Nash Stuart: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
Nash Stuart: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
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STUART NASH (Labour) 
: 
 I was hoping that you Mr Chairman would call me in the debate on the last part but that is OK.  
The CHAIRPERSON (Eric Roy) 
: You’re getting a very fair deal. 
STUART NASH 
: It is a very fair deal I agree. You are a very fair Chairman.  
We are back once again to amendments made in this 70-page Supplementary Order Paper which was tabled on Wednesday. I wonder whether there is a little dissent between the honourable Minister in the chair the Minister of Revenue and his National colleagues. I say that because of what happened about 10 minutes ago before the Hon Pete Hodgson took a call. The Minister stood up and said he thought we could deal with this if we had a couple more calls on the part. We could deal with it here and now.  
That was sort of agreed. Labour members understood that that was what would happen: there would be a couple of calls and we would deal with it because it was quite an important matter dealing with members’ out-of-town expenses. As soon as that was agreed upon—and I thought it was agreed upon—the Minister in the chair went outside— 
Chris Tremain 
: I raise a point of order Mr Chairperson. This has nothing to do with Part 5 of the bill. Again this is a tight part and he is talking about what might have happened historically. Can you ask him to focus on Part 5 please. 
The CHAIRPERSON (Eric Roy) 
: Yes I think we should debate Part 5. 
STUART NASH 
: I agree. I suppose I was just very surprised that National tried to call a closure motion before the Minister returned to the chair. That is why I was a bit surprised.  
Part 5 basically deals with amendments to the KiwiSaver Act 2006. There is a summary of proposed amendments in the Supplementary Order Paper. First of all there is a consequential amendment that relates to the introduction of look-through companies. We have talked about these at length and no doubt we will be talking about them a lot more. The amendment gets rid of loss attributing qualifying companies and brings in look-through companies without any proper consultation at all. The Supplementary Order Paper has not gone to a select committee. Mr Brendon Burns who is a very valuable member of the Finance and Expenditure Committee the Hon Shane Jones who is a very important member of the select committee and the Hon David Cunliffe have not been allowed to look at this amendment and understand the implications of the changes to the KiwiSaver Act and look-through companies. If it had gone to the select committee we would have been able to question tax officials and we would have been able to question our expert adviser and come up with a reasonable debate and a good line on how it will work. We would have been able to satisfy ourselves that in fact this is good sound legislation.  
The irony is that when I look in the Supplementary Order Paper at new clause 94B which talks about look-through companies I see that we would not necessarily disagree with some of this legislation if we had had the opportunity to analyse it in the way that members of Parliament should and the way that the people of New Zealand expect. That is the concern we have about this legislation. I am not too sure whether we have made that clear but that is the concern we have about it.  
I will talk about clauses 94 to 99. A summary of the proposed amendments states: “If a KiwiSaver scheme provider winds up their operation and ceases to exist Inland Revenue manages the transfer of members to a new scheme”—that sounds good; it is a great idea—“following notification by the scheme trustees or the Government Actuary. Several remedial amendments to the scheme wind-up provisions within the KiwiSaver Act 2006 will fine-tune the current provisions ensuring they give full effect to the scheme wind-up policy intent. These amendments clarify the date a member is allocated to a new scheme add a requirement for scheme providers to supply the IRD number (tax file number) they hold for transferring members and remove the requirement to send additional information packs to existing members.” It is one of those common-sense amendments—if we take out the Supplementary Order Paper and put it to one side—that actually makes it easier for people to become involved and to stay involved within the KiwiSaver provision and within the tax regime.  
As either the Hon Trevor Mallard or the Hon Pete Hodgson—someone on the Labour side—mentioned tax legislation is probably too big at the moment. I was talking to a Queen’s Counsel about 6 months ago and he said that Singaporean tax legislation is about one-tenth the size of New Zealand tax legislation and there are no problems with the Singaporean regime in terms of the level of avoidance we have here. It may be of course that tax avoiders in Singapore get whipped—I am not too sure whether that is the case—which might act as a deterrent. But the point is that we have a lot of tax legislation it is very complex and it is quite hard to understand.  
