OECD: Link Super age to life expectancy
Report recommends boost to ICU capacity, improve maths teaching, lower corporate tax to lift investment
The New Zealand Government should link the age of eligibility for New Zealand superannuation to life expectancy, a report by the OECD has recommended.
The latest OECD economic survey of New Zealand has found strong Government support to protect jobs and incomes has helped New Zealand recover quickly from the impact of Covid-19 but more work needs to be done.
“The near-term economic outlook is positive. The New Zealand economy has recovered strongly from the pandemic,” OECD Secretary-General Mathias Cormann said.
After surging to 4.7 per cent in 2021, New Zealand’s GDP is expected to rise 3.8 per cent this year before easing to 2.5 per cent growth in 2023. But Cormann said the need for action was pressing in a number of areas to make growth sustainable.
“For instance, helping the digital sector to grow would help boost labour productivity.
“Linking pension eligibility to life expectancy and adopting long-term debt-to-GDP targets would help address the projected increase in government debt.”
Prime Minister Jacinda Ardern has previously said she would not increase the NZ Super eligibility age of 65, under her leadership.
The main findings of the report also include that New Zealand’s intensive care capacity is low compared to other countries and it recommends increasing ICU capacity and vaccination rates among vulnerable groups.
“Once vaccination rates are high progressively relax border restrictions, as planned,” it says.
It notes that household mortgage debt is high.
The Reserve Bank has already brought back loan-to-value restrictions after easing them in 2020 and is consulting on debt-servicing restrictions.
The OECD report recommends either requiring banks to use minimum interest rates for assessing borrowers’ debt servicing capacity or by introducing debt-to-income restrictions.
Under increasing housing affordability and better protection for displaced workers it said that
New Zealand should identify and remove barriers to special purpose vehicles to give better access to infrastructure financing.
On top of that it should introduce a planned social insurance scheme to help who lose their jobs.
It also notes that productivity is low by international standards owing to muted product market competition, weak international linkages and innovation and skills and qualification mismatches.
Corporate tax rates were also high by international caparisons holding back capital investment.
The report recommends removing barriers to competition in the retail grocery sector and complement research and development tax credits with targeted grants.
On boosting productivity the report found the domestic pipeline of advanced ICT skills was weak with poor maths achievement limiting the proportion of school students who could obtain qualifications needed for a career in this area.
That has left employers preferring to recruit experienced workers with advance ICT skills rather than training them into those roles.
Finance Minister Grant Robertson said the survey had recognised the Government’s response to the Covid19 pandemic.
“The Government’s books continue to outperform forecasts and we have one of the most favourable debt positions in the world,” he said.
Robertson said wellbeing remained central to its approach.