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A booklet published by ACT New Zealand in 1995

Our financial surpluses give New Zealanders the first chance for many years to escape from eventual dependency on a government benefit.

Now we can save for our own retirement.

Unfortunately, on current plans, the surpluses will be used to buy votes in a combination of tax cuts and higher spending.

To demonstrate fiscal responsibility Bill Birch has put financial parameters as a condition for his tax cuts. These include getting government debt down to 30 per cent of GDP.

Currently net government debt is forecast this year to be $30.8 billion which is 33.6 per cent of GDP, and this the Government considers to be close enough.

Now, when you look carefully at the government accounts you find included in Government debt a pension liability of $8.1 billion. You have to look carefully because they don't want you to know.

A quarter of public debt is owed to public servant and politicians. This is an enormous fact about our economy. But what about our pensions? Why don't the pensions of taxpayers appear on the books?

They don't. We are not accounted for. We have no guarantees. The reason for this is the fact that pensions to public servants and MPs are contractual. Our pensions are not. They are benefits. This means they can be adjusted downwards without legal consequence.

The practical effect is that in terms of taxpayer commitments MPs and public servants have the security given only to Swiss Bankers and Japanese investors - while we taxpayers are at the end of the queue, destined to be welfare beneficiaries in retirement existing on whatever bone the political process throws (currently $8,000 married or $9,500 net single a year).

The reason the pension liability to the rest of us is not put on the books is a very practical one. To do so would put our credit ratings through the floor and banish forever any thought of tax cuts.

The same procedures that produce the $8.1 billion liability for public servants produce a pension and health care liability for the rest of us of $350 billion.

Rather than a debt-to-GDP ratio being the modest 33.6 per cent at the moment it would be closer to 400 percent. We debated this with Bill Birch on the radio. He said pension liabilities are not debt. We say they're not debt only on one condition: you are not obliged to pay.

Recognising New Zealand's true retirement liabilities creates a very different picture of the health of our economy. The same is true for all western countries. But we should take no comfort from that. In the 21st century the West will not set the pace.

In New Zealand the political response to the problem has been one of expedience. There is a solution, but the State has ignored it.

Jim Bolger, Mike Moore and Jim Anderton signed a truce. In the Superannuation Accord they agreed not to bang each other over the head about our retirement. It is a no-win for any of them.

The losers remain us, but the loss is not yet apparent. So we debate the surcharge threshold, asset testing, the pension's generosity. But nowhere do we discuss the fundamental problem of care for the elderly in the years ahead.

The Superannuation Accord has bought the politicians some time just as the surcharge and the shifting of the age of retirement bought time (already it is running out).

None of the politicians who signed the Accord will be around when the bills really begin to roll in. Think Big never cost Sir Robert Muldoon a thing. It will be our children paying and us on tight rations. The problem has become one for future generations of politicians to deal with.

Politicians have pointed to the Todd Taskforce as justifying the status quo. But the Todd Taskforce only looked at private provision for retirement (that was actually the title of their report). It didn't look at the whole problem.

They were commissioned to examine only:

Therefore, its conclusion was that New Zealanders must start saving now because we can't rely solely on National Superannuation to provide for us in retirement.

Politicians ignore this inconvenient fact -while voting themselves the best pension scheme in the country's history.

They don't have to rely on National Super like the rest of us.

They each have their own private fund of their own choosing. For every dollar they put in we put in another two.

A young cabinet minister can squirrel away say, $10,000 from his salary a year and get an additional $20,000 from the taxpayer tax-free. After three terms have a fund that allows them to retire with $1 million (in today's dollars) without ever having to put in another cent.

Even a young backbencher putting away $5,000 can retire after three terms with half a million.

Politicians have a diamond-studded fund; we pay taxes and look forward to retiring on a benefit.

So politicians do understand the power of compound interest and the importance of having a fund.