Scott AlastairTAXATION (ANNUAL RATES FOR 2018-19 MODERNISING TAX ADMINISTRATION AND REMEDIAL MATTERS) BILLIn CommitteeDebate resumed from 20 February.Part 1 Annual rates of income tax (continued)ALASTAIR SCOTT (National—Wairarapa): I'm not going to go through the title of the bill again. Mr Chair you've eloquently outlined the title of the bill—long as it is. There's a lot in the bill and we are here at the committee stage during the first call. The last time I stood I was talking on the KiwiSaver enhancements: the lost opportunity that this bill has not taken up by doing something that should have been done or could have been done in this amendment bill.There have been a couple of things that are good. I particularly like the holiday period being reduced from five years to one year and the renaming of it to talk about a saving suspension and that's all about getting people involved in KiwiSaver. KiwiSaver is a good platform and it encourages people to save for their superannuation and their first home in fact. But I think there has been a lot of opportunity that could have been taken up. As we know not enough people are in KiwiSaver. In fact the people that should be in KiwiSaver many many many of them are not in KiwiSaver and that's simply because there is an option for them not to participate. It's almost too easy to opt out and thereby not save for their future retirement needs.So there could have been more work done on the KiwiSaver enhancements. I'll give you an example: let's just talk about the five-year lock-in period. So a couple of things the KiwiSaver enhancement also does is remove the five-year lock-in period—that's a good thing. It allows the over-65s to opt in to KiwiSaver—that's also a very positive change—and then it allows larger contributions to be made to the KiwiSaver: the 6 percent and 10 percent contributions. But that's only going to be used by those that can afford to put in the 6 percent or 10 percent contribution and that's all very well and good but I'm more concerned about those people who are not even in the KiwiSaver scheme. I'm concerned about those people who despite a legislated minimum wage increase for example are still not putting funds into the KiwiSaver.By not putting funds toward or participating in the KiwiSaver they are leaving money on the table. They're leaving money on the table for the employer to keep for themselves. The business is not obliged—if the KiwiSaver participant does not join in then obviously the employer has got the anticipated contribution of that KiwiSaver participant ready to be put into the scheme. But if the individual is not participating then of course there is no obligation for the employer to put that anywhere except in his bottom line.So there's a missed opportunity here for participation rates to be increased in KiwiSaver and there's a lot of work that could be done around that. I'm not suggesting a $1000 rebate or a $1000 incentive which the previous Government took away because that was again not targeting the people that are most in need—the people that should be in the KiwiSaver programme that are not in the KiwiSaver programme. So you know for example hypothetically if the KiwiSaver was compulsory that would enable—CHAIRPERSON (Adrian Rurawhe): Can I just ask the member to come back to Part 1 of—ALASTAIR SCOTT: Well I'm talking about the KiwiSaver opportunities—the KiwiSaver enhancements—that are available to this bill. CHAIRPERSON (Adrian Rurawhe): We are debating the rates. I mean that's in Part 4 but if you can—ALASTAIR SCOTT: All right I'll come—OK. CHAIRPERSON (Adrian Rurawhe): —at least relate those comments to Part 1. ALASTAIR SCOTT: All right. Well I think I've made my point. There's a missed opportunity here for the KiwiSaver to be enhanced further than this bill has done. The next point obviously is the setting of the income tax rates. This bill sets the rates for the year and again it's a missed opportunity. There was an opportunity for the Government to back up to reinforce and to adopt the thresholds that we had initiated but the Government did not. The Government did not. They maintained the old old rates. That essentially has taken away $1000 out of taxpayers' pockets. So that's another missed opportunity. So again this bill—though it does some good things—is a bill of missed opportunity. Now there's an amendment I believe under the name of Amy Adams which I won't go to but I'm sure other members will. But my second point here is around the rates that are actually being set. They are effectively higher than they would otherwise be. They are effectively higher than they need to be because there are surpluses up the wazoo for this Government to go and spend invest or waste without having these rates that are in place and that are being set by this amendment bill today. There was an opportunity to give taxpayers money—their money; remembering that it's their money—for themselves to spend as they wish. As I say the Government of the day—the Labour Government—has not taken up the opportunity to change the thresholds that were in place prior to this bill. The other parts of the bill that I'd like to just touch on very briefly relate to the Working for Families abatement rates and thresholds—again another missed opportunity. Abatement rates as we know are a massive disincentive to work. They incentivise people to remain in the status quo—the situation that they find themselves in—because for every dollar that they earn the abatement rate is so high that it sort of says to them Well I'm not even going to bother getting out of bed." In fact you can paint a situation where an abatement rate is actually where you earn a dollar and you owe the Government more than the dollar. There are situations where abatement rates are so aggressive that it encourages people to stay in bed or on the couch and that is exactly what we don't want to do. We want to have abatement rates and—"