Nash Stuart: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — Second Reading 
Nash Stuart: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — Second Reading 
[Volume:664;Page:12186] 
STUART NASH (Labour) 
: 
 I rise to support the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill. There is no doubt that that is quite a mouthful. It is another bill that was started under Labour that is being debated in this session of urgency. The bill is supported by all in the House. It is a sensible bill and it goes a long way to clearing up a few areas and making it easier for people to understand tax matters. 
As has already been mentioned the main provision is the introduction of changes to the tax rules to allow New Zealanders returning home from Australia or Australians deciding that this is really the best place in the world to live to bring their retirement savings with them and for New Zealanders to take their retirement savings to Australia if they decide that the land of no clouds severe water shortages and a million Russel Normans is better than Godzone. The bill also includes a number of technical changes to the rules surrounding KiwiSaver gift duty exemptions and binding rulings to improve the way in which the rules work and to reduce compliance costs for taxpayers. 
In regard to retirement savings portability as mentioned it is a sensible arrangement. We have been told that under this scheme potentially $16.6 billion in lost contributions from New Zealanders working in Australia would come back to New Zealand. Even if a fraction of that money was to come back home it would have a positive impact. When we consider how the country has been hollowed out to the tune of hundreds of millions of dollars as a result of the finance company collapses then any money that returns this way in the form of savings is more than welcome. 
And of course Australians know how to save. As my colleague David Parker alluded to the Australian superannuation scheme is light years ahead of the New Zealand equivalent. That this Government keeps comparing itself with Australia’s is a little strange if not downright disingenuous all things considered. This National Government has ultimately undermined its commitment to New Zealand superannuation. We have the Cullen fund which was designed as a top-up to the Government’s national superannuation and this Government axed contributions to it. Since this decision was taken by Mr English the Cullen fund has gone on to make a small fortune as the global equity markets have recovered in the wake of the global financial economic crisis. Then we have KiwiSaver. About 1 million Kiwis have taken up this scheme. I ask Iain Lees-Galloway whether he remembers who developed KiwiSaver. Was it a Labour Government? 
Iain Lees-Galloway 
: The Labour Government—Michael Cullen. 
STUART NASH 
: Yes I think it was a Labour Government. A million Kiwis view it as a vital part of their retirement savings and planning for the future which is what the scheme was set up for. One of the major differences between the New Zealand scheme and the Australian scheme is that theirs is compulsory. We once had a compulsory superannuation scheme whose architect was Sir Roger Douglas when part of the Kirk Cabinet. It was visionary at the time only it was removed illegally as it turned out by Prime Minister Muldoon. 
Brendon Burns 
: Which Government? 
STUART NASH 
: National I think. It is good to see Sir Roger Douglas sitting in the House because that was visionary legislation. Imagine what our economy would look like now if his superannuation scheme had continued like the Australian scheme did—it was set up at about the same time—into the 21st century. I think this economy would look quite different now if Sir Roger’s scheme had continued. 
As David Parker also mentioned Australian employers will soon be obliged to pay 12 percent of an employee’s salary into the fund and to invest it in local and international infrastructure as well as in a huge number of other local and international investments. Members should correct me if I am wrong but I believe that it is one of the largest superannuation funds in the world right now and growing. And this Government has cut employer contributions when the Australians are increasing theirs. It is quite interesting. 
Anyway I come back to the bill and its key provisions. It includes trans-Tasman portability of retirement savings. The portability arrangements will allow retirees who have retirement savings in both New Zealand and Australia to consolidate them in one account in their country of residence. These amendments give effect to an agreement between the Minister of Finance and the Australian Treasurer made in July 2009. These arrangements are expected to come into effect during the second half of 2010. The amendments cover only the transfer of retirement savings between the KiwiSaver scheme and an Australian complying superannuation fund regulated by the Australian Prudential Regulation Authority. By that I mean that it cannot be a private superannuation scheme; it has to be a KiwiSaver scheme. A member must permanently emigrate to Australia and supply proof of his or her emigration to the provider. In order to protect the value of the savings transfers of savings between New Zealand and Australia will be exempt from any entry or exit taxes. For permanent emigration to a country other than Australia the current rules for transfer and cash withdrawals will apply. However if a member permanently emigrates to Australia the following new rules will apply—and I am referring to a member of the scheme not a member of this House. Well I suppose it could be a member of this House if a member wanted to go there—or to go back home. A member will be able to transfer all of the Crown contributions; his or her member tax credits will not be recovered by the Crown. Retirement savings may not be withdrawn in cash and a member must transfer the full amount of his or her savings and not a partial amount. 
Requirements for proof of permanent emigration to Australia will be the same as for permanent emigration to other countries. KiwiSaver members can request to transfer their savings at any time after supplying the provider with proof of their permanent emigration to Australia and fees charged by KiwiSaver providers on the transfer of retirement savings to Australia must not be unreasonable. I cannot imagine the investment sector being unreasonable! Why would that provision need to be included? Australian rules will provide that New Zealand - sourced retirement savings may not be transferred from Australia to a third country. 
The following rules will apply to funds transferred from Australia to KiwiSaver. A person who is retired may withdraw his or her Australian-sourced retirement savings at age 60. A member tax credit of up to $1428 per year will not be paid on contributions to KiwiSaver schemes consisting of Australia-sourced retirement savings. Australia-sourced retirement savings may not be withdrawn for use for the purpose of buying a first home diverted to a member’s mortgage repayments under the mortgage diversion facility or used to count towards eligibility for deposit subsidy. Australia-sourced retirement savings may not be transferred to a third country either. [ 
Interruption 
] I know that this is rather dry but this is an important bill because a hell of a lot of people in Australia want to come home. 
David Garrett 
: No no it’s fascinating. 
STUART NASH 
: I think it is important that we outline some of the reasons we are doing this and some of the practical measures. When the member opposite starts jumping up and down about speeches I have to ask what planet he is on. He is the man who introduced “three strikes” and what a load of bollocks that was. I come back to the bill. 
David Garrett 
: Absolutely! 87 percent of the public are wrong Nash! That’s why you’re sitting over there. 
STUART NASH 
: Is someone talking? Is there a noise somewhere in the House? Anyway the current inability of individuals to streamline and consolidate their personal retirement savings has led to some individuals paying multiple fees for the administration of their retirement savings account. These costs undermine the effectiveness of policies aimed at improving retirement living standards. Also the ability to transfer savings is one factor individuals take into account when considering employment opportunities on either side of the Tasman. 
The Australian superannuation Minister has indicated that around A$13 billion is involved and I mentioned this before. That is about NZ$16.6 billion in lost retirement savings in many small retirement savings accounts of New Zealand workers in Australia. Under the status quo an individual may transfer their KiwiSaver savings to Australia on permanently emigrating there but Australian complying superannuation funds may not be transferred to New Zealand. 
There are a number of other provisions in the bill. I will leave it at that because it is a very good bill. Mr Foss acted as a good chair of the Finance and Expenditure Committee. We received some very good advice from the Inland Revenue Department and some good submissions as well. It is good legislation so I commend it to the House. Thank you.