Susan St John: The real problem in Peters’ case
13 November 2019
Opinion: Winston Peters’ case highlights the absurd reality of the state “peering into people’s bedrooms” to save money on NZ Super, claims Susan St John.
Media is awash with reports on Winston Peters and his High Court claim against those he believed leaked news of his superannuation overpayment to the media.
And no wonder – it is an expensive business for New Zealand’s taxpayers who are footing the bill for two Queens Counsel and legal teams and, if the court case goes Peters’ way, will also be picking up the damages bill for $1.8 million.
Peters is part of a group of very highly-paid and wealthy superannuitants. Typically, many of those in this group would not spend any time at all thinking about how much they were getting. It’s unlikely they would notice the winter energy payment added on for a few months and then removed. It’s likely they ignore the letters that everyone gets to verify their personal details. NZ Super is chickenfeed to wealthy people, raising the question, why don’t we recover the pension through much more progressive taxation?
But putting aside that issue, and any irritation over costs and court time-wasting, this case highlights the absurdity of paying a different rate of NZ Super to those who ‘share’ with their married or de facto partner, and those who ‘share’ with anyone else. The different rates for different sharing scenarios and the confusion this causes is at the heart of this overpayment problem.
That Peters was careless in filling out the form there seems no doubt. He thought he was being asked for his marital status when he ticked 'separated, living apart'. That answer then took him to ask if he wanted a living alone payment. As he was not living alone he ticked the 'No' box.
Understandably, he thought that since his partner was not on Super that she was irrelevant to the application. Despite being Minister for Senior Citizens at one point, he appears genuinely surprised to find that his younger de facto partner had anything to do with it.
Peters is not on trial here. Many people get caught out by not comprehending the rules around their living circumstances and have to repay overpayments. There was an error made, with no intent to defraud, the correct processes were followed in the investigation, no fear or favour issues, the overpayment was repaid, and the case should have been closed and his privacy protected. End of story.
The problem was that even the Minister who should have known better has been confused. In her written evidence, the then-MSD Minister Anne Tolley talks of Peters being on the 'living alone rate'. But to be on the living alone rate clearly would have raised suspicions of fraud, as the living alone box would have had to have been checked deliberately, 'Yes'.
Perhaps, once the case is concluded, Peters could turn his mind to supporting better retirement income policies including gradually aligning the single and married rates.
That may explain why instead of telling her sister there was an overpayment but it was not fraud and the mistake had been resolved, she said “he is not as great as you think because he was receiving a single super when he was living with someone else”.
If she was confused about the difference between living alone, single sharing and married or de facto rates, then it is no wonder that Peters was alarmed that his case had got into her hands and the potential for slurs to arise for political gain. The tragedy of this saga is that the case will wind its way to a weary end with almost no one asking the obvious question – why does NZ have different sharing rates in the 21st century when relationships are so fluid, especially for older, unmarried people?
The University of Auckland’s Retirement Policy and Research Centre (RPRC) has been challenging this issue of different sharing rates for many years. The best the Ministry of Social Development can do is use weak 19th century logic to defend the differences. They pronounce that a married couple can:
- enjoy lower accommodation costs than two single people (who share);
- have their personal household effects on one insurance policy whereas two single people who are sharing accommodation would be more likely to have separate insurance costs totalling a higher amount;
- share vehicle expenses, while two single people may be more likely to have their own individual transport and vehicle costs;
- generally share meals, while two single people sharing accommodation may not have merged their lives to that extent.
There is absolutely no rational behind these ‘justifications’. If the argument is based on ‘economies of scale’ – i.e. two can live more cheaply than one – then why is the lower individual rate not paid for sisters who share, or brothers, or friends – or anyone who is sharing a home with someone who isn’t a ‘partner’?
Fundamentally, this policy demonstrates a punitive attitude towards both marriage and de facto relationships. It boils down to peering into people’s bedrooms so that the state can save money.
We don’t expect a married person to pay more tax than a single sharing person on the same income. We don’t pay different married and single sharing rates of ACC. Entitlement to New Zealand Superannuation has always been without regard to a spouse’s income and so it is “individual” payment. All aspects of NZ Super should reflect that.
The anomalous spousal provision is another hangover from times past. Under this policy, a person who may have lived all their life in New Zealand can find their NZ Super is drastically reduced because they have a partner with an overseas pension (even if it is a recent liaison or a second or third marriage). But legislation, just introduced, will stop this stupidity reflecting a “modernisation” and movement to “individualisation”.
What does it take for common sense on the different rates issue to also prevail? Perhaps, once the case is concluded, Peters could turn his mind to supporting better retirement income policies including gradually aligning the single and married rates as the Retirement Policy and Research Centre (RPRC) has recommended in their paper for the 2019 Retirement Incomes review on fiscal sustainability.
Susan St John is Honorary Associate Professor of Economics at the Business School and Director of the Retirement Policy and Research Centre.
This article reflects the opinion of the author and not necessarily the views of the University of Auckland.
Used with permission from Newsroom Susan St John: The real problem in Peters’ case 13 November 2019.
Alison Sims | Research Communications Editor
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