Foss Craig: Government Superannuation Fund Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Foss Craig: Government Superannuation Fund Amendment Bill — First Reading 
[Sitting date: 23 September 2008. Volume:650;Page:19069. Text is incorporated into the Bound Volume.] 
CRAIG FOSS (National—Tukituki) 
: 
 I have been speaking quite a bit tonight and today on various finance bills so I hope there is a free run tomorrow. I hope that “Mr Whip” and Dr Cullen can finish up on these finance bills as it would be most appreciated and that we will get this one through quite quickly early tonight. As my colleague just said yes National is supporting this bill with a very brief change to the indexation and a change to the algorithm which was written in incorrectly but assumed to be correct over many years. I missed the first reading speech but I have just picked up that there was a $33 million cost to the change of— 
Hon Dr Michael Cullen 
: The liability. 
CRAIG FOSS 
: —the liability due to the change in funding from 90 percent to 100 percent. That is fine. I also note that it was announced in Budget 2008 so that was all on the Table at the time. 
I have spoken twice now to the Government Superannuitants Association at its annual conference and I enjoyed the conference recently about 2 or 3 weeks ago when I was there. When I spoke the first time I think the consumer price index adjustments at that time had been talked about and promised by the Minister to go from 80 percent to 90 percent.  
Hon Dr Michael Cullen 
: We did that. 
CRAIG FOSS 
: The Government did that; that is correct. But I have a question for the Minister because at the same conference I was shown a demographic profile of the association’s members who have been asking for this increase for quite some time. Many of the receivers of the annuities or their spouses have been quite elderly and so unfortunately demographics have meant that many have fallen from the scheme and are no longer receiving annuities. So I ask the Minister whether the quantum has actually changed—has the total amount changed even though the consumer price index adjustments went from 80 percent to 90 percent and now are going from 90 percent to 100 percent? The Minister has said that the liability has changed so I presume there is an increase in benefits. I acknowledge that then and thank the Minister for the information. 
I notice though that in my last speech—I suppose it was late 2005 when I spoke there—I acknowledged that the Minister had announced that increase prior to the 2005 election and I predicted at that time that prior to the next election he might also announce an increase to 100 percent of the consumer price index which he consequently has done. So that is all very good. In 2011 I wonder which Minister will announce that the adjustment will go to 110 percent but anyway— 
My colleague talked about inflation as the underlying problem here and that is true. This particular organisation has two issues one of which I will touch on in a minute. But another cost there as my colleague has said is the underpinning of inflation from the fiscal spend-up etc. The cost although small—even when we go from 90 percent to 100 percent the higher inflation is the higher interest rates are—has more impact on members of the superannuation fund once they receive their annuities. As we learnt at the conference the other day the adjustment of the consumer price index for the following year is announced in late January but members do not receive their first payment until the first week in April so they have a small cash flow issue there. The change is of course dependent on inflation at the time. The time period is only 2 months—I acknowledge that—but many of these people are struggling none the less and they do feel hard done by in relation to other issues they are quite strong advocates on. The Consumers Price Index used to be announced in early to mid-March and they would be paid on the first payday in April. As our collection of information and statistics has become more efficient the announcement is now coming out in mid-January. Therefore they feel that they should have their payments as soon as possible after the announcement of the consumer price index rather than just on the old date they are stuck with at the moment. 
I understand that Treasury is doing some work on some of the other issues around this Government superannuation scheme—from when it moved from “exempt/exempt/taxed” to “taxed/taxed/exempt” in 1990—and I will touch on that now. I reiterate what my colleague Lockwood Smith just said—that National will be supporting this bill and that it will go through its first reading quite rapidly I am sure.  
But I acknowledge the other issue that the members of the Government Superannuitants Association are particularly strong advocates for. Their argument is that when their annuities were repriced in 1990— 
Hon Dr Michael Cullen 
: Oh don’t buy into that one! 
CRAIG FOSS 
: —ha ha!—a 33 percent tax rate was used and they are concerned that any changes in personal income taxes may undervalue what they signed up to back then. My point—and I made this point to them at their conference—is that that has not really been an issue for 9 long years because personal income tax cuts have not been on the cards for 9 long years. So it is obviously a more pertinent issue to them at the current time with the tax changes announced in the recent Budget and of course with the National Party’s programme for personal income taxes that will be announced in a few weeks’ time. 
Hon Dr Michael Cullen 
: Oh is a 9-point promise about to come out here? 
CRAIG FOSS 
: No it is certainly not. I am just acknowledging the issues which are quite publicly known. The Minister acknowledged that he is a member of the Government Superannuation Fund as are some of my colleagues and that is all fine. Members have been strong advocates for that change and it has been mentioned in their newsletters for many many years. It has been relayed to me and I understand—and I would like confirmation—that Treasury is doing some work on this issue: costings etc. and an investigation. It will be interesting to see how far down the track that work has progressed. 
On that note I will finish. National will be voting for this bill. It gives a further incentive for the Government of the day to keep inflation down and therefore to keep interest rates down so that people who have done the hard yards and contributed to a superannuation scheme such as this one will get as good and as high-value an entitlement as they believe they should get. Thank you.