Copeland Gordon: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
Copeland Gordon: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — In Committee 
[Volume:644;Page:13725] 
GORDON COPELAND (Independent) 
: 
 I will also speak about Part 3 in particular about clause 235 and the provisions thereafter that relate to the mortgage diversion provisions in relation to KiwiSaver. I think that all of us in this Committee recognise the importance of homeownership not just to provide stability for families which in itself is a most important public policy goal but also in retirement. In fact a free home in retirement is the difference for many hundreds of thousands of New Zealanders between relative comfort and moderate to severe hardship. All of us know that New Zealand superannuation is inadequate if at the same time a person is trying to pay rent on a house. 
In that connection I will draw some statistics to the attention of the Committee prepared for me by the Parliamentary Library. The number of privately owned owner-occupied homes in New Zealand peaked as a percentage of all homes at 73 percent in 1986 but by the year 2000 that percentage had dropped to less than 50 percent. That is a massive drop of 23 percent in just 20 years. By contrast the percentage of people renting or leasing a home went from 23 percent in 1986 to 44 percent in 2006—almost a corresponding offset. One statistic the percentage of private homeownerships went down 23 percent and there was a 21 percent increase in the number of people renting or leasing. 
That brings into focus I suppose the tremendous importance of the mortgage diversion part of the KiwiSaver scheme. It can be utilised by people who have been in KiwiSaver for 12 months and it enables them under subparagraph (i) of new section 229(2)(i) in clause 235(6) to divert “half of the total contributions deducted for or contributed by the person received by their KiwiSaver scheme provider;” into the repayment of a mortgage on their home for as long as that mortgage continues. That of course is a very very important part of the overall arrangements. That is a holistic approach to savings because it enables a KiwiSaver member both to pay off a mortgage and to save systematically for retirement at one and the same time. As a result many will enter their retirement with both a freehold home and a well-diversified portfolio of financial investments. That is the goal we want to achieve through this important legislation. 
The first anniversary of people coming initially into KiwiSaver will occur on 1 July 2008 so in practical terms mortgage diversion will start from that point onwards. I can confidently predict that this facility will be extremely popular. Why do I say that? I say that based just on my own personal experience and that of many other people I know. We all appreciate that for young people raising children and endeavouring to pay off mortgages it is also very difficult at that point in time—when the bills are mounting and there are mouths to feed—also to be setting aside money systematically for retirement. That reality has not changed. In fact the statistics I have just quoted show that it has actually become worse—much worse—in the last 20 years. 
In my view the huge reduction in the level of homeownership rates and the increasing number of people who are forced long-term to rent is now one of the great problems that face our society. So we need to find a way through that and that is what mortgage diversion does. It is a vitally important component of KiwiSaver in my view and one that I have no doubt will make an important contribution to both the social and financial security of hundreds of thousands of New Zealanders as we move through time. I can foresee 20 years from now that this House and all New Zealand will look back on the introduction of KiwiSaver including the mortgage diversion component and say that it has profoundly affected the financial and social security of New Zealanders and their families. For that reason this part of the bill has my wholehearted support. It was something I personally worked very hard to bring into legislation. I am delighted that it was adopted by the Government and I think that in time it will prove to be a very very important contribution. Thank you.