Hipkins Chris: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
Hipkins Chris: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
[Volume:672;Page:18968] 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I start by complimenting the Minister in the chair the Minister of Revenue who has just resumed his seat on the very polished way he seamlessly transitioned from defending a previous Labour Government to defending the current National Government. I think I will leave my comments simply at that. 
However I want to pick up a point made by Craig Foss. It was ironic for Craig Foss a National member of Parliament to stand up in this debate on Part 2 of the Taxation (Annual Rates and Budget Measures) Bill and talk about the failed finance companies and the people who have lost their savings given that National has had 2½ years to do something about that and has done absolutely nothing. But then that could have something to do with the fact that half of them used to work for the failed finance companies. It is a bit rich for National members to say they will deal with the failed finance companies by hocking off the State-owned enterprises—that is effectively what Craig Foss argued in this Chamber. 
I want to pick up the issues around KiwiSaver and in particular the changes to the member tax credit. This Government will be effectively cutting it in half. But before I do that I want to pick up a comment from the speech made by the Minister of Finance in the House yesterday. People will find the comment on page 27 in the Budget speech—and it also relates to KiwiSaver. He states: “The Government will require agencies to fund the cost of KiwiSaver and some State sector retirement schemes for their employees. This will generate savings of $650 million.” We should think very carefully about what that actually means. It means that those State sector agencies that will have to pay their share of the cost of KiwiSaver are effectively having their funding cut by $650 million. So if somebody is working in a large social policy area where the salary costs are high—for example education or health—their funding in real terms will be cut because they will now have to meet the cost of the employer contribution to KiwiSaver. That is a real-terms funding cut. So when the Government talks about increasing funding for areas like health and education I point out that a big chunk of it is already taken up by the other changes it is making in the area of superannuation and it is not being upfront and transparent about that. It is a sort of a triple whammy. 
I come back to the issue of the tax credit. Let us take the example of someone in the education field a teacher for example who signed up for KiwiSaver. They will find that their member tax credit gets cut in half by the Government. Clause 7 addresses this issue. The tax credit will go down from $1042.86 to $521.43. Basically the member tax credit is cut in half. Then they find that the funding of the employer’s contribution means that other parts of their work are being cut—suddenly the money to fund the employer contribution has to be found from somewhere else because the Government has hacked away at that as well. So they are getting a double whammy. If the Government is taking $650 million out of the employer side of the contributions to KiwiSaver that has to come from somewhere else. I see the Minister of Revenue shaking his head. I simply turn his attention to the Budget statement on page 27 of the Budget documents. If I have interpreted that wrongly I would welcome him standing up and clarifying it. I think that is the only way it can be clarified. If the Government is requiring agencies to fund the cost of KiwiSaver saving $650 million that money has to come from somewhere else so that money has to be a cut in real terms. If I have interpreted it wrongly I look forward to the Minister of Revenue’s clarification of it in his contribution to this debate. 
National went into the last election promising New Zealanders that it could afford tax cuts and that nothing else would change. There would be no changes to KiwiSaver other than the changes National foreshadowed in its election manifesto. National said it would not cut Working for Families and it would not cut interest-free student loans. National has broken those promises in this year’s Budget. Here we go again particularly when it comes to retirement savings. National has a very proud history of taking very good savings schemes introduced under a Labour Government and ripping the guts out of them. That is exactly what Rob Muldoon did in the 1970s after a very good savings scheme was put in place by the Norm Kirk Labour Government. Rob Muldoon bribed New Zealanders with their own money in order to win the 1975 election and sabotaged New Zealand’s savings for over two decades after that. The last Labour Government started to deal with that by introducing KiwiSaver and once again we are seeing the National Government ripping the guts out of it. This is National’s pattern when it comes to savings. 
It is a bit rich for Bill English to stand up in this House and bemoan our poor savings record when as the Minister of Finance he has consistently undermined it. The first thing he did was to cut the minimum contribution to KiwiSaver in half from 4 percent to 2 percent. He cut funding for the New Zealand Superannuation Fund. He stopped putting away the funding to pay for the baby boomers’ retirement. Then he turned round and said we had a terrible record of saving for retirement. The Government is not leading by example—but then this Government never leads by example. It tells everybody else that they have to stomach cuts but it is never willing to cut the money it spends on itself. The Government is happy to have new BMWs new carpet and so on. The Government is not willing to lead by example particularly when it comes to savings. The Labour Government led by example when it came to savings. We set up the KiwiSaver scheme and we put the member tax credits and the kickstart in it. We led by example when it came to savings by setting up the Cullen fund the New Zealand Superannuation Fund to pay for the baby boomers’ retirement. They are both things that this Government is kicking the guts out of and hacking into. 
This Budget has no real vision for the future and no real plan to get New Zealand moving. It has no real plan to make sure New Zealanders can live a comfortable and safe retirement. It is not there; I have read it. I spent the evening last night sitting in the Chamber reading through the documentation. There is no plan. This must be one of the blandest Budgets; all the Government is doing is cutting: cut here cut there cut here cut there. There are lots of cuts and lots of pain but no real gain. New Zealanders at home will be asking about the gain and the plan. The Government is asking New Zealanders to stomach all these cuts but New Zealanders are not seeing any light at the end of the tunnel. This Government has mismanaged the economy. It has taken it from a surplus of $5 billion to $7 billion every year to one of the biggest deficits ever recorded in New Zealand’s history. That is what we get with Bill English as the Minister of Finance. He failed when he was the Minister of Finance the first time round in the last National Government and he has failed again in the tenure of this Government. That is one of the reasons why New Zealanders are going to vote out this Government at the coming election. I tell members that the feedback that has been coming overwhelmingly in the last couple of days is that people have changed their minds about National because of what it is doing to KiwiSaver. New Zealanders know how important KiwiSaver is to the future of this country and this Government is kicking the guts out of it. This Government is kicking the guts out of KiwiSaver and I think that is totally wrong. It is short-sighted and that pretty much sums up the Government’s approach. 
The Government is also getting into Working for Families. What was National’s promise before the last election? What was the absolute promise of John Key? He told New Zealanders that National would not touch Working for Families. Hang on a minute I think there is even a pledge card with the promise on it not to touch Working for Families. It was on a pledge card but it is not even worth the paper it was written on. It was headed up with the words “My key commitments to you”. I think that National after this Budget has broken just about every one of those promises. I do not think there is a single commitment left on that pledge card with John Key’s signature on it that he has not broken. He has broken almost every one of them and I think that is absolutely outrageous. That is one of the things New Zealanders will be keeping in mind when it comes to voting at the next election. They can vote for Labour which keeps its promises and makes promises we know we can afford or they can vote for National which promises before an election whatever it needs to in order to get elected and then does whatever it wants once it gets the Treasury benches. Nothing sums that up more than the two major changes being made in this part of the bill. There are the cuts to KiwiSaver which kick the guts out of the Government’s contribution to KiwiSaver. The Government says to New Zealanders that it wants them to save but it is not willing to do its bit. And the Government is cutting Working for Families even though it promised it would not do that. Working for Families was another initiative introduced during the term of the last Labour Government. That initiative lifted hundreds of thousands of New Zealand children out of poverty which is something we on this side of the Chamber are incredibly proud of and will continue to defend right the way to the very bitter end. Working for Families is a good policy. It recognises the fact that those families raising kids face higher costs and that we as a society should help with them.