Roy Heather: KiwiSaver Bill — First Reading 
Roy Heather: KiwiSaver Bill — First Reading 
[Volume:629;Page:1692] 
HEATHER ROY (Deputy Leader—ACT) 
: 
 I rise to speak to the first reading of the KiwiSaver Bill 2006 on behalf of ACT New Zealand. ACT will be opposing the bill. We do not believe that the bill will achieve what the Government says it sets out to achieve. There is nothing wrong of course with encouraging savings. Indeed we should be encouraging people to save in whatever shape or form they feel is right for their particular situation. What does matter is the way in which we go about it. 
The KiwiSaver Bill—a very thick bill—is very cynical. The announcement of the bill came at the last Budget and was timed to be an incentive for people who thought savings plans would be the answer to all their savings woes to vote for the Government. In fact an examination of the detail of the bill shows just how mean the bill is even though it was promoted as something that would deal with the savings woes of much of the population. We have just heard from the Green Party MP Sue Bradford and many others about how the bill will not help the most needy. I was very surprised to hear Mr Gordon Copeland of United Future say that the bill was targeted to the most needy when we know that the most needy in our society are those who are not earning and who are unable to earn. This bill in fact ignores those people who could most do with the benefits of saving. It is targeted at voters who probably are floating voters—voters who might float to the centre-right or to the centre-left. 
Dr Cullen when he outlined the bill spoke a lot about the timing of the introduction of the scheme. He outlined the dates but he omitted to tell the House and New Zealanders that the savings scheme would come into being just in time for the next election. So here we have a bill that was introduced in time for the election we have just had and a scheme that will come into being just in time for the next election. Mr Hughes laughs because he knows that what I am saying is absolutely true. He is very worried because his electorate is in a very precarious position for the Labour Party. The vote-buying aspects of this bill might have been played down— 
Darren Hughes 
: How’s that member’s electorate going? 
HEATHER ROY 
: I ask Mr Hughes: who came back against all predictions? This is a vote-buying bill. There is no doubt about it and those of us on this side of the House know indeed that that is the case. 
I come back again to the aspect of who will and will not benefit from this bill. The Maori Party MP Hone Harawira made a very pertinent point. In fact during question No. 2 today Dr Cullen said in response to a supplementary question by Tariana Turia one of the Maori Party co-leaders that it did not matter that only 4 percent of Maori would actually be here to enjoy the benefits of savings schemes because the families of the other Maori would inherit their savings. That must be of quite some consolation to the 96 percent of Maori who will not be here to enjoy the benefits of this bill. In fact if this bill is being promoted by the Labour Party for the purposes of inheritance then that I contend is absolutely shameful and no better than the asset testing that will come into being for those in aged-care facilities later this year. 
The background to the bill given in the Bills Digest states in relation to who will be eligible: “Savings are primarily for retirement and they are ‘locked in’ (i.e. they will not be accessible) until the age of eligibility for NZ Superannuation which is currently 65…”. That in itself is a large problem with this bill. It is not flexible. It does not provide for choice. It does not provide for people to be able to use their own savings when they need them most. For some people that might well be the age of 65 and beyond but for many people the money they have saved themselves will not be eligible for use when they may well need it for other things. They cannot decide when they will use it; somebody else does on their behalf. They will have to apply in times of financial hardship or if they want to emigrate to get back the money that they have set aside for a rainy day. 
So there are many problems with this bill. I have mentioned the timing. I have mentioned that those most in need will in fact not be eligible for this savings scheme. We know that what would have been of much more benefit to New Zealanders at election time were tax cuts. ACT along with National said that money should be given back to people who earn it and given back to them now—not at the age of 65 and not sometime when Labour determines they should have it. That hard-earned money should be given back. In fact ACT would have gone further than National. Our policy was much more generous. It would have lowered tax rates to two levels: for those earning above $38000 in 1 year the level would have been lowered to 25c in the dollar and for those earning less than $38000 it would have been lowered to 15c in the dollar. That would have meant that every earner in this country would be significantly better off. The way to help beneficiaries most is to encourage them into work so that they are financially better off and in a better position to save. Once they have reached that point tax cuts would benefit them significantly. 
This bill is in fact a first home buyers account. I think it was Mr Key of the National Party who pointed that out. This is not actually a savings scheme; there is no flexibility in it. It is a first home buyers account. As Mr Key said and I agree with him there is absolutely nothing wrong with that but let us be honest about exactly what it is. It is a first home buyers account—let us call it that. It is not about long-term saving; it is about helping people into homes. 
If we want to talk about savings plans let us look at other savings plans. Let us not just limit people to one plan. People will not have a great deal of choice. The Bills Digest states: “Employees will be automatically enrolled into KiwiSaver when they start a new job. They will have three weeks to ‘opt-out’…”. There is an element of compulsion about that. Many people will not realise that they can opt out. They will not realise that that is a choice available to them. But beneficiaries—those who most need assistance—will have to opt in. How many of them are actually in a position to do that? Very few. 
We should be looking to other savings plans such as those provided by the private sector. Let us look at the activa Plan that has been put in place by Southern Cross. Health is a very good example of somewhere we need to look forward. That plan helps people provide for their own health care. It gives them an incentive to buy their own health insurance and goodness only knows that this Labour Government’s greatest failure is in health. It is a savings plan that could help people to take responsibility for their own health care. Instead the Government is promoting its own bill. The Government knows best according to those on the other side of the House—Labour knows best how people should save. This was a vote-buying exercise for the last election timed to be a vote-buying exercise for the next election. 
This is more work too for employers. It is another job for employers. They will be responsible for deducting employees’ contributions and forwarding them to the Inland Revenue Department with PAYE tax deductions. We know how friendly this Government is to the small businesses and employers of this country: not at all. This legislation will be more work more bureaucracy and more red tape for employers to contend with. 
This bill is a cynical attempt at vote buying and it is more fuzzy-thinking economics. I am surprised that Mr Gordon Copeland spoke for United Future in support of this bill because he of many MPs has some knowledge of economics. The Minister of Finance however thinks that tax cuts are inflationary but that an increase in Government spending is not. How did he come to that conclusion? Not many economists—probably not even Mr Easton who loves supporting the Government—would agree with that. 
 What do New Zealanders want? Sixty percent of New Zealand voters at the election voted for parties that promoted some sort of tax relief. New Zealanders want tax cuts and New Zealanders need tax cuts—that is the way to help people. Let them decide for themselves how to spend their own money. If they want to make that decision it is up to them. Tax cuts would also allow them to save more money because they would have more in their back pockets. People would think more about buying health insurance about spending money on their children’s education and about saving. New Zealanders are not stupid people; they know what is best for them and they should be left to make that decision for themselves. ACT will not be supporting this bill.