Shearer David: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
Shearer David: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
[Volume:672;Page:18987] 
DAVID SHEARER (Labour—Mt Albert) 
: 
 I will start by responding to what the Minister in the chair the Minister of Revenue was talking about in relation to his response to us saying that we were making it up. I will point out a couple of figures that of course we all agree on in this Chamber and that is that in a matter of 3 years we have gone from a $5 billion surplus to a $16.7 billion deficit. Nobody would disagree with that. The only thing that people would have difficulty with I think is understanding how on earth that actually happened. How did we go from a $5 billion surplus to a $16.7 billion deficit in the space of 3 years? People on the other side will say “Well actually it’s all about the earthquake.” Well actually even by Treasury estimates less than 10 percent of that deficit is made up by the Christchurch earthquake. The deficit will also be described as being because of the global financial crisis but that cannot in any way account for the degree of difference between $5 billion and $16.7 billion. 
A lot of the deficit can be attributed to mismanagement and the changes that this Government has brought in and that includes the changes to the taxation system. The changes to the taxation system included borrowing for the latest tax cuts. I would like to hear the Minister comment on that because that is one of the things that Treasury came up with in the Budget statement last year. That is another point: a lot of the discussion today has been about the Government’s future projections. I wonder when we talk about making up figures whether we can actually believe some of those projections. It has been commented on before that the difference between for example the forecasts of the Minister’s ministry which is the Inland Revenue Department and Treasury forecasts are grossly different. Who do we believe here? I would be more tempted to believe the Inland Revenue Department’s forecasts simply because its forecasts seem to be founded on a greater degree of certainty than Treasury’s. 
I have looked at the Treasury figures that Standard and Poor’s talked about. Why Standard and Poor’s goes along with it I do not know. Certainly the Prime Minister has led us to believe that this Budget is all about satisfying Standard and Poor’s. But Standard and Poor’s also said that the Budget foresees an operating deficit of $16.7 billion or 8.4 percent of GDP yet only 6 months ago the Half Year Economic and Fiscal Update was forecasting an operating deficit of $11 billion or 5.5 percent of GDP. Yet Treasury forecasts looking out for the next 3 years are extraordinarily rosy. My question asks why on earth we are prepared to accept those forecasts on which this Budget is founded. Why are we prepared to accept those figures? 
The other thing that I will bring up goes directly to the purpose of this bill and that is KiwiSaver. We have had many many speakers talking about KiwiSaver and saying that it has been halved or gutted yet the Minister in the chair said just a week or two ago on  
Q+A 
 that he needed to make sure that “KiwiSaver survives and is sustainable and is politician-proof in the future”. And he is right. 
Sitting suspended from 1 p.m. to 2 p.m. 
DAVID SHEARER 
: Before the lunch break we were discussing the certainty of KiwiSaver. On the assumption that at least the return would be equal or better over a period of time 1.7 million people put their money into KiwiSaver. I made the point that on Television New Zealand’s  
Q+A 
 programme last week the Minister of Revenue Peter Dunne said that making sure that KiwiSaver survives is sustainable and is “politician-proof” in the future is necessary but we have to make some changes now. It seems a bit of a contradiction. 
I would like to conclude this point because I think it cuts to the heart of what we are trying to say in the Taxation (Annual Rates and Budget Measures) Bill. In the course of the short history of KiwiSaver we have gone from a situation in which one regime brought it in to one in which the National Government cut the employer contribution. Now that employer contribution has been brought up slightly but the tax rebate has been slashed by the Government. If that is not political tinkering and meddling then I am not quite sure what is. I believe it really does make us think and contemplate the future of KiwiSaver and the confidence New Zealanders should have in putting their money into an account an investment or a system of savings when it will be meddled with by politicians for political reasons. 
I look at Mr Dunne’s statement on  
Q+A 
 and I wonder—I would like to hear from him on exactly this matter—how he can square that statement that KiwiSaver survives is sustainable and is politician proof but we will have to make some changes now. That seems to be a contradiction because we have tampered with it twice already in the course of this Government. The Minister I would imagine as a member of the previous Government as well probably had something to say on the formation of KiwiSaver what it should deliver and how it would impact on savings for New Zealanders. Perhaps he could relate to this Government something of the advice he gave the last Government on the establishment of KiwiSaver and whether he thought that it would need meddling with and changing at that point in order for it to persist throughout its life. 
We are looking at a real problem with retirement and a baby-boom section of the population who are coming to a period when they will be collecting record amounts of superannuation and impacting on the economy in terms of their health and welfare. Other speakers have mentioned other means but KiwiSaver is one way of ensuring that there will be some security in the economy. For it to now be meddled with means that it will erode the confidence many New Zealanders have in KiwiSaver in the future. I would not be surprised if as a result of this Budget we had fewer New Zealanders taking up KiwiSaver fewer people being involved in it because their confidence in it and the confidence that politicians will not simply meddle and play around with it has been shattered. They do not have confidence any more that that will not happen. They would rather do the thing we are trying to get away from and that is put their money if they have any spare into the property market because at least there they can see bricks and mortar—that sort of thing. That is exactly the situation we do not want but in effect it is exactly what we are incentivising those people to do to put their money into less productive areas of our economy rather than putting it into KiwiSaver. 
If we look at this trend in the long term I sincerely hope this does not happen because—if members can believe it—the projections out over the next 20 years will put about $60 billion of savings into our economy that could be used for productive enterprises. For the political expediency of the short term we are undermining the ability of KiwiSaver to persist and have the confidence of New Zealanders through time. It is so fundamental. When I look at my kids I would like to think they have an opportunity to save early and reap the rewards later on not to have those rewards undermined by the political whims of the day. Frankly this bill is a political whim. It is politicians playing around with our future and it should not happen.