The Right Thing
It is rare for the Greens and Act to see eye to eye on anything, but it seems they agree on the stupidity of borrowing to pay into the Cullen fund. No normal person would borrow money in order to place it in a savings fund that is losing money. Even borrowing money to place in a fund that is making money is dubious, as the fund gains have little likelihood of being better than the cost of borrowing.
Cullen actually anticipated this situation (yes, he did some things right!) and set up the fund so that governments could take a payment holiday in bad economic times. What he did not foresee, was his own party using this sensible precaution as a weapon to score political points. This is only one of the reasons I called him “short-sighted” in my last post.
It was completely predictable that Phil Goff would make political capital by instilling fear into the elderly with the lie that pension amounts would be threatened. He knows as well as anyone else that borrowing money to supply the Cullen fund is insane. He also knows that it will make no difference to pension payments – only to how the government funds those payments. In reality, the Cullen fund is simply a hedge fund to smooth over a sharp blip in pensions. It is far too small to effectively fund all pension requirements. Frankly, it will do little more that delay the inevitable move towards increasing the age of eligibility.
English was very clear on the News tonight that pensions would remain at 66% of the average wage. I note he did not talk about the movement of the age of eligibility. It is very politically unpopular, but the reality is that it will come sooner rather than later. The Cullen fund just puts off the inevitable by a few years.
Regardless of the political weather, contributions to the Cullen fund should be stopped until the economy recovers. Everyone knows this is the right thing to do, including Goff and the irritating Dunne. If Labour and the Dunne party wish to engage in a little political prostitution, so be it. Under no circumstances should Key and English cave in to pressure and borrow to satisfy peoples irrational fears. They owe it to the country to stand firm and do the right thing, not the popular one.
At the very least, they will enjoy a brief moment of consensus with Act and the Greens.
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Feb 25 09 8:57 pm
Do the right thing or the politically advantageous thing? Now there’s a conundrum for a party and leader as they sink in the polls.
Which means there is no excuse for John Key not to do the right thing!
Feb 25 09 9:54 pm
“Which means there is no excuse for John Key not to do the right thing!
I certainly hope he wouldn’t do either the wrong or left thing
Feb 26 09 9:08 am
Excellent post. Lets hope that this is the path they choose.
Feb 27 09 8:48 pm
Its all very well saving, but I have bills to pay, and food to buy. Saving is a luxury as far as I am concerned at the moment…
Looks like the contributions are $2,000,000,000 a year, and it looks like the Treasury is that amount in the whole. Make sense to me, and better than allowing our hospitals to crumble..