My colleague Pete Hodgson outlined that point before. As a very senior member of Parliament and as a former Cabinet Minister who knows legislation like the back of his hand—and he knows his hand very well; he was a vet—if he finds this legislation hard to understand how will New Zealanders who are concerned about the complexity of legislation find it? Pete Hodgson knows legislation he knows how to read it and he knows how to cross-reference it yet even he is having difficulty. That is no disrespect to my colleague’s intelligence because we all know that “vetenariany” school—I cannot even say it properly can I? Vet school is one of the hardest to get into. Well it is now; it might not have been when Pete Hodgson got in but I suspect it was probably even harder.  
I come back to KiwiSaver. KiwiSaver is a hugely successful scheme— 
Brendon Burns 
: A great Labour scheme. 
STUART NASH 
: —put together of course by Labour. But we do not need to go on about all successful schemes being put together by Labour! We absolutely need to make it easy and as simple as possible for people to remain in schemes for whatever reason they decide even if for example a provider winds up. If a provider winds up and the person putting money into that scheme wishes to remain in KiwiSaver—and why would they not—this amendment makes it easy for them to do so. 
Basically once KiwiSaver scheme trustees resolve to wind up their scheme and nominate an effective date of closure they have 14 days to lodge a copy of notice with both the Government Actuary and the Commissioner of Inland Revenue. Currently section 50 of the KiwiSaver Act 2006 determines that when the Commissioner receives notice from a provider of the impending wind-up of a scheme the member must be allocated by default to another scheme as soon as is practicable. Section 51(4)(b) of the Act determines that the final date for allocating the member to a new scheme should be 3 months after the date on which the notice has been received.  
The problem we had and the problem that the Finance and Expenditure Committee dealt with is that these sections do not take into account the effective date of closure nominated in the notice by the scheme that is being wound up. This is what clauses 94 to 99 deal with. It is likely to be the date that transfer of membership has been arranged for. These clauses just tie it up clarify it and make it a lot simpler. It makes it easier for Kiwis who are in KiwiSaver to make sure they do not miss out in any way.  
To have the final allocation date set at 3 months after the date that notification was received can cause an early transfer of members. Again it is one of those unintentional consequences that we need to mitigate. This affects the scheme providers’ obligations to continue to meet the provision of their trustee until the scheme is wound up.  
We have here a Supplementary Order Paper that changes some of the provisions of the Act. Of course Labour members cannot support it because we have only just seen it. A lot of us were out we had planned days in our electorates we were at school prize-givings and we were doing all the things that good constituency and list MPs—and list MPs who are going to be constituency MPs—do so we did not have a good opportunity to analyse new clause 94B which is about the automatic enrolment rules that will not be applied. We have in clauses 94 to 99 of the bill the sort of common-sense tax legislation that Labour has always supported in the past because it has gone through the right process.  
To be a little more detailed clauses 95 and 96 talk about the allocation of certain people to default KiwiSaver schemes and the sending of investment statements. They do not take into account as mentioned the effective date of closure nominated by the scheme that is being wound up. It is likely to be the date that it has been arranged for. We have not talked about it at length but we gave it due consideration in the select committee as we would have given due consideration to new clause 94B if that Supplementary Order Paper had been its own bill. One could make a very strong argument that a Supplementary Order Paper that is larger than the bill should perhaps be the bill itself and the bill should be the Supplementary Order Paper. Having said that I say that that is not a good way to do things. All tax legislation should be in a bill that goes through the proper process; I do not think anyone would doubt that at all.  
Clause 98 deals with the issuing of information packs. Currently section 59(a) of the KiwiSaver Act provides that KiwiSaver information packs should be sent to members when their scheme is winding up. Again this makes sense because we do not want people to be operating in the dark. The lack of financial literacy in this country has led to massive losses. I know the Retirement Commissioner is working very hard to address the issue of financial literacy and I say that it is about time. It is a wonderful initiative that I think we all support—I know the Ministry of Education has got behind it—because the level of financial literacy is dreadful.