Cullen Michael: Taxation (KiwiSaver and Company Tax RateAmendments) Bill — Second Reading In Committee Third Reading 
Cullen Michael: Taxation (KiwiSaver and Company Tax RateAmendments) Bill — Second Reading In Committee Third Reading 
[Volume:639;Page:9482] 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I was really pleased by that speech because at last Dr the Hon Lockwood Smith PhD got really angry. He really threatened to burst his budgie smugglers in that one it seemed to me. What did we hear from him? Let me tell him about Treasury. Treasury has changed its mind on savings. He can go to the website this afternoon—it has just been released I think. Treasury is saying there is a case for supporting savings in New Zealand which is not what it said 2 years ago 4 years ago 5 years ago or 6 years ago. There is a need for savings. That man who just preceded me and gave some actuarial calculations receives a $400-a-week subsidy from the taxpayer for his superannuation. That is not his salary; that is a subsidy on his superannuation. He does not want ordinary New Zealanders to get a $20-a-week subsidy plus a $20-a-week subsidy to the employer to help to pay for the employer’s contribution. There is a big “h” word for that which we are not allowed to use within this Parliament. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: No no no. 
Hon Dr MICHAEL CULLEN 
: That is right Mr Assistant Speaker we are not allowed to use that word within this Parliament. 
So what have we heard? We heard from Mr English. Mr English’s fundamental basic brilliant economic insight was that we should increase our savings but we should not reduce our consumption. 
Hon Bill English 
: Yes. 
Hon Dr MICHAEL CULLEN 
: No. That is exactly what he said yesterday. But if we are to increase our savings we have to reduce the rate of growth in our consumption. And if we want to sustainably grow our economy we have to increase our saving and our investing. Mr English is caught betwixt and between. He does not believe there should be large-scale tax cuts at all in this Budget whether it be for business or otherwise—none. That is why he was banned from television and radio after 2 o’clock yesterday afternoon and it is why Mr Key has had to rush from pillar to post trying to fill in and telling people they can have everything. 
Dr the Hon Lockwood Smith PhD told us we could have tax cuts because he is a brilliant economist. He told us that we had accumulated surpluses of $35 billion and we could have spent all of that on tax cuts. What that means is—I ask members to just stop; I will put it simply—that an increased debt by $35 billion plus the interest on that $35 billion would more than double the gross debt of the New Zealand Government in the space of 7 years compared with where we are. That is the Opposition’s remedy. It is to borrow and spend its way to prosperity because that’s what— 
Hon Members 
: Jacqui Dean! 
Hon Dr MICHAEL CULLEN 
: No no. Jacqui Dean was getting it from overseas. But it would take a large Jacqui Dean shopping basket to get $35 billion from overseas when she went out to collect it from somewhere or other. 
We heard Mr Brownlee say on the radio that we should increase our savings but that there should be no risk of anybody making any loss on their savings. Well that is a pretty interesting guarantee. I do not know how we would do that— 
Hon Bill English 
: Who said that? 
Hon Dr MICHAEL CULLEN 
: Gerry Brownlee said that; I heard him on the radio actually—just after 2 o’clock. Yes I can see him sort of puffing and looking worried about that one. Goodness me—he should not be let loose on economic matters either I tell Mr English. 
Then of course we had one from Mr Key which was that there should be no cost to employers but that there should be no wages/superannuation trade-off. Well that is interesting; I do not know how anyone could achieve that one. 
What we are hearing from members opposite is—let us go through the arguments. The employer contribution is set at a maximum of 4 percent. Assuming a 50 percent sign-up that is 2 percent of an employer’s wage and salary bill. Assuming that the Government pays half of that through the tax credit it becomes 1 percent of the total wage and salary bill—and Mr Key Mr English and Dr the Hon Lockwood Smith PhD say that the entire wage growth over the next 4 years will be forgone in order to pay for a 1 percent increase in the wage and salary bill—the entire increase. That is a whole new code of economics. It is no wonder National is close to Alasdair Thompson the former social credit finance spokesperson from the Northern Employers and Manufacturers Association. It is no wonder the main critic of KiwiSaver in the public arena is one Gareth Morgan who failed in a tender to be a KiwiSaver default provider. All right—let us get that straight in the public arena before he goes too far off on his little crusade around KiwiSaver at the present time. 
National is arguing that we should not have tax cuts for business. But we have an interesting situation: for the first time since 1988 Parliament has voted on a tax cut for business in terms of the corporate headline rate and the National Party has opposed it at every point. The National members have fought it to the death to the limit of their abilities; they have fought this bill to a standstill in Parliament. Then they voted against a $20-a-week tax credit for employees—not against the compulsory provisions for employers’ part; that is in another bill which has been sent off to a select committee. This bill deals with only the KiwiSaver employee tax credit. Those members voted against that credit when I suspect that almost every member of the National caucus belongs to a taxpayer-subsidised superannuation scheme which they contribute to and the taxpayer supports. 
Hon Member 
: Oh that’s fair enough. 
Hon Dr MICHAEL CULLEN 
: That is brilliant—it is all right for them. That is different you know. 
Then we heard the argument that ordinary people cannot afford to save. Well let me run through that for the benefit of those members. If people change their jobs—as some members will after the next election given this Budget—they will be compulsorily enrolled in a KiwiSaver scheme. They will have to make a conscious decision to pull their money out at that point because from their first payslip their KiwiSaver contributions will be deducted. If they can continue on with those contributions they—low-income earners—will then have their savings trebled with the tax credit to the employee and the tax credit from the employer. The net cost to the employer for a low-income earner will be zero. 
Hon Member 
: How much? 
Hon Dr MICHAEL CULLEN 
: Zero—to the employer! Is that a good deal or is that not a good deal? 
Well National members say that no we should not do that. But they have no alternative. They say to low-income people that they might get a $2 or $3-a-week tax cut—but those people will not save that. That will get lost in the noise for people on low incomes. Those people will not save that. So what answer do the National members have at all? 
Hon Member 
: None. 
Hon Dr MICHAEL CULLEN 
: None—they have lost it; they have lost the opportunity there. 
Hon Bill English 
: Oh yeah yeah yeah! 
Hon Dr MICHAEL CULLEN 
: And I will make a firm projection as Mr English goes “yeah yeah yeah!”; he is going to get up and talk about the workers again in another couple of minutes. I predict that by September or October of next year or whenever we have the election National will be supporting this scheme—just as they support the original KiwiSaver scheme as they support 4 weeks’ holiday as they now support nuclear-free New Zealand as they support the Employment Relations Act and as they support everything they have fought against at successive elections. I am just wondering what the hell I can get away with given the way those people will flip-flop.