Cunliffe David: Taxation (Urgent Measures and Annual Rates) Bill — In Committee Third Reading 
Cunliffe David: Taxation (Urgent Measures and Annual Rates) Bill — In Committee Third Reading 
[Volume:651;Page:233] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 May I comment in passing that that was the most extraordinary vote I have seen in many a year: that the Government of the day would put on a “hugely justified” financial veto told the Parliament and the public that it would cost three-quarters of a billion dollars to protect poor New Zealanders—overwhelmingly and disproportionately Maori New Zealanders—from the negative consequences of this bill and then once it had secured the support of the Maori Party to ditch the interests of— 
Craig Foss 
: I raise a point of order Mr Chairperson. We have moved on from Part 3; we are now on Part 4 which talks about KiwiSaver. I would ask that the member could bring it back to this part please. 
The CHAIRPERSON (Hon Rick Barker) 
: The member makes a fair point. 
Hon DAVID CUNLIFFE 
: The member makes a fair point. I confess my incredulity got the better of me and I will move to Part 4. 
Part 4 is the single most important part of this bill. It is the single most important part of this bill because it contains the lion’s share of how it is paid for. $3.5 billion is being stripped out of KiwiSaver and the Opposition parties will show in detail in this Committee stage of debate what is being done: precisely what changes are being made that cause KiwiSaver to be gutted; why once again the Government is not being full and frank in the way it is presenting these changes; the financial and economic effects of the change and the impacts on ordinary Kiwis; and finally why this is bad policy on any measure of the Government’s own objectives. 
Let me begin with what is being done. In very very simple terms the Government is proposing to change the so-called minimum contribution from 4 percent to 2 percent. Now that of itself does not ostensibly sound bad and it did not sound bad in the election campaign. At a lower threshold more people might come in and it might improve uptake one might think. Does it sound good so far? A number of Kiwis thought it was a palatable change. Here is the not-so-fine print: it is effectively not a minimum at all; it is an effective maximum. Why is that? Firstly because the default setting for any new worker is not now 4 percent but under this bill it will be 2 percent. We know and the data shows that most of the 827000—I think it is now—New Zealanders who are in KiwiSaver came there through the default option when they took a new job. So it is being prejudiced from the start-off. 
The second and perhaps most important feature is of course that the matching contribution is capped at 2 percent. So technically people could put in more than 2 percent it is just that they would not get any return on it because it would not be subsidised by either the Government or the employer. That accentuates the difference between the Australian scheme which is a 9 percent—wait for it—purely employer-funded scheme and the New Zealand scheme under this bill which is now largely employee funded. Interestingly enough the Government is also going to repeal the part of the KiwiSaver legislation that protects employees from the actions of employers who seek to offset against wages. It may come up with another solution to that problem so I will not overemphasise that one. To make matters worse when the Government realised that it had stuffed up in the campaign and over-promised to the tune of some $700 million because it finally figured out what had been obvious to Labour for months—that ordinary working Kiwis on low incomes would have their actual annual contribution cut from $1000 to $520 and it decided to restore that very sharp-edged Christmas present— 
Hon Dr Michael Cullen 
: Not quite! 
Hon DAVID CUNLIFFE 
: Not quite as Dr Cullen says but that move cost the Government $700 million. It then did the Grinch act with the $40 enrolment fee to save $200 million. 
Hon Lianne Dalziel 
: How miserable is that! 
Hon DAVID CUNLIFFE 
: I hear people on this side of the Chamber outraged and the well-suited gentlemen on the far side of the Chamber give not a toss. Why is that? Because for someone on the income of I do not know Steven Joyce when he sold RadioWorks $40 is not a big deal. But for someone on a minimum wage of $12 an hour—or something closer to $9 after tax—$40 off savings is a significant disincentive. When that is combined with the fact that Government has just scrapped anything over a 2 percent contribution and one is going to get diddly-squat from one’s boss suddenly it is not looking so attractive. 
Now we come to the next point. The Government’s own analysis provided in the introduction to this bill was clarified by my esteemed colleague Dr Michael Cullen when he asked the question: “What provision has been made for further enrolments in the financial estimates for this bill?”. The answer was “Nothing”. Why is that? It is because the Government is not expecting anybody else to enrol because it has just gutted the scheme. 
I want to cast our memories back to a particular moment for us—one of the most hopeful moments of the election campaign—which was the day the National Party announced its tax policy. Our tracking polls showed its support drop about 5 percent in a day because this policy is a political lemon. It is a loser. A million Kiwis either enrolled in KiwiSaver or wished they could have. A million Kiwis thought it was great to have a nest egg and mainly they are New Zealanders who are not of substantial means. Average-wage earners enrolling at 30 get about $420000 when they retire. That is a big deal for them. That is the value of their home and that for many people I have talked to is not only their principal saving vehicle but also their hope for a better future. That hope has been taken away from them by a Government that does not seem to care. 
Why? It has been done in order to fund a tax cut for the better off. Those who earn less than $44000 and have kids will lose. Those on the average wage of $45000 get $1.92 a week more. Whoopee! But those on three-quarters of a million dollars get $264 more a week. Wow! The Government is taking from the poor gutting KiwiSaver to give to the rich. That is fabulous stuff and the Government has done that on its first day in the job! I could say: “Told you so New Zealand.” I wish I did not have to. 
Hon Bill English 
: So Labour got it wrong? 
Hon DAVID CUNLIFFE 
: The current Minister—he may not last long at this rate; a bit like Gerry Brownlee the shortest-lived Leader of the House—Mr English tried to enter a financial veto. When he realised it was going public he quickly withdrew it but sadly the damage was done because the public knows it was a $750 million stuff-up. That is the second $700 million stuff-up that that Minister has made in his first week with a warrant. I tell Mr English that it is not a good start. We wish him luck from here on. 
Finally if this is inequitable and if this is a very unpopular move it is also an economically fundamentally stupid move. It is stupid because if Bill English had not noticed there is a global credit squeeze on. Presumably that is the reason he wants to tilt the New Zealand Superannuation Fund into loaning to itself by having both assets and liabilities. He wants more savings in New Zealand but he is gutting the best single savings vehicle the country has ever known. It is bizarre. The only other example I can think of was Rob Muldoon killing that superannuation fund of yesteryear—the Kirk fund—whereas he said he would not. So in a sense we are used to that kind of double-talk from that party but it is none the less sad for New Zealanders whose hope for the future is being sold down the river.