with National, but having looked at the agreement, I’m pleasantly surprised to see how aligned it is. I think they’ve made a very good start with the way they’ve positioned some of their policies.”
However, Crossan is disappointed that the super age isn’t moving.
“I would have liked to have seen it raised to 67 over time, and for there to be a means tested benefit for those in their 60s physically burnt out by their jobs. Super is so important but it needs to be affordable and the reality is that with an ageing population we need our people to stay productive for longer.”
And regarding the coalition itself, Crossan is hopeful.
“Our new Prime Minister is young but both she and the caucus are very aware of the ageing population and the realities that's going to bring. Saying that, they are new to the game and I hope they find people they can trust to give them good information to make the positive changes we need.
There are a lot of competing wants and needs and realistically we can't have it all. I think that one the great things that the coalition could pull off is to really focus on their major programmes for change – child poverty, housing and clean rivers because in the long term they’re going to benefit everybody.”
Article written by Hannah Hill, Lifetime Income.
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