Jones Shane: Questions for Oral Answer — Questions to Ministers 
Jones Shane: Questions for Oral Answer — Questions to Ministers 
[Volume:633;Page:4835] 
5. Hon MARK GOSCHE (Labour—Maungakiekie) 
 on behalf of  
SHANE JONES (Labour) 
 to the  
Minister of Finance 
: What enhancements if any does he plan to introduce to the KiwiSaver scheme? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Today I announced a series of changes that build on the excellent work of the Finance and Expenditure Committee. Among these changes are the exemption for employer contributions to the KiwiSaver scheme and the specified superannuation contributions withholding tax capped at the lesser figure of the employer’s contribution or 4 percent of the employee’s gross salary or wages. 
Hon Mark Gosche 
: How will these changes benefit workers and employers? 
Hon Dr MICHAEL CULLEN 
: By making the employer contributions tax-free up to the 4 percent limit we are making it more attractive for workers to save as their balances will grow more quickly with an employer subsidy. We are also giving employers more choices when it comes to remunerating their workers and I welcome the fact that even before these changes were announced Fletcher Building became the first employer to propose a subsidised KiwiSaver workplace scheme. 
Gordon Copeland 
: Will the changes announced today assist New Zealanders to build equity in their family home; if so how? 
Hon Dr MICHAEL CULLEN 
: It is obvious that the changes announced today do because they include a mortgage diversion scheme proposed by the member who asked the question. That will allow part of a person’s KiwiSaver contribution to go towards paying off the mortgage on his or her home. 
Craig Foss 
: Can the Minister confirm that the indexation of personal tax rates as promised in the 2005 Budget will not now be implemented due to a trade-off against the mortgage diversion changes to the KiwiSaver scheme as announced today? 
Hon Dr MICHAEL CULLEN 
: No help is on its way. 
John Key 
: Can the Minister confirm that some employers will offset the cost of their contributions to employee accounts against future wage increases so that in effect for those employees there is no free lunch here? 
Hon Dr MICHAEL CULLEN 
: No I cannot confirm that. Obviously it is a matter of negotiation between employers and employees. But for a member who has occasionally flirted in public with the idea of a compulsory scheme that seemed a particularly strange question to ask. 
John Key 
: Can the Minister confirm that in effect for some people who are currently in a match savings scheme that may become KiwSaver compliant—to take the example of someone in the State sector retirement scheme who currently has 6 percent of his or her income trapped in that scheme; 3 percent from the employee and 3 percent from the employer—now under the mortgage diversion changes such employees will in fact be able to take the 3 percent out that they are contributing and so for some people savings will go down and not up as a result of his changes? 
Hon Dr MICHAEL CULLEN 
: No because if it were the KiwiSaver scheme they could of course withdraw completely with a holiday on their contributions. The point of the mortgage diversion scheme is that they retain contributions into and in connection with the KiwiSaver scheme.