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New Zealand Superannuation: The facts and the fiction

26 June 2015

The following commentary by Dr Lisa Marriott, Associate Professor in Taxation at Victoria Business School, was published in The Dominion Post.

The facts about New Zealand Superannuation
lisa-marriott

Dr Lisa Marriott, Associate Professor in Taxation at Victoria Business School

If you are a New Zealander who meets the residency test you are entitled to New Zealand Superannuation (the old-age pension) when you reach the age of 65.

The pension is not asset-tested – you can have unlimited assets and receive the pension. Nor is it income-tested – you can have unlimited income and qualify for the benefit. You do not need to be 'retired' – you can have a full-time job and still collect the full pension.

While this may sound like we have already started talking fiction, these are indeed the facts.

In 2015, a single person aged over 65 and living alone will receive $374.53 per week ($19,475.56 per annum). A couple living together, where both receive the pension, will receive $576.20 jointly ($29,962.40 per annum). These rates are after tax has been deducted.

In contrast, a single person seeking work aged over 25 years of age will receive Jobseeker Support of $210.13 after tax. A jobseeker aged 20-24 years will receive $175.10 after tax, or less than half of their retired counterparts.

It is unclear why a single retired person needs $165 per week more than a single younger person seeking work. Yes, health costs may be higher for our older generations, but the health system is largely government-funded and subsidies exist for those with high health needs.

Census 2013 reports that 607,035 people aged 65 years and over are usually resident in New Zealand, with the majority receiving New Zealand Superannuation.

In 2013/14 we spent $10.9 billion on superannuation payments. By comparison, we spent $4.3 billion on other core benefits comprising $1.7 billion in Jobseeker Support and emergency benefits; $1.2 billion in sole parent support; and $1.4 billion in supported living payments.

Budget 2015/16 provides $12.2 billion for New Zealand Superannuation payments, which is an increase of 12 percent from two years earlier.

Provisions for other core benefits remains unchanged from 2013/14 at $4.3 billion, or around one-third of the cost of New Zealand Superannuation.

The fiction about New Zealand Superannuation

Many believe that New Zealand Superannuation is an entitlement, and the universal nature of the pension is one of its many strengths.

Our health system is largely universal, but health care is provided according to need – to those who are sick. So, why do we automatically pay a pension to those who have no need for the funds?

For argument's sake, New Zealand Superannuation could be tapered back for people with incomes over $50,000 and eliminated by the time this income is $100,000.

The question also needs to be asked about the level of superannuation appropriate for those with significant capital assets, e.g. over $2 million. Perhaps people with such portfolios should be expected to support themselves in their retirement?

These issues are unlikely to impact on most people aged over 65, but will remove the current anomaly whereby people who have no need for the pension still receive it.

We frequently hear that New Zealand Superannuation is affordable. In theory, we can afford anything, but the real issue is how we pay for it.

Currently, New Zealand Superannuation accounts for 16 percent of core crown revenue. Projections are that retired people will number 1.1 million by 2031, with accompanying pension costs increasing to $20 billion a year.

The Government will have to take measures to be able to afford pension payments, which could include seeking more revenue to fund it through tax increases, reducing expenditure in other government services, or increasing debt (which will also need to be paid for, so back to square one).

Back to the facts

The Finance Minister recently claimed that the real funding issue in New Zealand is long-term welfare dependency, not New Zealand Superannuation.

The reality is they are both problematic.

However, we have twice as many superannuitants as beneficiaries, and the majority of them are long-term recipients of state assistance.

Average life expectancy is currently around 81 years of age – slightly more for women and slightly less for men. Therefore, on average, retired people will receive 16 years of pension payments.

Yes, some people receiving welfare benefits are also long term recipients of state assistance. However, we shouldn’t let this fact be used as a tool to distract from the much needed public debate on the future of New Zealand Superannuation.

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Launch of the Asian Pacific Copyright Association

29 May 2015

 Susan Corbett and presenters

“Would the Asian Pacific region benefit from harmonisation of copyright laws throughout the region?” was the topic on the menu at a breakfast Business Links Seminar held on 20 May.

Organised jointly by the Centre of Accounting, Governance and Taxation Research (CAGTR) and the Asian Pacific Copyright Association (APCA), the seminar was attended by lawyers and people involved with copyright. It was also an opportunity to introduce APCA to the public for the first time.

