Superannuation is pegged to inflation and wages to ensure that it rises by the rate of inflation at a minimum, but in line with wages when wages are rising faster. In practice, this means that superannuation rises with wages rather than inflation, meaning superannuitant incomes grow faster than those on other benefits.
The last Labour Government indexed benefits to wages in 2019, after a report from its welfare working group. The then-Children’s Commissioner had been calling for a change in indexation, saying it would have a “huge” impact on child poverty.
The policy had a rocky road, however, as after it was introduced, New Zealand suffered a debilitating bout of inflation, meaning that the wage index worked out as less than if benefits had remained pegged to inflation. Labour topped up the difference.
This policy would avoid that through a “double lock” indexing benefit rates to the higher of wage growth or inflation.
The coalition returned to the traditional inflation index.
Act leader David Seymour attacked the move, saying the policy did not address the underlying problems with the economy, which was that “productivity growth has been weak”.
“We’re having a cost-of-living election because we haven’t put enough emphasis on wealth creation for the last 20 or 30 years.
“Any policy that says ‘We’ll cut the golden goose a bit finer’ is not going to solve the underlying problem New Zealand has,” Seymour said.