Lotu-Iiga Peseta Sam: Questions for Oral Answer — Questions to Ministers 
Lotu-Iiga Peseta Sam: Questions for Oral Answer — Questions to Ministers 
[Volume:672;Page:18637] 
2. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
 to the  
Minister of Finance 
: What changes is the Government making to improve KiwiSaver and make it more sustainable? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 As the Prime Minister confirmed yesterday the Budget will include a package of measures aimed at ensuring that KiwiSaver is sustainable into the future reducing the need for extra borrowing and contributing to national savings. In addition to reducing the amount provided through the member tax credit more will go into KiwiSaver from both individuals and employers and the $1000 kick-start payment for new members will remain as it is. 
Peseta Sam Lotu-Iiga 
: What role will KiwiSaver play in the future? 
Hon BILL ENGLISH 
: The first source of retirement income for all New Zealanders will remain New Zealand superannuation which remains unchanged. KiwiSaver is an important supplement. It has 1.7 million members and the number is growing by 20000 a month. Projections show that with the changes the Government is intending to make total KiwiSaver funds will grow to $25 billion by 2015 and almost $60 billion by 2021. 
Peseta Sam Lotu-Iiga 
: How will these changes lift national savings? 
Hon BILL ENGLISH 
: It is important to understand that national savings are not the same as retirement savings. National savings are the sum of private savings—in KiwiSaver but also of course in housing in investment in business and so on—and Government savings. So far just over half of all KiwiSaver balances has been contributed by the Government which is now in effect borrowing from abroad to make those contributions. As the Prime Minister has said borrowing from one bank to deposit in another is not saving and it is not what Kiwis do. 
Hon David Cunliffe 
: Does he accept that the changes he is proposing to make to KiwiSaver will amount to an extra $10-a-week tax increase for 1.7 million KiwiSavers or does he think they should take refuge in the New Zealand Superannuation Fund which he has just refused to pre-fund for a decade? 
Hon BILL ENGLISH 
: Well Kiwis have the security of national superannuation for their retirement. In respect of the New Zealand Superannuation Fund and KiwiSaver the Government has made decisions that reflect the circumstances we find ourselves in—that is with a record $16 billion to $17 billion deficit which has been the price of supporting this economy through the recession and facing the costs of rebuilding Christchurch. Taken as a whole the changes to KiwiSaver and the reductions in the deficit will put the whole New Zealand economy on a stronger footing without affecting people’s retirement savings significantly. 
Peseta Sam Lotu-Iiga 
: Will the intended changes to KiwiSaver endure over time? 
Hon BILL ENGLISH 
: I believe that the intended savings will endure over time partly because Labour has indicated through its leader that it will not reverse the changes that the Government will make. That is a pretty good vote of confidence in changes that Labour members have not yet heard all the details of. No sensible future Government will want to borrow to subsidise private savings. 
Hon David Cunliffe 
: Referring to the Minister’s previous answer how much of the $16 billion deficit he is forecasting for this year’s Budget is driven by the $23 billion of tax cuts he has handed out in the last two Budgets and is he now prepared to agree that much of that tax cutting was misdirected and that overall it was unaffordable for a country that has failed to grow as he projected? 
Hon BILL ENGLISH 
: No. As we have pointed out to the member a number of times and as he can verify through looking at the figures the two tax packages implemented by the National-led Government have been fiscally neutral. In fact Labour’s estimates show that those tax packages will have the net effect of increasing tax revenue over the next few years. So the Opposition’s assertion that tax cuts have cost the Government revenue is simply wrong. Those changes were designed to change the incentives in the economy and they certainly will have a long-run positive impact on the New Zealand economy.