Parker David: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — First Reading 
Parker David: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — First Reading 
[Volume:659;Page:8307] 
Hon DAVID PARKER (Labour) 
: 
 As prior speakers on behalf of the Labour Party have no doubt already said Labour will be supporting the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill to the select committee. We are particularly pleased to see that the KiwiSaver provisions introduced by the previous Labour Government have led to an arrangement being possible with the Australian Government for the portability of savings under Australian superannuation schemes so that they can be brought back home to New Zealand KiwiSaver compliant schemes. 
It is interesting to reflect upon the divergence of the New Zealand and Australian economies in the last few decades particularly given some of the I think simplistic analysis by the 2025 Taskforce which was chaired of course by Dr Don Brash. The big difference between New Zealand and Australia over the last three decades is when it comes to savings. The Australians save well; New Zealanders do not. Australians have been saving for their retirement for decades; New Zealanders have not been. Indeed if any member in this House can speak authoritatively on that issue I would have to say it is Sir Roger Douglas. Sir Roger introduced into this House in 1972—I think from talking to him recently; I had to check with him for the exact date—a private member’s bill. He was in Opposition at that stage in the Labour Party. The bill introduced compulsory superannuation savings in New Zealand. Not long thereafter a Labour Government was elected and that Labour Government introduced—again using the model that Sir Roger Douglas had developed—compulsory superannuation savings in New Zealand. 
Those compulsory savings were used by the National Party under the Rt Hon Sir Robert Muldoon as the cornerstone of its campaign against the Labour Party at the following election. He did a couple of things that were terrible. Members will remember the “reds under the bed” cartoons—or I should say the dancing Cossacks cartoons—and the talk that the whole of New Zealand was according to Sir Robert Muldoon and the then National Government going to end up owned by the superannuation scheme and that therefore it was a bad thing to do. National promised that if it was re-elected it would axe the scheme and would give everyone the money back. Indeed Sir Robert Muldoon encouraged people to stop making contributions to the superannuation scheme despite the fact that the law remained on the books of the country. As a consequence he was successfully taken to court in what is still a notable case  
Fitzgerald v Muldoon 
. Mr Fitzgerald took the Prime Minister of New Zealand to court for ignoring the laws of this land in telling people that they did not have to comply with the requirements of compulsory superannuation. 
That is a big difference that has arisen between the fortunes of Australia and New Zealand. For the three decades since then we have not had settled superannuation policy on any long-term or durable basis and we as New Zealanders have not saved enough. We have spent too much and we have not saved enough. 
The most recent recurrence of this terrible trend in New Zealand of National Governments unwinding the positive moves towards better provision for long-term savings for superannuation and investment capital for new or expanding enterprises in New Zealand is of course the current Government. The current Government has relied upon KiwiSaver to achieve the advances that are referred to in this bill in terms of the portability of superannuation from Australia into New Zealand. Those advances would not have occurred but for the KiwiSaver scheme. The KiwiSaver scheme is sufficiently similar to the Australian scheme that the Australians have been convinced that there should be portability and that the superannuation savings under Australian schemes should be able to be converted into KiwiSaver. 
Of course KiwiSaver in itself is less effective than it was. The savings deficit in New Zealand is significant. New Zealanders need to save a lot more. KiwiSaver gave significant tax credits to employers which eased for them the transition into contributing to the savings of their employees. Employers got a contribution by way of a tax credit to the amount that they were spending on their employee’s savings. The employee was required in response to save 4 percent of his or her earnings. The inducements to the employee included tax benefits to the employee. So through the combination of the tax credits to the employer and the tax benefits to the employee droves of New Zealanders were beginning to save 4 percent of their income plus 4 percent matched by their employer over time. That has been halved by the current Government. In doing so the current Government also removed the tax credit to employers so if the employer is now contributing it is at a real cost to him or her and there will be less encouragement from employers for employees to begin to save for their retirement and to reverse the long-term trend in New Zealand of insufficient savings. 
Those insufficient savings show up most transparently in our current account deficit. Year by year New Zealand gets poorer as we sell more of ourselves to overseas lenders. That is essentially what a current account deficit does. Except to the extent that the additional capital that is coming into the country goes into productive investment the rest of it is consumed and in New Zealand the majority of it is consumed. As a country we get poorer and poorer to the extent of our current account deficit which is largely consumed. That reflects the fact that we spend more than we earn and we do not save enough. As a consequence our country gets poorer and poorer year by year. Although the Government has been saying that it will reverse that and that it will cause the next round of economic growth in New Zealand to be in the productive export sector the tradable sector—be it primary produce or manufactured goods and services—the reality is different. The growth we are now starting to see in New Zealand is actually from the re-inflation of the Auckland property market. We are seeing an increase in residential housing activity. We are not seeing the increase in export-related investment that we need to cure our current account deficit. In part that is because the competitive investment capital is not available to our businesses at competitive international rates. In part it is because we have a volatile exchange rate. 
Neither of those issues are fixed by this legislation but Labour will none the less support the bill being referred to a select committee because it is good that we at last have some vestige of savings policy in New Zealand through KiwiSaver that is being recognised by the Australian Government as sufficiently good to allow reciprocity or conversion of Australian-based superannuation into New Zealand schemes. 
Other changes made in this bill are supported by the Opposition. Indeed I think we did some of the preliminary work under the Hon Peter Dunne who held the same role in the previous Government relating to gifts to charities and to the removal of gift duty consequences for larger gifts to charities. That seems to be a desirable thing to do as well. In closing I say that Labour supports the bill being referred to a select committee but it laments the fact that KiwiSaver is not as good as it could be.