Associate Professor Susan Corbett, General Secretary of APCA and its driving force, introduced the four presenters: Susy Frankel, Professor of Law at Victoria University and Chair of the Copyright Tribunal; Lida Ayoubi, PhD candidate in Law at Victoria University; Jonathan Barrett, Senior Lecturer in the School of Accounting and Commercial Law at Victoria University and Kate Duckworth, Partner at Catalyst Intellectual Property and a leading intellectual property specialist.

Associate Professor Corbett also acknowledged Professor Adrian Sterling, an expert in copyright and founder of APCA. Professor Sterling, who resides in England, sent a message to participants. “From the point of view of the individual countries of the region, harmonisation will assist in the local administration of rights, for instance by establishing principles concerning justiciability and applicable law,” he wrote.

At the end of the seminar, APCA president Brent McAnulty outlined the importance of having a copyright voice in the Asia Pacific and encouraged attendees to join ACPA.

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Installation of Victoria Chapter of Beta Alpha Psi

29 May 2015

 Kevin Stocks BAP President with BAP Executive and with Pearl Rozenberg

Formal installation of the Victoria Wellington chapter of Beta Alpha Psi (BAP) into the international organisation took place during a ceremony during April.

Kevin Stocks, President of BAP, and Regional Adviser Pearl Rozenberg, (left and right above with the BAP Executive) attended the function at Rutherford House to oversee the formal process and welcome students, School of Accounting and Commercial Law staff members, and other guests.

Pearl Rozenberg explained that Beta Alpha Psi is both an honour and professional organisation. 
“Membership in Beta Alpha Psi recognises academic excellence, and complements members’ formal education by providing interaction among students, faculty, and professionals.” 

The Victoria Wellington Chapter has become the 308th BAP chapter internationally, and Ms Rozenberg congratulated those students present.

“We are installing this Chapter today because each of you has achieved a personal record of superior scholarship in your academic endeavours, and has demonstrated active participation in the programme of your petitioning chapter.”

BAP President Kevin Stocks presented the Charter, Banner, and Gavel to the local President of Beta Alpha Psi, James Van Dissen.

Mr Stocks encouraged the students, both past and present, to continue to strive for excellence academically and in their personal lives.

“If you practice the attributes of scholarship, responsibility, and tolerance, you will exemplify the ideals for which Beta Alpha Psi stands, and which are fundamental for the well-being of society.”

Trish Keeper (pictured below), senior lecturer at the School of Accounting and Commercial Law and the Victoria Wellington Chapter mentor, concluded the proceedings by also congratulating the students on their achievement.

The Beta Alpha Psi website.

Trish Keeper - BAP mentor

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Research finds strategies to overcome ethnic discrimination in accounting industry

18 May 2015

Victoria University of Wellington PhD graduate Dr George Huang.

Dr George Huang, School of Accounting and Commercial Law PhD graduate

Aspiring accountants from an ethnic minority have greater success finding a job if they adopt strategies that minimise their cultural differences, a Victoria University of Wellington PhD graduate has found.

Dr George Huang, from the School of Accounting and Commercial Law, has found accounting graduates from an ethnic minority have a harder time entering the accounting industry in Wellington than New Zealanders.

His research confirms previous studies that show Chinese and Indian nationals are more likely to be excluded from entering the workforce, based on factors that are determined by their ethnicity.

But Dr Huang’s study goes a step further and finds those from the Middle East, Africa and other Asian countries are also more likely to face discrimination than their New Zealand counterparts.

Dr Huang explains that employers typically have two streams of criteria when hiring new employees.

The first is based on technical knowledge, skills and qualifications. The second includes social and cultural factors such as mannerisms, oral language skills and local experience, which are most often determined by the applicant’s ethnic background.

"I found New Zealand society can place too much attention on social and cultural constructs. When employers do this, they can overlook the capability and functionality of the accountant.

"The second part of my thesis provides several strategies for aspirant accountants to overcome potential discrimination on social and cultural bases.

"Some strategies, such as cutting out the overseas qualifications or experience from their CV, or changing to an English surname are not so positive, but really worked," he says.

Dr Huang also found aspiring accountants had more success finding a job if they focussed on niche roles and developed local social networks in the industry.

Forty-five accounting graduates from across 20 ethnic backgrounds were interviewed in Wellington in early 2014 for the research and of those, 38 have since found employment appropriate to their qualifications.

Professor Rachel Baskerville from the School of Accounting and Commercial Law says Dr Huang's research is "a unique contribution" to other studies on exclusion factors in the workplace.

