Cunliffe David: KiwiSaver Budget Measures Bill — First Reading Second Reading In Committee Third ReadingText is incorporated into the Bound VolumeCunliffe David: KiwiSaver Budget Measures Bill — First Reading Second Reading In Committee Third Reading[Sitting date: 21 May 2015. Volume:705;Page:3849. Text is incorporated into the Bound Volume.]Hon DAVID CUNLIFFE (Labour—New Lynn):Clause 3 is relating this back to the principal Act which of course is the KiwiSaver Act 2006. In this short call I want to go back to why the KiwiSaver Act was put in place in the first place. These remarks are foreshadowed by the earlier call that I took on clause 2.There were always three separate and mutually reinforcing objectives around KiwiSaver. The Government seems to be ignoring two of them. The first one which is common ground is that KiwiSaver helps New Zealanders save. In particular it helps those who otherwise would have low savings rates. One of things that Labour abhors is that the removal of the kick-start contribution weakens the incentives which are particularly important for those who have the least and therefore actually thwarts that objective.The Inland Revenue Department study upon which this piece of legislation has been based is in our view a very narrow and very flawed piece of work for several reasons. Firstly it ignores the broader goals which I will discuss in a second. Secondly because it talks about leakage from a target group which is low-income low-saving New Zealanders it does not address the fact that there is a broader benefit for all New Zealanders saving. We would say the Government releasing that Inland Revenue Department study on the same day that it put the legislation into the House is really just political cover. We do not think that it has a high level of analytical weight that can be attached to it.What are the other two objectives beyond helping individual New Zealand families save? The first is actually touched upon briefly in the Government’s Fiscal Strategy Report released this week. On page B.29 it is a goal of the Government to reduce “… government debt through higher public savings [plus put] New Zealand in a better position to cope with the next economic shock or natural disaster. It helps to raise national savings maintain credibility with international lenders reduce finance costs and allow the internationally competitive sectors of the economy to grow.” It goes on to talk about the advantages of the New Zealand Superannuation Fund but interestingly enough does not mention KiwiSaver per se.So it is common ground between the two sides of the Chamber that we need to grow New Zealand’s savings. Members opposite are putting all of their eggs in the basket of public saving reducing the Crown’s debt. The problem with that argument is that it misses the fact that actually only 15 percent of New Zealand’s total debt is public and 85 percent of it—Brett Hudson: Borrow and spend. Nothing changes.Hon DAVID CUNLIFFE: These are facts. Listen to the facts. Eighty-five percent of it is private debt. If we are going to turn New Zealand round if we are going to become more financially self-sufficient this is the reason that the KiwiSaver Act 2006 was set up. Clause 3 hooks this amendment to that Act so it is entirely within scope I think to reprise the objectives of that Act.The key thing is to recognise that growing New Zealand’s total savings position must be driven off private savings and we must therefore have an effective KiwiSaver scheme as well as an effective New Zealand Superannuation Fund. If we do that we move to the third argument which is that we affect a whole lot of macroeconomic variables in a really positive way. What are they and why do they matter?Our savings deficit our gap between what we earn and what we spend by mathematical certainty is going to be the same as the difference in our current account between what we import and what we export in terms of capital. So our savings deficit will in the long run equal our current account deficit. New Zealand’s problem is that we do not pay our way in the world. That is just a fact and that is something that both sides of the House have been grappling with. In order to do that the purpose for which the 2006 Act was set up was to grow our savings position. KiwiSaver is one of the most important tools in the public tool box to do that. Without it we would be sunk. We must keep it strong.At the last election there was a competition between the policies of the two major parties in terms of how to grow New Zealand’s savings rate. I think it was the New Zealand Institute of Economic Research Business and Economic Research Ltd or both that did some comparative analysis between the two. What they showed was that Labour’s plan was going to grow national savings by about three times or four times the rate of change of National’s. That was before National took the kick-start component out of KiwiSaver. I come back to the point that my colleague Grant Robertson made earlier: this is not the first time—