Volume 639 Week 44 - Thursday 17 May 2007(continued on Friday 18 May 2007) 
Volume 639 Week 44 - Thursday 17 May 2007(continued on Friday 18 May 2007) 
[Volume:639;Page:9427] 
Thursday 17 May 2007 
( 
continued on Friday 18 May 2007 
) 
Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill 
First Reading 
Debate resumed. 
TIM GROSER (National) 
: 
 It will be unclear how historians will finally judge this eighth Budget although I think they will look upon this as one of a series of a certain course of action before any judgment is passed; but I personally will be remembering this Budget as the time when Dr Michael Cullen the great Budget surplus denier finally admitted though not by very much reality on this issue when he made this very cautious statement: “Budget surpluses are still somewhat higher than necessary to be consistent with long-term fiscal objectives.” So at last we have seen at least the beginning of some admission of this reality. After $20 billion of extra tax that has been accumulated over the last 6 or 7 years after everybody in the country knew there was a surplus finally Dr Cullen is prepared to admit that reality—if only very marginally and very sparingly. 
I actually say this with some regret because I have quite enjoyed the last 5 years in which Dr Cullen who is certainly capable of manipulating statistics—I called them “torturing statistics until they confess” yesterday—to the point where one gets some component of the operating balance excluding revaluations and accounting changes and one adds this and takes away that finally asserts that contrary to what the National Party and others are saying there is no Budget surplus; there is about $1.83 left which might be enough to buy a litre of milk on a heavy discount from Pak ‘N Save. 
In the course of this he has basically divided New Zealand into three categories. The first category is those who are convinced there is no surplus. That is a category of one person—himself. The second category is a somewhat larger group of bewildered and bedazzled followers of Dr Cullen who are really not quite sure having heard the mastery of this denial of the Budget surplus in action. The third group are about 99 percent of New Zealanders who do not believe a word of it. 
But finally we have at least the beginning at least a small opening recognising that there may be an issue here. I suppose we should be grateful for small mercies. The problem is of course that it has been forced on Dr Cullen by the underlying dependence of his Government on a diminishing group of camp followers from the third parties and therefore the concessions that he made totally lack any coherence totally lack the right sense of timing and have missed the political winds. 
The problem is that it is too late politically for this Government and it is too late economically. The time to do this was during the good years. The opportunity has been wasted. The darker clouds are coming over the horizon and now finally the recognition comes that there may be just a fraction of headroom but these are concessions that have been wrung out of this Government by the coalition parties. They have been wrung out of this Government; with the greatest of reluctance some minor concessions have been made. 
If we listen to the Government’s counter-attack on the Opposition last night it basically amounts to a single argument: “Vote against tax cuts vote against your own policy on charities—make our day!”. That is basically the defence of the Government. How puerile it would be for the Government to imagine that the public would expect the Opposition to vote with the Government on the very centrepiece of government the very issue on which the New Zealand public will judge the performance of the Government—namely its Budget strategy. I am not going to accuse the Government of literally believing this puerile approach. 
Chris Auchinvole 
: Why not? 
TIM GROSER 
: No I will give it the benefit of the doubt. Mr Auchinvole can take a different view but I personally do not think the Government is so naive as to actually believe that the Opposition would vote for its Budget. Yes there are a couple of things in this Budget that are worth doing—in particular we have been astonished that the Government adopted National’s entire policy on charities having only weeks ago characterised it as “Tory charity”. I thought that was a bit weak; it was back to the cloth-cap back to the glory days of Labour’s struggle against the boss class. I thought that was pretty weak but what really intrigued me as it intrigued other members was Dr Cullen’s characterisation of it as only the redemptive power of the State being able to sort this problem out. Philosophically that is quite an intriguing statement. I do not want to use today to get into higher reaches of philosophy but some of us—the Welsh for example—thought that Graham Henry was the great redeemer but that was only briefly. We may ourselves have to take that view depending on what happens to the selection of Ali Williams and others but that is for the future to determine. 
I really thought it was fascinating that Dr Cullen ascribed redemptive powers to the State. We could have a whole new religious party on this. We could have hymns recast for this—“The State the Great Redeemer”.. But I do not want to get into the higher regions of religion on this point. But for Dr Cullen having declared this as absolute anathema 3 weeks ago suddenly to do a U-turn and put it into his Budget is simply astonishing. Yes of course we support that component but let us take the metaphor of the curate’s egg. Just because there are some aspects of the overall deal that will be acceptable to the Opposition to think that we would back the Government’s centrepiece of its economic strategy is utterly naive. Unlike Mr Auchinvole who thinks Dr Cullen is capable of it I am not prepared to believe that. I think it is sheer opportunism on the part of the Government. 
The Government asked yesterday what we would say to business. Well it should tune in and listen to what Mr John Key will be saying at midday in the North Harbour Stadium primarily to a business audience. I think the Government will find a very adequate response. 
A party vote was called for on the question  
That the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill be now read a first time. 
Ayes 61 
New Zealand Labour 49; New Zealand First 7; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 48 
New Zealand National 48. 
Abstentions 4 
Maori Party 4. 
Bill read a first time. 
Taxation (KiwiSaver and Company Tax RateAmendments) Bill 
Second Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill be now read a second time 
. Let me recap briefly the two main features of this bill. I refer first to the change in the current company tax rate from 33 percent to 30 percent starting from a company’s 2008-09 income year. I note that despite the votes we are going to see against this bill no one is actually opposed to the company tax rate being cut. That is the one point of unanimity in the House so far. We are dividing on an issue that everyone agrees on. The public of New Zealand will draw their own conclusions about that. There is also broad agreement on why we are cutting the company tax rate—to improve New Zealand’s international competitiveness by aligning our company tax rate with Australia’s making New Zealand a more attractive country in which to do business. 
I know Mr Assistant Speaker that it is probably a breach of the Standing Orders to refer to the debate immediately passed but I was intrigued by Mr Groser’s comment that the biggest company tax rate cut—in fact the only company tax rate cut—in the previous 20 years is a minor measure. I say that if this measure is a minor one and if a business tax reform package that brings in $3.4 billion of business tax adjustments over the next 4 years is a minor measure then let us have many more of them. I am very happy to be associated with the measure. It is something that New Zealand will benefit from and it is extremely positive. 
Equally beneficial is the enhancement of the KiwiSaver scheme and if one looks at the commentaries overnight one sees that it is viewed in a similarly positive way—I gather even by the leader of the National Party. The enhancement to the KiwiSaver scheme is the introduction of a further incentive for people by giving them a tax credit of up to $20 a week for contributions to a complying KiwiSaver scheme fund from 1 July this year. Yet again we are going to have the House dividing on something that everyone agrees on and on something that regardless of the outcome of this vote and this bill today and regardless of the outcome of future elections will become a feature of New Zealand’s savings system long into the future. Again the public of New Zealand will draw their own conclusions about what is going on here. The excuse that the Opposition parties are opposing because that is what Oppositions do has limited currency in an environment where people are expecting a positive contribution from this Parliament. 
The KiwiSaver tax credit will be available to everyone over the age of 18 years and up until the age of 65. The scheme is designed to help people build their retirement savings faster. In turn it is about giving them greater security in retirement and helping to contribute to a stronger economy. The good news is that it applies from 1 July this year. One of the reasons the publicity about KiwiSaver has been a little coy to date has been the development of this dramatic new proposal. The reaction overnight shows how positively it is viewed by many people—and by young people in particular. They see this as an important opportunity to get a good start in life and in a working career. 
In addition to those principal changes this bill brings in several amendments that are part of the building blocks of those changes. I think it has been overlooked but it is a very important move that the reduction in the tax rate for certain savings vehicles from 33 percent to 30 percent from the beginning of the 2008-09 income year—so that people who are saving through entities such as unit trusts and widely held superannuation and group investment funds will also benefit from the 30 percent rate applying for those funds—levels the playing field even further in terms of encouraging a savings culture in New Zealand. The bill also includes a number of amendments to the portfolio investment entity tax rules to ensure the smooth introduction of KiwiSaver later this year. 
Members will be well aware—and indeed supportive—of the idea that these changes need to be made at this point to ensure the smooth implementation of KiwiSaver and to ensure that where interest has been shown people can effectively apply from the start of July. Already the initial estimates from the Inland Revenue Department and Treasury about the likely uptake of the scheme are being revised upwards as people hear more details about it. It is with great pleasure that I recommend the passage of this bill through the House as quickly as possible and I am very happy to move its second reading this morning. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 This Taxation (KiwiSaver and Company Tax Rate Amendments) Bill is the first measure to implement the Government’s great money-go-round Budget. 
Hon David Benson-Pope 
: Can’t you do better than that? 
Dr the Hon LOCKWOOD SMITH 
: What is the Minister’s name? Mr Benson-Pope thinks it is boring. I guess that is why he gets into exciting things like stuffing tennis balls into students’ mouths. Is that the kind of excitement that that member likes? 
As I said this bill implements the first part of the great money-go-round. This Government is fairly used to that kind of thing because we already have a great money-go-round in this country and it is called Working for Families. Probably now in excess of $1 billion is taxed off these New Zealand families by this Labour Government that knows best. This Government knows best! New Zealanders are dumb people! Only this Labour Government—and Dr Cullen in particular—knows best. So it taxes that $1 billion off these New Zealand families and then gives it all back to the same families. It alters the balance a bit and gives some families back a bit more than it took off them. OK so it alters the distribution of it a bit. 
But in essence one can actually calculate exactly how much is purely a money-go-round by looking at the average tax rate every family pays. If one looks at the tax graph of average tax rates—at the area under the tax line for those people with no children compared with the area under the tax graphs for people with children—one can work out exactly the money-go-round and how much the same families are taxed and what they get back from this Government. It is not redistributed; it is the same tax that is taken off families and handed back to exactly the same families. This Government is reasonably familiar with the manipulation of money-go-rounds. The sad thing is that it has been estimated that to collect that $1 of tax it probably costs $1.20. While the money is churned through the bureaucracy to go back to the same people there is a cost on the way. Of course New Zealand is the worse off for it. 
The Government has some experience in these money-go-rounds but this one is a new one—whereby the Government on the one hand says it is going to reduce the amount of tax it takes off businesses and employers but on the other hand it is going to require them to make compulsory contributions to this KiwiSaver scheme. Of course that is another money-go-round because on the one hand the Government says it is taking less off employers but on the other hand it is imposing what is in effect an employer tax. 
As we look at this bill which implements the employees’ side of the KiwiSaver tax credits one has to ask oneself what Dr Cullen is actually trying to achieve with this legislation. If one looks at what has happened in the economy over the last few years one can ask what the major problems have been. I would have thought given the seriousness of the situation the New Zealand economy is in right now—and Dr Cullen admitted in his Budget speech that it is unbalanced; he used the word “unbalanced”— 
Hon Dr Michael Cullen 
: That’s right. 
Dr the Hon LOCKWOOD SMITH 
: He acknowledges that fact here now. But is this lack of savings as he calls it the biggest problem contributing to the lack of balance? I put it to Dr Cullen that there has actually been no shortage of capital in New Zealand. There has been no shortage of ability for businesses in New Zealand to acquire capital. But Dr Cullen seems to have this view that capital is only good capital if it is owned by New Zealand people. That is a kind of childish view of a global economy. What is critically important is whether businesses have the capital they need to invest in improving productivity. There is no evidence that there has been a shortage of capital. There sure is evidence that there have been problems with productivity because under Dr Cullen’s rule he has been extraordinarily successful in damaging productivity. He inherited an economy that was growing during the 1990s. Productivity growth was 2 percent a year during most of the 1990s. It was 2 percent a year from 1992 to 2000. Dr Cullen has succeeded in reducing that productivity growth by two-thirds and he has now stalled it. Productivity growth has now virtually stalled in this country. 
There has been plenty of capital available so it is quite clear that availability of capital has not been what has stalled productivity growth in this country. Yet productivity growth is the No. 1 issue if we want non-inflationary growth. I am sure Dr Cullen does want it because he does not want the Reserve Bank to keep upping the cash rate because we do not have non-inflationary growth at the moment. The bit of growth that we are getting is putting a lot of pressure on inflation. Dr Cullen knows that. He knows that yet nothing in this bill will change that balance. There has been plenty of capital available but our productivity has collapsed and that is the No. 1 economic problem facing this country. 
Dr Cullen might claim that he is bringing the corporate tax rate down from 33c to 30c—and I accept that that is a positive step; we do not argue against that—but even he knows that corporate tax is not the final tax paid by New Zealanders. He knows that. And of course many New Zealand businesses and employers are not corporates. Sure those that are incorporated will get the benefit of that tax cut but we all know that corporate tax is not the final tax paid by New Zealanders. Personal tax is the final tax paid by New Zealanders and this bill does nothing to help hard-working New Zealanders. 
That is the first serious point I make. There is no evidence that New Zealand business has been short of capital; no evidence whatsoever. Sure the price of capital in New Zealand is unacceptably high—that has a lot to do with the Government’s massive spending programme over the last 6 years—but there is no evidence of a shortage of capital. So this bill which is the first step in this programme to try to force New Zealanders to save a lot more because Dr Cullen knows what they should do with their money a lot better than they do will not actually do anything to New Zealand’s economy. A shortage of capital is not the issue. The issue is productivity and the damage done to our economy by excessive regulation an excessive tax burden and totally inadequate programmes to address the infrastructure problems of this country. 
The second point I will make in relation to this bill is this. I listened to Laila Harré on the radio this morning. I ask my colleagues whether Laila Harré is a paid-up National Party member. 
Tim Groser 
: Not when we last checked. 
Dr the Hon LOCKWOOD SMITH 
: I am told that she was not when we last checked. I remember Laila Harré in this House. I remember Laila Harré being far more aligned to the left and to Labour Party thinking than to ours. What did Laila Harré say this morning about Dr Cullen’s KiwiSaver tax credit system? Laila Harré said that sadly it will not do anything for her members. That is the point I was trying to make to Dr Cullen yesterday—this measure this Taxation (KiwiSaver and Company Tax Rate Amendments) Bill does nothing for the low-waged. 
Sadly in New Zealand as in all countries we have people who do not earn enough. Maybe they do not have the skills to earn enough or maybe life has not smiled sufficiently on them. Either way they do not earn enough and sadly it is those people who will get nothing out of this. They got nothing out of Dr Cullen’s Working for Families in the last Budget prior to the last election. That targeted middle New Zealand—not low-income people or people on benefits. This Minister talks about caring for the left. I see that Tariana Turia is nodding. She knows that many Maori people are caught in these low-waged positions and we all know in truth that this bill does nothing for them. It is a cynical manipulation by Dr Cullen who thinks that he knows best. 
One of the stunning features of this Labour Government is that its members think most New Zealanders are stupid. They think that most New Zealanders are stupid and that they do not know what to do with their own money. Government members think that Dr Cullen is the saviour and that he should dictate how people’s lives should be lived how they should raise their families and how they should spend or not spend their money—and New Zealanders are sick of it. They are sick to death of having Dr Cullen and Labour telling them and dictating to them how their lives should be run. I look forward to the day when more New Zealanders can pursue their dreams and goals and not have Dr Cullen foist it on them that Labour knows best. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Before I call the next member I would ask the members on my right to look at Speakers’ rulings 57/3. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Well at last the previous speaker got angry. He really managed to wind himself up to a full fit of totally insincere anger at the end of that speech. And what was the source of that anger? This Government is daring—daring—to provide support for saving. Who said that? Dr the Hon Lockwood Smith PhD. What is Dr the Hon Lockwood Smith PhD on? He is on a parliamentary superannuation scheme where he contributes 8 percent of his parliamentary salary and the Government matches that at a rate of about two to one at least. There is a money-go-round and Dr the Hon Lockwood Smith PhD has his little dibs right in the middle of it. What he is worried about is that people on ordinary incomes will also get some help from saving. “God help us! It is meant only for chaps like us.” says Dr the Hon Lockwood Smith PhD. It is not meant for ordinary folks—the kinds of people who do not spend their lives looking at their Charolais cattle with moony eyes saying how lovely this all looks from either end and “Here is my future.” while the cattle look extremely anxious and worried about the prospect that may be facing them. 
So he is going to vote against this Taxation (KiwiSaver and Company Tax Rate Amendments) Bill and what is in this bill? A cut in the corporate tax rate. Dr the Hon Lockwood Smith says angrily that this will do nothing for the ordinary taxpayer because it is not a final tax. Well when I said that I was scorned by the National Party. But he did admit finally that it might do a little bit for productivity. He did say that there was no capital problem but it was just that we had to borrow it from overseas and we have to pay an interest rate premium—because we have the second-highest national debt in the developed world as a proportion of national income. So we pay an interest rate premium and that is a cost to business—a cost to business I say to Dr the Hon Lockwood Smith PhD. We pay higher interest rates in New Zealand not just when monetary policy is tight; we pay higher interest rates across the board in New Zealand than many overseas countries do because we do not save enough. 
Dr the Hon Lockwood Smith asks what we are to do about those on low incomes. Well in fact this scheme does more for those on low incomes to help them save than it does for those on high incomes because the tax credits are worth more. You see what is in this bill is not the compulsory employer contributions; it is only the employee tax credit. And what did Mr Key say about that? [ 
Interruption 
] Yes that is right—exactly. He said very little about it. What did Mr English say about it? Well nothing because Mr English has not been allowed to appear in the media because Mr English does not support the madness that says this economy is in a position of being able to have large-scale personal tax cuts. He is not allowed to say that—he said it 2 or 3 weeks ago and he has been told to shut up. 
Mr Key goes on saying that what we need to do is to spend our way to prosperity and that we will do that by borrowing some more money so that we can afford to spend our way to prosperity. Well when one is a short-term money market trader playing with other people’s money and does not have to worry about what happens one can do that kind of thing. But when one is running a country and if one gets it wrong and one wants to restructure “the business” what it means is that one has to throw hundreds and thousands of people out of work and close down businesses all over the show. It is not like the private sector—actually it is not like the private sector. With the decisions that we have to make people cannot suddenly say that they will go and work for somebody else. If we get it wrong people will suffer in large numbers. 
Mr Key famously said that he never cried when he had to sack people. Well I am pleased that I do not go around sacking lots of people. What I can say is that one Kiwi has already decided to come back to New Zealand as a result of this Budget—Jan Cameron of Kathmandu is coming back to New Zealand. Almost every commentator has supported the KiwiSaver changes and it was described as a bold and courageous move. When National members were asked whether they would unwind it they said: “Hmm well we will have to think about this. We will have to look at that and think about it before the next election.” One can already see the retreat and the flip-flop being described in their minds as they go forward. But in the meantime Dr the Hon Lockwood Smith PhD will get very very angry because ordinary New Zealanders are going to get supported to save—and that is not what is supposed to happen in his view of life. Tough! 
CRAIG FOSS (National—Tukituki) 
: 
 I rise to speak to the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill. When KiwiSaver was originally announced it was a relatively simple project and the original KiwiSaver bill was a relatively simple bill. Various advisers and officials said they were not sure of the take-up or the participation rate that KiwiSaver would bring. So what happened in about July last year after the bill had gone through 6 months at the select committee? Various advisers said there would be very little take-up of KiwiSaver and there would actually be just savings shift from some private schemes by some new entrants into the KiwiSaver scheme who would not quite realise what they were doing and who essentially would be locked in for life. 
Suddenly the Government had to have a bit of an incentive—a bit of a bribe perhaps—so the specified superannuation contribution withholding tax exemption was brought in as well as the mortgage diversion scheme which I will talk about again in a minute. At that time participation models said that about 20 to 25 percent would participate in KiwiSaver—so that was fair enough; I guess the Government was starting to learn the meaning of the word “incentives” and what they bring to the place. But interestingly even if this proposal in the Budget announcement yesterday and the provisions in the bill around KiwiSaver are so wonderful and even if these tax credits—however they are variously described—are so fantastic for our economy and so great for all participants even at that rate presumably only 50 percent of taxpayers will participate. So according to Treasury’s models and revenue advice 50 percent will not participate. If the scheme were so good would it not be 100 percent? If Labour were so true to what it says to those people it claims it represents would not the scheme be constructed in some other way? 
The reports are already coming in—we have already seen them. There was a bit of gloss on the various news channels last night but the reports are coming in and people are asking: “Where is the cash; how can I live?” and “Where is the cash; how can I get by?”. I would like to quote a couple of institutional analyses of the Budget if I may. A quick quote is that Westpac describes the Budget as “a bit of give and take.” But here is the kicker; here are the bits where once one starts reading one sees the details of the Budget coming through: “The fiscal impulse over the next 3 years is bigger than that published in the half-year economic and fiscal update.” Listen to this: “This will keep upward pressure on inflation and interest rates.” That is those who are least able to afford it those who are least able to find cash will continue to struggle. Life has just got harder for them. Their real income their purchasing power for the next 3 to 4 years—at least under this current regime—has just been officially cut. It is an absolute disgrace that this Labour Government wants so absolutely urgently to hurt the people that its party was apparently formed to protect. 
There is another comment here from the BNZ that is interesting—I will just read it out quickly as I move back to the bill. A common theme is starting to come through in descriptions of the Budget: “Budget: more angst for Bollard” and “Fiscal stimulus bad news for the Reserve Bank of New Zealand.” What does that mean? It means that the Budget is bad news for the mortgage payers and the credit card payers of New Zealand. That is another point I will come back to. These quotes interestingly are very very descriptive and again the kind of thing we find out when we start to wander through the back pages of the Budget. Members should listen to the BNZ’s description of some of the assumptions in the Budget: “we feel that Treasury are still making heroic assumptions …”. So there are “heroic assumptions” in the Budget—I will come back to that in a minute. 
It is also interesting to note some of the reports that are coming through in this Export Year. The currency is pretty much unchanged interest rates are signalled to go up and it is Export Year. Let us think it through. As I noted last night in 2000 when Dr Cullen first had the opportunity to start to help reward New Zealanders and let them share in the upside of the upcoming economic boom the current account rate was 5 percent and he was aiming for it to come down to 2 percent of GDP. Currently it is 9 percent and the difference in currency is about 40 percent. Exporters have to work 40 percent harder just to get ahead; they are in pretty much the same position as other hard workers of New Zealand. 
When KiwiSaver was first announced there was a lot of fanfare about that thing called the mortgage diversion scheme which gave $1000 for the first 5 years to help first home buyers etc. We did not hear a word of this scheme in the Budget—not one word. One of the stinging criticisms of the original KiwiSaver scheme was the contradiction between a first home buyer scheme and a retirement savings scheme. One cannot have both. If this Government were somewhat courageous or listened to some of its more sensible advisers it would perhaps start to split out and deal to the two rather than just give the constant shallow rhetoric we had about trying to help first home buyers etc. Yet it has put in a scheme like this and had a 1-hour Budget speech that totally rejects one of the original core tenets of the KiwiSaver scheme. That does not make sense to me; perhaps the Minister Mr Carter will have more to say on it when he gets questioned next week. 
Part of the bill brings the company tax rate down to 30 percent. I say “Bravo; well done.”; we support the Government on that. But as usual they just cannot trust the real world. There are so many caveats so many details and so many uncertainties—the Government just cannot keep it simple. On that basis we will be voting against the package the “all” in here. We want to be voting for a Budget that will build a future for New Zealand but everything that Dr Cullen touches does not have just strings attached—it has chains. 
