English Bill: Taxation (KiwiSaver and Company Tax RateAmendments) Bill — Second Reading In Committee Third Reading 
English Bill: Taxation (KiwiSaver and Company Tax RateAmendments) Bill — Second Reading In Committee Third Reading 
[Volume:639;Page:9452] 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 I want to pick up from where the member for Napier Chris Tremain left off when he made the point that for many New Zealanders the KiwiSaver scheme will be out of reach. He was reinforcing the point made earlier on by the co-leader of the Maori Party Tariana Turia. She made the pretty straightforward statement that if 50 percent of Kiwis take part in this scheme it means that 50 percent do not. The 50 percent who do not take part are missing out every way around. Not only do they miss out on the now multibillion-dollar contribution by the Government to a personal savings account but also—probably worse than that—they miss out on the changes to their tax thresholds which at least would give them the cost of a packet of chewing gum a week. That is really what is hard to understand about this particular package of measures. 
Shane Jones 
: You’ll adopt it though Bill. 
Hon BILL ENGLISH 
: We certainly will not adopt that bit. 
Why did the Government decide that with a large surplus it was not going to follow through on the promises it had made for the last two Budgets to allow for changes in income tax thresholds because of inflation? That would have put some money in the pocket of every low-income and middle-income earner in this country. Out of mean-mindedness or some other motive that the member from the Hutt Valley could no doubt tell us about the Government decided to pull back the change in income tax thresholds which has the effect of excluding at least 50 percent of New Zealanders—and in the next couple of years probably more than that—from any benefits at all from this Budget. I cannot understand the political logic of it nor can I understand the economic logic of it actually. 
I would like the Government to explain it. If the Government is willing to put through a tax credit—which is not actually a tax credit—of $20 per week when employees contribute then why is it not willing to give them $5 a week as a tax reduction which it had already promised? I am sure many New Zealanders out there will themselves be asking that. 
There is no doubt who supports this Budget or who is keener on what is in it: higher-income New Zealanders. It is quite clear that that is who supports this Budget. The people who are represented by the Maori Party—what is in it for them? We are going to hear a lot of talk from Labour about engaging low-income people in KiwiSaver but the raw facts of the matter are pretty straightforward: one has to give up spending in order to take part. This is where Dr Cullen is having trouble with the consistency of his message. He is trying to say that this whole package is going to lead to big increases in savings but no reductions in household spending. If he had the courage of his convictions he would have made the whole thing compulsory. But of course he did not do that because he knows he would then collect the blame from every single household in New Zealand for confiscating some of their weekly pay so that they can have it back when they are 65. At least this way New Zealanders have to put up their hand to volunteer for it. But the effect is the same. 
The Government has decided that low-income and middle-income people who cannot afford to save have to just stick it. They have to just stick it. They cannot afford to save so they do not get either the benefit of the employer contribution or the benefit of the Government contribution and they miss out on the reduction in taxes that was promised to them in the last two Budgets. Now worse than that they are going to be caught up in confusing industrial relations negotiations over pay because some people in the workplace may opt into the scheme and the Government is compelling the employer to put any prospective pay rise into the employees’ savings accounts. If some workers do not opt in what will happen then? Those people may face no increases in pay and may not even get the benefit of the employer’s contribution either. That is a price that Labour is going to become much more aware of over the next 6 months as the reality of semi-compulsory savings bites.