Cunliffe David: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — In Committee 
Cunliffe David: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — In Committee 
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Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Mr Chairperson— 
Hon Simon Power 
: It was just about all over. 
Hon DAVID CUNLIFFE 
: The member should not confuse politeness with indecision. 
Hon Simon Power 
: Fair enough. 
Hon DAVID CUNLIFFE 
: Fair enough. I am pleased to say civility in the Chamber is not dead. Labour supports the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill but there are a number of important matters in it that bear the Committee’s consideration in some detail. I give notice that Labour will be introducing an amendment from Stuart Nash to this bill which will seek to exempt local authority rates from the higher rate of GST during the year of transition to that rate. That amendment follows from the massive 28 pages of amendments on Government Supplementary Order Papers that are already known as the “whoops we forgot about the changes on the way to breaking our promise” amendments. 
A number of important measures contained in this bill are worthy of the consideration and support of the whole Committee. The trans-Tasman portability of retirement savings has long been an issue and this Government is now seeking to legislate on it based on work started by the previous Labour administration. We commend the Government for bringing that work to a conclusion and we thank our partners across the Tasman for facilitating an agreement on that matter. The bill introduces new rules for 18-year-olds who seek to enrol in KiwiSaver; flexibility in the provisions applying to a resident cooperative company; the effective cancellation of branch equivalent tax account debits around conduit-relieved dividends; a number of new rules around binding rulings which will be of particular interest to the banking sector; and exemptions from gift duty for gifts made to local and central government. 
It has been interesting to read press reports about the Crafar farms deal because the current Government appears to be receiving $200000 in gifts from the consortium behind the Crafar farms deal. If I might I will interrupt this bipartisan broadcast to say what an outrage it is that this Government is accepting that kind of I hesitate to say bribe but gratuity— 
Hon Simon Power 
: No he can’t say that. 
Hon DAVID CUNLIFFE 
: That is why I hesitated. 
Hon Simon Power 
: I raise a point of order Mr Chairperson. You may have missed it while you were having a conversation with the Minister in the chair but the phrase just used by the member who has resumed his seat in relation to a matter that has no bearing on this Committee stage or the bill that is being considered by the Committee is outside the Standing Orders. The member should withdraw and apologise for using that phrase. 
Hon DAVID CUNLIFFE 
: Speaking to the point of order Mr Chairperson I point out in the first instance that it cannot be outside the scope of the bill because the bill contains an exemption for gifts made to central government. That was why I raised the point. But more important I used the phrase “I hesitate to say” a word which I then did not use. So the Minister is rather jumping at shadows. 
Hon Simon Power 
: You did use it. 
Hon DAVID CUNLIFFE 
: I used the word “gratuity” and I submit that that is not outside— 
Hon Simon Power 
: No that is not correct. Although I accept the first part of the member’s explanation that he said something to the effect of “I would hesitate to use” it was the word that followed those introductory remarks that members on this side of the Chamber have taken offence to. It was not the word “gratuity”; it was another word. The member knows what the word is and he should apologise for using it. 
Hon DAVID CUNLIFFE 
: To clarify the point I said “I hesitate to say bribe but gratuity”. So I did not in fact use the word “bribe” and there is nothing— 
The CHAIRPERSON (Hon Rick Barker) 
: I say to the member that that might be cute but it does not cut the mustard. To simply say “I’m not going to say something” and then utter the word is effectively the same as using the word. The member has condemned himself by his own words. The member will stand withdraw and apologise. 
Hon DAVID CUNLIFFE 
: I withdraw and apologise. This is a very important bill because it shows that in the Government breaking its promise not to raise GST—and there can be no doubt that the Government did make a promise and it did subsequently break it—it has fallen afoul of the huge complexity that is now falling on ordinary Kiwi businesses and households. That is why Ernst and Young and other prominent consulting and accounting firms are saying things like this. I quote from Ernst and Young last week: “As we face the harsh reality of the 1 October GST increase to 15 percent many are realising this is not a modest increase and the issues are actually more complex than anyone first imagined.” 
If anybody doubts the truth of that statement he or she needs to look no further than the Minister’s own 28-page Supplementary Order Papers the “Whoops we should have thought of this before we made the change” amendments which it is very important that the Committee now addresses. 
David Garrett 
: You’ve made that joke David. 
