How politicians feather their own nests
Had we not screamed at the impertinence and laughed in disbelief about Jonathan Hunt’s attempt to get a British pension when he was New Zealand’s High Commissioner in London, we would probably have forgotten who the real double-dippers in this country are.
But this case has made it clear to even the most ignorant and/or generous people: The real double-dippers are...
New Zealand’s parliamentarians are the real double-dippers.
They receive NZ Super at the age of 65 and, already after nine years in Parliament and from the age of 50, some even earlier, a second pension from the Government Superannuation Fund (GSF). The latter is topped up by the taxpayer because the Fund is hopelessly underfunded. And, of course, it is topped up by the recipients of overseas pensions who are denied NZ Super, and their Kiwi partners who fall under the scope of Spousal Provision. (In the year up to 30 June 2009 members contributions to Parliamentary Superannuation were at NZ$ 156,000; the Government = taxpayer contributed NZ$ 3,680,000 to parliamentarians' pensions.)
An exemplary case of greed
Why is Jonathan Hunt's case so exemplary and how has he opened everyone’s eyes? He is proof that parliamentarians - with very few exceptions - only care about injustice if it affects them personally. It is about their lack of judgment what injustice really is and their belief of being entitled to a life of luxury at taxpayers' cost, at the same time denying hard working New Zealanders even basic human rights, as in the case of Spousal Provision.
Jonathan Hunt, born in 1938, was a longtime member of the Labour Party. He was Minister of Telecommunications and Broadcasting, Minister of Tourism, Minister of Housing and Postmaster General. During the fifth Labour Government he served as Speaker of the New Zealand House of Representatives from 1999 to 2005, and was the longest serving MP in Parliament (1966 until 2005) where he was called “Father of the House”.
Doing so much for the country, Hunt became member of the Order of New Zealand in 2004, the nation’s highest civilian honour. And for his loyal contributions to the Labour Party and his genius idea to make taxpayers top up parliamentary pensions, then Prime Minister Helen Clark rewarded Hunt by appointing him High Commissioner in London, New Zealand’s highest-ranking diplomatic post in Europe. Hunt left Parliament on 30 March 2005.
A High Commissioner claiming a UK pension
Due to the Social Security Agreement New Zealand has with the UK, NZ Super is not paid to New Zealanders living in the UK. But New Zealanders can apply for a British pension – and Hunt voiced his intention of drawing those NZ$ 125 a week while overseas if he could qualify. He did not think this would be morally wrong and what reaction it would trigger, instead he said: “I’m not doing anything I’m not entitled to.”
Newspaper and TV reports reminded New Zealanders that Hunt had run up a record taxi bill of NZ$ 30,000 in one year (1996) at taxpayers' expense as an MP. And they recalled parliamentary colleagues calling the double-dipping MP the “Minister of Wine and Cheese” for his love of the good things in life.
"It is not appropriate"
You can only imagine how Helen Clark probably has reacted behind closed doors. She might have exploded like a volcano but in public she put on a grim pokerface, squeezing out a tortured smile. In a press conference she expressed her disgust with calm words: “I don’t think he should be taking the British pension as High Commissioner.” And: “It is not appropriate.” The Ministry of Foreign Affairs was ordered to pass on her comment.
TVNZ reported that Hunt had compensation: A New Zealand wine company gave him a barrel of its product as a thank you for agreeing to promote it and other New Zealand wines in Britain...
It is this kind of shameless greed and sense of entitlement that is concerning because it is the same people who defend and retain Section 70 of the Social Security Act. They find it fair that overseas pensions are deducted from NZ Super. At the same time they go to great lengths to secure their own pensions (and claim more taxpayers’ money for their private pleasures, as the June 2010 revelations about the scandalous abuse of ministerial credit cards proved once again).
An interesting article by Brian Easton shows that politicians rewarding themselves for their service did not start with the establishment of the Government Superannuation Fund (GSF) in 1948. He writes: “The story begins with the opening legislation of the nation’s second Parliament in 1856, when three members of the old Executive Council were granted pensions - no contribution, and paid by the taxpayer. By 1858 Parliament was granting a non-contributory pension to long-serving employees in order to ‘secure those best fitted … for the public service.”
Rewarding long-term employment
This, and rewarding long-term employment, was the primary aim when the Government Superannuation Fund was established in 1948 as the consolidation of earlier schemes. It provided a way for public servants to save for their retirement by making regular contributions to the Fund (a certain percentage of their salaries). In return they would receive a defined level of income in retirement.
However, due to growing public anger at funding gaps, the GSF was closed to new enrolments on 1 July 1992 (in 1995 for people employed with certain Pacific governments) – and this is where the real problem started: there are less and less contributors and more and more annuitants.
As of June 2010, the Government Superannuation Fund Authority (GSFA) published a number of about 68,000 members, made up of 15,000 contributors, 6,000 deferred pensions and 47,000 annuitants. (The Government Superannuitants Association/GSA claims they have 75,000 members.) Since 1996, the number of annuitants has exceeded the number of contributors. It is expected that entitlements will continue to be paid by GSF for the next 50 to 60 years and then become history.