I note the wins that the very sensible Mr Dunne has achieved in this Budget. The leverage that member has given the small numbers of his caucus is quite incredible. If members recall he spoke in the past of a target of “30 30 30”—30 company 30 top marginal 30 trust etc. Well he is getting there; we are part of the way there. Coming down to 30 percent for company tax is a good first step in the right direction. I say congratulations to Mr Dunne on that one. But of course there is a double-edged sword there because the incentives to arbitrage between the top marginal tax of 39c and this new company tax at 30c just got a whole lot bigger overnight. As per normal the devil is in the detail here. As our leader John Key noted yesterday John Tamihere was right: there is a subtle change in a word here a subtle change in a word there. Down the bottom of page 67 of the Budget document in the notes to the accounts we see that all sorts of underlying issues and tenets are flowing through this Budget. 
Of course Dr Cullen and members opposite get up but all they can really do is to make personal attacks: “Ha ha ha—you’re voting against that.” You know if Government members were so proud of the Budget and if they had so much ownership of it they would be talking about the detail of the Budget. Instead we have heard particularly last night of Dr Cullen’s very curious fascination with the clothes John Key wore when on  
Close Up 
. 
I will touch base on the productivity issue. You know wage earners in New Zealand took a pay cut last night but the crux of what the BNZ is saying is that the only way out of the problem Dr Cullen has created over the series of the last seven Budgets is productivity. Forty percent of the economy is part of this state. Members should listen to what the BNZ says this Budget entails because this Budget is wrong: “Over the past three years labour productivity growth … has averaged 0.4% per annum and over the past 10 years has averaged 1.2% per annum. Treasury assume growth going forward will average 1.7% per annum.” 
Where on earth will that increase come from? Because unless that is achieved the numbers in this Budget the parameters around the modelling for this KiwiSaver proposal are absolutely junk—absolutely junk. This is a train crash waiting to happen for all sorts of reasons. Its underlying assumptions are the starting point. I say well done to Dr Cullen for the company tax rate but I tell him that the package here is an absolute nonsense. 
R DOUG WOOLERTON (NZ First) 
: 
 Following that speech—and I regard Craig Foss as a friend on a personal basis I would like to think—I tell a lot of my other friends in the National Party and I have just as many in the Labour Party as everybody knows in case people think there is a change of allegiance here to not let the moneylenders and money boys take over their party. Average people do not deal on the stock market. Average people are not experts in shifting money around. Average people do not go to the financial pages of the newspaper every day. I know Mr Foss and I go to him for advice. I regard him as an expert. I talk to Dr the Hon Lockwood Smith and respect him. But do not degrade or be nasty to the people who do not have the level of expertise of those members because this bill evens out the situation. Lots of people are happy to invest just some part of their income in a fund that is managed by somebody else and many people prefer to do that. I am actually one of them. I would like to think that one day I will get the time to mess around with money and shift a bit of it around different companies but at the present time I do not want to do that. I want somebody to do it for me. 
Bob Clarkson 
: I’ll do it. 
R DOUG WOOLERTON 
: Bob Clarkson will do it for me and I could probably do worse than give him a couple of bob to look after for me I admit that. But I prefer to give it to AMP AXA New Zealand the Tower Group or somebody like that and this is what this scheme is about. Firstly the Government has to get the tax rate that those companies are charged down to a reasonable level and this bill we are talking about now goes further and does it for other entities. I applaud that. It helps the average person or the person at the lower end whom National would like to talk about get a tax rate that only the elite perhaps enjoyed previously and it allows those people who want to invest through entities and who want to join up to KiwiSaver to have an avenue for doing so. They do not have to go to a stockbroker they do not have to go to the bank manager they do not have to learn about the vagaries of the financial markets they can put the money away and basically forget about it. 
We know that all is not without risk and in the depths of this bill is some attempt and I applaud the Government for it to get the huge costs that these companies have previously charged down to a reasonable rate. I applaud that as well. But this legislation is not about people who want to invest in the stock market it is about saving to the degree that one wants. The Government has recognised that it is hard for people who do not earn a lot and it has stepped in to make sure that that can happen. It saddens me because those who are very financially literate in the National Party are deliberately saying that this is a wage cut for the lowly paid when they know—because they are financially literate and I would like to think they are responsible enough to say—that money going into the bank in the form of saving is just as important or more important as a wage. Because this is a wage increase that the Government is happy to help people with. 
Sure one cannot use it until one is 65 but it is putting money away which is very important and people on lower wages have never ever ever been able to do that during their lives. They do not have the expertise of Mr Tremain. They do not have the expertise of Mr Foss Mr Bennett or God bless us all Bob Clarkson whom we recognise as having particular expertise in making money. I would liked to think that Mr Clarkson who is known for his largesse would have ensured that his employees had something like this given to them by him of his own free will— 
Hon Damien O'Connor 
: Did he? 
R DOUG WOOLERTON 
: —because he talks about all these things. And the question my colleague Damien O’Connor asks is “Did he?”. I think we can safely assume the answer to that is “No”. So we have had to come to this House to ensure that the Government is going to look after those people at the lower end and give them some certainty for the future. This bill does that. Will the Government do another “Muldoon”? That is the critical question as we go into the next election and as we go into the future. I tell Mr O’Connor that I do not think it will do a “Muldoon” because it knows that it cannot do that twice in living memory. The Government cannot raid people’s futures twice in living memory. 
I was in the National Party in the Muldoon years. I know what happened. I was in the hierarchy and had been so for many years so I know what Muldoon did and I know what people in the National Party thought of it. I can tell Mr O’Connor that the people in the National Party will in no way allow the present-day National Party to get rid of this scheme. They will not. So I can tell members just about with certainty that this scheme will remain even under a National Government whenever that may be in the future and many of these members may not be here at that point. 
Hon Damien O'Connor 
: With a money trader for a leader! 
R DOUG WOOLERTON 
: Even with a money trader for a leader there are still at this point more people who do real things rather than money trading in the National Party and I am encouraging them to take up positions in the National Party and not to leave it all to the money traders. 
Dr Cullen was quite right when he said to Dr the Hon Lockwood Smith that we in this place—every one of us—are on a scheme such as is being offered through KiwiSaver; only ours is better. Our scheme is two for one. For every $1 we put in we get $2 put into our savings. Now we regard that as part of our salary. When I see articles written in the newspapers about parliamentary perks and all those sorts of things that is— 
Hon Member 
: Baubles! 
R DOUG WOOLERTON 
: —baubles exactly and that is uppermost amongst them. We regard that as a very very good scheme. I know very financially literate members in this place who do not subscribe to a recognised scheme such as AMP the Tower Group AXA or whatever; they have designed their own and that is allowed too. But these are people at the top end. Now Dr Cullen and this Government with New Zealand First support is trying to extend these great benefits down to people who have hitherto never been able to have them. I think that that is an indictment and I would like to think that people with the ability to spread their largesse around like Bob Clarkson would have been able to do that for their workers. 
But I think and I am pretty sure that the National Party will not get rid of these schemes. It will certainly not put the tax rate back up for companies but maybe it will. But I do not think it will. It will certainly not allow the tax rate to go back for providers. It will certainly not allow companies such as AXA the Tower Group and what not to have their tax rates put back up. But in fact today sadly National members are talking about opposing this bill—and they are—and talking about lower salary earners getting less income. They know that that is not correct. 
TARIANA TURIA (Co-Leader—Maori Party) 
: 
Tena koe Mr Assistant Speaker. Tenatatou katoa. It was Plato who once said: “The excessive increase of anything often causes a reaction in the opposite direction.” And so it is that yesterday the Minister of Finance introduced a reduction in the headline rate of corporate tax from 33 percent to 30 percent while in the same breath he announced that there would be compulsory employer contributions to KiwiSaver phased in over the next 4 years. 
This bill provides for the tax rate changes and the KiwiSaver enhancements announced in the Budget. The idea is that the company tax rate reductions will increase productivity and improve international competitiveness meaning that overseas companies will want to come over here and do business. That might be well and good but it does make me think about the likely impacts on our own local businesses and business people. 
We have already experienced New Zealand companies shutting up shop and moving overseas businesses downsizing and a fall in wages. There is also the not insignificant matter of some 300000 New Zealand children living in poverty. What about the basics like being able to afford to heat the home buy clothing pay for transport and participate in sport? What about the ability to eat a decent meal unhampered by missing or decayed teeth? 
Maori Party members support a reduction in company tax rates as part of our taxation policy so we are hardly going to oppose the notion of it. We believe that larger corporations should be encouraged to grow to increase employment of rising quality and that a decline in their tax rate from 33 percent to 30 percent will help to effect that. But the wider issue is that the tax relief will not go to those who need it most urgently and those are beneficiaries and people on low incomes. 
We looked to the 2007 Budget with one clear aspiration—that is that all people should have sufficient income to be able to participate in society and in their communities. We expected there to be initiatives to support meaningful full-time work and for people to benefit from a realistic minimum wage. We have talked before in this House about the need to raise to $25000 the maximum level of income that people may earn before they are taxed but we have yet to see a system that redistributes wealth equitably. We continue to note that the KiwiSaver scheme is not accessible to all—namely beneficiaries and those on low incomes—yet through the enhanced KiwiSaver scheme it is expected that 50 percent of New Zealanders aged from 18 to 65 years will actively contribute to KiwiSaver or a complying superannuation fund. 
The economy should not be a “game of two halves”. If 50 percent of New Zealanders are benefiting from KiwiSaver it does not take the use of a calculator to realise that 50 percent are not. One-half of New Zealanders are getting a pretty good deal—and I include ourselves in those who are getting a pretty good deal. Those opting into this scheme or a complying superannuation fund will receive a tax credit dollar for dollar of their contribution up to a cap of $20 a week. Those opting into the scheme or a complying superannuation fund will receive compulsory matching employer contributions starting at 1 percent in 2008 and reaching 4 percent of gross salary or wages by 2011. But for some vaguely defined different subgroups of the labour force—that is the working poor and beneficiaries—the benefits will be negligible. 
This new category of people “subgroups” appears in the general questions and answers section of the KiwiSaver package. I wonder whether these are the people who earlier this year were referred to as “the underclass”—“sub” meaning subordinate secondary below the radar or inferior. These different subgroups presumably are those families who live with net-of-housing cost incomes below the 60 percent line—23.6 percent of whom are Maori 40.2 percent of whom are Pasifika and 15 percent of whom are Pakeha. Subgroups are also no doubt those who live in houses defined as overcrowded—23 percent of all Maori 43 percent of all Pasifika and 5 percent of all Pakeha. Subgroups are no doubt those who live in severe hardship with below-average earnings and high-frequency visits to food banks. Subgroups are no doubt those who live in clusters drawing a benefit. Subgroups are obviously not those who will benefit from the Government’s largesse in this Budget. 
The Maori Party does support the enhancements to KiwiSaver that act as incentives to join the scheme but we will not desist from confronting the situation for beneficiary New Zealanders living or struggling to live on a measly few hundred dollars a week. For average people on an unemployment benefit a 4 percent contribution would see them put about $12 into KiwiSaver. Although they will not of course receive any employer contribution they will get a tax credit of $12. That will bring them to a grand total of $24 in savings a week. That may not sound very much to people who are in this House but if it means sacrificing 20 litres of milk a week or bus fares for the kids to get to school then the prospect of savings becomes remote. 
The question of whether low-income workers will be able to commit to giving the minimum 4 percent of their pay to join up to KiwiSaver has of course been frequently raised by the Maori Party and it is ironic that just 2 days after the bill to protect the rights of children was passed another bill is before the House that still continues to leave our poorest families behind. The proportion of all children in severe hardship or significant hardship in New Zealand has increased from 18 percent to 26 percent since the year 2000. I am reminded of the wisdom of Bishop Desmond Tutu who said: “If you are neutral in situations of injustice you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral the mouse will not appreciate your neutrality.” 
The ongoing injustice of social exclusion is evident in the thousands of New Zealand families who are struggling to live on incomes well below the poverty line. We cannot collude with the silence of neutrality or the “fairness for all” rhetoric which ignores the reality that too many New Zealanders are unable to participate in their communities. Benefit levels are still far too low to enable families to do anything about the situations of social distress they find themselves in. We contrast that with the projected $3 billion to enhance the KiwiSaver scheme and the $2.1 billion that the reduction in company tax will cost the country in lost revenue. 
We believe that the moral test of a Government is how it treats those who are at the dawn of life those who are its most vulnerable and our poorest and socially impoverished citizens—amongst them tragically a disproportionate number of young people. The Maori Party believes that if we invest in people and give priority to our human capital our whole society will prosper. We believe that the amount of the benefit should be raised to that of the minimum wage and that work should be meaningful productive and skill-enhancing. These are aspirations that are worthy of urgency at any time of the year. Tena koe. 
Hon TREVOR MALLARD (Minister for Economic Development) 
: 
 I thank the co-leader of the Maori Party for her comments and for what I perceived to be general support for the legislation even if she says it does not go far enough. I think that is the summary of what I took from her comments because she indicated that as far as they went the company tax rate changes and the KiwiSaver enhancements were good things. I agree with her on that. I disagree with her final point. My view is that it is appropriate to keep a difference between the rate of a benefit and the rate of the minimum wage. I think if we are to encourage people to go to work we have to accept that going to work costs and that that should be recognised as part of our remuneration system. But generally I thank her for her comments. 
I also say that we should be able to work together on ensuring that Maori are involved in KiwiSaver to the greatest extent possible. I think that given the way it works with people going to new jobs and with people having job changes Maori are likely to be disproportionately enrolled in the scheme as a starting point. Part of our challenge I think is to encourage them to stay enrolled and not to opt out. But also we need to look at people who are in jobs and staying in jobs and to work on ways to encourage them to join up. Frankly—and I agree with Ms Turia on the Maori mortality statistics—there is not a fair deal for Maori from superannuation given the way it works because the collection rates are not nearly as high as for other people as a result of the shorter lifespans of Maori. The difference with KiwiSaver is that the money put into the scheme will stay with the family; it will stay with the estate. Until we get the gap closed so to speak—and we did quite a lot of work on that together in the past—that will provide an equity for the family. Having that transfer I think is useful. 
But the key will be to make sure that people go into the KiwiSaver scheme. The test I have been doing to gauge the attractiveness of the scheme is to take a green $20 note and say to people that if they can get one of these each week then the Government will put another one on top of it and the employer—with a 100 percent Government subsidy actually—will put— 
Chris Tremain 
: Up to $500. 
Hon TREVOR MALLARD 
: We are talking about $20 with a 100 percent subsidy on $20. The member knows that. He has a reasonable reputation in some areas but not in mathematics; we are talking about a $20 contribution. And that is the nicest thing I have said about a Tory for a long time—that the member has a reputation for being good in some areas. 
I will go back to Tariana Turia’s point. If we can take $20 from a person $20 from the taxpayer and $20 from the employer—totally subsidised—then that is $60 a week. That is over $3000 a year sitting in a fund before any interest goes on to it—before any returns go into it—and that is a nest egg that builds. People as they become more Internet savvy will be able to check on it each week and watch their money go up. People will get statements and they will see some real returns. That is positive. 
I turn now to the National Party and I say to its members that I am looking forward to sending Bill English’s speech on this bill to every employer in my electorate—the bit where he says that National will vote against a cut in company tax. The National Party! 
Darren Hughes 
: Unbelievable! 
Hon TREVOR MALLARD 
: Well no it is believable. When was the last time the National Party voted for a cut in the company tax rate? 
Darren Hughes 
: The 1960s. 
Hon TREVOR MALLARD 
: No I do not think it was. I do not think the company tax rates were cut in the 1960s. I think it was before I was born. It is really ancient ancient history. In fact I have a real question—and Mr Dunne may know the answer to this. Has the National Party ever in its history since the 1930s voted for a reduction in the rate of company tax? Never! Never in its life! In 1988—and I can remember back as far as that; I was about David Cunliffe’s age at the time—National voted against that. 
National used to be a party that supported business. It used to be a great party. It used to be the party of Holyoake and of Marshall. It had a history of supporting business and doing things for business. It has been a party with a history of calling for tax cuts for companies and voting for them. If I were outside the Parliament I could call that hypocritical but I am not so I will not. 
Hon Damien O'Connor 
: An “h”. 
Hon TREVOR MALLARD 
: It is a big “H” word. The big “H” word is another one actually. It stands for “Helen” in my case so I will not say it at all. 
I ask National members why they do not just vote for the second reading of this bill. Why do they not vote for the company tax rate cuts at the Committee stage? They may want to vote against some of the other bits. I welcome this. I thank them for it— 
Craig Foss 
: Where’s the money for the programme? 
Hon TREVOR MALLARD 
: I say that as far as Craig Foss is concerned the employers in his electorate will be receiving copies of Bill English’s speech too—and that turkey will have— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: No. The member will not use nicknames or any other names. He will withdraw. 
Hon TREVOR MALLARD 
: We are not allowed to call members turkeys? That is a new one. I withdraw. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Thank you. 
HEATHER ROY (Deputy Leader—ACT) 
: 
 I rise to speak to the second reading of this bill. Here we are yet again pushing through a hugely complex bill about matters that affect every person in the country—businesses and individuals. Here we are sitting under urgency on a Friday pushing through something that none of us on the Opposition side of the House have had a chance to have a proper look at. 
Bob Clarkson 
: More bureaucrats. 
HEATHER ROY 
: That is quite right. More bureaucrats will be needed as a result of this legislation. And here we are. Many of us have had to cancel appointments with constituents around the country so we can be here today to defend democracy. 
A quick look at the explanatory note shows me that the bill is about a huge number of things. Here we have enhancements to KiwiSaver and changes to the company tax rate—changes that I have to say are a bit of a backhander. On the one hand we are—properly—giving businesses a reduction in company tax rates; they should have been done well before Dr Cullen’s eighth Budget. On the other hand we are saying that employers now have a compulsory obligation to contribute so that the Government gets the honour and the glory for giving people a savings scheme. Where is the fairness in that? Many employers will be worse off as a result of this Budget. If they are supposed to be grateful then this is no sort of Government at all—as we know it is not. 
There are changes relating to research and development tax credits. Again there are more complications. This Government loves penalties and here we are putting in place penalties that we have not even had a chance to look at to consider whether they are fair and proper. This bill is not going to go to a select committee. No one will have the opportunity to look— 
Hon Peter Dunne 
: It’s the wrong bill. That’s the bill that’s going to the select committee. 
HEATHER ROY 
: Good—I am pleased it is going to a select committee because it jolly well should—[ 
Interruption 
] It is a bit confusing because we were given this bill last night to have a quick look at and now we are supposed to be experts on it so we can stand here and talk on it with some degree of authority. It is all very well for Mr Peter Dunne. He has had the chance for months to look at the legislation so that at election time he can say: “Look at the gains I’ve made from this Government.” 
Other policy includes tax exemptions implementation of fair dividend rates in life insurance—the list goes on and on. There is a huge degree of detail and complexity and we are supposed to be grateful that we are here on a Friday debating on behalf of the people of New Zealand who have great concerns; they are not going to get the chance to voice those concerns themselves. There are a great number of concerns and this is not democracy working as it should. 
Dr Cullen promised us that his policies would bring New Zealand 4 percent growth in GDP. He actually said at one point—many years ago—that that was how he would be measured. Well under National Certificate of Educational Achievement standards Dr Cullen has just scored Not Achieved. Or if we are talking about unit standards he has scored Fail. Actually he has not because one is not allowed to say “fail”. That is not allowed in this day and age. So on his score card there will be nothing. There will be just Not Achieved. 
What do we have today? Is it 4 percent growth in GDP? No. Today it is 2 percent growth in GDP. What is Dr Cullen’s forecast for the next 3 years? It is less than 2 percent. There is a bit of a gap is there not between 4 percent and less than 2 percent? He is not doing very well even by his own standards let alone by the standards of the rest of us on the Opposition side of the House. We have some ambition for this country but sadly Dr Cullen does not. What is Dr Cullen’s forecast for the next 5 years? It is an average of 2.3 percent. Already we are seeing a huge shortfall against his own self-imposed 4 percent yardstick. Dr Cullen’s yardstick—and perhaps this will be a message to him or enlighten him—will not get New Zealand’s GDP per capita into the top half of countries in the OECD. The country is being dragged—with kicking and screaming from members on the Opposition side of the House—right to the end of the bottom half of the OECD. Dr Cullen has certainly failed. 
We need a flat-tax rate of 20 percent. That would really kick-start the growth that New Zealand desperately needs if we want a First World health and a First World education system and if we want decent economic growth. The way to achieve more savings and more investment is to put more money in people’s pockets to achieve higher economic growth. That means across-the-board comprehensive tax cuts—not just to the company tax rate where it has been given with one hand and taken away with the other. It means bringing the top rate of personal taxation down to the same level as company taxation rates. That level too should be dropped to 30c in the dollar and other rates dropped significantly if we could not look realistically at a flat-tax rate of 20 percent. That would mean more savings more investment and a more prosperous future. 
Dr Cullen and the Labour Party do not seem interested in those things for New Zealand but that is why I came to this House. I want to see decent economic growth in this country. I want to see a decent health system where everybody gets the treatment they need. I want to see a decent education system. Our Minister of Finance should be aiming at much more than a Not Achieved he should be aiming at an Excellence but he has no idea how to go about doing that. 
Once again this is a Budget for tax accountants to get fat on. The Inland Revenue Department must be sitting today wondering how it is supposed to introduce the detail and deal with the complexity of it. No doubt as Mr Clarkson points out there will be more employment. There will be more bureaucrats and more people trying to deal with the complexity of a system that did not need to be that way. The tax package is incoherent. It is cutting company tax independently of personal rates and that makes absolutely no sense at all. The complicated tax credits for investing in Government schemes just add to the complexity of our tax system. 
People out there are focusing on KiwiSaver in the Budget and that is exactly what Dr Cullen intended. I was in a taxi this morning and the taxi driver said that it was all people in his office have been talking about this morning. But guess what those people cannot afford 4 percent of their income to go into savings. They need that to pay their mortgage and to feed their families; they certainly cannot entertain the idea of 8 percent. It might sound all very attractive on paper but where are they supposed to get that money from? Dr Cullen has not addressed that. He should be here in this House telling us how that is going to happen. 
Bob Clarkson 
: They’re not a people party. 
HEATHER ROY 
: They are not a people party at all; they are here for themselves. The Christchurch  
Press 
 “Perspectives” column is very interesting this morning. It contains a very interesting article written by Michael Littlewood who is the co-director of the retirement policy and research centre at Auckland University. He made some very interesting comments and I am going to read a few of those out. Firstly he said: “Until recently New Zealand had a simple transparent”—[ 
Interruption 
] Perhaps the Minister Mark Burton would like to stand and take a call because I cannot hear myself over here. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I remind members on my right to look at Speakers’ ruling 57/3. Interjections are to be “rare and reasonable” and as a former colleague once said here if at all possible witty. At the moment we are having conversations. 
HEATHER ROY 
: I want to read out some of the comments that Michael Littlewood a very well-respected gentleman has made on the KiwiSaver tax breaks and the Budget. He said: “Until recently New Zealand had a simple transparent tax and retirement income structure that has served us well. In fact it was a world leader in simplicity in transparency and equity but not a lot of New Zealanders understood that.” He went on to say: “The Government and other commentators have created a straw man.” He said that the Government is telling New Zealanders this: “you’re hopeless savers; you can’t be trusted with your own money; you own too much property; you’re drowning in debt; we here in Wellington”—“we” meaning the Government—“know much better what to do with your money and here’s how it’s all going to happen.” Those comments are exactly right. This is a “we know best Budget”. The Government is saying poor people out there know nothing and need to come and listen carefully to what the Government has to say because it knows best how people should spend their money. 