Hon DAVID CUNLIFFE 
: That brings me to Mr Garrett. Mr Garrett has Supplementary Order Paper 158 in his name on KiwiSaver contribution rates which Labour after sincere thought will be supporting. The Supplementary Order Paper suggests that members of the public should have the choice to up their KiwiSaver contribution rate to 4 percent 6 percent or 8 percent. What is really interesting about this is that there is no matching contribution from employers or the Government. We think that is a matter of concern. Although we do not oppose people having choice about their contribution rate we note that in the last 24 hours the Minister of Finance Bill English has told the country that any changes recommended by the Savings Working Group to improve KiwiSaver must be revenue-neutral. Well let us hang on a second. If the Government will not contribute to better incentives for savings if it thinks that a big bold solution is required and if the employer is not to contribute which the Supplementary Order Paper makes clear then exactly who is to contribute to it? The answer is logical: Kiwi households and individuals. If New Zealanders around the country are not to be incentivised why would they pay more? 
One can only reach the interim conclusion that compulsion is coming to a town near you. Compulsion is coming from the Government that has railed against the nanny State. Will it be the granny State with compulsory superannuation? Has Crosby/Textor thrown a loop somewhere? Has something gone wrong with the polling that the Minister has been doing? What has got into this Government? Here is a Supplementary Order Paper masquerading as a measure that will provide more choice. At the same time the Minister of Finance is saying there will be no new incentives from the Government and the measure has to be fiscally neutral yet the Government is making no move to improve employer contributions. That means only one thing: New Zealanders will be stuck with higher GST and compulsory savings which will be met from a pay cheque that has hardly moved during the recession. And many people are without jobs. How many people are unemployed? It is 159000 people which is 19000 more people than a couple of months ago. It is absolutely clear in that context that there is no recovery hitting Main Street. It is not hitting Wall Street either but it is certainly not hitting Main Street in the country towns and cities of New Zealand because the dole queues are lengthening. 
The debate that the House is about to have on KiwiSaver and improving New Zealand’s saving rates is indeed crucial; no more than that it is fundamental. It is fundamental because New Zealand’s international debt is approaching 100 percent of GDP. It is more than $40000 for every man woman and child and most of it is personal private debt that has been used to borrow for home mortgages in order to bid house prices up. There are some problems with that. The first is that we cannot eat our house so it is a very awkward form of retirement savings. Secondly the capital that we borrowed from foreigners has not gone into supporting our businesses or improving productivity. It is simply making housing less affordable. I would argue that that helps nobody in the long run. 
The Government after 2 years of having no plan and after 2 years and two Budgets of denying that the savings gap even exists has finally woken up to the mess and said it had better get a plan. It wondered how it would produce a plan given that National did not think of one while it was in Opposition so it decided to have another working-group. After two Budgets and 2 years of National being in Government finally there is to be a committee. 
Dr Ashraf Choudhary 
: Another committee? 
Hon DAVID CUNLIFFE 
: Another committee. It is to be just like the Tax Working Group when eminent people from the private sector and academia were put to work on a hard problem but then the Government ignored most of the recommendations. Will the Government ignore the recommendations of the Savings Working Group? Or has it thoroughly tied the hands of the group’s members before they start? The poor old experts on the group will have a very narrow ambit within which to come up with recommendations: no new Government money a Government shy of employer contributions and no more incentives. Oops that must mean compulsion. 
When we look at the fine print of the terms of reference for the working-group we find a couple of other sneaky little things. The first is the phrase “Government savings”. We all know what Government savings are do we not? Government savings are slash-and-burn in the Government’s Budget. That is how the Government saves under National. Three-quarters of the Government’s Budget is spent on health education and social services which means that if we are to have Government savings it will be saving on the teachers in our kids’ schools the doctors nurses orderlies and cleaners in our hospitals and the cops on the beat. That is how the Government makes savings. There are no more back-office services to be cut. This Government is through the fat and the meat and is into the bone. 
The other sneaky little phrase in the terms of reference is “a lack of incentives”. KiwiSaver was right down the bottom of the list. It was almost as though the Government was embarrassed to cover it. But when the Government did cover it it talked about examining the fairness and equity of KiwiSaver as though it is to try to pull it apart. There was no language about boosting KiwiSaver. There was no language about strengthening the scheme in order to get more New Zealanders involved. There are 1 million Kiwis in KiwiSaver at the moment. It is the best and biggest single attempt that New Zealand has ever made to improve the savings rate since Norman Kirk started the New Zealand superannuation scheme. And of course we know what happened to that: Rob Muldoon killed it. That was a $50 billion mistake which is rivalled only by the decision of Bill English and John Key to can the pre-funding of the New Zealand Superannuation Fund.