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Nadine Chalmers-Ross: Budget timebomb ignored

opinion Nadine Chalmers-Ross

Published: 6:30PM Thursday May 24, 2012 Source: ONE News

The economy's back on track, the Government's books will soon be back in order, we're out of the woods. Phewf!

At least, that's what the Government would have you believe after the zero Budget they self-describe as "responsible financial management".

Sure, the Budget shows a path back to surplus, even though it's a small one, by 2015.

Yes, it does that without taking an axe to welfare or health or education.

Credit rating agencies like Standard and Poor's have reaffirmed our credit rating.

Tick. Tick. Tick for the Budget to-do list.

(Even if your local paperboy will be deprived of a tax refund.)

But it's tinkering really.

It's tinkering because they're doing nothing to address the timebomb that is superannuation.

A timebomb that, according to the numbers in this Budget, is already starting to detonate.

Those numbers are staggering. In the current year, the Government will spend $8.8 billion on superannuation.

Within five years, there will be 680,000 superannuitants and the cost of supporting them will blow out to $12.3 billion.

That's a 30% rise and at that point it will account for 51% of social assistance expenses.

You read that right: more than half.

"The lack of addressing the ageing population is where this Budget really falls down," according the Westpac chief economist Dominick Stephens.

Health spending is a similar story.

"The Government is trumpeting the increase in health (spending). I regard it more as a runaway train which is shunting everything else in the Budget aside. You can't fail to increase spending on health as your population ages," Stephens told me.

The problem is, once you have 680,000 people getting a cheque from the Government once a week, good luck getting them to vote in favour of parting with any of it.

"One in four voters are in that age group and most of them at the last election voted National," points out Raymond Miller, Associate Professor of political science at Auckland University.

"And of course there are many people who are 55 to 64 who are looking at Government policies and plans and thinking, my gosh, I don't want to miss out either."

But if they don't, everyone else will.

The longer they leave it, the bigger the costs will get and the greater the power of the retiree voting block.

National can take some credit for steering us through a financial crisis, for holding their course through a debt crisis.

But if they keep their heads in the sand they'll walk us right into another one and you can't call that "responsible financial management".