The article continues: “In the United States tax breaks for retirement saving are expensive favour the rich are complex and don’t seem to increase saving.” We never look around the world to see how other countries are getting on; we just rush forward and do these things ourselves. Michael Littlewood says that in Australia compulsory tax-favoured savings seem only now after 15 years to be having a little impact and it is only very little. He continues: “In Britain tax breaks for saving favour the rich at the expense of the poor.” That is where the taxi driver was absolutely right this morning. Half the value of tax incentives goes to the top 10 percent of taxpayers who do not need any incentive to save; that makes absolutely no sense. 
This Budget is a Fail. Mr Littlewood’s final comment could not have summed it up any better. He says: “So we seem not to have a retirement saving problem; retirees seem to be in good shape;”—and they are—“tax incentives are costly complex regressive inequitable and ineffective; governments seem to affect citizens’ total behaviour only a little but most important of all what we already had actually seemed to be working.” So here we are putting in place something we know is not going to work and that people will have no control over. 
CHRIS TREMAIN (National—Napier) 
: 
 The Minister of Finance has challenged those of us on this side of the House to go back to our provincial areas and explain why National will not be voting for this bill. I have a challenge for the Labour members and it is to go back to their provincial electorates and explain to their constituents how this bill will really impact on small to medium enterprises in their electorates and how it will particularly impact on exporters in Export Year—the year of the exporter. I want to tell Government members in case they have not opened their eyes where exporters are in Export Year. Many of our exporters are not making one dollar at all. If they are not making money they do not get any sort of tax break whatsoever. But when they get hit with a payroll tax guess what happens? 
David Bennett 
: You’ve got to pay. 
CHRIS TREMAIN 
: They have to pay it so unfortunately they end up losing more. I want to begin my speech by talking about one exporter from my electorate Design Spun and an email that this exporter recently sent to me. I want members to understand the impact that this bill will have on exporters such as this and on their ability to improve exports out of this country. It is my opinion that I will be able to explain with ease to these guys why I voted against this bill for them. 
Here is the email from Mr Jackson of Design Spun: “As a manufacturer and an exporter”—he then has in brackets a big “was” with exclamation marks—“New Zealand’s current economic environment is an extremely difficult place to be trading in. We have spent the last 2 years building on our export market and it has been very disappointing to watch those efforts eroded daily by the level of the New Zealand dollar. We are being caned from both ends with the higher dollar making our major competitor imported yarns even cheaper affecting our domestic market also. Government legislation has also played a significant part with direct cash-cost increases in the form of minimum wage increases the additional week’s holiday particularly in the form of significant ongoing compliance adding cost and detracting from the business at hand.” 
But guess what another tax is coming for that business and I will explain that shortly. Mr Jackson goes on to explain: “We talk to a number of different businesses daily and they are not experiencing the rosy times that commentators would have them believe. They are in similar positions to us except that they are currently holding off making decisions regarding their future hoping the environment will change.” Mr Jackson said that they were not quitters but that this was too tough and they had had enough. He says: “Watch this space. There’s a helluva lot more of us out there that feel the same way. Every way you turn these days there’s a barrier of some description.” [ 
Interruption 
] 
These are the sorts of people that Mr Hughes will have to explain this payroll tax to when he goes back to his electorate. I would have welcomed this bill if it were purely to reduce company taxes without a sting in the tail. But there is a sting in the tail. This bill does not include a tax rate. It comes with a payroll tax that employers like Mr Jackson will have no ability to overcome. The sting in the tail is compulsorily matching employer contributions to employee savings and it is this kick that is the reason that National will be voting against the bill. Up front the bill looks good and the spin will be fantastic but I ask members to think about Mr Jackson in this regard. 
Here is a question I posed for the Labour Party yesterday and it is one that I think people need to really understand. For most businesses the biggest cost in expenditure is the cost of labour. I talked about that yesterday. A good example is Mr Jackson’s business: after materials labour will be his biggest cost. It is all very well when a business is making big profits because a 3 percent reduction in the headline corporate tax rate will actually improve its position. However when exporters make no money there is no advantage in a tax rate drop but there is a huge cost in increasing the compulsory employee payments that the exporter will have to come up with. 
Yesterday I used the example of a business that was making a profit and I used the example of a travel agency. I am no longer involved in those businesses but I know enough about them to give members an example. In the travel business labour costs are about 40 percent of the total top line. If a travel company is making a profit of 10 percent it is doing well. But I am talking about exporters that are making no money right now. Let us take a business that has a $250000 turnover with labour costs of $100000 and a $25000 bottom line. That business would be paying tax right now of $8250 at 33 percent but the tax will be dropped to $7500—much lower a $750 drop in taxation. That business even if 50 percent of its employees take on the KiwiSaver programme after it has taken on the tax credit that is available from the Government will be having to front—[ 
Interruption 
] You cannot deny this Mr Jones. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member cannot use the word “you”; it refers to the Speaker. 
CHRIS TREMAIN 
: My apologies. Mr Jones cannot deny that a company in that situation will be faced with additional costs for its business—I ask him to tell that company that that will not be the case. In the case of small businesses as soon as they get above an average pay of $25000 for every dollar after that that is contributed the employers will have to come up with the money themselves. 
The Government tells us that it is not a problem because it is 1 percent 2 percent 3 percent and 4 percent. The Government tells us it is not a problem and that the phase-in of the compulsory matching employer contributions will be taken into account in wage and salary bargaining as is the case with the current campaign by the Engineering Printing and Manufacturing Union. That is what we were told yesterday. The problem is that there are a couple of key things. The first point in that statement is that the Government expects—[ 
Interruption 
]; no it does not guarantee that that will be the case—that the phase-in of the compulsory and members should note the word “compulsory” matching employer contributions will be taken into account in wage and salary bargaining as is the case in the current campaign by the Engineering Printing and Manufacturing Union. 
Here is where we really see the sting in the tail. The Labour Government expects there will not be changes but there are no guarantees. The employer contributions will now be compulsory. There is a huge difference here. The big difference is when one is on the other side of the negotiating table. Where we got to here is that when something is not compulsory it is a bargaining chip and that is what I said yesterday. When it is compulsory it is a given. In this case now the employee contribution above the average pay of $25000 is compulsory. So when employers are sitting around a bargaining table with their employees do they think that employees will sit— 
Darren Hughes 
: National will adopt this policy before the next election. I guarantee it. 
CHRIS TREMAIN 
: I ask Mr Hughes whether he honestly believes that employees and unions will sit on the other side of the negotiation table now that it is compulsory for employers to make contributions and say: “That is OK now. We won’t take a pay rise.”—just out of good faith—“That additional 1 percent will be fine.” 
Darren Hughes 
: It’s not about no pay rise; it’s about the rate of the pay rise. Look at what the Australians do with a higher unionised workforce in Australia. 
CHRIS TREMAIN 
: With the unionised situation they will not take account of the position that employers have to find themselves in—they will not. There is a big difference—a huge difference. The point I make today is that we are introducing additional costs to employers and particularly in the year of the exporter to companies like Design Spun. Such companies which are not making any money will not benefit from a drop in the corporate tax rate. They will have to struggle on. But what we are getting is an increase in the costs and an increase in the payroll tax so that businesses will face increased costs thereby making it more difficult for them to export. I will find it easy to vote against that. Thank you Mr Assistant Speaker. 
SHANE JONES (Labour) 
: 
 Overnight a deluge of patriotism has graced the pages of the media that has been upholding our Budget. Why? Because people have finally seen the light: if they stick with the other side of the House they not only will see their promises dashed but they will see economic confetti. People have confidence in this side of the House; they see that the Budget is not only addressing our more recent problems but laying down a pathway that they will be the first to ride upon. [ 
Interruption 
] 
National members have been told to come here be noisy and demonstrate that their greatest contribution at this tender stage of their career is to create noise and mayhem. Unfortunately for Mr Clarkson but fortunately for the people of Tauranga that noise as it rises is inversely related to the period of time he will spend in this House. It will be goodnight and haere ra for him. 
David Bennett 
: Look in the mirror! 
SHANE JONES 
: Our friend Mr Bennett came to the House mistakenly believing he could achieve a career by attacking our rangatira from Ngati Wai the leader of Aotearoa Tuatahi Winston Peters. We however have noted—and I am sure Winston has commented on—that the more Mr Bennett talks the more his head glistens. It is evident that the very healthy dosages of oil that he applies to his heavily lacquered head are not actually improving his prospects of recovering lost hair growth. His rhetoric and his intellectual contributions are as bald as his head. He is not like our other pakeke who is the salt of the earth a man of the land. He understands completely both ends of the dairy industry; the only one David Bennett from the Waikato understands is the udder he sucked on in order to get here. That is it—never a truer word has been spoken. That is why we actually do not fear Mr Bennett. We will lament however with the people of Tauranga that in a passing fit of foolishness they sent Mr Clarkson here. 
I turn back to the Budget. Every single thing that we have offered here we know National will ape. I am not talking about physiological characteristics; I am talking about patterns of behaviour once we get close to the next election. For the 18 months we have been here not one single original idea has flowed from the new people—not one. 
Steve Chadwick 
: Just tax cuts. 
SHANE JONES 
: Oh yes they have talked about tax cuts but when we do cut tax National is the first to vote against it. Secondly National members complain that people are leaving to go to Australia. Of course their rhetoric is adding to the reasons why those people want to flee. But we are providing a brilliant remedy that will cause many of those people to take up the stance of patriotism. That is what we have done and it has been covered in the newspapers. Savings are to be deepened thus building a wider and more handsome pool of capital to grow private enterprise and business. National members are just disappointed that this side of the House has been able to introduce a system that causes both employers and employees to accept the full range of their duties. 
David Bennett 
: Oh rubbish! 
SHANE JONES 
: Absolutely! They know that in the 1990s there was a bare Spartan approach that the market would take care of everything and employers owed no obligations to anyone other than the shareholders. Fortunately as a consequence of this Budget employers as time passes and once they are able to dismiss the confusion inside the rhetoric of the Opposition will gladly embrace their responsibilities. More employees will have a greater sense of security going forward. 
I look forward to this bill coming to the Finance and Expenditure Committee where I have no doubt that the more talented members on that side of the House will assume a very productive role. I refer to the rear members not the fore members. Kia ora tatou. 
A party vote was called for on the question  
That the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill be now read a second time. 
Ayes 61 
New Zealand Labour 49; New Zealand First 7; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 50 
New Zealand National 48; ACT New Zealand 2. 
Abstentions 4 
Maori Party 3. 
Bill read a second time. 
In Committee 
Part 1 Amendments to Income Tax Act 2004 
Hon TONY RYALL (National—Bay of Plenty) 
: 
 I am pleased to be able to take a call to oppose the progress of this bill which frankly will not be good for New Zealanders. This is a bill that will send a very bad message to low-income New Zealanders. These are the people who cannot afford to save for their retirements. These are the people whom Labour came to Parliament to represent. 
Let us think about those people who voted for Labour at the last election—the few low-income people who voted for Labour at the last election. They find it difficult to make ends meet. They are working in jobs that in Australia would be paid one-third more. 
Hon David Carter 
: More—50 percent more. 
Hon TONY RYALL 
: The Hon David Carter says they would be paid 50 percent more. They are people for whom $10 or $20 per week is a lot of money. In fact one of my colleagues went to a breakfast today held by a public health association and a woman stood up and said that for $10 or $20 per week she could feed a family for 3 days. She asked whether the Labour Party realised that $20 per week pays for 10 loaves of bread quite a number of eggs and a lot of other produce that families can have. Those families are not in a position to take the benefits of the KiwiSaver scheme. 
I ask Labour members to take a call to explain to me how they will tell the people at the Otara flea market on Saturday that KiwiSaver incentives will work for them. What those people in Otara need are higher paid jobs and lower personal taxes. Those are what will get those people ahead: higher paid jobs and lower taxes. This bill provides neither of those. 
What this bill will do is actually lower their pay increases in the future because Dr Cullen stood up and said that the compensation for the employer contributions will be pay increase sacrifice. So what happens if someone is one of those low-income people who cannot afford to save in KiwiSaver but his or her employer says they will not give him or her a pay increase because it is going into KiwiSaver contributions? I ask members to remember that this Government has all of these low-income workers tied up on multi-employer collective agreements so what goes for one goes for the other regardless of his or her circumstances. This Government is saying to those low-income people that when their multi-employer collective agreement is negotiated their employer will hold back an increase in order to allow for the KiwiSaver contributions. But most of those people will not be making KiwiSaver contributions. They will not get the pay increase they need to help them and their families survive. 
What the Labour Government will say to those people at the Otara flea market this weekend I do not know. What it will hope is that they have not worked out that all of this KiwiSaver hype—all the hundreds of millions of dollars—will do nothing to help low-income people which the Labour Party says it represents. It will in fact harm the chances of hard-working people getting ahead. Because if somebody is in one of those low-income families—as the woman was at the public health association’s breakfast this morning which was attended by Paula Bennett—he or she wants lower taxes in order to get more money for the work that he or she does and his or her wages to go up. This bill does not allow or provide for either of those things. 
Darren Hughes 
: What happens when you turn 65? 
Hon TONY RYALL 
: Well if someone has not contributed anything then there is no difference at all. What I will be really interested in hearing from the Labour members in this debate is how this bill matches Dr Cullen’s comments that this will help the affordability of superannuation in the future. What does that mean? Do not forget that affordability of superannuation in the future is driven by national superannuation payments. National superannuation is not means tested. Will we end up with means testing based on one’s contribution to KiwiSaver? That is the only way the Government can say that there is improved sustainability of national superannuation payments if it is going to means test the superannuation when people are 65. Is that what Labour means? 
How can Dr Cullen say that this will contribute to sustainability of superannuation if it will not have any effect on national superannuation? It cannot contribute to the sustainability of superannuation payments by the public unless there is substitution of KiwiSaver income for national superannuation income. That would be breaching the political consensus across the divide on the universality of national superannuation. I suspect that is the code for what Dr Cullen meant when he said that this would enhance the sustainability of national superannuation into the future. 
National is strongly opposed to this bill. We believe that tax cuts will put more money in people’s pockets give them every incentive to work harder to get ahead under their own steam and let them make decisions about their own money and its benefits to their families. This bill is not a tax cut it is not tax relief; it is a money-go-round. It is not a free gift. New Zealanders are paying for this and that simply cannot be right. It will cost business and it will not be good for the overall status of many low-income New Zealanders. 
I am concerned. I want to hear from Labour members how somebody who cannot afford to save for his or her superannuation will benefit from this. I would like to see those low-income people getting the chance to get more money in their pockets for doing the same amount of work I would like to see them getting every incentive to pocket some more for working harder and I would like to see them getting a pay rise. 
Dr the Hon Lockwood Smith 
: Whereas in Auckland they are going to pay a 10c petrol tax. 
Hon TONY RYALL 
: As Dr the Hon Lockwood Smith says many of those low-income people in Auckland will now have to pay 10c petrol tax—as we in other parts of New Zealand will as well I suspect from what is being proposed in this bill. 
So what the National Party says to the Government is very clear: reward incentive; do not discriminate against low-income people; give everybody the message that if they work hard then they will pocket more money and that if they save and contribute then they will be respected—but let us get those wages up. The Government does not understand that the most pressing issue for families today is that they can go to Australia and be paid 33 percent more than they are being paid here. That is an enormous gap. People can go to Australia and earn a whole lot more money. I think that every New Zealander would rather the Government was concentrating on closing that gap. It should forget about the other “closing the gap” it talks about which is incidentally now being called “reconciliation”. We have gone from “closing the gaps” to “reducing disparity” to “reconciliation”. 
I think that the Waitangi Tribunal may be renamed the “Truth and Reconciliation Tribunal” and frankly Helen Clark could never appear before it because “truth” is part of the title. What this Government needs to answer is: how will a low-income person in Otara benefit from this proposal versus lower taxes and a pay rise? Let the Labour Party members answer this question: under a highly centralised “MECA-ised” employment market what happens if half the workers are in KiwiSaver and the other half are not and the employer says: “We’re taking 1 or 2 percent off the table for the pay negotiations this year to pay for the KiwiSaver contribution. Michael Cullen said that was OK.”? How is that going to work? Why should the person who is not in KiwiSaver miss out on a pay rise because the other half is in the scheme? 
Hon Mark Burton 
: Stop making it up. 
Hon TONY RYALL 
: That is the guy who will soon be the former MP for Taupo. I have seen the polling. He will be going back to being the Rural Education Activities Programme coordinator in Taupo in less than a year’s time. 
Hon David Carter 
: They won’t want him. 
Hon TONY RYALL 
: Well yes they may not want him. It is a case of “reap what ye sow.” So really the important issue here is that the Government will not answer the questions. The questions are these. How do low-income people benefit? How will we deal under a “MECA-ised” workforce with giving some people a pay increase and not others? Why would people sacrifice the pay increases for some poor people for the others who are contributing to KiwiSaver? The third question is: is the Government going to means test national superannuation? 
Hon DAVID CARTER (National) 
: 
 This morning the body language of the Labour members in this Chamber says it all. They came into the House yesterday for the reading of the Budget and Dr Cullen had obviously conned them and told them that it was all good news and that it would correct the 10 percent poll differentiation between National and Labour. Darren Hughes nods his head and agrees. Then when those members actually heard the Budget and a few people who are a lot sharper than Darren Hughes analysed the Budget particularly the KiwiSaver bit it became clear that Dr Cullen has been too clever by half. We now know that he has presented a very complicated savings system that simply will not be accepted by most wage earners in this country. 
The interesting thing was that Helen Clark knew it by the time Dr Cullen had delivered the Budget. In her opening address she stood up and said: “Is that it? Is that it?”. Helen Clark knows that Michael Cullen has now delivered his final Budget in this House. He has had eight chances to deliver a Budget that ensured growth for this country and he has had eight failures one after another. He is gone Darren Hughes is about to go and the guy sitting next to him Mark Burton is definitely about to go because KiwiSaver will not work. 
What I find sad is that a week earlier the Australian Budget was read. There for the fifth Budget in a row the Government has delivered tax cuts real meaningful tax cuts to the wage earners of Australia to the extent now that anybody living in Australia—and 1 million New Zealanders are living in Australia—can earn 50 percent more in take-home pay. The two reasons I tell Darren Hughes are that wage rates are higher and now tax rates are significantly lower in Australia. 
What we see now is the KiwiSaver scheme presented to this country and even Treasury says that 50 percent of New Zealanders will not take it up. I want Labour members to acknowledge today in this Committee which 50 percent that is. Low-income New Zealanders cannot afford to take it up and they will reject this scheme. So the ones who will take it up are the higher-income New Zealanders—and by the way they are pretty sensible people who are saving anyway. 
I feel for the people Tony Ryall just spoke about. Those are the people in Otara who are battling away with no support from this Labour Government. The people who went to the polls at the last election were dragged out of their State house probably by the union delegate and made to go and vote. They voted in good faith thinking that Labour would look after them. 
Darren Hughes 
: What did they get in the Working for Families package then? 
Hon DAVID CARTER 
: And here Darren Hughes refuses to think about them. He is interested only in keeping his seat on the Government side of the Chamber and he has less than 18 months to go before he is out of there and Nathan Guy is sitting in it. That is what will happen to Darren Hughes. 
We see that KiwiSaver is delivering nothing to the people in Otara and Dr Cullen true to form wants to hit them again. He has put in a Budget that gave them nothing in KiwiSaver but gave them a tax increase of 10c on their petrol. I remember sitting in the House in I think February 2002 under extraordinary urgency when that Government drove through a petrol tax of 5c a litre and said then that it was to fix Auckland’s roads. There is already a tax of 5c a litre on petrol and it was put on 5 years ago to fix Auckland’s roads. Dr Cullen put that into his surpluses—massive surpluses. He has not fixed Auckland’s roads he comes to the House with this go and he says he will slam people with another 10c a litre. People will remember that I say to Darren Hughes even if he has forgotten it. 
The real issue in the KiwiSaver scheme is that it encourages people to leave this country. I remember when Don Brash used to say that 500 people a week get on a plane and leave New Zealand to go and live in Australia because it is so much more attractive. I thought that that was a huge figure and I wondered whether it was right. John Key told me the other day it was not right—it is now 700 people. Every week 700 New Zealanders leave because of the Labour Government. 
R DOUG WOOLERTON (NZ First) 
: 
 New Zealand First supports Part 1 of the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill and I am delighted to hear about the National Party’s interest in the people of Otara. I am a bit saddened about the way that National members speak about them as though they are an uneducated bunch of people who cannot work things out for themselves. The National Party I used to belong to many years ago actually did know about the people of Otara and it would have supported tax cuts for companies because it would have wanted to help companies to stay in New Zealand. It would have wanted New Zealand to be competitive with Australia. It would have wanted our companies to be competitive even in Europe but competitiveness with Australia was just a given. So I cannot believe that the National Party has come to a point where it cannot support the reduction of taxation for companies and cannot support the reduction of taxation as contained in Part 1 of this bill for what I call savings institutions—I presume that people understand what they are—which is where the money from KiwiSaver will be kept looked after and hopefully will grow. 
I cannot believe that the National Party is opposing those things because it is through investment in our businesses that we all do better. The people who are leaving our country are to me absolutely a sign that some policies of past years have failed. I think that is a market signal that we can all work out. I think it is quite obvious. Furthermore that market signal has been there for many many years now. We have all talked about it and recognised it. It has been talked about in the Chamber but this is the first Budget that recognises it and attempts to go some way towards catching up with the taxation regime for businesses in Australia and the trading regime in Australia. 
The Opposition promotes itself as the so-called business-friendly party so it is rather amusing to hear National members say on the one hand that Australia is a great place—where the employer’s contribution to the compulsory scheme equates to around 9 percent of labour costs whereas the KiwiSaver scheme will be in the region of 1 percent—and on the other hand that they oppose the bill. That cost of about 1 percent is laudable and it should be applauded in the Chamber. I also make the point that I have not heard one National Party member say that National would get rid of either the KiwiSaver scheme or the taxation reductions proposed in this bill. I suggest most strongly that is because National does not intend to get rid of either. 
New Zealand First is prepared to be quite upfront and to welcome the KiwiSaver scheme. We welcome the company tax deductions. We would like to see as I am sure Mr Peter Dunne would want to see further cuts in company taxation. This bill is a first step and if we learn anything in this place we know that change is incremental. When change is not incremental people cannot cope with things. 
David Bennett 
: Tell that to superannuitants. Are you going to means test them? 
R DOUG WOOLERTON 
: I tell Mr David Bennett that New Zealand First will make an issue out of superannuation at the next election. I challenge him and the party he is a member of to tell the people of New Zealand what National would do about superannuation if it were to become the Government at some stage. 
JUDITH COLLINS (National—Clevedon) 
: 
 It was very interesting to hear the representative from New Zealand First tell us that he supports this Budget as I recall that in 2002 that party opposed the Budget because it had a fuel tax of 5c a litre. We hear today that New Zealand First supports this Budget which has a fuel tax of 10c a litre. So that is inflation is it not? Talk about a turn-round and flip-flop—New Zealand First has just done a major one. 
When I look at the cost of this Budget I realise the people who are not going to benefit are the poor. In today’s  
New Zealand Herald 
 I 
saw comment from the unionist Laila Harré. Do members remember her? The headline stated: “Workers party fails to help the poor”. She is right on that one. There is nothing for people who are struggling other than a 10c a litre increase in their fuel costs. That is what the Budget does for the people of Botany for the people of Dannemore and for the other people of east Auckland. There is nothing for them except that they will get a 10 percent hike in their fuel bills. That cost will carry right the way through to food bills and to every other sector of the community—to transport costs generally. That is exactly what the Budget means. Those people do not get access to a rail line; they get to pay for a rail line twice. They get to pay extra rates in order to pay for other people to use a rail line and they get to pay higher fuel bills so that other people can get access to a rail line. That is simply not fair. 
