Hipkins Chris: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
Text is incorporated into the Bound Volume 
Hipkins Chris: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — In Committee 
[Sitting date: 16 October 2012. Volume:684;Page:5858. Text is incorporated into the Bound Volume.] 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I am very happy to take a call on the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill. We are on Part 5 which deals with among other things changes to the KiwiSaver Act of 2006. I have to say I am surprised to be here debating a bill a measure put forward by the National Government to increase the KiwiSaver contributions to 3 percent. This is a special moment for me because one of the very first speeches I gave in this House—I think it might even have been before my maiden speech—was opposing the newly elected National Government’s decision to cut KiwiSaver contributions from 4 percent to 2 percent. I said at the time—I had only just arrived here—that I thought it was a very short-sighted measure and that 4 percent probably was not enough. Here we are and I am pleased the Government is increasing the contributions to 3 percent. In fact I think they should go back to 4 percent and potentially go higher than that. So I am very pleased to have this opportunity to talk about this decision. 
I think that moving back to 3 percent is a very sensible move. I think it was an unwise decision to drop the contribution in the first place. I am not entirely sure what the motivation behind the National Government proposing that at the time was given that the uptake of KiwiSaver was so high. I think KiwiSaver when it was first created in 2006 exceeded the then Labour Government’s expectations manyfold. I do not think it was possible to anticipate that so many people would sign up for KiwiSaver. It was hugely popular and I remember watching Michael Cullen continuously ticking off milestones in the KiwiSaver scheme. I think that was really fantastic. I think it was therefore confusing when the incoming National Government decided to cut it in half without any real justification for doing so because it was clear that 4 percent did not provide a barrier to people wanting to sign up for KiwiSaver. They were already signing up for KiwiSaver in large numbers at 4 percent and so the argument that more people would sign up for it if we dropped the contribution rate to 2 percent was in fact a little bit of a folly. So I am very pleased to see that it is going up to 3 percent now. 
There is another interesting aspect to this which is that we want to encourage retirement savings generally. Dropping the KiwiSaver contribution from 4 percent to 2 percent created some inequities in the system whereas the Government had previously provided other superannuation schemes that were more generous than 2 percent but less generous than 4 percent. For example when I was a public sector employee I was a member of the State Sector Retirement Savings Scheme and that has a contribution rate of 3 percent. When KiwiSaver was introduced future public servants were prevented from signing up to be members of that scheme on the basis that everyone could sign up for KiwiSaver. It was more generous there was a bigger contribution and therefore they were better off doing that. When the Government cut that to 2 percent it created some real unfairness because it meant that newer people signing up to be public servants—and we want people to sign up to work in the public service and serve New Zealanders—were being penalised and they were being disadvantaged because they could no longer get the 3 percent employer contribution that they might have been able to get before KiwiSaver was introduced and before membership to the State Sector Retirement Savings Scheme was cut off. So this bill now brings KiwiSaver back up to that rate. I think that is very good and I am sure it will be welcomed by the people who would otherwise have missed out on that extra 1 percent employer contribution. 
There is an interesting provision in new section 112B inserted by clause 157B about non-deduction notices. I have not had a chance to study this in great detail with reference back to the principal Act and of course when you are reading an amendment bill without making reference to the principal Act sometimes things are not always as clear as they might otherwise be. But by my reading of this matter people can whenever they want to issue a non-deduction notice to their employer and stop their KiwiSaver contributions and the employer contributions would also cease at that point. Previously you needed the approval I believe of the Commissioner of Inland Revenue or his or her delegated agent in order to cease your contributions to the KiwiSaver scheme. What I am wondering is whether these non-deduction notices remove that requirement. Can anybody just opt out of KiwiSaver whenever they feel like it or will they still need that waiver if you like from the Commissioner of Inland Revenue? Certainly read on its own that is what that section would suggest but as I say I have not got the principal Act in front of me to refer back to and it may well be that there are sections in the principal Act that I have missed that might actually cover that issue. 
There are some other interesting provisions in Part 5 in particular the provision relating to unsuccessful software development in new section DB 31B inserted by clause 163. Section DB 31B(1) states: “This section applies when a person incurs expenditure in the development of software for use in the person’s business if—(b) the development of the software is abandoned before the software is fit to be used in the person’s business;”. I think it is really important to note that Government software development does not come in under this category here because as we have seen in recent days and weeks the Government is not doing particularly well when it comes to software development and how it manages information within departments. I think maybe we do need to look at how we could incentivise the Government to up its game here. Obviously a tax deduction is a bit pointless because the money would go back to the Government in the first place but there is merit in discussing how we could get the Government’s software development and IT project development sharpened up a little bit in light of recent announcements and recent debates that have taken place in this House. 
There are some other interesting provisions in this part such as clause 166 “Spreading forward of deductions for repairs to fishing boats”. I have to say that is an interesting topic. I am sure the owners of the fishing boats will be very very pleased with these amendments. So on that note I would finally say that the Labour Party is supporting this bill because it contains many measures that we do support and particularly I am pleased— 
Dr David Clark 
: What about cabbage boats? 
CHRIS HIPKINS 
: What about cabbage boats? That is a good point actually. I have just thought of another 5 minutes! Will this amendment to the repairs of fishing boats apply to cabbage boats that Mr Banks might be wanting to come into the country on? That is a very good question. I do not know because the definition of a fishing boat—from just glancing through it—is defined under the Fisheries Act 1983. I do not know what the definition of a fishing boat is. I am not sure whether John Banks’ cabbage boats would necessarily come in under that but I am sure that one of the other members of the Opposition or the Minister in the chair the Minister of Consumer Affairs might be able to clear that up for us. He is nodding his head so I am feeling very optimistic. I think he is misleading me though because I get the sense that he is not going to take the next call and answer all my questions. I am going to be bitterly bitterly disappointed by that because I think there are many issues to be cleared up particularly this new revelation that has just arisen a few moments ago that in fact John Banks’ cabbage boat could be covered by this exemption or these requirements around certain repairs to fishing boats. That is a very interesting development and one that I think it would be interesting to hear the Minister’s feedback on. 
I was winding up before and David Clark kindly gave me some new material to work from but finally I just want to summarise by saying that the Labour Party supports this bill. We are very pleased with the KiwiSaver amendments in particular. We do not think that the Government did the right thing in cutting KiwiSaver contributions from 4 percent to 2 percent particularly at a time when the Government was saying it wanted New Zealanders to save more money and its decisions around KiwiSaver certainly went in the opposite direction. So we are very pleased to see it going back to 3 percent and the Labour Party will be supporting this piece of legislation.