Dunne Peter: Taxation (Budget Tax Measures) Bill — In Committee Third Reading 
Dunne Peter: Taxation (Budget Tax Measures) Bill — In Committee Third Reading 
[Volume:654;Page:4031] 
Hon PETER DUNNE (Minister of Revenue) 
 on behalf of the  
Minister of Finance 
: I move  
That the Taxation (Budget Tax Measures) Bill be now read a third time 
. This bill has two prime components. Part 1 changes the Government’s tax reduction plans in light of the Budget announcement yesterday and introduces the deferral of those plans until economic conditions improve. The debate during the Committee stage focused on the state of the New Zealand economy whether those cuts were affordable in the current context and what the alternatives might be. The reality is that the Committee of the whole House overwhelmingly—in fact I think unanimously—endorsed the proposition that these tax cuts should be deferred at this time even though a number of members made it clear that this was not their preferred course of action but that it was an inevitable response to the current global economic crisis. Most members noted that in the current framework where the Government is facing significant additional fiscal pressures it would have been fiscally irresponsible to proceed with the tax cuts at this time. 
Part 2 deals with a very specific issue which is the closing off of the current mortgage diversion scheme within KiwiSaver. The reasons that were advanced for that change were quite simple. First the uptake of the scheme has been particularly slow. In fact somewhat less than 600 people out of over a million KiwiSavers have availed themselves of the mortgage diversion facility. One of the largest fund managers in New Zealand BT Funds Management which acts as the agent for Westpac says it has fewer than 30 members enrolled in its particular scheme to give effect to this facility. The consequence of the facility is that the complexities it gives rise to are causing pressures amongst fund providers on continuing to offer the option. 
The second point is that changes to KiwiSaver particularly the introduction of the “2 plus 2” percent contribution regime meant that the maximum income where benefit starts to accrue from mortgage diversion is $104000. That is because of the additional 2 percent being retained in earners’ own pockets and also because of the way in which the mortgage diversion scheme has worked—it has essentially become a top-up over and above the basic mortgage repayments. So for those reasons it was the Government’s view that the scheme had not worked and ought to be repealed. There was a good discussion in the Committee of the whole House about whether the scheme ought to be repealed but the conclusion of virtually all parties bar one at the end of the day was that repealing it was probably the correct course of action to take. 
At this stage I simply thank members who have contributed to the various debates as this bill has proceeded. I acknowledge the work of the officials who have attended throughout and as usual have proffered their advice as appropriate from time to time but who have sat here in wonderment watching the ensuing debate. On that basis I am happy to commend this bill to the consideration of the House.