2 min read

Looking back

Attention Conservation Notice: NZ alternative history. A week or so ago this would have been a timely response to two big news stories involving 50-year estimates of large sums of money to a purported two decimal place accuracy.

With the new NZ Super reforms just enacted, it is a good time to look back at the nearly five decades of the controversial national savings scheme. Few would deny that there has been some benefit; Kiwis over 65 are now the wealthiest age group and old-age poverty is no longer an expectation, at least for the middle class. Some commentators claim savings locked away in super explain New Zealand’s housing affordability crisis, though others point to immigration or to zoning restrictions as the true cause. Comparison to Norway and Saudi Arabia is unavoidable, but not a level playing field. Those two nations had literally a licence to pump oil for decades, and easily had the resources to pivot into renewable energy and arms sales.

Somewhat unfairly, the old NZ Super may be longest remembered for the “Raiding Cossacks” scandals that made David Fisher’s name as an investigative reporter, ably assisted by Laurence Clark’s cartoons. Investments in post-Soviet Russia looked like a growth opportunity, but possession is nine points of the law and extracting the gains turned into a quagmire. Economists argue that a bigger loss for New Zealand was the so-called “Sheep-shagger” era of the 1980s, when NZ Super propped up the fading wool and lamb industry in the North Island. Their investments delayed the massively profitable conversion into dairy, and left farmers without the resources to adapt when methane emissions were restricted in 2004.

A recent opinion piece by Piopio Asset Management claims that NZ individual savings, invested by a diversity of private-sector managers, would have built up to a massive $240 billion if Muldoon had cancelled the NZ Super scheme as he planned. Perhaps private investment would indeed have outperformed centralised public management; perhaps it would have had comparable results; perhaps NZ would have wasted the money on a house-price spiral. Prediction is always hard, not only about the future.