Clark David: KiwiSaver Budget Measures Bill — First ReadingText is incorporated into the Bound VolumeClark David: KiwiSaver Budget Measures Bill — First Reading[Sitting date: 21 May 2015. Volume:705;Page:3776. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): National has hit the panic button in its seventh Budget. It has failed to reach surplus and it has failed to outline a plan. It is stealing from future generations through this measure by taking the $1000 kick-start programme out of action. This is a Government that is going to ensure Kiwis miss out that is going to ensure kids miss out.The Government has said that it will increase benefits in this Budget but it is giving with one hand and taking away with another. It is helping to lift the most vulnerable people—sure—and it should get some credit for that but it should not have to come at the cost of taking down those who are just a few rungs higher on the ladder.This is a Government that has broken promises before—we know that. We have heard about the GST promise that John Key made—that there would be no GST increases. Next thing it is up to 15 percent. We have heard about the 40 percent economic growth target. He said that we want to grow the economy so that exports are 40 percent of it. Well they are down to 30 percent now and they are going backwards. We have heard about the promise to increase wages by $7000 by the end of next year for ordinary workers. Well we know that that has just been kicked out in this Budget by 3 years to 2019. We also know—biggest of all—that this Government promised a surplus which it has failed again to deliver. The one that it is projecting for next year is wafer-thin. It is less than a rounding error.This is a Government that has produced no surpluses in 7 years after a Labour Government that produced nine surpluses in 9 years. This is a Government that is failing. This is a Government that has no vision and no plan for the future. The Government has broken its promises to grow jobs to lift wages and to not impose any new taxes. Cutting KiwiSaver will reduce savings at the very time when we need to increase them. We need long-term thinking not short-term thinking. I am sure that Mr Bishop will try to argue that cutting the contributions to those who are starting to save for the first time is somehow a long-term plan. But the people at home will not be convinced of that; I do not believe that they will. They would not have signed up to it in the first place if they thought it was a bad idea. We know that already 2.5 million Kiwis have signed up to Labour’s KiwiSaver programme.The Government cut the member contributions last time round. This Government halved the employer contributions in the last Budget in 2011 and we know that it has a plan to cut it back further. It is weighing up the options. How do we cut it further? In Australia they introduced a KiwiSaver-like scheme shortly after the Labour Government introduced one here in the 1970s and they have kept that scheme. Australia now has $1.3 trillion in retirement savings. This KiwiSaver scheme is growing. It is a proud scheme but it is only in its infancy and the Government wants to cut it again. The Government has cut the superannuation fund contributions and now it is cutting the KiwiSaver kick-start. It is a Government that is out of ideas it is scrimping and saving and it is costing middle-income Kiwis as it tries to prove that it can get to a surplus eventually and it is failing. It is failing to do even that—even to achieve its own biggest election promise.Half a million Kiwis—that is 500000 Kiwis—will be deprived of the $1000 KiwiSaver kick-start payment over the next 4 years. That is a shocking statistic. KiwiSaver is growing in popularity and the number of people opting out is reducing over time. Many members of the House I am sure will have studied the Inland Revenue Department’s evaluation of KiwiSaver its final summary report from 2007 to 2014. The department examined KiwiSaver and its estimate in the 2010 survey was that additionality—i.e. extra savings on top of what people would ordinarily have saved—was 36 percent. Then in 2013 the department said that had not significantly changed.Hon Todd McClay: Not true.Dr DAVID CLARK: It is a fact. The Minister shakes his head. It is his department. He shakes his head. He is out of touch.This is clear—and the scheme is working. I know plenty of people who have signed up for the scheme because of the $1000 kick-start. In fact if the Government really believed that it had no effect it would not make this legislation retrospective. There is silence on the other side of the House. The Government would not make this legislation retrospective if it did not believe it worked. The Government has no answer to that. It cannot have it both ways. If the Government really believed it did not work it would not make the legislation retrospective; it would allow people to sign up for it while the bill was being passed through the House. But Government members know in their heart of hearts that that is not true. That incentive is there and it does encourage people to save and it does encourage people to join the scheme.This cut is stealing from kids’ pockets. It is robbing the savings of future generations. It is a short-sighted attempt to somehow plug the $1 billion hole in the Budget that has emerged in the last year. This is a Government with $88 billion in debt—let us not forget. The Government pays about $10 million in interest a day—$10 million in interest a day. This is a Government that is failing to manage the economy. It has already halved the member tax credit in Budget 2011. It is cutting savings further. This is the kind of economic mismanagement that has seen the Government run up more debt than Muldoon did. Those Kiwis who will miss out will be at home watching this. They will hear that they have missed out and they will be sorry—certainly the ones who voted for this Government will be sorry. This is not something that was talked about. These kinds of cuts were not talked about in the last election—taking away half a million Kiwis’ access to the $1000 kick-start grant that comes with the KiwiSaver scheme.This is a country that has struggled with capital debt. We know that is a problem for this country—having enough savings as a pool for investors to call upon to grow new businesses and that pool of savings is essential if we wish to diversify the economy and if we do not wish to be for ever dependent on dairy prices and on commodity price cycles. The dairy industry does what it can and it contributes to our economy in good measure but we actually need a number of other industries. We need clean industries. We need growing industries. We need innovative industries. Those industries need to be able to access savings so that they can grow. We need an economy that is diversified and that is sustainable so that New Zealanders can enjoy in the future the prosperity that they enjoy now.Cutting savings is not a vision. Yet that is the vision that this Government has come up with. It has failed the test it has set itself to achieve surplus and now it is trying to plug the hole by cutting savings. That will not do. It is retrospective and it is unfair. Good on those Kiwis who have already accessed it but think about the ones who have not. I say to those people at home who are watching this late at night—as we pass this legislation under urgency because the Government knows that if it did not pass it retrospectively and quickly there would be outrage—if your colleagues join KiwiSaver on Wednesday and you at home send in the form today they can join the scheme and get a thousand bucks but you cannot. That is the change that this Government is bringing in. It has chopped the member tax credit and it is now chopping the $1000 kick-start payment.This is a Government that is out of ideas and that is trying to fill a hole. It will claim that it will not have an effect on enrolment rates. If it really believes that it would not make the changes retrospective. There is a Supplementary Order Paper that suggests that the date be pushed out and I challenge the Minister of Revenue if he really believes that it will not have an effect to adopt that Supplementary Order Paper and to let people have that $1000 if they want to sign up in the next wee while but I am pretty sure that he will not. He knows in his heart of hearts that that 36 percent figure from the Inland Revenue Department—that “additionality” the additional savings that this scheme has enabled—is a number that is real.I will read from the Inland Revenue Department report here where it says that using a flow measure of savings the estimated level of “additionality” rather than substituting from other forms of saving was 36 percent. The main reason that people join the scheme is that it is “an easy way to save”—well that is not rocket science. “The second reason was the contributions from the Crown and their employer.” These are incentives and if they believe in economics they will believe that incentives matter. “There is likely to be an interaction [effect] between these two reasons with the contributions also making it easy to save more.”Those are the key findings from a report that this Government is ignoring. Instead it is ensuring that half a million Kiwis will be deprived of the $1000 KiwiSaverkick-start payment over the next 4 years and this is a disgrace. Labour’s policy is to restart this programme. We would not do such a thing; we would not be so mean to the kids of the future. This retrospective legislation is robbing future savings in a short-sighted attempt to pay for the $1 billion Budget black hole that the Government has dug.