Rich Katherine: KiwiSaver Bill — In Committee 
Rich Katherine: KiwiSaver Bill — In Committee 
[Volume:633;Page:4939] 
KATHERINE RICH (National) 
: 
 I rise to speak to Part 4. It has been interesting to hear a number of Ministers wax lyrical about what KiwiSaver will do. One of the comments made regularly is that the captains of the finance industry are very keen on it they are enthusiastic about it and they think the Government’s proposal is a good idea. I think Ministers need to understand that those involved in the finance industry have no choice. Most of them who have made some positive comments about the KiwiSaver scheme have done so because they do not want to be left behind. They are interested in this section of the bill which is all about the processes used to select the default providers. Those firms do not want to be left behind because they see this as an opportunity to take on a serious amount of business. 
One of the things that has concerned those involved in the finance industry has—of course—been the time delays with the development of this bill but also some of the time frames. Everybody who had a look at them said they would be unworkable. It has been interesting that in the eleventh hour the Government has been forced to heed those calls for extra time because what is currently before the industry is nothing more than a dog’s breakfast. It is going to be a nightmare if this thing is rushed. One of the things that concerns many on the Opposition side of the House is that when Kiwis start to look at this as an option there cannot be a rushed system with firms keeping to a Government-placed deadline that is unworkable. 
Another concern to those in the industry relates to some of the changes made in just the last couple of weeks—the miraculous inclusion of a mortgage diversion section to KiwiSaver. They argue that in order for them to be able to provide this service to Kiwis at a reasonable rate and one at which they can make a profit there has to be a maximum number of transactions. The more transactions there are the more costly it is for them to provide this service. In the last 2 weeks the Government has brought in mortgage diversion. This means that some Kiwis will ring up and say they want to put some money on to their mortgage they want to do that regularly or whatever decision they might make. That increases the transactions involved in the scheme and therefore the cost. Likewise there is the cost of contribution holidays. The stopping and starting of payments makes the system more complex than it needs to be and also more costly to run. 
A lot of firms have looked at this and I think they are banking on a long-term thought that this could be compulsory. Although the Government is looking at Australia and saying that New Zealand could have some of the positive things that the Australians have it will not be the same. The Australians have a scheme that is compulsory; the payments go out on a regular basis; there is no stopping and starting or opting-in and opting-out. There is not the complexity of KiwiSaver. The number of firms involved is set and they can calculate what they are going to make out of it. 
The other point that is really important is that if tax breaks are provided to one scheme—the KiwiSaver scheme—then that inevitably creates an unlevel playing field for all other kinds of schemes that aim to do exactly the same thing which is helping New Zealanders prepare for their superannuation. The Government says it wants a scheme that Kiwis will use but in this way it is giving KiwiSaver the advantage vis-à-vis all sorts of other superannuation schemes. That does not make sense. If the Government wants to deal with the tax issue in superannuation it may as well do it with all the schemes—that is keep the rules the same and the products the same so they can be compared. At the moment the Government is making KiwiSaver stand out on its own: “Be part of this scheme and you’ll get a tax advantage. Be part of some other scheme and you won’t.” That will not provide fairness for those Kiwis who have done the right thing by providing for their superannuation without the help of this scheme. 
It will also put some other company schemes on the back foot. Some companies have been providing superannuation for their staff members for a long time but perhaps because staff cannot pick up their superannuation entitlement and take it somewhere else their scheme will be treated differently as well.