No Hole on the Horizon

Treasury now predicts that the Cullen fund will be $37 billion light in a decades time ($22 billion less in payments and $15 billion loss of interest). Idiot at No Right Turn erroneously suggests that this shortfall is somehow National’s fault because they have suspended payments to the Cullen fund. He even has a graph. 

*Sigh*. Let’s try this slowly for Idiot, Phil Goff and the denizens of the Standard (that I am unable to force myself to read anymore). There is NO hole in the Cullen fund. There is simply no money for it. There is not some sort of magical gap in it because National has taken something away. There is simply no money to put in it. It will, therefore be a smaller, less useful fund.

This has nothing to do with National and everything to do with the current recession – ably aided by Mr. Cullen who seems to have managed to boot us into recession half a year earlier than anyone else. Because of this, the current government (which happens to be National-led, but the same would apply to a Labour-led one) has to borrow money to fund the Cullen fund. So while the Cullen fund gets larger, the government debt will get larger too. To spell it out, although the Cullen fund would be larger, Government debt would be larger by the same amount. If you borrow for the Cullen fund, you merely move the tax burden from pensions to debt servicing. Idiots nice graph would be equally matched by a similar graph showing Labour growing debt compared with National’s

And don’t even think of trying to make out that the Cullen fund will make a better rate of return than the interest on the debt. That kind of risky, dumb-assed thinking is precisely what destroyed Iceland’s economy.

Additional:

Clearly the Herald journalists are equally economically illiterate. In an article entitled “Budget 09: Super burden shifts to next generation“, the opening line is:

“Taxpayers will pay more than $1 billion a year more for pensions from 2020 into the indefinite future as a result of the Government’s decision to stop paying into the NZ Superannuation Fund for the next 11 years.”

No they won’t. Taxpayers were going to pay that extra amount because of the recession. It has exactly squat to do with National’s budget.

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