When I read on I saw what Richard Prebble had to say. He pointed out that this Government is now taking $20 billion a year more out of New Zealand taxpayers than National did in 1999. Our taxpayers are now paying $20 billion that they should not have to pay. Richard Prebble is right. In that time what has happened? We see 700 people leave this country every week to go and live in Australia and they do so because there they are paid more their taxes are less and they have more incentive to save. 
KiwiSaver will appeal to some people that is for sure: people who are already saving money. When I heard Dr Cullen say yesterday that after 45 years of saving people will have $400000 I thought that may seem a lot of money. But I will tell the Committee something. In the early 1980s we bought our first house for $33000. When we bought that house for $33000 it was a really big stretch. Today that house even without our improvements would not sell for less than about $600000. So if somebody is to be told that after 45 years of renting he or she will be able to buy a house I do not believe that is a legitimate promise to make. 
It is also unbelievably unfair for people to be told the Government will just take the money out and the person’s employer will pay and that will be great. It is not great and the reason is that most businesses in New Zealand are those of small-business owners. Most people do not own their business through a company; most people pay a personal tax rate. Those people will receive nothing at all out of the deduction in company tax. What they will get though is to pay for the Government’s election bribe. That is exactly what it will be. I think about people with small businesses in my electorate—panel beaters and motor mechanics—who will face another cost. What will happen? It will go straight to their accountant and it will put up their compliance costs. Then when employees go along and say they need some extra money because fuel costs have gone up the boss will say: “I’d love to give you some extra money but I’m already giving it to you in KiwiSaver. Just remember that for every dollar that I have to give you now I also have to top up your KiwiSaver. So how about we do a little deal?”. 
That is what will happen. Little cash deals will happen and little things like that will encourage tax avoidance. That will not help the system at all. More people will be doing anything they can to get as much cash as possible out of the system rather than going through the official system. This whole system is about making our taxation system more complicated. Taxation systems must be very very simple. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak to Part 1 which deals with amendments to the Income Tax Act 2004 and particularly to speak about a couple of clauses that deal with tax credits for contributions made by people to the KiwiSaver scheme or a complying superannuation fund. That deals with the way the Government will help employees get a $20 contribution at the end of the financial year. The tax credit will apply to all contributions made up to a maximum of $20 a week or $1042.86 a year. 
On the face of it that appears to be a good scheme but the problem is that the average yearly wage is $45000 in this country. That is the average wage so I imagine the median wage would be significantly below $45000. People on $45000 cannot afford to save money going forward. That is very typical of people living in Napier where the median wage is well below the average of $45000. Many people in my electorate are unable to save and will find they cannot afford to take 4 percent out of their wage to contribute to the scheme. 
Let us look at what that 4 percent means. It is 4 percent of the gross wage not the net wage. It is 4 percent of the gross wage but is deducted from the net wage so it would be quite a significant chunk of their take-home pay. It is more like 5 to 6 percent. For people on $25000 or $30000 per annum who are bringing up a family and trying to get ahead that is hard yards. No one in the Chamber sits on a low level of income so we have to take into consideration the people on those incomes. The reality is that for the money we are talking about here—$26000 a year—that is a $20 a week contribution. 
Out of a take-home pay of say $360 or $380 $20 is a significant amount. Rent might be $180 or $200 then there are power and electricity bills. Out of say $100 left over for food $20 is significant. In fact I would challenge anybody in this House to be able to save in that environment. 
If it becomes impossible for those people to save then the question is what we do as a country to lift the game for them. That is where the National Party comes in with a totally different tack from where the Labour Government is taking our country. It is a totally different tack. We take the tack that we need to put the handbrake on Government spending. 
We saw the Minister of Finance Michael Cullen stand up and tell us how he was going to spend $54 billion on this nation’s income. He stood up and told us how he was going to spend some 32 or 33 percent of the GDP of this country. There has been a $20 billion increase since the year 2000. He has the cheek to stand up here and tell low-income New Zealanders who are on $26000 to $30000 a year that they will now have to save money by putting aside $20 a week while this Government continues to crank up its spending. It has cranked up its spending by an additional $3.8 billion in this last Budget. The Government is saying that it is OK for the Government to spend big time but it wants average Kiwis to save. 
National members say that that spending increase has to stop. It can continue to rise by the consumer price index level—so we are not talking about massive cuts—but we cannot keep adding to the fire of Government spending with continued increases. On top of that National members say that we should take the Australian approach with consistent and ongoing cuts to personal taxes. There should be consistent gradual increases to cuts in personal taxes so that Kiwis have the opportunity to invest their own money in the choices they want to make as people living in this country—whether it is repaying their mortgage investing in business or investing in their family’s education and trying to get them up the income ladder. Because as I said earlier if people are at the bottom of the ladder then it is impossible for them to save $20 a week. 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 I want to pick up from where the member for Napier Chris Tremain left off when he made the point that for many New Zealanders the KiwiSaver scheme will be out of reach. He was reinforcing the point made earlier on by the co-leader of the Maori Party Tariana Turia. She made the pretty straightforward statement that if 50 percent of Kiwis take part in this scheme it means that 50 percent do not. The 50 percent who do not take part are missing out every way around. Not only do they miss out on the now multibillion-dollar contribution by the Government to a personal savings account but also—probably worse than that—they miss out on the changes to their tax thresholds which at least would give them the cost of a packet of chewing gum a week. That is really what is hard to understand about this particular package of measures. 
Shane Jones 
: You’ll adopt it though Bill. 
Hon BILL ENGLISH 
: We certainly will not adopt that bit. 
Why did the Government decide that with a large surplus it was not going to follow through on the promises it had made for the last two Budgets to allow for changes in income tax thresholds because of inflation? That would have put some money in the pocket of every low-income and middle-income earner in this country. Out of mean-mindedness or some other motive that the member from the Hutt Valley could no doubt tell us about the Government decided to pull back the change in income tax thresholds which has the effect of excluding at least 50 percent of New Zealanders—and in the next couple of years probably more than that—from any benefits at all from this Budget. I cannot understand the political logic of it nor can I understand the economic logic of it actually. 
I would like the Government to explain it. If the Government is willing to put through a tax credit—which is not actually a tax credit—of $20 per week when employees contribute then why is it not willing to give them $5 a week as a tax reduction which it had already promised? I am sure many New Zealanders out there will themselves be asking that. 
There is no doubt who supports this Budget or who is keener on what is in it: higher-income New Zealanders. It is quite clear that that is who supports this Budget. The people who are represented by the Maori Party—what is in it for them? We are going to hear a lot of talk from Labour about engaging low-income people in KiwiSaver but the raw facts of the matter are pretty straightforward: one has to give up spending in order to take part. This is where Dr Cullen is having trouble with the consistency of his message. He is trying to say that this whole package is going to lead to big increases in savings but no reductions in household spending. If he had the courage of his convictions he would have made the whole thing compulsory. But of course he did not do that because he knows he would then collect the blame from every single household in New Zealand for confiscating some of their weekly pay so that they can have it back when they are 65. At least this way New Zealanders have to put up their hand to volunteer for it. But the effect is the same. 
The Government has decided that low-income and middle-income people who cannot afford to save have to just stick it. They have to just stick it. They cannot afford to save so they do not get either the benefit of the employer contribution or the benefit of the Government contribution and they miss out on the reduction in taxes that was promised to them in the last two Budgets. Now worse than that they are going to be caught up in confusing industrial relations negotiations over pay because some people in the workplace may opt into the scheme and the Government is compelling the employer to put any prospective pay rise into the employees’ savings accounts. If some workers do not opt in what will happen then? Those people may face no increases in pay and may not even get the benefit of the employer’s contribution either. That is a price that Labour is going to become much more aware of over the next 6 months as the reality of semi-compulsory savings bites. 
Hon MAURICE WILLIAMSON (National—Pakuranga) 
: 
 It is usual for members of Parliament to have quite a bit of feedback sent to our electorate offices the morning after a Budget. When there are things in the Budget that are good members will often hear people saying it was great that they happened. I can report immediately to the Chamber that the feedback I have received from the people of Howick and Pakuranga is that of sheer outrage. They have never had access to a rail network and never will have. Even those who are quite green in their feelings and would love to use a rail network if they could simply do not have one. They simply do not have one. 
It is really interesting. Outside my electorate office is the Pakuranga Highway—a three-lane highway—and in the mornings I look out to see cars just locked blocked and stopped as far as the eye can see. Guess what? Yesterday Dr Cullen said to those people that he would charge them another 10c a litre on their petrol tax in order to pay for the electrification of a rail network somewhere on the other side of the city. 
That went down like a cup of cold sick with the people of Howick and Pakuranga and I bet it was the same with the voters of the North Shore Northcote Murray McCully’s East Coast Bays and Judith Collins’ area of Clevedon Beachlands and Maraetai. People in those Auckland regions will be saying to the Government: “Excuse me? You are going to tax me to pay for the electrification of a rail network that I don’t have any access to at all even if I want access to it?”. That is what the feedback from those people has been. 
I have to speak on behalf of what may end up being a new constituency block for me. I may with boundary changes end up with some people from the Glen Innes and Point England areas. I have not had contact with those people yet because the boundaries may not be changed but they may end up in my constituency. I understand that those people are mainly Labour voters but I can tell the Labour Government that they will be pretty angry about what happened yesterday as well. 
I know for a fact from the levels of household debt being accumulated by people in areas like that that they do not have one cent of spare discretionary income each week to put into anything. What with hire purchase payments their budget does not exist. Their budget is blown to pieces each week and they struggle from day to day to make ends meet. If not they are accumulating debt on their credit cards. Often we hear people in Glen Innes say they have maxed out on their credit cards. These are the people whom Dr Cullen should be representing. They are not the people whom the Tory party would normally be out there speaking on behalf of. That is why this Budget will not go down well with Labour voters. 
Dr Cullen says to those people who do not have a cent of discretionary expenditure that if they save some money each week then they will get into this KiwiSaver scheme and the Government and the employers will put some money in and that will be good for them. I can tell members now that if Trevor Mallard wants to come with me and wander the streets of Glen Innes or Point England the very first response he will get from those people will be: “How the bloody hell do I save anything when I can’t save already?”. They will ask how they can save a cent how they can have money taken off their pay and put into a KiwiSaver account. 
A lot of people in my current patch of Howick and Pakuranga will say they have enough discretionary spending to put 4 percent of their pay into the scheme. They are in the wealthier higher-income end and they will say they are OK with this. They will say that they can do with this scheme and that it is fine—they will provide 4 percent of their pay and their employers and the Government will tip in some money. They will say that it is not a bad idea. But what about the people at the bottom end of the spectrum whom the Labour Government is supposed to be an advocate for? 
Hon Trevor Mallard 
: What about the workers? 
Hon MAURICE WILLIAMSON 
: Absolutely; Trevor Mallard has called the question right. There we are “Stadium Boy” has made the right call for once; “Stadium Boy” has it right. What about the workers? Well the workers have been shafted even more than Auckland was over the stadium—and boy that was the biggest shafting I have ever seen. The workers are being absolutely shafted. Any of the workers who are listening out there all those people who are sitting out in the workshops of the South Auckland factories now hanging on every word that Parliament is broadcasting into those factories—and there will be thousands of them—will be asking: “Hang on why is Trevor Mallard yelling out ‘What about the workers?’ when what he did yesterday shafted those of us at the low end?”. 
That is what KiwiSaver is: it is a nice little welfare benefit for those on a high income or those with a bit of discretionary expenditure or a few bob that they can put away and it is an absolute kick in the guts for people down at the bottom end. That is the point National is trying to make. This Budget is best typified by the old Joe Hill days of the trade unions. “Pie in the sky when you die”—that is what people will get. 
SHANE JONES (Labour) 
: 
 Let us return to what we are actually gathered here for which is to talk about the Budget and let us recite some recent history. In 1967 dollars and cents came to New Zealand as our currency. The point at which we moved from the pound and the ha’penny to our current currency I say to all listeners out there in Aotearoa marks how far we have to go back to identify a time when National members actually introduced a tax reduction for company tax. In all the years since 1966-67 National members have not brought to this House a bill or a proposal to reduce the tax burdens on company tax. That is a statement of fact. 
Hon Maurice Williamson 
: But you give with one hand and take with the other. 
SHANE JONES 
: Those members had the opportunity in the 1990s—when my very good and friendly co-watcher of rugby Mr Williamson was in power—to change that tax rate. The facts betray them; despite the rhetoric those members did not reduce the company tax burden. 
Let us look at what Labour has done in relation to the specific steps we have taken. Within the same period of time our friends the toilers in the company world the toilers in the firms and the toilers in the world of enterprise with regard to the burden of tax placed on their shoulders have enjoyed a reduction of 33 percent—33 percent I say to Mr Carter. Up in Kerikeri Dargaville and the Northern Wairoa Kaikohe and Kaitaia people are clapping and singing praises. They cannot believe that not only have we come good on our promise but we have also gone further than that. We have addressed those long-term problems of bottlenecked degraded infrastructure in Auckland. 
Of course the people of Auckland need to participate democratically in their regional council because regional councils I say to Mr Woolerton have a critical role to play as to what when and at what level this petrol tax would be imposed. It is entirely up to them because this is democracy flourishing in the context of the Budget. The decision I say to Mr Carter moves to the level of the community most impacted on by the ongoing clogging and problems that Mr Williamson talks about but the facts show that when Mr Williamson had the chance he did not move to remedy the problem. 
So I would say to all listeners in Aotearoa that over the same period of time that National members did nothing with the company tax rate Labour has reduced that tax rate by a third. This Budget lays out what will happen when we go forward beyond this year—for all political spectators all citizenry and all firms—and it is a clear platform upon which National is looking forward to a fight between ourselves and its team which has at least found someone who is willing to give it a go. For the last 9 or 10 years we have had a game of sport under way but there has never been a team on the other side that has been anywhere near match-fit—no. Now at least there is someone who might be. Admittedly we believe that he has filched our garb. He never has an original idea and wanders around the country talking about things that he will quickly toss out but he borrows liberally from this side of the Chamber as to what his party’s ideas are. We understand that. As I said last night that is very predictable. Ah Polonius has come back to the Chamber no doubt to strike more poses. You know a good poser will never overcome the presence of vacuity and that is what that member ought to remember. 
However let me continue. Not only have we allowed regional councils to play a key role and not only have we forged ahead and rewarded the toilers in the world of private enterprise and companies but also—and the members on the other side of the Chamber do not realise this—we know that the pit within which low-income people fell was traceable back to National’s time in Government when those members held authority. Step by step I say to Mr Woolerton along with our great friends from Aotearoa Tuatahi who have vigilantly watched the importance of savings we will take low-income people out of that pit. I look forward to that party joining with us some more. 
JOHN CARTER (National—Northland) 
: 
 It gives me great pleasure to follow the Tory in the Labour Party Shane Jones. You know Shane Jones and I are Northland MPs and along with the other MPs from that area we all work well in the Northland scene. But the unfortunate thing with Shane Jones is that when he decided to get into politics he tripped over and fell into the wrong party because underneath it all he is a Tory at heart and he hates having to defend this Budget. If one can get Shane Jones in the quiet in the back room somewhere he will say: “Man I just do not know where we are going.” Here he is and we could see the lacklustre effort that he put in when he was trying to defend this Budget. 
I am really looking forward to the next election campaign and being on the campaign trail with Shane Jones because I would ask him three questions about this Budget that affect the people of Northland. The first thing is that he is out there saying that Labour has done it for business. Well when we look at it it may be that Labour did do just a little bit for business—until we actually start doing the maths. Then the only way we can say that businesses got an increase is if we stand on our heads and the figures will then go up the right way. The fact is that businesses will pay. Labour gives it to them on the one hand and it takes it away on the other. That is the first point. 
 My second point though—and this is the point I really want to ask Shane about—is that he talks about the fact that KiwiSaver will be great. He talks about the fact that it will work for people in Northland and he talks about businesses. Well you know in Northland most of the businesses are sole traders; they are not companies they are small individual people who have gone out and taken a chance. They have gone out and had a go. They are standing up as we would expect New Zealanders—good Kiwi people—to do. They are men and women out there having a go. But what will this legislation do for them? It will penalise them will it not? It will cause them cost; they will have to pay. They will not get any benefit from the reduced company taxes—they do not pay them. But if they are employers—and most of them are employers of one or two people—and they are paying wages of let us say $60000 they will have to pay something like $3000. Whatever the figure is it will cost them money. 
How will that benefit or encourage the small-business people in Northland? It will not help them at all. In fact it is a negative for them. Just maybe it will tip them over the edge. In Northland a good number of businesses are right on the edge—they go from hand to mouth and they just keep going. They make it they work hard they do all the things they can and now the Government comes along and says: “Well here’s another bill and here’s another tax. You are going to have to pay. You are going to have to front up.” 
What about the people who work in the Moerewa freezing works? What about the people who work in kiwifruit businesses in Kerikeri? What about the small people who work driving a school bus to Mangamuka? What will they get out of this? They will get absolutely nothing. The fact is that they will get nothing out of it because they cannot afford to take anything from it. 
How much surplus cash does the person who is earning $18000 a year have hanging around to put into KiwiSaver? Negative—they have no surplus cash at all. I say to Mr Mallard and Mr Shane Jones that these people do not have a spare cent to put into KiwiSaver. So what is their only option? They will opt out—they have to opt out. This legislation does not help the people of Northland. I know a young fella up there who has just started working at Pak ‘N Save. He has a partner and a child and a second child on the way. He earns $15 an hour. He is doing well and getting himself established but man he sure ain’t got any surplus cash to pick up his share of what Michael Cullen says he should have. That is the shame of it. This young lad wants to buy his own home. This young lad is having a go. This young lad is actually trying to make a go of a life for himself here in New Zealand and this Government has done absolutely nothing for him in this Budget. 
TIM BARNETT (Senior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 63 
New Zealand Labour 49; New Zealand First 7; United Future 2; ACT New Zealand 2; Progressive 1; Independents: Copeland Field. 
Noes 48 
New Zealand National 48. 
Abstentions 3 
Maori Party 3. 
Motion agreed to. 
Part 2 Amendments to other Acts and Regulations 
Hon DAVID CARTER (National) 
: 
 I certainly want to speak to Part 2 of the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill because looking through this really complex legislation that the Hon Peter Dunne and the Hon Michael Cullen have cooked up it springs to mind that one important question has not been asked in the debate so far. I would ask how many more Inland Revenue Department officials will be employed to manage this extremely complex KiwiSaver scheme. How many more high-rise buildings in Wellington will be filled with Inland Revenue Department officials who have to work through the complexity of a scheme that even Treasury which is known for its optimism in floating the scheme says that only 50 percent of wage earners will take up? 
With this legislation we will have a scheme whereby come 1 July employers must by law sign up everybody who works for them. All the wage calculations will have to be redone. Many people in New Zealand farming situations are paid on a regular basis with an automatic payment. Those payments will all have to be changed. There will be huge complexity for the employer huge confusion for the employee and lots and lots of bureaucrats trying to sort it out. 
An employee is signed on to a scheme presumably a little tagged account is opened in KiwiSaver for this person and 2 weeks later this lower-income New Zealander will say: “I like the idea of it but I simply cannot afford to stay in.” So this person will go back to the employer and ask to be taken out of the scheme. Treasury is saying that 50 percent of employees will take this option; I say to Peter Dunne today that it will be more than 50 percent judging by the calls coming into my electorate office this morning. 
So once this employee asks to be taken out the poor old employer will have to go back and recalculate the wages and PAYE deductions and will have to go back to the bank where the employer will probably incur a charge to change it back to what it was prior to 1 July 2007. Then the Inland Revenue Department—with its hundreds more bureaucrats—will have to post out a cheque to the employee for the $20 or $40 that has gone into the account in the couple of weeks before the employee made the decision that he or she could not stay in the scheme. That sounds incredibly complex and incredibly stupid. 
We can see the shock on the faces of the New Zealand First members who have only just realised that this will happen. Yet they are signed up to support this nonsense. Labour members have not even thought this through. Michael Cullen has—this scheme employs lots of bureaucrats; that does not seem to worry him—but the Labour members themselves obviously have not realised how complicated it is. 
That is why we saw Dr Cullen getting a really hard time on  
Close Up 
 last night. Then he came down to the House at about 8 o’clock last night and lost his rag because he knew he had lost the argument with John Key on the benefits of the KiwiSaver. He knew then that New Zealanders had not swallowed it hook line and sinker. He has been too clever by half and has stuck something in here that his own Labour caucus simply does not understand. 
Today when we analyse this scheme in detail we realise just how massively complicated it is and how much more Inland Revenue Department bureaucracy we will have to build to manage something that in a couple of weeks will revert to the status quo for low-income New Zealanders. Peter Dunne instead of sitting there should actually stand up and defend this legislation. He is part of the design of the thing. He will go down as being attached to the folly of Dr Cullen for the KiwiSaver scheme which will not work. It will not work because lower-paid New Zealanders simply cannot afford to stay in the scheme. 
 I look at the complexity of the Dr Cullen scheme and at the simplicity of the scheme of Peter Costello Treasurer for the Australian Government. He has come in with five Budgets one after another in a row and he has been able to simplify the tax system by delivering tax cuts and giving the chance for wage earners in Australia to keep more of their own money. But no Dr Cullen says: “That would be wrong we cannot leave that money in the hands of New Zealanders.” and says that he can do better. 
CHARLES CHAUVEL (Labour) 
: 
 I want to speak just briefly in support of the bill and to take some real-world examples in response to some of the issues that have been raised by previous speakers. I am looking at the second page of this morning’s  
Dominion Post 
 where a couple of calculations really give the lie to some of the sillier claims we have just heard. 
There is the example of a single person on the minimum wage earning $11.25 an hour or $450 a week. If that person decides to join KiwiSaver on 1 July he or she will have to put away $18 a week. We have heard from polls and surveys of people’s savings habits and intentions that people really want to be able to save and they really want incentives to join this scheme. I think that many New Zealanders even if they are on modest incomes will look at that requirement of $18 a week look at the incentives that now exist—or that will exist when this legislation passes—and will think they will make a real effort to put that sort of money aside. Now if that person puts $18 a week aside which is the minimum contribution—4 percent of gross salary—then the Government would add under this legislation another $18. From 1 April next year the employer will pay $4.50 a week. Then stepping up the scheme by 2011 the employer would have to match the contributions up to 4 percent. Assuming that the person retired in 35 years there would be $150000 in the bank which is enough to earn about $8000 a year in interest in today’s dollars. That assumes a very conservative rate of return on the funds of about 2.5 percent. 
It seems to me that there will probably be quite a high uptake of the scheme if those figures are correct. People have been crying out for some assistance and some incentivisation to help them to save. That will now exist and it is the answer to the question of what the kiwifruit worker in Kerikeri or the school bus driver would do—questions that John Carter raised earlier. That is a living example of the figures those people will have to think about in order to join the scheme and of the benefits that they will get. 
There is another example: that of a single person on the average wage. If a 50-year-old who earns a gross salary of $45000 contributes 8 percent which is about $70 a week by the time that person retires at 65 there will be accumulated funds of $110000 which is enough to generate $8000 a year during retirement over and above the superannuation contribution. Now that is real money. It is the sort of fund that people have been wanting to build up—the sort of nest egg that ordinary Kiwis would like to have but that they have not had the assistance or wherewithal to put together. I am very proud that this legislation and the accompanying package will allow that to happen. 
