How To Treat NZ Super Applicants Like Other Beneficiaries

Old people in New Zealand are a funny bunch. On the one hand, they’re deeply critical of beneficiaries. They’re the first to support crackdowns on benefit fraud (a literal rounding error in terms of Vote MSD) and would likely agree that if a beneficiary starts earning more money they should have their benefit reduced.

They are much less willing to consider themselves beneficiaries, when they are nothing but beneficiaries. There is no material difference between a retiree couple who failed to save enough money for retirement in liquid assets, whilst living in a $700,000 villa in Auckland, and a person who continues to receive an unemployment benefit whilst they move into work.

NZ Super beneficiaries should be treated like other beneficiaries. If they were subjected to the same level of asset testing that any other class of person was, NZ Super applications would plummet because many NZ Super eligible people know deep down that they don’t really need state assistance, they’re just taking the free $15,000 a year with no questions asked.

How many older voters would have wholeheartedly supported the crackdown on other types of beneficiaries while happily spending their fortnightly super payment? They actually rationalise that because they paid taxes (which have already been spent) they are somehow entitled to NZ Super from their 65th birthday until their death.

The funny thing is that some NZ Super recipients will get more from NZ Super than they ever paid in taxes. Some NZ Super recipients never actually worked a day in their lives – but they’ll happily bank their super and vote for Winston First.

If you have a look at Work and Income’s website, you’ll be able to find the application form for NZ Superannuation. It’s 13 pages and doesn’t require much besides confirming the fact you worked in New Zealand and your bank account details.

If you move across to the unemployment benefit application form – you will find that it is 36 pages. You must declare if you’re still working, the financial situation of your partner and any assets you have. This means most Kiwis can’t actually get the unemployment benefit because someone else can support them or they can sell down assets to survive.

My solution to the NZ Super cost blowout because of changing demographics and a sense of entitlement is to simply replace the superannuation application form with the unemployment benefit application form.

This is a far simpler solution because many NZ Super applicants who don’t really need the money will be deterred by the level of disclosure they must make to Work and Income around their employment status and level of assets.

When they have to admit on paper that they are taking the mickey out of the safety net, many will not go through with the application. I would guess thousands of fewer applications a year would be processed, saving billions over dollars over the next few decades.

A lot of old people are really secretive about their financial affairs, so with one easy form change, the marginal applicant who doesn’t really need NZ Super to survive, will find that it’s not worth their time to gather details of their asset base in order to avoid getting done by Work and Income for failing to disclose details of their financial situation.

People who do need NZ Super to survive won’t be harmed by the form change – and the system will be able to continue functioning as a support net for people who actually need it instead of cynical asset rich cash poor older people getting more money than a struggling student gets from StudyLink.

Are We All Beneficiaries Now?

I never thought I’d link to a post by Helen Kelly over at The Standard. But her post “We Are All Beneficiaries Now” perfectly highlights what I was talking about the other day. Farmers are the most coddled special interest group in the country, particularly under National governments which put a statistically disproportionate number of farmers into positions of power.

Where I differ from Helen Kelly is that I don’t agree with farmers getting social protection. It is patently absurd for a group who overwhelmingly reject the idea of a welfare safety net to be the beneficiary of a “no questions asked”, “no work seminar attendance necessary” handout after central government declares a “drought”.

When is the drought announcement coming for the construction sector, which despite dreams of the Christchurch rebuild and a housing supply problem, is still 20% off its peak and consents at 50% of their boom level, in order to enable the payments from “Construction Support Trusts” and special treatment from Inland Revenue to be triggered?

Oh wait, I forgot, because of the way the construction industry is structured through contractor/sub-contractor relationships, every small business in the construction sector thinks that they are the big man. When progress payments are on time they’ve got the ute, the jet ski and even a cheeky $1000 for the missus to go to the shopping mall. Big business has effectively conned sub-contractors into thinking that they are businessmen just like them.

What this does is make organising the construction sector in the manner the farming sector is organised very difficult. Few sub-contractors realise how they are at a persistent disadvantage due to asymmetric information, lack of bargaining power and rampant commercial illiteracy.

If one business sector can’t get handouts, none of them should. Sadly, special interest groups can negotiate very effectively on behalf of their industry. If only the construction sector (my favourite industry if that isn’t already clear by now) realised the benefits of sub-contractors organising.

I have a project idea in mind that would involve writing small guides for subbies with their heads screwed on who want to figure out how to put themselves in a position to get screwed by main contractors less often. A “Construction Contractors Union” of sorts. I used to think union was a dirty word – but the truth is that when we are all beneficiaries, it is commercial suicide to not “get in on the game” of painting your special interest group as deserving of handouts.