"He was able to give voice to many aspiring professionals who are otherwise silent," she says.

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SACL student wins with Summer Gold Poster

1 April 2015

Harry Berger, a third year student in accounting and law, won a Faculty Best Poster prize for his rendition of “The Third Sector in 2045”. Harry’s research, the result of his summer scholarship in 2014/15 used scenario mapping to forecast the future of the not-for-profit (or third) sector. He identified specific drivers that were most likely to affect the future of the third sector and then combined them to forecast how this might affect the sector in 2045. With each scenario synopsis, he also provided a caution, showing the shape of excess. Harry was supervised by  Associate Professors Carolyn Cordery (SACL) and Karen Smith (School of Management).  Harry's poster is available here.

Harry and Carolyn with the poster

Photo: Harry Berger and Carolyn Cordery beside Harry's winning poster

 

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New Financial Markets Law Publication

24 March 2015

Financial Markets Conduct Regulation: A Practitioner’s Guide, a book co-written by Trish Keeper, Senior Lecturer in Commercial Law, was recently launched at a function at Buddle Findlay. The book provides guidance on the legislative scheme implemented by the Financial Markets Conduct Act 2013, the largest change in New Zealand’s financial market laws in the last 20 years. It is designed to provide a resource for all those advising on, or working within, the reformed financial markets regime. The book is co-authored with Victoria Stace from the Victoria University Law School and practitioners from law firms in Wellington, Hamilton and Auckland. It is published by LexisNexis.

trish-keeper-new-financial-markets-law-publication

Trish Keeper (centre) and co-authors

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SACL’s Achievements Ceremony - top students’ Awards for Excellence and Prizes night

20 March 2015

Photo: The Excellence Award and Prize Winners with, in the front row, the sponsors of the Prizes, and with, from right to left: Prof Ian Eggleton, Head of School, SACL, Mr Tony Dale, Chief Executive of the XRB and Carolyn Cordery, Associate Professor, SACL

Top students in the School of Accounting and Commercial Law were recently honoured at the School’s Achievements Ceremony held on Tuesday, 10 March with Awards for Excellence in Accounting, Commercial Law and Taxation. A number of students were also commemorated for prizes they had won in a number of sponsored courses in the School.

The ceremony was held in the Memorial Theatre, Student Union Building in the presence of family and friends of the award winning students, SACL staff members and representatives from the sponsoring firms and organisations, and friends of SACL.

The keynote speech was given by Tony Dale, Chief Executive of the External Reporting Board and an alumnus of the School. Mr Dale addressed the students, congratulating them on their achievement and encouraging them to aim high, consider further study and appreciate the high quality of the accounting, commercial law and taxation courses they were studying.

The Prize Winners received their certificates from senior management in private and public sector organsiations while the Excellence Award winners were the best academic performers in their second and third years of study in Accounting, Commercial Law and Taxation courses.

The full list of Excellence Award and Prize winners is:

Prize Winners

Liam Beattie, Elizabeth Goggin, Matthew Lunny, Carolyn Palmer, Timothy Paterson, Dawn Richardson, Arushi Sharma and James Van Dissen with Shuhua Chen and Nicole Sullivan receiving their prizes in absentia.

Excellence Award Winners

Certificate of Excellence in Accounting

Zoe Brandon, Cory Dixon, Ursula Inder, Nadeeja Liyanage, Alicia McQuade, Shane Philipsen, Derek Snow, Brittany Stewart and Andrea Tarelli. Kelly David and Akmal Idris received their certificate in absentia.

Certificate of Excellence in Commercial Law

William Lower, Rosie Murphy and Alice Niland-Williment. Receiving their certificate in absentia were: Peter Childs, Evelyn Elisara, Robert Holland, Michael Nelson and George Spittle.

Certificate of Excellence in Taxation

Jonathan Jeevaraj, Harneet Kalra, Davina Lach and Alison Snellen with David Wing receiving his certificate in absentia.

There were also ten students who achieved Excellence in two disciplines:

Samuel Barr, Siobhan Bassett, Sarah Burr, Youh-Chern Lin and Alex Tunstall (with Shuhua Chen and Harriette Moore in absentia) who received Certificates of Excellence in Accounting and Commercial Law; and Elizabeth Goggin, Zoe Goodwin and Caroline Young who received Certificates of Excellence in Accounting and Taxation.

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