The Prime Minister has ruled out means-testing the winter energy payment – a debate David Seymour says New Zealanders deserve to have
Analysis: Twenty percent of retired New Zealanders don’t own their own home and 40 percent of pensioners depend entirely on their $25,000 a year of superannuation to live on.
It’s a grim reality for many older Kiwis who chew up a large of chunk of their fortnightly pension paying for sky-high market rents and inflated food, which increased by 12 percent for the year to March for the average household, according to the latest figures from Stats NZ.
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There is increasingly more elderly people living in poverty, some of whom told their stories to TVNZ’s Sunday, which included accounts of sitting in the dark or not flushing their toilet to save power and forgoing vegetables and living on two-minute noodles to survive.
Though no political leader will commit to means-testing superannuation, as it would amount to political suicide, there’s an argument to be made for applying stricter criteria to the more recent winter energy payment policy and freeing up hundreds of millions of dollars to help those elderly most in need.
ACT leader David Seymour says stripping back the criteria for the winter energy payment would save $379 million.
It would mean “the people who really need the support would still get it, while the retired couple who might put it towards a holiday in Fiji won’t".
Last year the Government, via Inland Revenue, rolled out a means-tested cost-of-living payment, which had its hiccups but for the most part was received by those who were entitled to it.
Superannuation and the winter energy payment are administered by the Ministry of Social Development, which still uses the same clunky IT system it has had since 1991.
An upgrade was funded at the last Budget but it’s a long-term piece of work and isn’t expected to be transformational anytime soon.
Though the Prime Minister hasn’t given a reason for not means-testing the winter energy payment, it’s understood in large part to be because the MSD IT system wouldn’t be able to cope with a more targeted approach.
It seems entirely archaic that in 2023 outdated IT systems are an excuse for dishing out money to those who don’t need help paying their power bill.
Currently anyone who receives superannuation also receives the power-saving payment, and trying to break it down any further than that would require MSD to have access to all forms of income received by pensioners.
Seymour has proposed the payment go to beneficiaries and those over-65s who have a community services card.
But even that would have its problems because community service cardholders lose their status if they receive any other incomes or earn interest on savings – something advocates for the retired don't want to be discouraged.
Although it makes financial sense for pensioners to have savings put away, it would block them from a community services card and therefore the winter energy payment if that was the criteria used.
There’s an argument for the outdated community services card rules to be updated too.
This isn’t an issue that is going away, as life for those on the pension only gets harder.
The Retirement Commission says, based on current trends, there’s going to be a 100 percent increase in people renting who are aged 65 and over.
“Long term the balance of homeownership is expected to shift to 60 percent homeowners and 40 percent paying rent. By 2048, this 40 percent will equate to up to 600,000 people,” the Retirement Commission says.
That’s a huge increase in people relying on the pension while paying market rent.
The accommodation supplement is available for those collecting superannuation, but again anyone who has more than $8100 in the bank doesn’t qualify, which the Retirement Commission says is far too low given the message to people is to save for their retirement.
Minister for Seniors Ginny Andersen says the Government is looking into how much it would cost to change that threshold.
She also told Sunday she knows those struggling on the pension don’t have enough to get by because she’s heard it herself.
When Newsroom asked Chris Hipkins if he accepts there are elderly people living in poverty in New Zealand, he dodged on two occasions.
“I accept there are a number of New Zealanders who are finding the cost-of-living a very big challenge at the moment, and that is something the Government’s committed to addressing,” he says.
Hipkins completely ruled out means-testing superannuation or the winter energy payment but stood by the decision to means-test the cost-of-living payment.
“I’m disappointed in Chris Hipkins. New Zealanders deserve to have these sorts of debates about means-testing." - David Seymour
In New Zealand, Seymour says, “it’s a choice between targeting genuine needs as precisely as possible or poorly targeted assistance that requires higher taxes to pay for it".
In contrast to Hipkins, he acknowledges how tough it is for those on the pension.
“If you still have a mortgage or are paying rent it is basically impossible to get by on the $25,000 pension.
“I’m disappointed in Chris Hipkins. New Zealanders deserve to have these sorts of debates about means-testing,” Seymour told Newsroom.
It’s a debate that has been silenced under Hipkins’ leadership, and the Prime Minister wouldn’t be drawn on whether there would be any specific assistance for the elderly in this month’s Budget.
It seems entirely archaic that in 2023 outdated IT systems are an excuse for dishing out money to those who don’t need help paying their power bill.
