Foss Craig: KiwiSaver Bill — Second Reading 
Foss Craig: KiwiSaver Bill — Second Reading 
[Volume:633;Page:4851] 
CRAIG FOSS (National—Tukituki) 
: 
 I thank the previous speaker who constantly praised the work ethic of National members. We are a team a solid team and we have a couple of key men. The compliments the previous speaker gave us are a compliment to our entire new intake—the 21 new energetic ambitious National MPs who will be over on that side of the Chamber before they know it. 
I attended virtually every Finance and Expenditure Committee meeting where this bill was discussed—I perhaps missed one somewhere along the way—but I am struggling to recognise some of the committee members from the other side of the House because so many of them sat in various seats to try to hold up Labour’s quorum throughout the discussions around this bill. I think that the previous speaker Mr Gosche attended the meetings most of the time but I struggle to identify most of the other members. I guess that points to how important Labour sees that committee to be—the once-powerful Finance and Expenditure Committee. The Labour stooges were mere “bums on seats” if you like to borrow the education analogy. They were there just to provide a quorum. As we know when the pressure starts to mount the Minister of Finance Dr Cullen will pull one of his strings something appears and those members all jump very high. 
The National Party opposed this bill at its first reading and we oppose it again now. As John Key said previously given the fundamental shifts that were announced at lunchtime today we will be reserving our judgment over the next week so we can study them further. At first cut it looks like a reaction to some bad polling. At second cut we will examine the changes further. I suggest that we probably knew more about the changes announced today and knew about them earlier than many of the Labour members because we are sure they were quite a surprise to them. 
The KiwiSaver Bill was promoted as a great scheme to increase the retirement cash holdings available to all New Zealanders for their future. Sadly the bill has now devolved and been traded away quite possibly in exchange for non-movement in the indexation of personal tax rates as United Future has argued and as the Minister announced in the 2005 Budget. Sadly it has probably been traded away to nothing more than a cheque book. Perhaps it is more like a piggy bank with one hole in the top and one hole in the bottom because that is essentially and effectively what the changes announced today are. 
Essentially from what we see at the moment of some of the large players the taxpayer is giving up taxpayer funds to subsidise the mortgage book. How will this help with living expenses? How will this help to pay for the price of petrol? How will this help the thousands of Grey Power members—whom New Zealand First members had a go at yesterday—who are trying to get by? I ask members to tell me how this will help New Zealanders as they struggle through the current shambles of this Government. 
I have great respect for the process and integrity of Parliament. I have watched Parliament over many many years and I fully respect the processes in this House and in the committees around it. I feel very privileged to be on the once all-powerful Finance and Expenditure Committee—well it used to be all-powerful. Obviously it is now stacked and Dr Cullen is pulling the strings all over the place. 
The Finance and Expenditure Committee spent many days and many hours on this bill. Officials spent I guess thousands of hours and thousands of dollars on preparing for and drafting this bill. We studied this bill at length. Officials from different ministries the Inland Revenue Department and the Ministry of Social Development actually worked together—which was something quite unusual in this instance—to try to prepare the bill for presentation to this Parliament for debate. Well obviously the bill has changed. The bill that was sent to the Finance and Expenditure Committee which submitters studied on which thousands of hours and thousands of dollars of resource were spent and which submitters believed was coming through is now totally different as a result of the changes announced today. 
Totally contrary to what the previous member said I recall a perhaps 2 or 3-minute discussion about in particular the mortgage diversion changes announced today. I recall the Labour members shaking their heads and having a bit of a giggle—basically that idea was not going to fly. When the officials from the Inland Revenue Department and the Ministry of Social Development were asked directly whether they were prepared whether systems and regulations were prepared whether everyone was ready and whether they could handle mortgage diversion their answer was very simple loud and clear—no. Yes it had been talked about for perhaps further consideration. Little did we know at that time—and in my eyes it was a total abuse of parliamentary process—that that consideration was going on up on the seventh floor and as the Government was under a bit of pressure it decided to roll it out and try to get some good headlines. 
I congratulate the United Future members on leveraging their votes to bring this policy in. I know that they are very keen on it so in that sense I say well done to them. 
Fundamental changes to the bill have been announced today—the mortgage diversion scheme and the changes to the exemption for the specified superannuation contribution withholding tax. In a nutshell the changes mean that the taxpayer is helping to fund the mortgage payments of those who have a mortgage—it is not even necessarily first home buyers in this instance. What an abuse of process! The bill we considered at the Finance and Expenditure Committee was I think about 250-odd pages long. We had hardly any discussion about these two fundamental changes. Many submitters were very very concerned about the haste with which this bill has been introduced. That was before the fundamental changes that have been announced today. 
That brings me to the commentary on the bill which the previous speaker alluded to. I will quote to the House from the commentary in relation to the concern of many members of the committee. This concern relates to the default provider provisions the process around which again has just turned to custard. Default providers spent hundreds of thousands of dollars on preparing themselves and their institutions to handle KiwiSaver as per the bill they received which was the bill that we considered. They did not even consider the mortgage diversion scheme or the change in its tax structure. The commentary states under the heading “Default provider provisions”: “Some members were concerned that the Government progressed the default provider provisions of the bill matters on which submissions were received prior to the select committee reporting back to the House.” 
Quite simply the bill was an ongoing moving beast at the time yet in relation to default providers Mr Cullen is on record as saying it would be very hard for them to lose money—and in fact after today’s announcement it will be even harder for them to lose money around this and they will be limited to about four or six providers—yet it was totally skewed for the large providers. Essentially Australian-owned banks will be the big winners out of this and perhaps Kiwibank. 
KiwiSaver was supposed to be a drive to increase savings. It failed. It is hand in hand—or should I say fist in fist—with the taxation bill a delay in the start date of which was also announced today. It will fail. Here is an example in relation to KiwiSaver. A person on $50000 invests 4 percent of that money via a KiwiSaver fund into US shares. That person will be taxed on his or her dividends plus 85 percent of the capital gain times his or her marginal tax rate whatever that might be. It is double taxation. If that same person who has an income of $50000 invests the same amount—4 percent or $2000—directly into US shares he or she will be taxed on the dividend only. How on earth is that supposed to help New Zealand’s savings and the efficiency of our markets? 
There were about 71 direct submissions on this bill. I believe that we are nudging 4000 submissions on the capital gains tax bill. In Mr Cullen’s press release today he talks about how he listened to the impact on submitters and we had a delay in the start date. OK that is fair enough but I certainly hope he considers the weight of those submissions because almost every single one of those 4000 submitters is saying that the proposed taxation bill which is hand in hand with the KiwiSaver Bill must be radically changed. It is an abuse of parliamentary process. If this bill is changed as radically as this 3 hours or so before its second reading what on earth are we to expect to be lined up for the taxation bill?