This scheme will be good not only for the average Kiwi worker but for the country. If members look at the projection of the funds that will be built up over time they will see that KiwiSaver funds under management by about 2030 again assuming a very conservative rate of return—2.5 percent—will be $100 billion. Now when members look at that and at the Cullen fund they will start to see a strategic reserve for the first time being built up in this country and will understand the importance of saving. Of course we know about the wider economic benefits of having a decent savings scheme and a decent capital fund such as this. We will have stronger and deeper capital markets leading to a lower cost of capital over time and easier access to capital for New Zealand businesses. 
The scheme will also reduce the pressure of inflation. We know we have a current account problem. Well finally we have the opportunity not only to help ordinary Kiwis but also to build up the sorts of strategic reserves that our neighbours across the Tasman whom we have heard about in speeches today did some time ago. It was interesting to hear the model from across the Tasman being idolised by David Carter the previous speaker. I wonder whether that means he wants the Australian model of a 9 percent payroll tax on employers rather than the sort of scheme that has been designed for New Zealand and will be presented through this legislation. 
Like the rest of this Budget this is good legislation for ordinary Kiwis for the country and for all of us. 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 The member Charles Chauvel who thinks he will be the member for Wellington Central but he will not be demonstrated the kind of cargo cult that Labour is trying to build up around the KiwiSaver system. It is only Labour people with that kind of champagne socialism attitude who think people on $11.25 an hour are saying: “Oh yeah I’d love to put away $18 a week.” People on $11.25 an hour are the last people who will go into the KiwiSaver scheme and they are also the first people who missed out in this Budget. If the Government had kept its promise to move the tax thresholds to allow for inflation people on $11.25 an hour would at least have received something—it may have been chewing gum but at least they would have received $2 or $3 a week. This would have been some recognition that they are paying a bigger percentage of their income as tax than they were 5 years ago simply because of inflation and a lazy big-spending Government.  
The reality I say to that member is actually much different from the cargo-cult mentality that he is trying to cultivate. People on $11.25 an hour even people on $15.25 an hour will be the least likely to opt in to KiwiSaver. The Government’s message to those on $11.25 an hour is “Cut your spending profligate!”. The Government says that these people are the ones who are causing inflation the ones driving up the housing market. The Government is telling people on $11.25 an hour to cut their spending because they are part of the savings problem. 
I guess that would have some credibility if the Government was cutting its spending. But of course it is not. There is a record new spend in this Budget; it has never been $3.8 billion before. It will be $3 billion or $4 billion next year. Is that not typical? This is champagne socialism. People on low incomes have to cut their spending to be patriotic while MPs and bureaucrats on high incomes go on spending up large taking money out of their cash deposits in the bank and shifting it into KiwiSaver with no increase in their rate of saving. What a hardship! They are thinking: “This is a terrible scheme; we will have to shift some money around.” 
The Labour MPs believe Dr Cullen who has told them this scheme will create a whole lot of new savings. Well it will not. There are only two ways to get more savings into KiwiSaver: to shift it from somewhere else or to spend less. Labour are telling us today that the people they expect to spend less are the ones on $11.25 an hour. Well I invite Mr Chauvel to get out to the supermarkets and tell the people stacking the shelves and serving on the counters that Labour’s vision for them is to give up $18 a week—and give up all prospect of pay increases for the next 4 years because the employer has been compelled to put the pay increase into their KiwiSaver account—and get it all back in 40 years’ time. I invite Mr Chauvel to come with me to the supermarkets around Wellington. We will get all the staff in the morning tearoom and tell them the truth: that Labour says: “Put $18 a week into an account. We can promise you jam in 40 years’ time if you give up your bread now.” 
That is why yesterday Labour members were looking really worried about this scheme because they know what a big gamble it is. The people who will take the tax advantages of this scheme vote National. They will bank it—they will. Their accountants are all on the job today. But the low-income person and the small employer have been ambushed. Small employers have been ambushed by the compulsory contributions which they never expected and which come just after they have had to find the money for the 4-week holiday and the time-in-lieu provisions of the Holidays Act. Low-income people have been ambushed by a Labour Government they thought supported them. 
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. 
SIMON POWER (National—Rangitikei) 
: 
 I came to the debate about KiwiSaver and the concept behind it with a reasonably open mind. I thought about what it would mean for my constituents. These are people who over the last 7 or 8 years have come into my electorate office and said to me: “I am a truckdriver.” “I work in a supermarket.” and “I am an apprentice mechanic.” or words to that effect. They are trying hard to etch out a living to look after their young children and to get that extra little bit of discretionary spend that would make the difference for them as they go through the supermarket buy the stationery for the school year or purchase the new pair of shoes for the school year’s commencement. 
I sat down and read through the documentation relating to KiwiSaver and thought about how it would affect those people today. The answer is that it will actually make them worse off because their discretionary spend at the introduction of the new scheme will get no bigger immediately and then will actually decrease over time as the employers’ contributions increase and as the inflation-adjusted wage rise they would otherwise have got disappears into the KiwiSaver scheme. Government members argue that when these individuals in the communities that we all in this House represent hit 65 they will have something for their retirement. That may well be the case but the problem is that the individuals I see in my electorate office who are in jobs like working in local supermarkets driving trucks or working as apprentice mechanics will have less discretionary spend from Budget day plus 1 year plus 2 years plus 3 years plus 4 years. 
The Government is saying to those individuals in the towns of Feilding Marton or Taihape: “We want you to take a portion of the wage that you already get”—with which they struggle to make their way in purchasing basic necessities for their families—“and we want you to put that aside for a rainy day.” The problem is that for those people it is raining now. It is bucketing down actually for those people as we speak. You see those people need the relief and the discretionary spend to increase today in order that they can go about their business. Those people are the people whom Labour for so long has purported to represent. 
This is my eighth year in this House and I have heard time and time again Labour members on the other side of the House interjecting comments like “What about the worker?” The answer is to throw the question back to Labour members. I say to those members on the Treasury benches: “What about the worker? What about the person who needs the extra discretionary spend today?”. If the argument were that we are all in this together we all have to pull together in order to save for tomorrow—which means pulling back our discretionary spend—and we will all do that as a country it might be easier to sell the argument. The problem is that the Government spend is increasing. The very people who need the discretionary spend are having it denied while the Government does nothing to cut its own spend over the next 4 years. 
I see that the Minister of Corrections is in the Chamber. We will get on to the fiscal risks in that area in another debate but they are substantial and we are talking big big bucks in that area. The one thing I am worried about is the 35-year-old dad in Feilding who drives a truck whose wife works part-time and who has two kids. He is not worrying today about his situation in 40 years’ time; he is worried about getting through this week. The Government is not doing its bit but is asking people in those situations to do their bit. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I want to reply to Simon Power who has just spoken because he and Mr Carter who spoke earlier are probably the only two contributors from his side of the Chamber who during the course of the debate have got remotely near what the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill is about. I say to Mr Power that I relate very much to the last part of his speech. I recall that as an 18-year-old I took out a life insurance policy for the princely sum of $1000. It was to mature when I reached the grand old age of 55 which I am not yet— 
Simon Power 
: Years away! 
Hon PETER DUNNE 
: Lightning years away! I did that on the basis that contributions made then as a student then regularly throughout the duration of the policy would secure me a wonderful future entitlement. We can laugh today about the sums involved but the reality is that there is something in the psyche about wanting to provide for one’s future. That is why the package the Budget introduces—and this legislation gives effect to—regarding the new enhanced KiwiSaver provisions will be attractive for many people. Mr Power went on to use an example of a 35-year-old truckdriver with a family of four and all of the demands that go with that. That truckdriver will be eligible and has been eligible for the Working for Families tax credits so he will be getting a considerable uplift— 
Simon Power 
: It’s making them dependent on the State. 
Hon PETER DUNNE 
: This is where I think we get into a fallacious argument from both the left and the right—on the one hand of making people dependent on the State and on the one hand of this being a money-go-round. The fact of the matter is that we are delivering assistance to people—or if one likes making a return to people—that enables them to get on with their own lives. I think that is the bottom line for most people. 
I have come across very few people who when they get their Working for Families tax credits say that they do not want the money because it comes from the State. It does not come in a different-coloured coin and the cheque is not different; people actually appreciate the fact they are getting something back. The National Party says it would give it to them as a tax cut. That is still giving something back; it is not going to come as a different cheque at the end of the day. So I think the member is indulging in an argument that is essentially irrelevant to most people. 
I come to Mr Carter. He asked a question some time ago about whether this measure would see the Inland Revenue Department spreading its tentacles even more widely into buildings in Wellington. 
Hon David Carter 
: No—how many more employees. 
Hon PETER DUNNE 
: I heard the member’s question and I am going to answer it. Mr Carter shares the impatience of those who think they know best. They ask a question then they become scared stiff they might get an answer so they try to shout one down. Let me answer his question. It was in two parts. Firstly the Inland Revenue Department is actually trying to consolidate into one building at the moment both in Wellington and in Christchurch so there is not to be a spread of tentacles. Secondly the major processing area for KiwiSaver is actually at the Inland Revenue Department in Te Rapa which I visited a couple of weeks ago. It has the staffing capacity at the moment to be able to address KiwiSaver both as it stands and as it is enhanced. So the notion that hordes of new bureaucrats will be employed simply does not stack up. 
We are running an operation that is as I think Mr Fairbrother pointed out using new technology and working effectively. It has a call centre in place now taking inquiries literally as we speak. I think the member will see in due course that there is not the army of bureaucrats he fears might be out there waiting to be employed. 
This part of the bill is really about the technical changes required to bring in three elements of the Budget package. The first is the changes to KiwiSaver and the second is the reduction in the company tax rate. They are probably the two that have received the most attention. But the third element is probably in many senses more important than both of the first two. 
This bill is establishing over a whole range of savings entities a uniform tax rate of 30 percent. We are levelling the playing field in that regard and giving New Zealanders who save a very big boost in terms of the taxation on the funds they contribute to. That is one of the critical strengths of this bill and I think it is important to note that investments in unit trusts group investment funds widely held superannuation funds widely held group investment trusts that attract— 
Katherine Rich 
: Mr Chairman— 
Hon PETER DUNNE 
: If the member will give me just a minute I will conclude. I will simply go through the range of funds that will now be taxed at 30 percent which will cover the whole range of savings made by New Zealanders regardless of whether they are KiwiSaver compliant. When we put that alongside the KiwiSaver regime and the enhancements included in the Budget we are creating a very positive benefit and savings opportunity for New Zealand. 
Finally let me make this point. I have listened to a lot of debate in this House over the 23 or 24 Budgets I have sat through where the concern about New Zealanders providing for their future—saving either for their retirement or for the benefit of the country—has been addressed in many respects. Yet this measure is the first coherent measure to give effect to those concerns that I have seen in that time. The big difference between it and some of the other attempts that have been made to introduce savings schemes is that this is not being compulsorily applied top down; this is a voluntary scheme and its success will depend on the extent to which people take it up. The original estimates for KiwiSaver said there would be a take-up rate of around 20 to 30 percent as the scheme kicked off. Estimates have now improved to nearer 50 percent. I do not think that is a cause for concern—in fact quite the contrary. As this scheme becomes more well-known as people become more aware of its capacity and of the opportunity it gives them we will see an even bigger uptake and we will actually start to see some addressing of this country’s underlying problem with long-term savings. Whatever side of the political spectrum people are on that has to be a good thing. 
I say to those people who for so long have compared us with countries like Australia Singapore and Chile and who have said how much better those countries are doing with their good savings records and with the massive savings schemes they have in place that we are actually now starting to catch up. In respect of infrastructure education health and all the other things we are starting now to build the investment base that will allow us to grow those things for the future. That is what this bill is about and that is why I am pleased to support it. 
KATHERINE RICH (National) 
: 
 I am always keen to hear from that Minister. He is a Minister who on this side of the Chamber we have a lot of respect for. But I think he overestimates the interest of 18 or 19-year-olds in this particular legislation. The Minister would have been a rare 18-year-old in taking out superannuation when he was at university although it is quite nice to think that while most 18-year-old men were thinking about beer girls and rock ‘n’ roll Peter Dunne was taking out his first superannuation policy planning for his future. I think he is a rare person who demonstrates common sense. 
One of the things that concern me about this legislation is that there is very little in it for people who vote Labour. We heard Russell Fairbrother talk about the person on $11.25 an hour and how he or she would benefit. I say to him that people on $11.25 will not opt into KiwiSaver because they cannot afford it. They cannot afford it because if they earn that amount of money they are struggling to put bread and butter on their tables and cover their costs. Those are the people who were shouting the loudest for tax cuts so they can increase their discretionary income and cover a few more of their bills. 
So low-income Kiwis on $11.25 an hour will now be in a position of subsidising the superannuation of higher-income people who have the ability to put some money away and save. And that is the thing. The $11.25 an hour wage earner will be hit in two ways. First those wage earners will not have the true option to opt into KiwiSaver. They will not put their money away. They will not be able to get credits through KiwiSaver and they will also be asked to subsidise high-income Kiwis who do have the option to save. But the last thing is that they will not get any pay increases. 
We have heard from the Minister of Finance and the unions that in order to appease some of the concerns of employers they are sending the message out right now that no pay increases should be expected. Basically this is the pay increase for those wage earners. So those people will get very little whatsoever and I think that will dawn on a lot of people as they suddenly work out the details of this package. I think of all those 18 and 19-year-olds in my home town right now. They are not going to get all excited about this. They will not see that they will be better off by getting a payment in 45 years’ time so I do not think they will be particularly excited about it. 
I think what we are seeing here is a debate forming about the difference between independence and dependence. Members heard my learned colleague Simon Power make the point that those Kiwis who are earning the average wage want to be able to survive and to be independent. They do not want to have a relationship with a Work and Income manager if they can help it. They do not want to spend their lives filling out forms because they believe that they are only getting back money they have earned in the first place. Therein lies the difference between National and Labour. We believe that people should be independent that they should not have to form a relationship with someone from Work and Income unless they really have to and that we should do more to allow people to stand on their own two feet and not continually have more money taken from their pocket only to have it handed back by the Government which believes that they should be grateful for getting their own money back. 
Even if we look at the Budget where has the chewing gum gone? In 2005 when Michael Cullen handed out this tax cut and thought that this would appease those calling for tax cuts he said: “You can have one but it will be in a couple of years.” Well that has gone as well and albeit that it was small I think it is something that many Kiwis will be disappointed about. We have heard lots of other announcements today that will bring benefits supposedly in a few years’ time but they are not forthcoming. 
One of the things that I think it is important to consider when we are looking at our savings problem is that it is not because people are lazy or short-sighted. The fundamental problem is that most New Zealanders are not earning enough to be able to put money aside. What we have here does not solve that; it just postpones the problem. The fundamental problem is that Kiwis do not earn enough. I am surprised that more Kiwis are not getting on a plane and going to Australia because in the last four or five Budgets we have seen Peter Costello deliver more money into the pockets of Australians. 
MARYAN STREET (Labour) 
: 
 I want to pick up a couple of points in speeches made over the last few minutes. A couple of things seem to be missing from the Opposition’s analysis of KiwiSaver its application and its potential uptake. First of all has the Opposition not noticed that the social debate around savings has altered—that people are very aware of the need to put aside money for their retirement? In fact after listening to some of the vox pop coverage expressed yesterday in the wake of the announcements about KiwiSaver it is patently obvious to me that of the four young people I heard all four would rather have the $20 put aside for them to complement their own savings than to have that $20 in the hand. That was said by four out of four people who were asked about that. They were young people who were watching their parents approach 65 years. One woman in particular said that her mother was approaching 65 and it was getting a bit scary. To a person they would rather have the money put aside and contributed to KiwiSaver than to have the $20 now—which they thought would go nowhere. 
This is absolutely a savings regime for the poor and the low paid. This is exactly who it is for. This is the best opportunity for the poor and the low paid to provide for their retirement—the best opportunity. The sooner the Opposition understands the structural shift in the economy that this KiwiSaver initiative represents the better. How will they go out and say to people: “We will give you a $10 a week tax cut across the board. You can have $10 now.”? People will say: “Oh yeah great; thank you. That’s not going to do much for me. I would rather make sure that I have $20 a week that’s going forward to my future.” This is the best opportunity that low-paid workers have of providing for their future. 
Given that the National Party seems to think it is on a crusade to woo the women’s vote it may like to consider what this means for women’s superannuation. It is an absolute given—it is well known—that women do not accrue the same level of savings as men and they do not receive the same amount back in superannuation as men do for all the reasons that we know about. First women are located predominantly in the lower-paid parts of the labour market. Secondly women have interruptions to their work history that interrupt their payment into savings. Thirdly we still have a persistent gender gap in earnings. Therefore there are three structural reasons why women do not achieve as much in the way of superannuation returns as men do. 
This is the best opportunity for women to be preparing in their own right as well as with their family and their partner to receive very substantial returns for their superannuation in years to come. KiwiSaver allows for holidays on payments. It allows for those holidays so that if and when women take time out of the workforce to raise children they can be seen to be continuous contributors including those holidays from their actual payments. It means they will have safeguarded accounts they can rely on when they turn 65. 
The first Labour Government was known for the welfare State and for provision for the poor and the needy. In Norman Kirk’s day the Labour Government was known for independent foreign policy. This Labour Government will be known for its contribution to older people and for security in the future. 
JUDITH COLLINS (National—Clevedon) 
: 
 We have just learnt a new term—social debate. What the hell does that mean? What is a social debate? It is just another politically correct term from that Government and from one of the most politically correct members of a politically correct Government. The people who pay for this will wonder what a social debate is as opposed to an unsocial debate I suppose. What does it mean? I say to Ms Street that most people here do not sit around talking in the language of social debate. Most people have to look after their kids. Most people have to pay the bills. Most people have not been living off the Government for years and years and years and working the taxpayer system. Most people have to work for a living. 
When I listen to that member and other Government members speak about this I ask who KiwiSaver is really going to help. Will it help the poor? Laila Harré says that it will not do a thing for the poor and I think she is right. Let us have a look at the people it will help. The Inland Revenue Department had to hire 400 more people just to bring in the most basic version of KiwiSaver last time. So we can forget the 1000 new police; we will have 1000 new tax bureaucrats in the Inland Revenue Department. That is just what this country needs—not! It is just what this country needs—sure! What this means is more bureaucracy and more taxes paid to pay for this Government to be able to give people back some of their own money. 
What we do not know is who will be eligible for this. I would like to ask the Minister in the chair whether all public servants will be eligible for this. Will all public servants on the Government superannuation scheme at the moment be eligible for this? If that is true then will that not do something to the blowout in the Budget? Will that not actually have an effect? If it is not true then why are public servants being treated differently from everyone else. Is that true? 
I would like to know about the stay-at-home mums. What is in it for them? What is in this Budget for the women whom Ms Street has just said she thinks so much about? What is in it for them? There is absolutely nothing in this Budget for them—absolutely nothing. What they are being told is: “Get ye out to the workforce.” That is what they are being told. We hope these mums are having three or four children because someone has to have three or four children. We have to have a decent population in this country. Those people need to be praised and they need to be helped. They do not need to pay for this Government trying to give a tax credit to people who are saying they do not even have enough money to buy into the scheme. 
Most people unfortunately do not earn enough at the moment. What we have to understand is that most workers in New Zealand get about a third of what they would get in Australia for doing the same job. That is what they end up with. All this Government wants to do—instead of looking to the future and saying: “Let’s try to grow this economy.”—is to grow the Government. We now get $20 billion of taxpayers’ money going into the Government—$20 billion more each year than we had under the last National Government in 1999. That is a huge increase and most people in this country are finding it very difficult to cope. 
We do know that the rich have got richer and the poor have got poorer. The people who are now becoming poor are the people with a couple of kids—two three or four kids or people who have one income or even two incomes for one person. Those people are our new poor. They have become the new poor under a Labour Government that likes to stand up on its hind legs and talk about the rights of women. Well what about the rights of women who do the work who look after the children and who help us have a better society because they work with their kids and are good mothers? What about them? There is absolutely nothing for them under this Government. 
The only thing they should know of course is that Michael Cullen has hinted that this will lead to some sort of means testing of national superannuation. He hinted at that yesterday when he spoke about how that would help to ensure that there would be enough money for national superannuation. Why would it help? These are supposed to be individual savings plans. Of course it will help only if this Government has in its mind that it will means test national superannuation. That will utterly destroy superannuation for those stay-at-home mums and destroy superannuation for people who have been on disability benefits for years because they are invalided and really cannot work. Means testing will destroy superannuation for the poor people. 
SHANE JONES (Labour) 
: 
Tena koe Mr Chairperson. [ 
Interruption 
] The nation is rejoicing from the tail of the fish to the head of the fish. Even in Horowhenua people are happy. For their infrastructure their bridges and their roads improvement is on the way. We will not see much of that member in the House; he will have to employ someone else on hopefully good wages to milk the cows—unlike Mr Bennett who has been feeding off the udder. That is an example of massive infrastructure development. 
I have been in and out of the Chamber to take toll calls from people up and down the country who are totally overwhelmed by the potential to improve savings improve the efficiency of firms and improve the prospects of children and grandchildren. These people are waiting with bated breath to hear how refined this product will actually be after it has been sifted by and shepherded through our Finance and Expenditure Committee. Like all proposals obviously the policy will be passed here but there is a need for further detail. The proposal is based on vision and the vision will be strengthened through attention to detail. I could not think of a better committee to undertake that role. 
I hope the members on the other side of the Chamber rise to the occasion and toss away this hyperbole this irrelevant rhetoric and bring real skills to the debate. I accept I may have been a tad irreverent in describing Mr Bennett as constantly lacquering his head with pottles of oil. He has just come back; he now has powdered his nose. We know that and that is why every contribution he makes in an attempt to undermine our matua Winston Peters is an irrelevancy. He has been mothered on milk he did not buy. 
I will say that at least those members towards the back of the Chamber make an attempt to contribute constructively but they overlook the fact that this debate is about a grand narrative that is moving Aotearoa forward. They seem to believe that the way to improve the roads is to constantly study the shape of the spark plug. No if one wants to lay down a better trajectory one has to step out of the minutiae. 
Simon Power 
: I raise a point of order Mr Chairperson. I was reluctant to interrupt the member because I was enjoying his contribution to the Committee. But I want to make sure that the same latitude of debate will be afforded to members on this side of the Chamber. I do not believe that Mr Jones in what was a highly entertaining description of a large seagoing creature has actually referred to Part 2 at all. You have let him go on Mr Chairperson which is fine by us but I want to be assured that the same latitude will be allowed National members given that he has got so far through his speech without interruption. 
The CHAIRPERSON (Hon Clem Simich) 
: Thank you for raising that. The same latitude? Not necessarily. I was trying to attract the attention of Mr Jones. The volume of his voice was such that he could not hear me. I was going to draw that matter to his attention. Can we commence on Part 2 please Mr Jones. 
SHANE JONES 
: I accept that counsel that guidance from my kinsman a learned parliamentarian. I will gladly take responsibility for any sense of offence that the institution might have suffered through largely my reciting members’ names. Let me come back however to the Budget. When our committee deals with the bill there are three things— 
Jacqui Dean 
: Three things! 
SHANE JONES 
: No two things are happening. We are passing legislation under urgency but the elements of the Budget that National members want to ape will be referred to our committee. Let us just see what they are: KiwiSaver which was laid down last year and added to this year; and the ability for firms to grow their wealth through better efficiencies and better incentives. It is a fantastic day we are looking at. 
