#opinion Could have been, Should have been – half a Trillion in fact

In the early 1970s, New Zealand faced a growing concern shared by many developed nations: how to guarantee retirement security for a population that was living longer but often retiring with little savings. Back then, there was a lot of foresight insofar as population data was making it clear the population would age to a point that there would inevitably be pressure put on the tax base – in other words, as more people retire out there are fewer taxpayers. What wasn’t so clear back then, as things such as the health and medical sector would evolve to the point that more people would live longer and therefore the health system would inevitably cost more, of course, that all makes sense because innovation and discovery have seen some diseases curable and many others preventable. Life expectancy in 1975 was 69 for males and 75 for females. Step forward to 2025, and life expectancy is now above 82. For Maori, life expectancy was 63 for men and 68 for women, lower when compared to non-Maori. Step forward to 2025, Māori life expectancy in the 2022–2024 period was 75.8 years (73.7 years for males and 78.0 years for females).

The Labour Government elected in 1972, led by Prime Minister Norman Kirk, believed New Zealand needed a long-term, sustainable superannuation system that encouraged personal saving but was supported by the state. Ironically enough, it was a Labour Government in Australia (under Paul Keating) that would introduce a similar scheme, albeit compulsion. As of 2024, the value of those funds (in Australia) is estimated to be worth $4.1 trillion (let that sink in). In New Zealand, it’s fair to assume that had we stuck to it, ours would have been worth at least half a trillion.

Instead, National were elected, and the New Zealand economy went through a period of great instability.

I recently wrote a Facebook post on this, but also wanted to connect two issues together: what to do about superannuation and also navigating housing.

“I think it’s important to understand that getting 20 and 40-somethings into their own homes enables a couple of important things. For 20-somethings, getting in early means a working life of building up their asset base, and for the 40’s, it’s about preparing for retirement, but not one of poverty, where up to 60% of your income is taken in rent.

At the moment, it’s unaffordable for both those groups, and part of that is access to capital and available stock. Back in the 1970s, Norm Kirk introduced a voluntary super scheme that had a combined contribution of 8%. Muldoon scrapped that – today it would have been worth half a trillion dollars.

Had we continued down the path, NZs books would be in very good shape.”

The establishment of a policy like the one Kirk attempted was important for the reasons I’ve just explained, as well as others. This belief led to the creation of what became known as the Kirk Superannuation Scheme – a contributory, compulsory (but phased-in) national savings programme that has since become a defining “what-if” in New Zealand’s economic history.

Norman Kirk and his Finance Minister Bill Rowling wanted to:

• Build a nationwide retirement fund that would grow over decades;
• Encourage personal responsibility for retirement income;
• Lift workers out of poverty in old age;
• Reduce the future fiscal burden on the government;
• Create a massive pool of capital to develop New Zealand’s economy.

Their vision was that the fund would eventually be worth tens of billions.

Although often mistakenly described as purely voluntary, the Labour Government’s scheme (passed in 1974) was intended to become compulsory over time:

• Workers would contribute a set percentage of their income to a personal superannuation account.
• The Government would match contributions in a way that incentivised saving.
• Funds were owned by the contributor and could not be withdrawn until retirement.
• By age 60 or 65, contributors would retire with a combination of their own fund and a universal government pension, ensuring financial stability.

Sound familiar?

It was a mixed model: part compulsory saving, part retirement benefit, and part nation-building fund. From the moment it was announced, the scheme faced strong criticism, particularly from the National Party led by Robert Muldoon.

Muldoon argued:

• It was too expensive for workers.
• It was unfair to young families and low-income earners.
• The government was interfering too much in personal financial planning.
• A compulsory national fund would give the state too much economic power.

Sound familiar?

Business groups also feared the massive state-backed fund would distort financial markets.

Norman Kirk, who died suddenly in August 1974, did not live to defend the scheme fully. His successor, Bill Rowling, continued the programme – but momentum weakened.

The 1975 election became a battleground over superannuation policy.

Muldoon campaigned fiercely against the Kirk/Rowling savings scheme, promising instead a generous, universal, non-contributory pension for all New Zealanders aged 60 and over – funded directly from taxation.

His message was simple and effective:

“Vote National, get more money at 60 no savings required.”

After winning the election, Muldoon abolished the Kirk scheme immediately and refunded contributions already paid. The replacement was National Superannuation – an expensive but politically popular pension that created long-term fiscal pressure and helped fuel massive public debt growth through the 1980s.

Economists often describe the Kirk scheme as one of New Zealand’s greatest missed chances.

If the scheme had survived:

• New Zealand would have built one of the largest sovereign wealth funds in the world by the early 2000s.
• Much of New Zealand’s foreign borrowing might have been unnecessary.
• The country would have had capital to invest in infrastructure, housing, and industry.
• Retirement savings inequality would be far lower.

Many comparisons are drawn to Australia’s compulsory superannuation, introduced in the 1990s – now worth over AUD $4 trillion.

Although abolished, the Kirk scheme influenced later policy:

• The New Zealand Superannuation Fund (Cullen Fund), created in 2001, echoes Kirk’s original long-term savings vision.
• KiwiSaver, introduced in 2007, resembles the contributory model Kirk proposed – but arrived 30 years later.
• Debates about compulsory savings and national wealth-building still reference the 1970s scheme.

Norman Kirk’s superannuation plan is remembered as a visionary reform ahead of its time, undone not by failure but by political opposition and the abrupt change of government. But we never quite went the extra mile.

Now to the housing market – we have fewer young people being able to buy in than ever before, chief among them young Rangatahi Maori and as for the 40 somethings, we have people struggling to own their own homes, which means, even increasing the superannuation age, won’t solve the problem – but all these things require long term solutions, as was evidenced by the Kirk Governments thinking.