Lees-Galloway Iain: Taxation (Budget Tax Measures) Bill — In Committee Third Reading 
Lees-Galloway Iain: Taxation (Budget Tax Measures) Bill — In Committee Third Reading 
[Volume:654;Page:4023] 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 Part 2 of the Taxation (Budget Tax Measures) Bill refers to the closing of mortgage diversion for KiwiSaver. When mortgage diversion was first mooted by the man whose name we dare not speak it was couched in terms of trying to encourage people into KiwiSaver. For people with mortgages especially young people looking at buying their first homes mortgage diversion was to encourage them to get involved in KiwiSaver when they were weighing up their saving options against having to pay off a substantial mortgage over a number of years. Mortgage diversion was an option to try to get them into KiwiSaver and encourage that savings habit; Lianne Dalziel talked about the inertia that many young Kiwis feel when thinking about their retirement savings. 
Within those terms of encouraging people to get into KiwiSaver Bill English tried to sell the gutting of KiwiSaver when we were in urgency before Christmas. Bill English said that the Government had made some changes to KiwiSaver that preserved the incentives that are paid into the savers’ accounts and a number of other changes such as the abolition of the employer tax credit and the member fee subsidy. He said that the main change had been to reduce the member contribution to 2 percent and that the Government believed that change would allow a good deal more New Zealanders to stay in the scheme when times are tough and for many others to enter the scheme at a lower contribution rate. None of that indicated any suggestion that the mortgage diversion facility was going to be cut. There was absolutely no indication during the election campaign or in the urgency before Christmas that this change was on the agenda. We are supposed to be repealing tax cuts. This provision has been slipped in for some reason—because of retribution or utu; I do not know what the reason is. 
Hon Peter Dunne 
: All of the above. 
IAIN LEES-GALLOWAY 
: There we go; we finally get to the heart of it. The system works and it is about retribution! 
We heard a lot from the other side of the Chamber about Labour not being prepared to deliver tax credits. But through KiwiSaver those tax credits were delivered and they were targeted. It was just like the research and development tax credits. It was about targeting them to where they were most valuable and where they would serve the best purpose unlike this broad-brush blunt-instrument approach to personal tax credits that the Government is so fixated with. 
Just before Bill English started trying to sell the cuts to KiwiSaver he said: “The reality is that over the next 5 years or so the fiscal capacity of the Government will be significantly less.” The Minister of Finance was able to predict the constraints that the Government would come under when it came to slashing and burning KiwiSaver but for some reason back in December he was not able to predict that the fiscal situation the Government was facing would mean that tax cuts would not be delivered. He has told us time and time again that things are worse since December and that the decision on tax cuts was made in a different environment yet he was able to predict the cut and burn to KiwiSaver. I wonder why he was not able to predict the lack of tax cuts back then. That is a very good question; it is just another flip-flop. 
KiwiSaver is about giving people certainty in their retirement. The reason it is not compulsory is so that there is a capacity to maintain universal superannuation. As good as KiwiSaver is the amount that people can save for their retirement is still entirely dependent on their income throughout their lives. We need to maintain a universal level of superannuation to make sure that there is a baseline level of superannuation that will take care of our elderly. When people have worked hard all their lives we need to take care of them. This Government is tweaking KiwiSaver cutting it back and mucking around with it.