LINDSAY TISCH (National—Piako) 
: 
 The Taxation (KiwiSaver and Company Tax Rate Amendments) Bill will make businesses $1 billion worse off than they are today. You see what is happening here is that although the corporate tax rate will be cut from 33 percent to 30 percent the cost of implementation for an employer will be higher than that 3c in the dollar cut. Where is the fairness and where is the equity in that? This measure is a tax increase. It is a compliance cost increase for small business. We all know that 95 percent of the businesses in New Zealand are small to medium sized enterprises. There are 300000 businesses that fall into that category. Sixty percent of those businesses will not benefit from the corporate tax rate reduction. Sixty percent of 300000 is 180000. One hundred and eighty thousand small to medium sized businesses—that is businesses employing fewer than 20 people—will get no actual benefit whatsoever. Why? Because they are either sole traders or partnerships they will miss out. 
However those businesses will still have to contribute to an employee’s KiwiSaver account. If an employee decides he or she wants to opt into the KiwiSaver scheme then deductions will have to be made. As we have seen the real hoax in yesterday’s Budget is that there will be a compulsory employer contribution. Who thought of that? The real hoax in this Budget is that businesses will carry the can. In fact it is— 
The CHAIRPERSON (Hon Clem Simich) 
: I am sorry Mr Tisch. This debate is on Part 2 which is entitled “Amendments to other Acts and Regulations”. Your debate was appropriate for Part 1 and it will also be appropriate for clauses 1 and 2 which are coming up shortly. 
LINDSAY TISCH 
: Well any sorts of amendments that come through in these parts have a reflection on the way we do business—whether it is as employees who are wondering what is in it for them or whether it is as a business owner. These points are very relevant because they add to the compliance costs associated with doing business. I think we have to make it very very clear that this measure is a hoax for small businesses—an absolute nonsense. 
When we look at any associated legislation that may be impacted on by this measure we see that it adds once again to compliance costs. What does KiwiSaver and all of the associated amendments that go with it actually mean to employers? What is the process they will have to go through? 
John Hayes 
: Cost. 
LINDSAY TISCH 
: Well it will end up being a cost. When I have gone around talking to business owners I have found that only about 5 percent of them actually know how the KiwiSaver scheme works. Yet that measure will be implemented from 1 July. The horrendous costs we will see with regard to it will be quite significant for small to medium sized enterprises which do not have the resources to employ somebody specifically to spend his or her time on the new payroll tax and to work through the process of whether someone will opt into or out of the scheme. The cost is associated with any provisions in other legislation that impact on what the whole scheme is about. 
In dealing with this issue—the process that one must go through in looking at whether an employee will opt into the scheme—the employer needs to be able to tell the person what is in it for him or her—what the employee will receive in terms of benefit. I will not discuss those things as I know they are not part of this debate. But I think we need to bring it back to the process that will be followed—with all the implications that go with it—and that the employer will have to go through. If the employer is a company then it will receive a tax reduction from 33c in the dollar to 30c in the dollar but if the employer is a sole trader or a partnership then he or she will get no benefit whatsoever. The compulsory contribution to an employee’s KiwiSaver account is where the compliance costs come in and that is what National is opposed to. This scheme is a hindrance and a hoax on employers in New Zealand. 
Let us look at the process that we will go through from 1 July. Here it is. I have a graph here; it is a matrix of what will be involved. 
Hon TONY RYALL (National—Bay of Plenty) 
: 
 I cannot help but agree with Lindsay Tisch’s contribution. I thought it was right on the money—and I will tell members about the money. New Zealanders are not going to get any of it. 
I am strongly opposed to these proposals in Part 2 of the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill because Government members have not answered the three important questions I asked them earlier this morning. I have listened to this debate and I have not heard one member opposite answer any of the three key questions that I asked earlier. 
The first question I asked was how a low-income person in Otara benefits from this bill. If he or she cannot afford to save anything what is benefiting that person in this bill? 
Shane Jones 
: You said that this morning! 
Hon TONY RYALL 
: And the member did not answer the question. I am repeating the question. I ask the member “Mr Tamihere” to take a call and to answer the question. [ 
Interruption 
] I ask the member to answer the question. The first question is how low-income people in Otara will benefit from this if they cannot save. What in this bill will increase their pay packets and give them more incentives? Nothing in this bill will do that. The second question is this. What effect will this have on the pay packet of a low-income person in Otara? The Labour Government has got employees into these multi-employer contracts so that everyone gets paid the same regardless. The union representatives of those low-income people in Otara will go to see the employer and the employer will say that there will be a 2 percent reduction in their pay increases because that is for KiwiSaver. That is what Dr Cullen said would happen. He said that the increased burden on business can be paid for through lower pay increases. 
So what will happen to that low-income family in Otara that is not in KiwiSaver is that their pay will be suppressed by the people who are in KiwiSaver because that is the way Labour has industrial relations these days—one gets paid the same regardless. Well what will the Government do about that? I have not heard a single answer to that question in the debate today. The question is simple. How will the Government stop low-income people having their pay increases suppressed because some of their workmates may be in KiwiSaver under multi-employer collective agreements? It cannot answer that question. 
The third question that Labour cannot answer is this. What in this bill will actually make people wealthier when they work hard? What is the incentive in this bill for people to work hard get ahead and keep money in their pockets? None of those three questions has been answered in this House today. Frankly that is simply not good enough. 
But let us look at what also is affected by Part 2—the lower company tax rate and the impact that will have on Part 2 particularly in some of the later clauses associated with the bill. I want to quote this comment which was made in 2001 and I want Government members to answer this—I wonder how they will rebut this argument: “The actual benefit of a lower company tax goes to foreign resident shareholders for whom it is in the main the final tax. Leaving aside the political question of whether our fiscal priority is to give tax breaks to foreigners the core question is whether this actually attracts any new foreign investment. Since this is a small increase in what is left over from profitable investment is the business community really saying to me that the profit potential of investment options for foreigners here versus elsewhere is so finely balanced that this will swing deals? I doubt it”. 
And who is the person who said that it is important to identify that for New Zealand resident shareholders “company tax is merely a withholding tax. They are eventually taxed at their marginal tax rate” and that the principal beneficiaries are foreign investors? Who said that? Dr Michael Cullen. He is the man who year after year has opposed lower company taxes saying that they will not work and that they do not benefit ordinary New Zealanders. The point of the National Party is this. The priority should be lower personal taxes for New Zealanders. Yes; send that message out to every home in New Zealand. Ring it out loud. The priority is lower personal taxes because that is what helps the poor person in Otara. KiwiSaver does not help the poor person in Otara and this Government cannot in any way argue that it does. 
TIM BARNETT (Senior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
NATHAN GUY (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. Standing Order 137(3) states: “The Speaker may accept a closure motion if in the Speaker’s opinion it is reasonable to do so.” The reason I raise this point of order is that we are in urgency and Part 2 is mainly around KiwiSaver about which the Opposition has some big concerns. According to my records we have had 10 or 11 speakers and we have many more to come. So I would ask that you rule accordingly Mr Chairperson. 
The CHAIRPERSON (Hon Clem Simich) 
: The member is making a plea for further debate. He is quite right; the debate was meant to be around Part 2 and very little of it has been. Therefore I will take one more call. 
DAVID BENNETT (National—Hamilton East) 
: 
 Yesterday out of this Budget we got one phrase that has not been in the papers yet and that is: “Is that it?”. Is that the last Budget from Michael Cullen? It is. Is that the last Budget from Helen Clark? It is. Is that the last Budget of the New Zealand First – Labour coalition? It is. Is that the last Budget where New Zealanders will be kicked around by this Government? It is because New Zealanders will stand up now and want a Government that will not tell them what to do. They will want Budget legislation with a Part 2 in it that actually reflects what they want to see happen. They will want a Part 2 that will deliver for all New Zealanders. 
Those people in New Zealand who work hard and try to make a living will be under this Budget put to the sword by this Labour – New Zealand First Government which has no recognition of hard-working New Zealanders. This is a Government that thinks it knows best. It thinks that by taking money from people then spending it and giving it back to them it knows better than those individuals who should have had the money in their hands in the first place. This is a Government that thinks it knows what people should do. It thinks it knows how people should live their lives. It thinks it knows how people should spend their money. Part 2 should not be like that. 
Part 2 should reflect ordinary New Zealanders’ ability to live their own lives determine their own destinies and have some tax cuts they have been promised over many years—tax cuts we were told about and tax cuts to the value of chewing gum that have now been put away. It is no good giving people “chewing-gum” tax cuts now because they are too small. We will have to wait till next year to get any tax cuts will we not? People will have to wait until the “Budget of all Budgets” in election year—the Budget where there will be a pay-out to buy the votes of people who have saved up for 9 years. That is what New Zealanders will have to wait for to get tax cuts and that is simply not good enough. 
The CHAIRPERSON (Hon Clem Simich) 
: Mr Bennett— 
DAVID BENNETT 
: But there are some other parts in Part 2 that we need to look at. In this Budget we see a number of things about KiwiSaver. The selling of this programme will be the goal of Labour over the next 6 months. It is Labour’s golden ticket to beat the polls so that it can come back and say it is doing what ordinary New Zealanders want to see happen. There is an element of truth to that I must admit. New Zealanders want to see some kind of savings policy but— 
The CHAIRPERSON (Hon Clem Simich) 
: You have made a number of references to Part 2 but I ask you please to let me know which Act or which part you are speaking to—the Tax Administration Act or the Companies Act? 
DAVID BENNETT 
: The KiwiSaver Act and company tax amendments. 
The CHAIRPERSON (Hon Clem Simich) 
: So you are speaking to the KiwiSaver Act 2006? 
DAVID BENNETT 
: Yes. 
The CHAIRPERSON (Hon Clem Simich) 
: OK. 
DAVID BENNETT 
: When we look at the KiwiSaver scheme we see there is an element of truth to the need to have some kind of savings regime but we cannot have a savings regime when the people who are most in need of savings will be left out. The people on low incomes who need a savings policy that will assist them through their lifetime will now be left out of the scheme. They are the ones who will be left out of it. It is all right for all those academics over there on the Labour benches who have been living off the hand of the Government for all their lives. They will get their tax cuts and they will take advantage of them but they are not looking after the people who voted them in. They are not looking after the people this House represents. They are looking after themselves; they know they will get tax benefits. They know they will get the advantage but they do not care about the people out there because they know they have a year and a half till an election and in a year and a half people will forget about this stuff. The real stuff will be in a year and a half when they go out there and go around the country promising handouts to certain interest groups. That is what they will be doing. They are not worried about ordinary New Zealanders making a go of it today. 
It is all right to talk about a charities policy now from this Government—a charities policy that National put out there but that has been stolen by the Labour Party and dressed up in its own colours. It is a policy that National put out there and New Zealanders had the advantage of knowing that National led the way. National was going to look after charities in New Zealand not these guys. The only charity they see is themselves and they see that they have the advantage. 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (Hon Clem Simich) 
: I thank members. They have clearly indicated that they want to have a wide-ranging debate and that will be afforded during debate on clauses 1 and 2. So I will put the question. 
A party vote was called for on the question  
That the question be now put. 
Ayes 61 
New Zealand Labour 49; New Zealand First 7; United Future 2; Progressive 1; Independent: Copeland; Independent: Field. 
Noes 48 
New Zealand National 48. 
Abstentions 3 
Maori Party 3. 
Motion agreed to. 
A party vote was called for on the question  
That Part 2 be agreed to. 
Ayes 61 
New Zealand Labour 49; New Zealand First 7; United Future 2; Progressive 1; Independent: Copeland; Independent: Field. 
Noes 48 
New Zealand National 48. 
Abstentions 3 
Maori Party 3. 
Part 2 agreed to. 
Clauses 1 and 2 
The CHAIRPERSON (Hon Clem Simich) 
: There will be one debate on the title and commencement in which contributors may if they wish summarise all other aspects they have covered. So there will be one debate and two questions. 
Hon DAVID CARTER (National) 
: 
 I want to cover one or two points that were raised by Labour members during this debate on the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill. The first point I would make to the Committee today is a comment on the rather amazing contribution from Shane Jones. Shane Jones said that when this legislation goes to the Finance and Expenditure Committee his select committee the committee will refine it. The reason that comment needs to be exposed today is that he is indeed chair of the Finance and Expenditure Committee but we are here in urgency pushing this legislation straight through the House because the Government does not want it to go to the select committee. So Shane Jones should get up to speed and realise that in fact he will not have the opportunity to refine this legislation before the select committee. 
 The next time this legislation comes before a select committee Shane Jones will not be chairing the Finance and Expenditure Committee; the next National Minister of Finance the Hon Bill English will be the one who has to send this back to the select committee to get it tidied up because that is the first opportunity it will have. Shane Jones certainly will not be the chair of the select committee and I suspect he probably will not be a member of Parliament. Given the way that Labour is rating at the moment it will not get many of its list members in here at all. 
The second point I would make is to take this opportunity to thank Mr Dunne for answering my questions. A number have been raised throughout the debate and finally I had an answer from Mr Dunne to my questions about whether this would increase the size of the bureaucracy of the Inland Revenue Department. I accept the answer that Mr Dunne gave me that although the scheme is complicated the department will not need any more staff. The question then arises if this is complicated and will put a lot of work on to the department’s employees what are those employees doing now that the department has all this spare capacity? I look forward to an answer from Mr Dunne. 
The third contribution I will remark on was the most amazing one of all from Ms Maryan Street. One or two of the questions raised by the National Party throughout this debate asked what is in this for low-income New Zealanders. Do members know that in the Chamber this morning Maryan Street said that low-income wage earners do not need $10 to $20 a week. 
Hon Members 
: What would she know! 
Hon DAVID CARTER 
: She said that low-income New Zealanders do not need an extra $10 or $20 a week. Doug Woolerton heard that comment. Well they will need $10 a week simply to keep putting petrol in the car if they live in Auckland. 
Lianne Dalziel is chipping in now but was not prepared to make a contribution during the debate. I look forward to hearing her take a call shortly. 
Then we had an amazing contribution from Mr Chauvel. He got hold of page 2 of the  
Dominion Post  
and mentioned a couple of points. I looked at the last part of the piece he was referring to and it is attributed to Government Budget document propaganda. It was not written by any  
Dominion Post  
editor so the interesting point is to look at some of the other comments in the newspapers. 
The Christchurch  
Press 
 which is not known generally for supporting the National Party states that the Budget is an “opportunity lost”. That comment is right on the mark on this occasion because Dr Cullen had the opportunity with the hugh surpluses that have been amassed to deliver a Budget that would have given growth to this economy. Instead he has fiddled with the KiwiSaver scheme which even his own Treasury officials say will not achieve greater than a 50 percent uptake. It has now been adequately explained throughout the debate that the very people who will not take up the option of KiwiSaver are the people earning $11.25 an hour who simply cannot afford to take it up. 
At one stage we had an interjection from Mr Mallard: “What about the workers?”. I say to Lianne Dalziel: “What about the workers?” the very people in the electorate of Christchurch East who voted for that member of Parliament. They have been let down completely by Lianne Dalziel. She does not care about the workers; all she is interested in is sitting in her plush chair in Parliament banking her big salary. She has lost touch with the people who voted for her. 
Hon MARIAN HOBBS (Labour—Wellington Central) 
: 
 I rise to support this legislation because I find this a very interesting Budget and a particularly interesting scheme. Budgets can make some changes to how we live as people and I want to take members through in a sense the experience of my parents and their behaviour and my behaviour in terms of debt. 
My parents lived through the Depression and consequently they never ever borrowed to buy something. They saved before they bought a fridge; so we did not have a fridge until about midway through the 1950s. We did not have car until about the 1970s; and that was a Skoda and that was doubtful! They would never ever do things like borrowing to buy something because they were brought up very strongly with this idea that one saved money before one went out and spent it. 
I have a look at myself and I find that if something goes wrong with the dryer I will very easily take my credit card to the company and buy a dryer on the credit card and then pay it off. That is so much the reverse of what actually happened in our parents’ lives. That is what this Budget and this bill are about. It is about returning us to a different way of acting to a way of responsible acting that accumulates money in this country instead of making us always subservient to money that we have to borrow overseas. 
This is a Budget about building capital for this country and I would have thought the capitalists who are so good at borrowing capital from overseas and who sit on the Opposition benches might be interested in this debate. [ 
Interruption 
] I cannot hear them; they are yelling so much. This bill is about bringing discipline self-pride and security to both individuals and this country’s economy. It is something that we desperately need to do. 
I have been out and about today and doing a radio programme with some economists. Have I found there has been a real buying of this legislation? You bet I have! The response from young people on the streets of Wellington has been: “A $20 a week tax cut disappears very fast—four lattes four bottles of beer. But $20 from the Government going into my savings account instead of a tax cut is money that will grow. It is money that will grow for the country’s capital development and money that will grow for me as a person. I would much rather have money saved than have money squandered.” That is the difference in what is being offered here. 
People on the other side condescendingly talk of the poor not being able to save. At the moment the “poor”—the people they refer to so blissfully at the Otara market which I do not think they have ever been to—are the people they refer to as not wanting to save. People do want to save and people want to find a way in which they are supported in their saving. This bill builds on that scheme and gives an incentive to save. The Opposition would rather give that incentive to be spent right now rather than saved. It is not a question of starving or saving because with this legislation the same Government is returning money to those very people whom the Opposition refers to as starving. They are the people who will receive better money because they will pay less when they go to the doctor and pay less for prescription charges and those aged 25 to 44 are the last group in this respect. That is money that is being saved and it is being awarded from this Budget. Therefore it is not a question of starving or saving; it is a question of supporting people into saving and supporting people into security for the future. 
I find it absolutely hypocritical to hear members opposite talk about a sound economy. I must say it is always really interesting that whenever one is on the hustings with the National Party people they always say very quickly: “It’s all right; for those roads we’ll just go out and borrow.” Where would they be borrowing from? It would be from overseas. Who has to pay back the money for that? The taxpayer has to pay back the money borrowed from overseas. This KiwiSaver is about growing capital in our country and growing security. 
JOHN HAYES (National—Wairarapa) 
: 
 I have heard some hypocrisy in my time and that last speaker definitely wants to take us back— 
The CHAIRPERSON (Hon Clem Simich) 
: No use of that word please. I will not want an apology; just go ahead. 
JOHN HAYES 
: I thought I said “that last speaker”? 
The CHAIRPERSON (Hon Clem Simich) 
: Just carry on. 
JOHN HAYES 
: Thank you Mr Chair. Let me come back to the points being made by the last speaker. In my view this Government wants to take us back to the 1930s when we did not have a huge exodus from our country of people floating off to better terms and conditions in Australia. The Government wants to create the conditions that trap people here and stop them from leaving this country. 
 This is a control-freak Government. The 2005 “chewing gum Budget” tax cuts have now been abandoned. This Government is clearly saying to the community through this KiwiSaver legislation that it knows better than individual citizens how to spend their money. The Government has decided that people in my community in the Wairarapa should leave their money with the Government. They can spend it later; they cannot spend it now. 
The problem is that this control is unnecessary. What is necessary is that the Government stop its own excessive capturing and spending of the surplus wages that we might contribute to saving. The problem in this country is that Government spending is far too high. It is also not properly focused. I spent yesterday afternoon trying to help a member of my community in Masterton who is paying $230 a month for an unfunded Alzheimer’s disease drug. This person lives in rented accommodation is on a benefit gets the maximum disability allowance and does not have enough money to live on. How is that person going to engage in this savings scheme? I think of the standard person living in Kuripuni with four kids working for $11 or $12 an hour. Where is that person going to get the surplus from to contribute to this savings scheme?  
The reality is that at least half the people in this country who are actively engaged in the economy and are not on benefits are never going to have the surplus to engage in this scheme. What you are doing is grabbing savings and trying to capture people from leaving this country and going to Australia. You are trying to stem the outflow of people from this country by restricting their access to their own money. I am really concerned that a good proportion of my electorate who are in a low-decile economic group will never be able to afford your KiwiSaver scheme. The 1000 bucks you are going to throw in upfront will not make the slightest difference. My community wants jam to put on the bread not to give you the bread— 
The CHAIRPERSON (Hon Clem Simich) 
: I do not need the bread. You must not refer to me. You do that by saying “you”. 
JOHN HAYES 
: This Government is locking up tax cuts and future pay increases. 
Let us see how much support this Government has when future generations of workers over the next 3 or 4 years say to their employers that they need a wage increase. For example yesterday a constituent said to me that there had been no change in their accident compensation levy since last year except for the bill which was up 17 percent. I think of every person in my community who is paying 12 to 20 percent rate increases on his or her property. Where will those people find the surplus to lock up in a savings scheme when they do not have sufficient money to put into their pockets now to meet their costs of living? 
As my colleague Lindsay Tisch said this scheme is about another tax imposition. It is a tax imposition on a community. It is a tax imposition on small business. The Government is saying that we have had 8 years of golden economic weather—but what is New Zealand doing? It is slipping down the OECD table. This Government has never had a better opportunity to increase standards of living—and what is it doing? It is sending us backwards. This savings scheme is going to send us further backwards. There will be a significant outflow of people from this community because they are going to say that there will be more Government control more bureaucracy and more people telling us what to do. 
CHRIS TREMAIN (National—Napier) 
: 
 Before getting into the guts of the bill I will just respond to Marian Hobbs across the other side of the Chamber. She is a member for whom I have a lot of respect and time. She told us a very nice story about her family and about how they had learnt to save after the Depression and put away every dollar. But that is kind of rich coming from a member of a Government that for the last 7 years has spent an additional $20 billion—$20 billion. This year in this Budget—I am not talking about saving—another $3.8 billion is being spent. I just think the member needs to take that into account before lecturing members on this side of the Chamber about saving. 
I also apologise to the Chair Clem Simich for the disparaging remarks from Mr Jones earlier on about my colleague David Bennett and various hair creams needed. I trust Mr Chair that you did not take that personally. I am just apologising on behalf of Mr Jones. 
I want to take a short call and address the Minister in the chair today Mr Dunne. I have three questions for him; I would like him to take a call and come back to me on them. The first issue concerns the tax cut for companies and more important the businesses in this community that will not achieve that tax cut. They will be lumped with a cost on their businesses. There are three areas I want the Minister to address if he takes a call. There are 118000 small to medium sized enterprises that are not corporatised but that are sole traders or partnerships. They will not get a reduction in the tax rate but they will have to meet the employer contribution. I understand that there is a $20 credit for each employer and that that covers only up to $500 per week. But the average wage in this country is not $26000; it is $45000. How are we going to sell this policy to those 118000 small to medium sized enterprises?—I am sure there are a number of them in the Ohariu-Belmont electorate and certainly many in the Napier electorate—because they will get an increase in costs. 
The next area I would like the Minister to take a call on concerns exporters. I spoke to the Minister previously about a number of the exporters in the Napier electorate who at this point in time are not making a dot. They are faced with an economic climate in which it is very difficult for them to make a dollar. They will not have a tax cut but will be faced with the additional costs above $500 per week of an employer contribution. That cost will rise by 1 2 3 and 4 percent over 4 years so it will be an additional 4 percent cost on their businesses. The Minister Mr Cullen told us that it is not a problem and that those costs will be negotiated as part of ongoing wage rounds. The problem is that the policy has become compulsory now not optional. It is negotiable when it is an optional policy but as soon as it becomes non-optional policy it will be off the negotiating table. 
We need to answer to the 118000 businesses I talked about to exporters and to all those other businesses that have large labour costs that are much higher than their profit margins. For the majority of businesses in this country—as Mr Woolerton knows—the cost of labour is way higher than the profit at the bottom. On the one hand the Government is saying that there will be a 3 percent cut at the bottom—if the business is making a profit then that is good—but why a 4 percent increase over 4 years in the top line of expenses? I cannot see how that is a benefit to those businesses. I ask Minister Peter Dunne to take a call and let this side of the Chamber know how that sting in the tail will benefit those businesses I have talked about today. 
