The ultimate goal: Send all Kiwis offshore...
The New Zealand government's scaremongering shines through every word they say when discussing the need for Direct Deduction Policy and Spousal Provision. Subsequent governments have adopted the precedents first established in the top secret 2005 "Review of Treatment of overseas pensions and payment of New Zealand superannuation and veteran's pension overseas". This paper was conducted by Treasury and the Ministry of Social Development. Hon Steve Maharey - yes, the "Hon" really means: Honourable... - managed to ignore nearly every finding of this Review and of his subsequent 2007 Review which was published on 12 June 2008.
He did not care about the injustice done to a minority. He did not care about New Zealand's international reputation as the country has got a bad reputation in foreign governments only. Section 70 has no influence on tourism and immigration, as it is kept secret to the wider public.
The only thing Maharey cared about was the fact that Section 70 generates so much money for the NZ government that the task of financing NZ Super becomes a lot easier. And it becomes easier by the year as more and more immigrants come into New Zealand, and more and more Kiwis go overseas and return with their overseas pension entitlements.
The ultimate goal for the Government should be to send every New Zealander out into foreign countries which have contributory pension schemes for at least 15 years and only grant permanent residence to immigrants who have worked in their countries for at least 15 years. In an ideal world NZ Super would be completely financed by foreign states' pension schemes, and the New Zealand government could distribute the immense savings to its parliamentarians by granting generous pay rises and more perks.
(But, of course, this only works in theory because in the first ten or fifteen years NZ Super would have to come down while the workers are away. Only after their return the pension payments for those over 65 could increase again as tax collections would go up from the incomes they earn and from their overseas pensions.)
Creating envy and animosity
When the Direct Deduction Policy and Spousal Provision were introduced, only a few New Zealand-born individuals were affected, so it was easy for the Government to paint the picture of greedy immigrants, and create a feeling of xenophobia, envy, and animosity against the foreigners who obviously wanted to double-dip and rip-off the state. But in May 2007 the number of Kiwis affected by the policy had already risen to 7%, and it is increasing constantly. They too do not see fairness in how the Government treats them and their overseas pensions.
A standard justification of the policy permanently used by politicians is that any change could "risk opening the system up to exploitation by those who seek to access New Zealand's relatively generous provisions while having made little or no contribution to New Zealand society" (see in Letters from Wellington).
Why would someone seek to access NZ Super when he can achieve the amount of NZ Super by working, for example, 15 years in Germany and more than twice the amount of NZ Super if he stays there? No-one comes to New Zealand thinking he would financially be better off than in his home country. Many people move to New Zealand without having an idea how the pension system works. But surely no-one thinks that his overseas pension, achieved in another life, will be used to pay for the state's responsibility to provide NZ Super.
New policies create even more inequities
The most ridiculous thing, however, is that the Government, despite permanently claiming that its highest priority is to avoid inequities, has itself introduced new policies that create inequities amongst immigrants. In the case of three Pacific Island states (Niue, Tokelau and Cook Islands) you could, with good will, call it a generous gesture towards states with constitutional ties to New Zealand. In the case of Samoa and Tonga it could be considered as foreign aid. But granting privileges to South Pacific islands that are constitutionally linked to France and the United States is a sign of incompetence. Even international tax experts ridicule it as those people in American Samoa, New Caledonia, Tahiti and its neighbouring islands are even better off than born and bred New Zealanders!
Kiwis are also treated worse than Australians. When adjusting the portability rules, the Government decided to give Australians access to NZ Super when they turn 65 and have not lived or worked a minute in New Zealand. If migration happens the other way round it can happen that a Kiwi gets nil NZ Super because he would get nil Australian Age Pension. This means: On one hand the Government tells us that it has to protect "New Zealand's relatively generous provisions" from exploitation by immigrants, and on the other hand it opens it up to Australians at the same moment and to a much bigger extent - and leaves its own people empty-handed.
How Labour cheated on New Zealand First
The then Labour-led Government mentioned that the issues canvassed in the Review were also the subject of a commitment in the Government's Confidence and Supply Agreement with New Zealand First. (They demanded the Government investigate ways to improve the treatment of senior citizens with overseas pensions.) Well, they investigated - and did next to nothing. But they did not break their promise to look into the issue.
You find a list of the famous Reviews' findings on a separate page of this website, and, of course, the full Review 2007 here.
Only one real Opposition
The difference between any New Zealand government in office and the Opposition is no major issue in the discussion about Section 70.
A former Opposition becomes the Government, and at some point the Government goes back into Opposition. The thinking and the ghostwriters remain the same.
The question would only be: who is the worst offender? The National Government which thinks that even Spousal Provision is a fair policy? Or the former Labour Government which found Spousal Provision unfair - but not unfair enough to find the money to abolish the policy which currently affects about 200 people? The injustice for 64,000 people - and numbers rising - remains.
So in fact, there is only one real opposition, apart from the Greens, New Zealand First, and United Future: the 64,000 people treated unfairly, and an unknown number of Kiwis who consider fairness and justice as a matter of morality and not of their wallets.
All parties have a poor record
The international pension experts on the Pension Reforms website note New Zealanders' resistance
to pension reforms. They also state that the current system is not sustainable. They say:
"Unfortunately for New Zealand, politicians of all parties have a poor past record in relation to age pension changes and the current government has stated quite firmly that it would not contemplate changes. PensionReforms suggests that the Treasury is right to draw attention to the long term cost of NZS but that it will be difficult politically to draw the New Zealand public into a sensible discussion on the issues."