Fairbrother Russell: Taxation (KiwiSaver and Company Tax RateAmendments) Bill — Second Reading In Committee Third Reading 
Fairbrother Russell: Taxation (KiwiSaver and Company Tax RateAmendments) Bill — Second Reading In Committee Third Reading 
[Volume:639;Page:9460] 
RUSSELL FAIRBROTHER (Labour) 
: 
 The difference between the National Party in the last speech given by its deputy leader and this Labour Government is that this is a Government that does not believe that a section of the economy should be permanently parked on $11.25 an hour. The changes to KiwiSaver are the first and important step to lifting the incomes of our lower-paid people to a higher range of brackets. It has been done in many ways such as increasing the funds for research and development to increase the skill base of our Kiwi businesses. I notice that John Shewan writing this morning welcomes the 45 percent subsidy by the Government on research and development and notes that it is urgently needed and will be great for investment. The editorial in the  
Dominion Post  
this morning also writes of welcoming research and development and also welcomes investment into the superannuation scheme noting that if there had been a tax cut instead it would have merely fuelled inflation. We know whom the fuelling of inflation would assist—the very people National wants to support by voting against this bill today. 
It is not true to say that this bill supports National Party voters. If that were true National would vote for the bill. But it is voting against the bill because its members know that the overall picture enhances the welfare of so many New Zealanders including those currently on $11.25 an hour. In fact those on $11.25 an hour will get two tax cuts from this part of this bill. They will get a $20 contribution as soon as they make their $20 payments and then as the money is invested in a portfolio investment entity that entity’s investment rate will come down from a 33c tax rate to a 30c rate. So there are two levels of tax cuts for the lower-income people who put money into KiwiSaver. 
I want briefly to address the point raised by David Carter who claimed that this legislation would increase the level of complication and who saw us increasing the level of expenditure on civil servants. I draw the member’s attention to clause 54 in Part 2. That clause provides for the electronic furnishing of returns which of course is now a well-established practice for the Inland Revenue Department and which will extend to the KiwiSaver provision. So as the computers in employers’ offices and the Inland Revenue Department become clearly able to interface it will ease the workload on both the offices of employers and the Inland Revenue Department. When David Carter made that trite and ill-considered criticism he failed to address Part 2 of this bill which includes clause 54. 
I will talk briefly about how KiwiSaver will help those on lower incomes. But first of all I will remove this myth that has been bandied around today that 50 percent of New Zealand workers will not be able to take part in the KiwiSaver scheme. 
Hon Member 
: That’s what your own Government says. 
RUSSELL FAIRBROTHER 
: No it does not; the members should read the papers more carefully. The scheme has been launched on the basis that there will be a 50 percent uptake. There are no figures at all to suggest that that 50 percent uptake will omit lower-paid workers. Maybe the best standard to consider is what the uptake is at present in other schemes that are voluntary and 50 percent seems to be about the norm. Of course if National members were so confident in their rhetoric they would be voting for the bill if that 50 percent were to come from their voters. But they know that the voters who will be most advantaged from this scheme are those who find it at present difficult to save. 
Every person who joins KiwiSaver and puts in $20 a week will get $60. There is no better return in this country for anybody who can pay $20 a week than to get a $60 return straight away. That is a simple truth. And that is the advantage of Part 2 because it brings the scheme into reality for everyone who has trouble in saving. It is not a scheme necessarily for the rich and the wealthy; it is a scheme for mums and dads and for young people who are considering the need to provide for their future. 
So what does Part 2 do? It sets up the framework so that if a couple on an average wage at age 30 join the scheme after 5 years they will have a deposit for their first home. This is the only realistic way in which many people today will be able to afford to buy their first homes because the speculation in the property market has pushed homes beyond the price able to be afforded by many.