Shortfall caused by previous Governments - and the taxpayer tops up
But, as you can imagine, the Fund’s assets are insufficient to cover its projected liabilities, i.e. its commitments to pay future entitlements. The GSF Authority – which took over in 2001 - writes on its website: “This shortfall was caused primarily by previous Governments deciding not to make employer contributions to the Fund during the term of contributors’ Government service. As a result the investment returns on the smaller asset base of the Fund, combined with contributions from members and non-government employers, are not sufficient to meet the annual cost of entitlements to members. The annual shortfall in the cost of entitlements is met by a ‘top-up’ from the government each year.”
A “top-up” by the Government is, of course, a top-up by the taxpayer.
According to the GSFA, the numbers are massive: “The Fund currently meets about 26% of the cost of entitlement payments. Contributions by members and non-Government employers, such as Telecom and Toll Holdings, provide about 7% and the Government meets the balance.” Again: the taxpayer meets the balance.
In NZ dollar amounts it reads even more impressive: as at 30 June 2009 the Fund had net assets of about NZ$ 2.8 billion to pay benefits, but a gross liability for promised retirement benefits of NZ$ 12,102 billion - leaving a deficit of about NZ$ 9,297 billion to be footed by the taxpayer. In numbers this reads as 9,297,917,000.
Fast decision no April Fools Day joke
The legislation that allows this top-up was passed by Parliament in 1987. The NZ Pension Abuse website quotes Neill Atkinson’s book “Rewarding Service”, describing the passing of the act as “the inglorious Dead of Night". Obviously it did not take MPs on both sides of the House longer than seven minutes to decide on massive improvements in the superannuation of parliamentarians and senior civil servants. (The text in the right column also refers to this act that has entered history as a massive breach of public trust.)
You find the “top-up” act in Section 88 of the Government Superannuation Fund Amendment Act 1992. Despite being implemented on 1 April 1987, it was no April Fools Day joke. The “Provision for payments” says:
(1) All retiring allowances and refunds of contributions and all other money payable under this Part of this Act shall be paid out of the Parliamentary Superannuation Account.
(2) Where in any year the money in the Parliamentary Superannuation Account is insufficient to meet the payments required by subsection (1) of this section, the deficiency shall be met by a payment from public money without further appropriation than this section.
Details about the membership of parliamentarians with the Fund are listed in Part 6 of the legislation, called Parliamentary Superannuation.
It even guarantees MPs leaving Parliament under the age of 50 special retirement payments. The general rule is that everyone who has served for a minimum of 9 years and is over 50 years old is entitled to “an annual retiring allowance”. The formula is as transparent as most Government policies:
P x (0.7 + (0.014 x t))
Newspaper articles about Jonathan Hunt’s attempt to claim a UK pension
Book information “Rewarding Service; A History of the Government Superannuation Fund” by Neill Atkinson on this website:
White herons, nesting at Okarito Lagoon
Nothing to hide
We have discovered a gem of an article on the internet which should not be hidden from a wider public, as it is written by someone with real insight: Rodney Hide, until 28 April 2011 leader of the ACT Party. It was published about 2004 (no date given), as he mentions that Jonathan Hunt had just turned 65 "last December" - which happened in 2003.
Rodney Hide wrote about pensions, parliamentarians and the unsustainable Government Superannuation Fund (GSF):
"Politicians drive pension policy in New Zealand. [...] Their over-riding concern is to secure votes (or at least not lose them) - and to make sure that they have a good pension scheme themselves.
MPs have at least secured their own pensions.
[On Jonathan Hunt turning 65] His best present was his National Super. It gives him an extra
$ 592.98 a fortnight... on top of the $ 7500 a fortnight he gets paid as Speaker. He is entitled to the same payment as pensioners who have no other income.
Mr Hunt is also entitled to a very generous parliamentary pension once he quits Parliament. This will provide him with an additional
$ 3,500 a fortnight - tax-free. That's equivalent to a pension before tax of $ 5,700 a fortnight - ten times what everyone else gets.
The Government Super Fund that pays out parliamentary pensions is hopelessly bankrupt. It pays out vastly more than it has ever taken in. It only survives because the poor taxpayer tops it up every year. The taxpayers' liability for the Fund totals over $ 13 billion.
[...] It doesn't matter which parties are in power - or what their promises are - history will repeat itself. The number of elderly is set to double again: the entitlement will again be halved. Politics can't beat arithmetic. [...] There will be chaos in pension policy. [...] The problem is that politicians set the policy with their eyes only to the next election, not with an eye to the next fifty years.
[...] We know MPs can move fast when they need to. In 1987 Jonathan Hunt late one night without public notice moved a new Bill. The Bill passed unanimously through all stages within seven minutes of its introduction. The Bill's purpose? To increase MP's pensions by a third and to allow MPs to qualify at age 45."
National Party Minister Nick Smith referred to the same issue in a speech on 17 October 2006:
"It is a matter of folklore that in 1987, when we had the last Labour Government, an MP's Superannuation bill was bunged through late at night, through all three stages, that went down in political folklore as one of the great breaches of the public trust."
In an article from 18 June 2009 the New Zealand Herald published the names of 13 MPs who can leave Parliament with pockets full of taxpayers' money (ab)used to finance the GSF scheme. John Carter is one of them.
Here is the list:
When Sir Roger Douglas left Parliament at the end of 2011 he also received the annuity. John Carter left Parliament in July 2011 to become a diplomat in the Cook Islands. He retired from his post as High Commissioner in July 2013, returned to New Zealand and became Mayor of the Far North in October 2013.
(Last update: 26 March 2015)