NATHAN GUY (National) 
: 
 Here we are today in urgency and on this side of the Chamber we have about a dozen National MPs while on the other side of the Chamber we can see two. That is how seriously Labour is taking this legislation— 
Hon Chris Carter 
: I raise a point of order Mr Chairman. The member knows perfectly well that he cannot refer to the absence of members and obviously he certainly cannot count them. There are a lot more Labour MPs here than that. 
NATHAN GUY 
: As I was saying we are taking this legislation under urgency extremely seriously. The Government wants to ram it through and not put it through to a select committee. 
Sitting suspended from 1 p.m. to 2 p.m. 
NATHAN GUY 
: I am keen to see the Government actually explain how it will sell KiwiSaver because I believe that a lot of the low-income earners in the area where I live in the likes of Foxton Shannon parts of Levin and Otaki will struggle to see any benefits from KiwiSaver. So I want to see and I want to hear today how the Government will get out there and sell this policy. I heard Gareth Morgan talking the other day. He believes that 30 percent of New Zealanders think KiwiSaver is something to do with saving the kiwis in the bush in New Zealand. 
So here we now have under urgency Dr Cullen ramming this bill through the House. He has bolted so much on to KiwiSaver that no one really understands it and he is expecting the House to adopt it here today under urgency. It will be implemented on 1 July under a mad mad rush. 
What we have seen under this Government—under Labour in particular and Dr Cullen’s ideology—is no tax breaks for the last 8 years. He expects low-income earners to save more and reduce their spending when we have a big-spending Government on the other side. So those hard-working people from the likes of Foxton Shannon and Levin—some of whom are on $11.25 a hour—who are expected to contribute $18 at 4 percent of their wage into KiwiSaver will struggle will they not? They will be in the smoko rooms or talking while they are working. A worker might be thinking: “What benefit am I going to get when I’ve got high interest rates I’ve got my mortgage being rolled over right now—where am I best to invest my money? Where am I best to put my hard-earned money? Is it better to put it into KiwiSaver at about $18-plus a week or not?”. That is what Mr Hughes will struggle to explain as he moves around the Otaki electorate which is the most marginal in the country and tries to sell this policy to hard-working New Zealanders. 
Right now half the workforce as Dr Cullen said when he addressed us here in Parliament will not sign up to KiwiSaver. If people have mortgages they are better off paying those off than investing in KiwiSaver. It will cost about 13 or 14 percent on my maths. High interest rates plus tax mean that people will be better off paying off their mortgages than putting money into KiwiSaver. 
Another thing I want members to explain is the duty of care and the trust deeds around KiwiSaver. Is the money secure? What is the reliability of people getting their money back when they are 65? 
The other thing that is really important in this bill is the taxation part of it. We have seen the reduction of the “chewing gum tax”. That has gone for the low-income earners. The union members of the Labour Government know that employers will have to negotiate with union members and I want to see how they will handle that when employers say that they have contributed part of workers’ pay increases because of the money they have contributed into KiwiSaver. So we will not see much of an increase in pay rates under this Government and under this proposal. 
Now we are seeing a huge divide between Australian and New Zealand wage brackets. In particular in Australia they are receiving a third higher in their net weekly pay in the hand. It is no wonder we are seeing 700 people a week leave New Zealand and head off to Australia. I understand we have a saving problem in this country but this will not fix it. 
DARREN HUGHES (Labour—Otaki) 
: 
 To assist my constituent Mr Guy I seek leave to table a document indicating that the National Party supports the KiwiSaver scheme. 
The CHAIRPERSON (H V Ross Robertson) 
: Is there any objection to that course of action being taken? There is. 
R DOUG WOOLERTON (NZ First) 
: 
 That contribution from Mr Nathan Guy was another of what I call the National Party financial adviser speeches. The people who will be better off under the KiwiSaver scheme the people who will be advantaged by it are the people who just know they need to save. They have been unable to save hitherto because there were no incentives no help from the Government and no help from employers or anybody else. But those people know they should save. It saddens me that the National Party does not give people apart from the wealthy the credit for wanting to do what they believe to be the right thing for themselves for their families and in fact for the country. People do want to save. They do want to put money away for the future. They do want to have the security that comes from doing that. But hitherto they have been absolutely unable to do so. 
The KiwiSaver scheme—especially the enhanced KiwiSaver which we are talking about now—enables people for just about the first time ever to save. We cannot stand here as New Zealand First and not applaud that. We have made an issue of the need for savings from the time we first came to Parliament and we will continue to do so. We are proud to support this bill and we do not take any heed of the manipulations that the National Party thinks people will have to go through in order to decide whether they will be part of this scheme. 
I want to attend to the issue of 50 percent participation in KiwiSaver which is being made a lot of. It has been said people cannot afford to participate in KiwiSaver and will not participate and in fact only 50 percent of people will participate. The community is just not divided up like that. There will be a time when people who do not participate in the initial stages will participate. They may not get all the benefits that early participation will give to anybody—we all know the rules of compounding interest—but they will be able to participate at some stage. It is not right to talk about only 50 percent of people participating in KiwiSaver then in the next sentence—or in the same sentence many times—to talk about communism compulsion and our socialist regime. If there was compulsion people would all be in KiwiSaver. I do understand that some members of the National Party have taken the time to at least say that the compulsion component they are talking about is on the employer when the employee decides to participate and that is certainly true. But one cannot talk about a 50 percent take-up on this issue and then talk about compulsion in the same breath because that is just not credible. 
We in New Zealand First have talked for years and years about the issue of encouraging saving. I have congratulated Mr Dunne before; I will do so again. I will also congratulate the leader of New Zealand First its deputy leader who is here and— 
Dr the Hon Lockwood Smith 
: What about anybody else? 
R DOUG WOOLERTON 
:—I was just going to do that—and the whole caucus because we have stuck to our guns over this issue. We have not played politics with it. Whenever a bill has come up that has had a savings component to it whether or not we agreed with it in its entirety we voted for it. There are many cases we would like to see. I am sure many other members of this Parliament would like to see the company tax rate come down to 20 percent—not just equal with Australia’s rate but more competitive than it. But that is not to be at this point and we understand that in this Parliament most change is incremental. When it is not it is really really scary so we would look forward to further enhancements not only of KiwiSaver but of a lower tax rate variety to the taxation system. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 61 
New Zealand Labour 49; New Zealand First 7; United Future 2; Progressive 1; Independent: Copeland ; Independent: Field. 
Noes 48 
New Zealand National 48. 
Clause 1 agreed to. 
The question was put that the following amendment in the name of the Hon Peter Dunne to clause 2(4) be agreed to: 
to omit “27(1)(2)(3)(4)(5) and (7)” and substitute “27”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 61 
New Zealand Labour 49; New Zealand First 7; United Future 2; Progressive 1; Independent: Copeland; Independent: Field. 
Noes 48 
New Zealand National 48. 
Amendment agreed to. 
A party vote was called for on the question  
That clause 2 as amended be agreed to. 
Ayes 61 
New Zealand Labour 49; New Zealand First 7; United Future 2; Progressive 1; Independent: Copeland; Independent: Field. 
Noes 48 
New Zealand National 48. 
Clause 2 as amended agreed to. 
Third Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill be now read a third time 
. This bill has two key provisions. The first is to bring in the mechanisms for lowering the current company tax rate to 30 percent from the beginning of a company’s 2008-09 income year and the second is the introduction of a tax credit for people saving for their retirement through KiwiSaver or a complying superannuation fund. 
I have to report to the House that the debate during the Committee stage was wide ranging but hardly edifying. The most significant point to emerge from the debate was that National went on record voting against a cut in the corporate tax rate. Many of us were surprised because we had always seen the National Party as the friend of business. 
We were very surprised at National’s actions today but we are even more surprised when we consider some of the history. Some of us who have been around for a while recall that the last time the business tax rate was cut in 1988 National also opposed that. I remember comments made by Mr Groser earlier in the debate on this bill that National could not possibly support this bill because it was the Opposition. So I will give National members some credit for their 1988 position—they were the Opposition and presumably were applying the Groser philosophy. 
Let us think back over the years about the National Party and company tax. As far as we can tell National may have made a downward adjustment of tax in about 1966 but subsequent to that of course the biggest intervention it made in the area of company tax in the late 1960s was the introduction of a payroll tax. Members will remember the debate that went on about Sir Robert Muldoon’s payroll tax. That tax was repealed in I think the early 1970s. 
Then there was the period of the third National Government when no business tax adjustments were made and every other tax went up through the roof. We had a personal tax rate of 66 percent by the time that National left office. Here we are today cutting the company tax rate back to 30c in the dollar and the Opposition is voting against it. So when we look at history I suppose we should not be surprised at National’s stand today even if it did take a few of us on to the back foot when National members stated it. 
The debate was fascinating as far as KiwiSaver was concerned. Everyone who participated in it from right around the Chamber—and I acknowledge particularly the contributions from my friend and colleague Mr Woolerton and from the members on the Government side—is in favour of people making provision for their retirement. Everyone thinks the idea of having long-term saving is a good one. Everyone thinks it is something we ought to encourage for growth. I do not know exactly how many times the Australian experience was quoted in the debate but it was quoted frequently. 
Yet when the crunch comes and we are introducing a system that not only provides for a dedicated long-term saving fund but also gives real incentives to employees if they choose to become involved—with matching contributions from an employer and a matching tax credit for the employee in the first 4 years—the Opposition votes against it. I find it a little difficult to understand how one can be for saving for thinking of the future and for all of these things but against the measures contained in this bill. 
This bill is a critical part of the Budget package. The KiwiSaver changes will take effect from 1 July of this year. I can assure those members who raised some concerns about this process being rushed that we are well on track to make it effective and operational from 1 July and I am sure that the uptake will be very high. 
There was a very interesting tenor to the debate in the Committee stage too where some National members said that only 50 percent of people will take this up. As Mr Woolerton pointed out the argument was then turned around to say that we cannot use compulsion because compulsion is a form of totalitarianism but that it was still wrong that only 50 percent of people will take this up. [ 
Interruption 
] I think Mr Duynhoven is right; National members seem to want a compulsory voluntary scheme. This is called having it both ways—playing off both sides against the middle and getting nowhere. 
With those few observations about what was as I say an illuminating but not particularly edifying Committee stage I am very happy to move the third reading of this bill. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I cannot say I am pleased to be speaking to the third reading of this Taxation (KiwiSaver and Company Tax Rates Amendments) Bill which is being rammed through all stages under urgency. National of course is perfectly happy to support the bit of the bill that reduces the corporate tax rate from 33c down to 30c; it is the rest of this bill that we do not like. The Government claims that subsidies for the KiwiSaver scheme are necessary because silly stupid dumb New Zealanders have not been saving enough money. That is Dr Cullen’s attitude: stupid Kiwis have not been saving enough money. Dr Cullen knows better and he will damn well make them save! 
 I want to put this to members. How on earth are ordinary Kiwis meant to save money when Dr Cullen now taxes them $20 billion more each year than when he came into office? How the hell are Kiwis meant to save money when Dr Cullen is taking $20 billion more off them? He is taking their hard-earned earnings off them and leaving them nothing to save. Dr Cullen admitted in the House the other day in answer to a question— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: There is far too much noise coming from this side of the House and there are many members who are not in their own seats. I would refer them to Speakers’ rulings 58/4 and 59/1. 
Dr the Hon LOCKWOOD SMITH 
: We do not mind because we know that those members are upset over this Budget. New Zealanders are not stupid. They know that Labour has been taxing them far too much since it came into office. As I was about to say in answer to a question in the House the other day Dr Cullen admitted his cumulative operating surplus. Does Dr Cullen remember the answer he gave to the question about what was the cumulative operating surplus since Labour came into office? Do members of the Labour caucus remember what the answer was? It was $35 billion. The cumulative surplus in the operating balance excluding revaluations and accounting changes since Labour has been in office is $35 billion. Dr Cullen has taken that off Kiwis and then he wonders why Kiwis cannot save! What has happened as a consequence is that Kiwis starved of cash have had to borrow. Dr Cullen has taxed them $35 billion in cumulative surpluses and left ordinary hard-working New Zealanders having to borrow. 
Dr Cullen thinks he is so smart that he has taxed them on all this money paid back Government debt put money into the super fund and left New Zealanders starved of cash. They have had to borrow money while Dr Cullen thinks he is so clever. We are opposed to this bill because Labour should be giving New Zealanders back some of the money they have earned. 
This bill is now of course subsidising Dr Cullen’s KiwiSaver scheme. It is interesting to look at what objective analysis says about that putting prejudice aside and looking at what the retirement policy and research centre at Auckland University says about it. We know that its spokesperson Michael Littlewood has a particular view on superannuation matters— 
Hon Dr Michael Cullen 
: Ha ha! 
Dr the Hon LOCKWOOD SMITH 
: Dr Cullen should not laugh at Auckland University. The work of that research department is actually objective analytical work. It shows that— 
Darren Hughes 
: Gerry Brownlee told him that. 
Dr the Hon LOCKWOOD SMITH 
: Dr Cullen actually once used to agree with him. Back in 2002 Dr Cullen said that it makes no sense to subsidise savings. Dr Cullen actually said that in 2002 and of course the research centre at Auckland University has shown through analytical work that subsidising savings does not work. So not only is Labour taxing New Zealanders to oblivion it is now going to subsidise its KiwiSaver scheme because it knows that without the subsidies it will do nothing yet close analysis of subsidised savings schemes shows they do not actually work. 
National members have been pointing out that sadly low to middle income wage and salary earners are not going to benefit at all from any of this. In fact they are going to suffer. If members look at page 16 of the Executive Summary Budget document they will see that it very conveniently spells out the increase in spending in this year’s Budget. One of the issues that has not been given a lot of coverage yet is the fiscal stimulus in this Budget. Labour has continued its track record of spend spend spend and the fiscal stimulus is more than the Reserve Bank of New Zealand was expecting. That means that mortgage rates will stay higher for longer. Low-income Kiwis will not be able to afford to put their 4 percent into this KiwiSaver scheme so they will not get any benefit out of those subsidies and get no benefit from that money-go-round. In fact they suffer; they will pay tax to fund those subsidies and will not get any of the subsidies. So the first thing is that low-income Kiwis pay the tax for those subsidies but will not get any of those subsidies. 
The second thing is that their mortgage interest rates will stay higher for longer because the fiscal stimulus in this Budget is higher than had been expected by the financial markets. The third thing is that employees will get lower wage increases because as Dr Cullen himself said yesterday there should be a trade-off so they will get lower wage increases. And what is more finally the “chewing gum tax” reductions that had been promised have been killed off by this Budget. It is little wonder that Laila Harré a former supporter of the Labour Party said she was so disappointed with this Budget and so disappointed with this legislation. It will hurt hard-working ordinary low-income New Zealanders. I have in my hand here today’s— 
Darren Hughes 
: It will be great for Working for Families. 
Dr the Hon LOCKWOOD SMITH 
: The junior Labour whip Darren Hughes should listen. These are the latest statistics today on New Zealanders leaving permanently. Does Mr Hughes know what these statistics show? The exodus is carrying on. In the year ended April one-third more New Zealanders went than just 2 years back. It is even worse. Up until last month we were losing them only to Australia. These statistics released today show that the net permanent loss or gain is not just a permanent loss to Australia it is now a permanent loss to both Europe and the Americas. Even when we allow for the huge influx from Asia we have lost New Zealanders in the month of April—a big increase in the numbers going—because they are sick of “Dr Cullen knows best.” They are sick of “Labour knows best.” They are going where they have more opportunity for themselves and their families. We will vote against this third reading. 
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. 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 I want to make just one point to Dr Cullen. If he is going to claim that KiwiSaver will bring very large benefits to the New Zealand economy because of the size of its effect he cannot then turn round and say: “But you’ll only have to give up 0.5 percent of your wage increases over 4 years.” The fact is that if it has very little effect on moderating wages it will not generate much in the way of new savings. The fundamental economics he will have to explain to people is that to increase our savings we have to reduce our consumption. That is the only way to do it. 
Labour MPs will have to go to the people they have been talking about in this debate—like the person in the supermarket working for $11.25 an hour. Charles Chauvel and some other champagne socialist over there said that they would go into supermarkets and tell those workers on $11.25—no on $12 an hour because they will be on the minimum wage—that they should put aside $18 a week that it will make them better off and they will get a tax credit when they turn 65 in 45 years’ time. I suspect that if we took a vote in a morning-tea room those former Labour voters would vote to take the tax cut Labour promised them then withdrew. That is the other thing that low and middle income earners will understand from this Budget. 
For two elections in a row Labour promised those earners “chewing gum tax cuts” and those cuts were rational; Peter Dunne had pushed them on to Labour. We were told that low and middle income people should have their taxation thresholds adjusted for inflation. I think it was going to cost $400 million. But in a spend of $3.8 billion Dr Cullen could not find it in his heart to give them something—just something. So the effect of this Budget is as follows: the 50 percent of people who go into KiwiSaver will have to reduce their net pay to get the benefits. Is that right? 
Hon Members 
: Yes that’s right. 
Hon BILL ENGLISH 
: People on higher incomes can do that or—much more likely—get their savings from other places and put them into KiwiSaver. That is what these schemes all do; they shift money around. That is where the bulk of KiwiSaver money will come from. But low and middle income people are worse off. They are worse off. They will have to drop their net pay when they are already under pressure to get the $20 tax credit in 20 years’ time and they will all be worse off because they will not get the tax cut Labour promised them. That is what Labour is going to regret over the next 18 months—that it deserted its core constituency. People who have higher incomes and people who are more likely to vote National will bank the profit. They will bank it because they will say that Dr Cullen should have been reducing taxes. He was not so they will take this bit. And they will not give him any credit for it whatsoever. 
There is another issue of equality that Labour used to care about: equality among retired people. One of the effects of KiwiSaver is that it will increase inequality among retired people. It is a Government subsidy to increase inequality among retired people because the people who get the biggest benefit of $20 a week for the next 30 years are people on higher incomes. This will leverage them up into even higher incomes when they retire. People who work part-time who are in and out of the workforce who are on benefits who are seasonal workers who are mothers at home or who are invalids sick or disabled will not get that leverage and they will get national superannuation as they always would. Is that right? 
Hon Maurice Williamson 
: What does Dr Cullen say to that? 
Hon BILL ENGLISH 
: How is Dr Cullen going to explain that? He came into politics to reduce inequality and he will go out of politics creating the largest Government subsidy for increasing it among old people— 
Hon Tony Ryall 
: He’s going to eat the rich and now he’s feeding them. 
Hon BILL ENGLISH 
: And he is feeding us. He goes on about how bad the subsidy on our superannuation is. Why is he increasing it? Is it because he plans to retire? Is that why he is doing it? I presume it is. 
The other thing that has come out of this “money-go-round Budget” is the illusion which Dr Cullen is trying to create that there is some kind of cargo cult about savings—that if the Government puts some money into people’s accounts somehow the country will be a whole lot better off. There is a place for incentives on savings and National members have indicated that we support KiwiSaver. The big issue ahead of us is how far that support should go and in making that decision we will take into account the fact that savings are not everything in an economy. 
The economy has actually been growing about 3 or 4 percent a year on low savings. So we can have growth without having a whole lot of savings. Japan is drowned in savings actually. Its savings have been so large that it has had a 10-year recession and a 1 percent interest rate. It has had no growth at all. I do not think that even KiwiSaver is going to achieve that. The point is that we need a much more balanced approach. There is no point in making people save and therefore compelling investment of their money unless there is a productive growing economy in which to invest. That means an economy with decent education standards and an infrastructure where Government money can actually be spent after it has been promised. It means an economy where labour productivity is growing an economy where young people feel that if they stay in this country they will get incomes higher than they would get if they went across the Tasman to Australia and an economy where people believe they—not just the Government—have a say about their money. 
Unless we have all those other factors savings will not contribute to the growth of this economy. Savings are a quantum of money. What is done with them is what matters. So the Government may grow the pile of savings—I am a bit sceptical; there may be some more—but on the other side of the equation it will gradually suffocate all the incentives for the economy to improve and for incomes to rise. You see Labour members might not understand this because of where they are in the electoral cycle. Labour members are all heading towards retirement but the country is not. The people of this country are not all heading for retirement at the next election. Government members are winding down when we need to wind this country up. 
Our message to 20 to 25-year-olds in New Zealand will be that they can choose either to support a Labour Party that is totally focused on building up money to deal with demographic risks that are 30 years away or to support a party that will help them save but will also help make a productive economy where they can invest that money and lift their incomes. I found when talking to 20 to 25-year-olds that they do not regard what is going to happen in 2040 as a vision for their future. Labour’s vision for today’s 20-year-olds is that they can have a big bank balance when they are in a retirement home. The best they can hope for in this country is to put up with low incomes be told by the Government what to do with all their money and get a bank balance when they are sitting in a rest home. 
Well National does not believe in that; fundamentally there is a basic philosophical divide. Dr Cullen is absolutely dismissive of what New Zealanders would do with an extra dollar. He says they will waste it. The only person in this country who is capable of deciding what to do with an extra dollar is Dr Michael Cullen PhD. Well there is a choice: back Michael Cullen or back New Zealanders. National backs New Zealanders. It believes that they can make good decisions about a dollar they earn. It believes that a dollar taken off them in extra tax by the Labour Government is likely to be wasted. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Just before I call the next speaker members are advised that New Zealand First has split its call. Each member speaking will get 5 minutes. The bell will go at 4 minutes indicating 1 minute remaining. 
R DOUG WOOLERTON (NZ First) 
: 
 Unfortunately the deputy leader of the National Party is doing exactly what speakers from the National Party have been doing all day—that is dealing with these things in cold isolation. He knows as the National Party knows and as we all know that this is one of a raft of measures one of which is the Working for Families package. Working for Families was a tax break but it was a targeted tax break. It was a targeted taxation concession and we in New Zealand First agree with that. It is not about giving back and it is not about putting people on welfare; it is about targeting taxation. 
I was alarmed to learn—and I had not realised this even though I spent a fair number of years in the National Party—that we have to go back to 1966 or thereabouts to find the last time the National Party gave a tax break to companies. I did not realise that. In all my years in the National Party I have to say that I was very proud of the fact that I believed we were a low-tax organisation. I believed that we were business-friendly. I believed in all of those things. I believed that we were good for families. I believed all of that. But it took me until many years later—after 11 years of being in this House—to find out that it was good old “Kiwi Keith”— 
David Bennett 
: What are you doing? 
R DOUG WOOLERTON 
: I am supporting a tax cut; National is voting against it. It was back in the days when dear old “Kiwi Keith” was the Prime Minister that National last gave a tax cut to the people of this country. 
In the last election National ran a campaign on tax cuts aided and abetted by the Exclusive Brethren—maybe they put their hands up National’s back—yet National has had no history of tax cuts since 1966. I am not trying to shove that up National; I am just saying I am surprised that given this wonderful opportunity National does not grab it with both hands in order to rectify the situation by at least going into the next election saying: “At least we voted for a tax cut. There’s been nothing from National since 1966 to 2007 but we voted for a tax cut in 2007. There’s our track record and we will cut some more after the 2008 election.” But National is not even doing that which is sad. I did not even know of that history and I think it is a bit unfortunate. 
