Woodhouse Michael: KiwiSaver Budget Measures Bill — First Reading Second Reading In Committee Third ReadingText is incorporated into the Bound VolumeWoodhouse Michael: KiwiSaver Budget Measures Bill — First Reading Second Reading In Committee Third Reading[Sitting date: 21 May 2015. Volume:705;Page:3824. Text is incorporated into the Bound Volume.]Hon MICHAEL WOODHOUSE (Minister of Immigration):I find myself drawn into the debate in a way I did not quite expect simply by putting up my hand and saying that my own children are not in KiwiSaver but I am. That is fair enough. Yes I thought as the chief executive of Mercy Hospital in Dunedin that all of my staff regardless of whether they were doctors at the top end of the salary scale or our lower skilled workers should take up KiwiSaver but the question and the thesis we have now is whether or not the incentives have been destroyed. The simple challenge that the members opposite have made is that every single member of the National caucus should give the $1000 back. So here is my challenge to them: if they are so principled about the changes that this Government has made I want every one of them who are currently paying the 39 percent top marginal tax rate when they do not have to to put their hands up—but they oppose that tax cut. So if they can say that they refused the benefits that this Government imposed that they were so principled that they continue to pay the 39 percent top marginal tax rate I will pay my $1000 back. I will write the cheque today because what is good for the goose is good for the gander.I want to come to Mr Tabuteau because Mr Tabuteau is the one sensible rational New Zealand First member who has half an ear on economics. I understand he lectured in economics but he is very tricky about those numbers. I like Mr Bayly the very smart fellow chartered accountant on the National caucus was fascinated by the use of the 10 percent rate of return. What is really interesting is that if you do get the excel spreadsheet out and calculate the future value of that lump sum using a 10 percent hurdle rate in the 50 years that Mr Tabuteau described between the 15 years and 65 it is indeed nearly $118000. Except what Mr Tabuteau forgot was that people have to pay tax. Maybe he does not but that 10 percent rate of return is a gross return. We know that the long-run rate of return in investment schemes is not 10 percent because there are hard times not that Mr Cunliffe would have told you that when he said that we should have been borrowing to invest in the New Zealand superannuation scheme. He never said that. In fact if he was such a genius about how to predict the market why in 2007 did he not trot along to the good Dr Cullen’s office knock on his door and say: “Guess what Mike? I think the rates of return are going to drop. We should pull out of those equities and go into fixed interest before the super scheme plummets.”?The simple fact is we cannot. Over 50 years there are good times and bad times. So the long-run rate of return at an after-tax pay rate of say a generous 6 percent in those 50 years is $18000. It is not to be sneezed at but it is not $118000.Hon David Cunliffe: You’re a medical doctor not a PhD.Hon MICHAEL WOODHOUSE: I am a chartered accountant Mr Cunliffe. Here is what else he did not say. The future value of the $175 million annuity which is the investment the Government would have to make if the Labour Opposition kept it—and that is fine; it has that prerogative to campaign on that—at the same 6 percent rate of return is $54 billion. So we take away the $18000 future value of that initial investment and we burden those 15-year-olds with an extra $54 billion of debt because we do not have cash in the bank to pay that $1000. We would have to borrow it. If we use the Government’s average interest rate of about 6 percent that is an extra $54 billion burden that this Opposition would have us have. It only knows how to borrow spend other people’s money and tax. Just remember it knows how to tax people but it is not so principled that it would pay the 39 percent marginal tax rate. I will get my cheque book out and I will write that $1000 cheque when one of them—one of them—can demonstrate that they are paying a 39 percent marginal tax rate.