The swarm of locusts that is the baby-boomer generation starts retiring this year, so we can delay no longer. The warnings from Treasury are scarily stark. It's time to grasp the question of retirement

In America they talk of the third rail; an issue so charged that to touch it is certain death, politically. It can refer to a number of issues, but most commonly it 's used to describe social security.

John Key may have learnt that lesson during his time in the US, because he's treated superannuation in the same fashion. It's sacrosanct, but the cries are getting louder -- that's got to change.

Key has promised more than once that he'll resign, both as prime minister and as an MP, rather than change the current entitlements around Super.

It's a move that's meant to make him look tough and decisive; instead it makes him look like a wimp. We need a government with the courage to grapple urgently with the question of retirement funding.

It's 2010, exactly 65 years since 1945. We no longer have the luxury of preparing and fudging and stalling on superannuation. The baby-boomers start retiring now, which means the first locusts are already landing on our crops, and behind them comes the swarm ready to devour our welfare budget. Yet our politicians are sitting there like the monkeys with their hands over their eyes, ears and mouth.

Treasury is making it crystal clear just how large the problem is. Sure, Treasury and welfare have hardly been bosom pals, so I take what it says with a truckload of salt. Yet Whitehead's comment at the weekend couldn't have been more direct:

"...you could afford to continue New Zealand superannuation, but what you can't afford is that plus all the other things that we're doing."

It's a stark choice that should grab our attention, and Mr Key's. The government's chief economic adviser is telling it that it can't keep its promise and continue with the welfare state as it is.

Rather than grasp that third rail, the government is looking at the other part of the equation; its Welfare Working Group kicks off next week looking at how it can save money in "all the other things that we're doing", which makes me very nervous indeed.

Whitehead undermined the conviction of his words when he also argued, on Q+A, against contributions to the super fund:

"Treasury's advice is to get your debt down first, and to get back to surplus, and that was part of the original act that was passed on the superannuation scheme.  Once we've done that our advice is yet get back into pre-funding."

In other words, "something must be done, er, but let's not actually start saving". Which is an interesting message from a outfit that wants us all to save, save, save. Do as we say, not as we do, Whitehead seems to be saying. Worse, the government's on the same page, having unwisely cut contributions to the Super Fund.

Fact is, paying down debt is not enough. Debt, like the poor, will always be with us. We need to save specifically for purpose.

And then we need to look hard at the agonisingly difficult question of who should get super and whether the age of eligibility needs to be raised from 65. The best arguments for and against stem from the same root point – proportionality.

As life expectancy increases, the year we spend on super are increasing as a proportion of our lives. So raising the age seems only practical and fair. Super was never intended to cover us for a fifth of our lives.

On the other hand, raising the age would mean that those who typically die youngest – the poor, Maori, Pacific people – would be hit hardest. If you only live to be 72, say, then raising the age to 67, as in Australia, amounts proportionately to a significant loss. Given that these are also the people who arguably have the greatest financial need, that seems counter-productive and unfair.

Means-testing? That would certainly be a mistake. Without a political stake in the scheme, it would be too easy for pressure to build to reduce or scrap it.

One thing we can probably all agree on is that the already retired need to be grandfathered through any changes (and that term has never been more appropriate!). And ordinary Kiwis approaching retirement need plenty of warning so that they can change their lifestyles and savings accordingly.

The tension pressing hard against that is that it's the baby boomers who will drain the most from the scheme, so as they hit retirement, we need to make the changes urgently.

History will recall that this is the year that the locusts arrived, so it's time to act. Does this government really want to be known as those who were on watch and did nothing? Or are they simply going to gut the rest of the welfare state to keep the same entitlements for the baby boomers? Tough choices ahead, but it's high time to start making them.