A lot of this legislation over a number of bills lines up our taxation law with that of Australia. It is cutting the corporate tax rate to line up with the rate of Australia a country with which we must be competitive. It is Australia’s savings—its mountain of money—that is being used to come over and buy our companies. New Zealand First’s concession in terms of the global economy is that we would not even mind if Australians came over here—accent and all—and started up new businesses. But they do not do that. They come over here and buy things like banks and buildings in the central business district of Auckland; they do not come here and involve themselves in entrepreneurial activity. Thank you. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I have been tied up outside the House for much of the morning. However I had a brief look at the bill before I left and I thought: “This will not take too long.” I do not even know why this has to go through in urgency today. I would have thought this bill would have huge support in this House. This is what it states: “Tax rate changes. The bill reduces from 33% to 30% tax rates for: companies: unit trusts: group investment funds (GIFs) that are taxed as if they are companies: widely held superannuation funds: widely held GIFs that are taxed as if they are trusts: life insurance policyholder funds. It also caps the top rate for PIEs at 30% instead of the previous 33%.” 
I knew in my heart that these guys would go for that. I did not know how Labour came up with it but I knew that the National Party would support it because it has been pushing this to the public and through the House time and time again for I cannot remember how long. Now that National members have the opportunity to vote for it they are going to vote against it! 
Jill Pettis 
: What? 
PETER BROWN 
: I know it is beyond belief. These tax cuts—and that is what they are; no ifs no buts no maybes—will encourage savings. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I am sorry to interrupt the honourable member but I say to members on my left and on the cross benches that their interjections on each other in close proximity as the members are interfere with the microphone. It is a longstanding convention that that does not happen. 
PETER BROWN 
: These reductions will encourage savings and will encourage investment in this country. 
I may stand corrected but I did not hear Bill English say much more than one word on the tax cuts in this bill. The only aspect he talked about was the KiwiSaver regime. Dr the Hon Lockwood Smith used as the champion of his debate Laila Harré. Laila Harré belongs on this side of the House. It is most unusual for the National Party to drag up her name as their champion. 
I challenge National members to say whether if this bill is so wrong they would scrap it if they became the Government. Will they tell us that now loud and clear? Would they scrap it? Would they reverse it? 
Hon Harry Duynhoven 
: You’ll get three different answers Peter. 
PETER BROWN 
: Yes. I draw to the attention of members that Australia has had compulsory superannuation for many a year now. It came in under the Keating Government. We have something like $15 billion under the Cullen fund or thereabouts. In Australia if my information is correct they have in excess of NZ$1 trillion. We can imagine what that can do. National members tell us weekly how many Kiwis go from here to there. Why do they go? One reason is that they get security in retirement. 
The second reason is that Kiwis get higher rates of pay in Australia. National gave an increase of $1 in the minimum wage in the 9 years it was in power in the 1990s. From 1990 to 1999 the previous National Government gave a $1 total increase in the minimum wage yet National members talk about people being poor. I have not looked it up—and I will look it up—but I would not mind betting that that increase occurred when New Zealand First was in coalition with National. 
R Doug Woolerton 
: It did. I remember it. 
PETER BROWN 
: That is when it occurred. 
This bill is a good bill for this country. New Zealand First has long been an advocate for savings in this country. We have said for many a year now that we need to save more in this country not only for our economic well-being now but also for our future economic well-being. We cannot live on debt; we cannot live on borrowed time. New Zealand First is absolutely delighted to put this bill through and to do so under urgency. 
I would urge National members to think again—to think about where they really stand on this issue for New Zealanders and for this country. They are just playing games. Thank you Mr Assistant Speaker. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
Tena koe Mr Assistant Speaker. Kia ora tatou. The Maori Party prides itself on following due process. Indeed our very establishment as a party is based on our respect for Maori being able to have access to due process before the law. So when we came to such a significant proposal to transform the economy to increase savings and to amend the system of taxation we felt duly obliged to undertake at least a limited process of consultation given that the pressure of urgency had removed the process of select committee consideration from the public. My co-leader TarianaTuria raised the point in the House this morning that if 50 percent of New Zealanders will benefit from KiwiSaver or a complying superannuation fund then that inevitably means that 50 percent will not. So I wanted to ponder a bit more about this 50 percent. 
The Maori Party supported the KiwiSaver scheme when that bill had its third reading in Parliament last year. But as the detail has come to hand in Budget 2007 we have been increasingly alarmed about the downstream effects of a scheme that is clearly not accessible to all namely beneficiaries and to those on low incomes. We have a $2 billion cash surplus yet the great numbers of New Zealanders who earn less than $500 a week will not be the lucky Kiwis benefiting from a $20 top-up. Their precious funds will be spent on clothes on groceries school uniforms travel the power bill and maybe if they are lucky the phone.  
So I travelled far and wide; well in fact I flicked through the local newspapers and media releases to hear what people thought. The  
New Zealand Herald  
consulted Rob who said: “Low-income earners will certainly be able to afford the four percent contribution. All they need to do is go and get another credit card and max it out at some ridiculous interest rate in order to pay their daily expenses”.  
My consultation process was not restricted just to Wellington. Here was an opinion from Auckland: “Most of these one parent families are living on less a week than the amount of financial assistance others get on top of their wages. On a benefit long term with no light at the end of the tunnel. 4 per cent of 200 is 8. $8 a week—not quite the phone bill money. Many cannot even afford the phone to ring an ambulance or other emergency service let alone for social contact. Think on that 
. 
” As I thought on that I did think about the recent economic survey of New Zealand undertaken by the OECD that identified the persistent gap in living standards compared with the rest of the OECD—an issue that another submitter David also raised. 
David Bennett 
: Hey! 
TE URUROA FLAVELL 
: No not David Bennett. It was another David. He said: “The fact of the matter is our economy is well behind most countries. In fact it’s safe to say we're not even on the same page. It’s plainly obvious that our economy is going downhill.”  
Of course it is not just individuals who are hurting from a Budget that continues to support a world in which the gaps are growing a world in which the poor suffer more. Representative of the views of other community groups were the comments from the Federation of Voluntary Welfare Organisations. Its chief executive Tina Reid commented that there are many low-paid and part-time staff who will find it very difficult to contribute to the KiwiSaver scheme. In her words she said and I quote: “If the Government is serious about supporting the sector for the long term it will have to address issues broader than today’s tax break—such as including rates of pay in a comprehensive way as part of the funding framework for the sector.” 
 Earlier this afternoon I listened to Mr Dunne promoting the fact that everyone thinks we should be providing for retirement and that everyone agrees with superannuation and planning ahead. So it was really interesting to read the comments of Michael Littlewood the co-director of the retirement policy and research centre of the University of Auckland. If anyone would know about the needs and the nature of retirement I think it would be him. I ask members to listen to what he said: “Where is the evidence that we need KiwiSaver? As someone with a long-time interest in this topic I know the evidence doesn’t exist. The 2007 Budget has just made things stunningly worse with further complex government-run interventions in the savings behaviour of New Zealanders.” 
What interests me even further is that research from the Ministry of Social Development has reported that today’s retirees have the lowest levels of hardship of any major group. Indeed only 8 percent show any degree of hardship at all. Yet the same ministry in other research—the  
Social Report 2006 
 and the living standards report—gives another side of the story about where our investment should be best spent. 
As we have said again and again the people who suffer the greatest poverty in New Zealand are children with 38 percent in hardship categories and an ever-escalating increase in severe hardship. These are the children whom people talked about this morning in a meeting hosted by the Child Poverty Action Group to share their bitter disappointment at the lack of vision in this Budget. These are the children who will not benefit from any investment in their future from this Budget—a Budget that plugs a few holes and throws a few meagre lollies out but has little else to go on. People at that breakfast talked about how this Budget could have been an ideal opportunity to produce something in a non-election year that could help the youth—a bold and courageous stand that stood up for the rights of children. 
It makes no sense to make the children suffer any further by subsidising savings schemes without first increasing the very level of a living income a meaningful wage and a standard of life. Why should there be hunger neglect Third World diseases and poverty when we have more than ample knowledge and resources to do something about it? 
Often in this complex we can see Parliament as a microcosm of the very society we live in. In winding up my in-depth analytical robust consultation on this bill I say that this morning I received a letter from a current employee within this complex. I will take a moment to read what she had to say: “I feel very let down by this Budget. I have been unemployed for some years now with an on-call job paying just over $14 an hour. As the unemployment pays $178 a week and we are allowed to earn $80 over and above that we pay seventy cents in every dollar earned from then on. I was looking forward to being able to join up with the Kiwi retirement fund and at least get a few dollars extra to help out when I turned 65. I feel that this Budget has done nothing to offer people like myself that works for some kind of sanctity and pays seventy cents in every dollar after the $80 earned.” 
We must look around this parliamentary complex outside the walls of this debating chamber to the people who clean the floors the people who open the doors and the people who keep us safe and secure warm well fed and able to do our jobs as MPs. What is their experience of the promise anticipated in Budget 2007? We talk a lot in this House about an inclusive society. It is indeed time that we faced up to the processes of alienation that we have created and supported through our behaviour with a Budget such as this—a Budget that could have been a little bit more inclusive. This Budget will undoubtedly benefit some people—and we will not stand in their way—but it will continue to alienate others and will fail to help the poor. As one of our own workers in Parliament told us “I feel very let down by this Budget. ” 
HEATHER ROY (Deputy Leader—ACT) 
: 
 Contrary to what the New Zealand First member Peter Brown said the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill is an awful bill and ACT will be opposing it. 
Dr Cullen came down to this House not long ago and berated the National Party—I think he came down to do only that—about misrepresenting the figures. Well I have news for Dr Cullen. He is the one who cannot do his sums. He has absolutely no idea what he is talking about. John Key was quite right when he said in this House yesterday that employers were receiving a $1 billion tax cut but were not told in advance that they would have $2 billion taken from them. Dr Cullen said that was not correct but in fact it is correct and if he had bothered to do his figures he would have seen that. John Key also said that workers would receive a hit to their pay packets as employers sought to claw back pay increases to offset the cost of their compulsory KiwiSaver payments. 
We are seeing nothing wonderful from this Budget. It is a case of having one little meagre token on the one hand with the Government taking a whole lot back on the other. That is the reality of this Budget. The legislation that we are debating the third reading of now is designed to put all of this in place. 
In fact if Dr Cullen had taken the time to do his figures he would have seen that a salary earner on $40000 a year would cost his or her employer $392 above the money that the employer receives from the Government via the subsidy—the employer will be $392 worse off. For someone earning $60000 the net cost to the employer will be $952 per year and for somebody earning $100000 the net cost to the employer above the subsidy will be $2072. Quite how that equates to employers being better off at the end of the day escapes me. The threshold seems to be about $27000. Anybody earning above $27000 will cost his or her employer money in terms of the KiwiSaver bill. I see that nobody on the other side of the House is able to refute that fact. 
The comments made by the Maori Party speaker who spoke before me Te Ururoa Flavell were absolutely right and I endorse them. Many people around the country are talking about KiwiSaver today because they know they will be worse off and will not be eligible to participate. Anybody earning about $15 an hour or less cannot afford the 4 percent contribution in savings let alone an 8 percent contribution. So those people who are least able to provide for themselves in their old age will not be able to benefit at all from this legislation. If that is what Labour calls a caring Government I ask members to please show me an uncaring one because that is just a travesty. 
The previous speaker also quoted from Michael Littlewood in today’s  
Press 
. He had some very good and pertinent comments to make and I would like to tell members a few of the other things he said. He said: “Until recently New Zealand had a simple transparent tax and retirement income structure that has served us well. In fact it was a world leader in simplicity transparency and equity”—[ 
Interruption 
] 
The ASSISTANT SPEAKER (Ann Hartley) 
: Order! 
HEATHER ROY 
: I will repeat that sentence because I think the member from Wanganui who will not be here for much longer missed it. I say to Mrs Pettis that she should listen to this: “In fact it was a world leader in simplicity transparency and equity …”. But what we will see as a result of both these bills which we have had to come back and sit through on a Friday when we should be out there talking to our constituents is complex legislation full of detail that will make our tax system much much more difficult. 
Hon Harry Duynhoven 
: You haven’t got any constituents. You’re a list MP. 
HEATHER ROY 
: I thank Mr Duynhoven but I take my duties seriously and I too see constituents. 
The worst news about KiwiSaver is that tax breaks now mean it might make sense for families who cannot afford 4 percent—and a lot of people cannot—to borrow their required KiwiSaver contributions in order to join and get the tax breaks and subsidies. When we have perverse incentives put forward by this Government which is supposed to care for the people what hope is there? 
We seem to be intent on ignoring the incentives that have been put forward by other Governments with regard to saving but in fact more savings seem to be an outcome of economic growth rather than a cause. The richer a country gets the more its citizens save. 
I would like to briefly examine some of the statements Dr Cullen made and some of the things that were announced in yesterday’s Budget. Quite some time ago Dr Cullen promised us that his policies would bring New Zealand 4 percent GDP growth. He went further than that in fact and said that he would stake his reputation on it and that it would be his yardstick. 
Well let us see what he has achieved. What do we have today? We have 2 percent economic growth. Is that turning us into a wealthy country when our target was 4 percent or possibly more? Absolutely not. What is Dr Cullen’s target his forecast for the next 3 years? It is for worse economic growth than we have today: less than 2 percent. What is Dr Cullen’s forecast for the next 5 years? It is for a mere 2.3 percent economic growth. It may be news to Dr Cullen that this will not get us into the top half of the OECD. Dr Cullen has failed. If we were looking at it in terms of National Certificate of Educational Achievement parlance we would say that he has earned a mark of Not Achieved. That is hardly satisfactory when he is targeting 4 percent economic growth. 
ACT would have liked to see several significant things in the Budget that would lead to economic growth in this country. ACT would have dropped the income tax rate to 20 percent. There has been a drop in the company tax rate to 30 percent. This of course is a move in the right direction but the top rate of personal tax should have been dropped to match that 30 percent at the very least. Ideally we should have had income tax dropped to a rate of 20 percent across the board. 
Government spending should have been held in real terms. It has increased by 32 percent during the time this Government has been in power. What have we seen in return for an increase in Government spending of 32 percent? Well in the health sector we have seen nothing at all. In fact we are moving backwards and most other Government departments cannot put forward a much better prospect. 
Bob Clarkson 
: We’re better than Chad! 
HEATHER ROY 
: We are better than Chad. Well that is a relief is it not? ACT would have dealt to red tape through a regulatory responsibility bill. Fortunately for this country there is one of those bills on the Order Paper—Rodney Hide’s bill which I hope the House will look at very carefully realise the sense of and vote in favour of. We should have been demanding transparency and accountability for all Government departments through service level agreements that would see heads of departments fired for failure to deliver and Cabinet Ministers held accountable when they do not keep their promises to the people of this country. We hand over our taxes in good faith in return for services that we should be able to expect but that are too often not delivered. Cabinet Ministers should be held accountable for that. 
In this Budget we should have seen shares in State-owned enterprises distributed to everyone so that every New Zealander every Kiwi would be a stakeholder in those. The Cullen fund should have been dismantled with a dividend paid into everyone’s KiwiSaver or given to an education endowment. That would have been a real Budget—a Budget that New Zealanders could have been proud of. That would have seen economic growth in this country not the economic growth of less than 2 percent that Dr Cullen is forecasting for the next 3 years nor the mere 2.3 percent forecasted for the next 5 years. Dr Cullen has failed his own self-imposed yardstick. 
The ACT party will not support this bill or the Budget. It is an awful Budget. It is a Budget where employers have been hoodwinked. They thought they were getting something that would help them compete overseas and help them with productivity. Instead they have been given something with one hand and it has been taken away with the other. That will not do anything for the future of this country. New Zealanders—like the Opposition in this Parliament—should be very very disappointed indeed with this Budget. 
SHANE JONES (Labour) 
: 
Tena koe Madam Assistant Speaker. The New Zealand Army has a great deal to answer for. It having consigned that member Heather Roy to latrine duty unfortunately we are left with the results—if that speech is any indication as to what she thinks about New Zealanders and how her powers of analysis are being applied to this Budget. There was not a single charitable thing to be said for our old people—no nothing whatsoever. Yet she exists by dint of the work that Rodney Hide—unfortunately for the people of Epsom—is endeavouring to do with the old people. 
For New Zealanders this Budget signals that Te Ao Marama has arrived. Not only do we have ongoing investment in social infrastructure physical capital and human capital but we have taken the time to address those problems that have been overlooked for far too long. 
I say in response to Heather Roy—with such a dreadful vacuous irrelevant sleep-inducing speech—that it is no wonder that the ACT party is now—[ 
Interruption 
] Oh OK. I can hear Mr Bennett who is described by the people in Hamilton as the Borat of the National Party without the looks or the intellect. The sooner he goes back to the rear end of the Ayrshire cow the better. 
I will return to Heather Roy. She cannot come to the Chamber and not acknowledge that this Budget not only contributes to those who offer care to our aged population but deals with the upcoming major change in our demography: the ageing nature of our population. Through KiwiSaver the Budget represents a brilliant opportunity for us as a nation to lay down something that will comprise a legacy. We will look back—as we now look back at Lange’s time to the very visionary approach that that Government took to seek to redress historical grievances—at this time and this Budget will rank alongside the stupendously visionary long-term approach Labour had on antinuclear policy. This will be the pro-savings time. 
To all Kiwis in Aotearoa Te Ao Marama has arrived. This is the time when Kiwis do not have to worry about the whanau having to pay too much for student loans. The Government has taken care of that one. Neither do Kiwis need to worry about feelings of insecurity about savings. The Government has addressed that. 
We have had some unfortunate and predictable misinformation coming from the Leader of the Opposition and the deputy leader of the Opposition who were getting their mathematics wrong. They do not like the fact that key advisers from PricewaterhouseCoopers came out this morning singing the praises of this Budget. That possibly does not please all members on this side of the House but they are prepared to advise both parties. Those advisers have identified that the 15 percent option for businesses to claim in order to drive research and development probably goes beyond anyone’s expectations in relation to generosity. 
Some of the keen observers of politics today are saying that this is a triple A Budget. We have heard from the international entities who appraise the creditworthiness and robustness of nations. They have not been able to catch their breath at the pace with which they have raced into the media to uphold the credentials and the principles underlying this Budget. 
We return to our core supporters: families. There is a ridiculous level of prattle coming from the other side of the House that those who are on lowish incomes have been forgotten about. Obviously those members are either afraid or unwilling to acknowledge the contribution of Working for Families which has delivered cash flow back into those families. 
In addition the Opposition does not like that all the heavy hitters in the business sector and enterprise sector are wiping their brows almost with disbelief that this Government has been able to achieve social infrastructure development and brilliant fiscal stewardship and with that the ability to invest in our economic estate. The Government has all the bases covered. 
The only base however that has been led astray continuously is that led astray by our colleagues from the Maori Party in our Maori world. It is not good. They come here demonstrating why literacy and numeracy are certainly needed. It beggars belief that my friend from our old school St Stephen’s should stand and speak against this Budget because privately he thoroughly agrees with everything. 
This is a great day. This is a great day for this Government which has the power the authority and the credibility to lead us into the rising sun. Kia ora tatou. 
CRAIG FOSS (National—Tukituki) 
: 
 I will take just a quick call to reply to the previous speaker the chairman of the Finance and Expenditure Committee. I would like to point out the audacity and the arrogance of this Government at the moment. This bill makes fundamental multibillion-dollar decisions that set parameters for New Zealanders’ savings for the future—so Government members allege—and the bill is not even going to a select committee. That member alleged yesterday that the bill was going to a select committee. It is not. That shows arrogance on top of his audacity or perhaps he is just too afraid to face up to submissions from his own supporters who do not want this type of policy. 
Finally I make one quick point. This bill from this Budget will leave interest rates higher for longer and our currency higher for longer in what is Export Year apparently. We are voting against this bill because this bill and this Budget are a confidence issue. We have no confidence in the series of Budgets from Dr Cullen. This is the eighth failure from eight Budgets that have resulted in the highest interest rates in the Western World and the highest exchange rates which are absolutely killing our economy. 
CHARLES CHAUVEL (Labour) 
: 
 I would like to deal with a few of the points that have been made by previous speakers in addressing the third reading of the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill. I would like to start with what “Simon English” had to say about ordinary workers in the smoko room. “Simon English” said that ordinary workers in the smoko room would reject this Budget. [ 
Interruption 
] No unlike Mr English I believe in referring to members by their proper names. How would he know what ordinary workers in the smoko room want? When was the last time he spoke to an ordinary worker? [ 
Interruption 
] 
I am really proud that my last job was as a partner in and owner and board member of a $60 million law firm. I am very proud of that and I will tell members why. I have had calls from former clients today telling me— 
Anne Tolley 
: What does this have to do with ordinary workers? 
CHARLES CHAUVEL 
: —I will come to that—what a great thing the targeted research and development tax exemptions will be and how fantastic they will be for keeping research and development onshore. They are saying what a great thing they will be for keeping head offices in New Zealand rather than our losing them overseas. That is what the people from the corporate sector are saying today. That is what they have been on the phone to say to me today. They think it is great they will get a reduction in corporate tax levels of 3c in the dollar because that proves that this is a Government that is listening to business and wants to see the best thing for investment in New Zealanders. That is what the business community is saying about this Budget. 
But let me turn to the ordinary workers and tell members about two recent situations I was in. I was talking to real live ones I say to Mr English not the pretend ones the National Party members tell us they talk to. I was at two recent events: an engineers union delegates forum in Petone and the launch of the industrial branch of the Labour Party in Gisborne. Mrs Tolley might like to listen to this. They are not the wealthy workers we heard about who Mr English thinks will worship in some sort of cargo cult that he accuses this Government of creating. They are ordinary working people who know that the Working for Families package has made a big difference to their lives and for whom the extension to the programme in April made an even bigger difference. 
One of them told me a story about how his wife used to have to work before the Working for Families package came in. They had to arrange for the wife’s mother to pick up the kids after school and look after them. The wife would then pick them up when she had finished work go home and look after them. Do members know what happens now? That does not have to happen. She can stay at home and look after the kids which is what she wants to do. It is a great thing. People really like having that choice which we have allowed them to exercise by the roll-out of the Working for Families package. 
What we are seeing with KiwiSaver is just the latest example of a roll-out of that sort of programme that allows people to realise their dreams—in this case building up a nest egg for a deposit on a house. What could be better than that? What could be better for ordinary New Zealanders than fulfilling that sort of dream? That is what they want and that is what this Government is delivering. Members opposite will see the results of that at the next election. 
I want to record for the House some interesting comments made today on the Budget. I would just like to read them. The ANZ said today: “once again Dr Cullen has struck a good balance between running prudent fiscal policy and not fanning an excessive domestic economy.” That was the comment from the ANZ. First NZ Capital said the Reserve Bank is now “unlikely to be driven towards changing its policy stance as a result of the fiscal update.” Standard and Poor’s has said the Budget places “New Zealand’s fiscal position amongst the ranks of AAA rated sovereigns such as Sweden Norway and Australia.” Those comments demonstrate that this Budget has been good for ordinary Kiwis because it continues Labour’s long tradition of targeting assistance to those who need it the most. It is good for business because it will help keep head offices and research and development onshore and help build up a strategic reserve of capital for use in New Zealand rather than our having to rely on overseas funds. It is a good Budget for New Zealand because it will continue to balance our programme of savings and investment in our future. 
A party vote was called for on the question  
That the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill be now read a third time. 
Ayes 61 
New Zealand Labour 49; New Zealand First 7; United Future 2; Progressive 1; Independent: Copeland; Independent: Field 
Noes 50 
New Zealand National 48; ACT New Zealand 2. 
Abstentions 3 
Maori Party 3. 
Bill read a third time. 
The House adjourned at 3.28 p.m. (Friday)