Foss Craig: KiwiSaver Bill — In Committee 
Foss Craig: KiwiSaver Bill — In Committee 
[Volume:633;Page:4937] 
CRAIG FOSS (National—Tukituki) 
: 
 I rise to speak to Part 4 of the KiwiSaver Bill. I acknowledge the new Clayton’s Minister in the chair—sorry; the new Minister in the chair—the Hon Damien O’Connor. As I pointed out in an earlier speech I have learnt much in the last week about how Parliament and the debating chamber work and about the abuse or lack of process particularly around this bill. In the last half an hour I imagine I have learnt a bit from the wise experience of Mr Woolerton. I look forward to sitting down with him and having a bit of a yarn at some stage. I also acknowledge again the powerful and vibrant speeches of all the Labour MPs who have endorsed this bill tonight. So far—we are up to Part 4 just over halfway through the bill—we have had a grand total of zero speeches from Labour MPs endorsing what is supposed to be flagship legislation for their final term in Government. 
Part 4 deals particularly with various superannuation schemes and with what happens to KiwiSaver schemes—more with the operational side of things. During the Finance and Expenditure Committee I recall quite a lot of discussion about—and other speakers have spoken of this—the default providers etc. This bill will drive significant changes to the New Zealand finance industry. Earlier speakers including myself have touched on the default providers and commented about the abuse of process around that provision. I think members will see some interesting joint ventures amongst say insurance companies and banks all absolutely clamouring to be one of the default providers. As I noted in an earlier speech Mr Cullen has noted that it would be very very difficult not to make money as a default provider. 
We do know that this bill will drive almost every fund and every small organisation to be KiwiSaver-compliant. No one is addressing the cost to those small funds and small institutions etc. of becoming KiwiSaver-compliant but they have been driven into a corner here. Particularly with the amendments tabled last Thursday they virtually have to become KiwiSaver-compliant. What does that mean for small credit unions around the country? There are quite a few in Hawke’s Bay. They are doing the right thing but they are struggling in the face of competition from the larger Australasian banks. What about our small local building societies? Again this bill will actually harm those building societies. They will struggle to cope with the changes and the compliance issues that they bring. 
Being a default provider brings massive first-mover advantage to anyone who wants to participate and try to become a default provider. As noted earlier there will be four to six default providers. Funnily enough if members think about the large financial institutions around the country they all begin with the letter “A” or they have a series of “A”s in their name. I ask members to think about what will happen in the real world when Joe or Jane Bloggs bowls along to a new job and wants to opt in and select a default provider. Whom will he or she select? It will be like what happens with “AAA Plumbing”. People will not have thought about their choice too much and they will go to the top of the list. They will guess that the providers have all done the trust deed and are OK so they will tick the top one under “A”. Then there will be ones starting with “AA” then “AAA”. It is absolute nonsense. That is the kind of real-world mesh test that this legislation will come up against and fail. 
It is interesting also to note from some of the submitters particularly the very large players that they are not going into KiwiSaver because they want to be part of KiwiSaver but because they see it as an awesome but loss-leading opportunity to market themselves to an entirely new group of customers or potential customers as they try to parade their wares to them. Let us remember that 1.1 million new job events every year will give those players 1.1 million opportunities to sell their products. What kinds of products will those large multinationals try to sell? They will try to sell insurance products and there was some wide-ranging discussion about that at the select committee. There will be various forms of cover and there may be some deals with employers. Providers may say to employers that if they select a particular scheme for their employees they will be given a 10 percent discount on fire and accident insurance for their buildings. Of course employers will take that. Does that actually serve employees to the best advantage? 
There is another very very interesting little item that people will try to solve.