Cunliffe David: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
Cunliffe David: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
[Volume:669;Page:16155] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to take my first call on Part 5 on the especially important topic of KiwiSaver. The proof of the pudding as they say is in the eating and KiwiSaver has been eaten by almost one out of every two adult New Zealanders. There are 1.5 million - odd members in the KiwiSaver scheme so I think people have voted with their feet and joined it. It has been a remarkably successful scheme evidenced by the fact that it has grown so strongly.  
Unfortunately in the last 2 years the rate of growth of the value of savings in the scheme has not kept pace with its earlier growth and that I would suggest is a direct reflection of the way the current Government has cheapened the scheme giving its employer buddies a free ride by reducing the employer contributions and thereby strangely putting relatively more of the weight of contribution on to the Crown and the taxpayer and that is potentially threatening the scheme.  
It is very interesting that the Government has chosen a back-door Supplementary Order Paper to begin the next wave of tinkering with the KiwiSaver scheme. The KiwiSaver concept is up for discussion at the moment alongside other savings instruments in the context of the Savings Working Group which is an academic group that has been brought together with heavily circumscribed terms of reference by the Minister of Finance who says that it cannot look at compulsory savings or other things but it can look at the opportunity costs of various ways of increasing the savings rate.  
Before going into that and the impact this part will have on that in a bit more detail I just have one definitional comment about the word “savings”. It has been overused at the moment by the Government. It contends that our recovery is not happening because New Zealand households and families are saving so much. Actually that is a bit of a stretch of the definition. People are not consuming so much because their real incomes are going down and they do not have as much to spend. Now being broke is not the same as having stuff left over and putting it in the piggy bank. The piggy bank is dry. In fact sometimes there is not food on the table. I just ducked out to go to the doctor for my throat infection and do members know how much it was? It was $91. That is $91 for a general practitioner consultation. When Kiwi families are paying $91 to go to the general practitioner I tell members there will not be much left over for KiwiSaver or anything else. Who was it took caps off general practitioner fees? The current Government. So things are going to hell in a handbasket all around the country.  
Our worry in short is that the amendments in this part to KiwiSaver are the thin end of a bigger wedge. We are worried that this Government will take the hatchet to KiwiSaver in the same the way it has undermined the New Zealand Superannuation Fund by suspending pre-funding for a decade. We are very very cautious about what will come out of the Savings Working Group and why. I hold in my hand the report of the Tax Working Group that lay behind some of the rest of this gargantuan Supplementary Order Paper. The Government first set very tight terms of reference and then it proceeded to ignore most of the recommendations picking and choosing the few it wanted. Of course the burden of most of the Supplementary Order Paper was in relation to replacing the loss attributing qualifying company regime with new look-through companies which are a slightly more tepid version of loss attributing qualifying companies but which still allow people to write off income from a company against personal income. We question in these tough times whether the country can afford those kinds of avoidance opportunities.  
Part 5 has a range of clauses like new clause 94B on the Supplementary Order Paper which make technical amendments to the way KiwiSaver operates so that automatic entry rules will not apply. Well automatic entry has been perhaps the single most important reason why so many people are in the KiwiSaver scheme because once they start and pick up their Government contribution then they get into a good savings habit. That is what real savings is; it is not just failing to consume because someone is short of money—it is actual savings habits that build the wealth of the family and the nation going forward. We are very concerned and we oppose new clause 94B which starts to undermine those automatic enrolment rules.