Key John: KiwiSaver Bill — First Reading 
Key John: KiwiSaver Bill — First Reading 
[Volume:629;Page:1675] 
JOHN KEY (National—Helensville) 
: 
 The fact that the Minister of Finance has to revert to those kinds of comments on a bill like the KiwiSaver Bill shows me just what pressure the Minister is under and how extreme it is. I think that shows he is at the end of his career and he is saddened unfortunately to be overseeing not only a collapse in confidence in his Government but also at having to be the one who picks up the pieces for Minister after Minister who fail him and his Government. 
Chris Auchinvole 
: Take the blame! 
JOHN KEY 
: I do not think he will take the blame actually. 
Let me start by saying that unfortunately for the Minister he is once again deluded if he thinks the National Party is the only party in New Zealand that is opposed to the KiwiSaver scheme. In fact what people in the industry say in the privacy and comfort of their own boardrooms— 
Jill Pettis 
: Enter the scheme you can buy another Georgian clock for £2000. 
JOHN KEY 
: Actually Jill you should start listening and stop talking because you clearly do not know what you are talking about and it would be useful for you to stop sounding like a fishwife and little bit more like an intellectual member of Parliament. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member will be seated. I refer the member again to the use of nicknames and also the use of a member’s first name. I refer the member to Speakers’ rulings 26/6 and 26/7. Members are not to use nicknames or Christian names; they should use the person’s full name or his or her title. 
JOHN KEY 
: That is quite correct. I should have said that Jill Pettis sounds like a fishwife and that she should be listening not talking. 
Jill Pettis 
: Oh! 
JOHN KEY 
: I say to Mrs Pettis that we could if she wanted to spend our entire time in this debate on the KiwiSaver Bill discussing her failure to win a seat and why she is on the way out of the Labour Party. I am happy to have that debate but I would rather debate KiwiSaver. 
Unfortunately Dr Cullen is quite wrong when he says that the National Party is the only party to oppose KiwiSaver. He is quite wrong when he says that the only people in New Zealand who are opposed to KiwiSaver are National members. In fact he will find that in the confidence and privacy of boardrooms around New Zealand most members of the savings industry have considerable concern about KiwiSaver but that for a variety of reasons they need to hold up a public position that sometimes looks a little different. 
Let us put a bit of perspective if we may around this whole debate so as to understand these points. Firstly the National Party does not argue the point—or at least I certainly do not—that there is a dissavings issue in New Zealand. New Zealanders are consuming on average around $1.14 for every dollar they earn. We do not debate the issue that on a long-term basis that dissavings rate is probably not sustainable. Nor do we debate the point that New Zealand has a high level of indebtedness. On average about $135 billion is owed by the private sector and 90 percent of it is owed offshore. That is not a debatable point either. 
Nor do we argue the point that the demographic changes occurring in New Zealand are quite significant. Currently one in eight New Zealanders are aged over 65 and if we roll the clock forward about 30 years that number will be one in four. Nor do we debate the fact that those New Zealanders are likely to live considerably longer. Most New Zealanders will be aware of the fact that the average woman in New Zealand currently dies at the age of 81 and the average man dies at the age of 79. As every decade passes New Zealanders live on average 2½ years longer. We can take the conclusion that New Zealanders will live a lot longer and I think most of us accept that they will be capable in fact of achieving a great deal more in their retirement. When they are 65 they will not be heading to the patio and the rocking chair; they most likely will be heading to the Gold Coast or the golf course. In fact many of them are heading to the Gold Coast well before they are 65 because this Government is overtaxing them to death. Anyway we will worry about the ones who hang around until they are 65. Jill Pettis will not be hanging around this House until she is 65 because she in the official term of this Government will be “gone-burger” “outski” and all that sort of stuff. Anyway we will worry about that later on. 
We do not argue those points and we do not actually argue the point—which  
The Economist 
 made and which I agree with—that if we want a private superannuation scheme a compulsory opt-in voluntary opt-out scheme has some merits to it. Let us put those facts on the table. 
But let us move to why KiwiSaver will be unsuccessful in its current structure. Firstly and most important why do New Zealanders not save in their current position? The answer is actually pretty simple: they simply do not earn enough. Using the most technical term savings are foregone consumption today for consumption tomorrow. Actually Dr Cullen might be right; I probably can forego a little consumption today for some consumption in the future and that is totally fine but the bulk of New Zealanders do not currently save because they make real-life decisions about consumption that they need to make for themselves and their families today. The reason they do not save is that they are earning $30000 or $40000 or $45000 they are seeking to raise a family and they have a variety of expenses. To make those savings today would simply require them to make compromises that are frankly unconscionable. Therefore they do not save. 
So I ask the first question: post-KiwiSaver what in their position will have changed? Nothing—absolutely nothing. Their ability to save is not enhanced. It is in no way different. In fact the National Party and rightfully so went into the election looking to give those New Zealanders who earn the average wage—$42000 in New Zealand—up to $50 a week more. That would have given them more chance to save than any other trumped-up little scheme that Michael Cullen thinks is a mighty fine idea. Fifty dollars a week could actually go quite a long way in terms of savings. That would be the first suggestion I would make to Michael Cullen. He should get out of the ivory tower and follow the advice of Treasury every self-respecting thinking New Zealander and the vast majority of New Zealand voters who voted for tax cuts. If he gives New Zealanders more money in their pocket there is a darned sight greater chance that they will save more than anything else. 
The second issue I raise is that if Michael Cullen thinks that 25 percent of New Zealanders will have a serious KiwiSaver account in 5 years’ time he is deluded in la-la land dreaming—or probably all three. The reason for that is quite simple. The State Sector Retirement Savings Scheme that the Government rolled out did receive a pretty high take-up rate—about 50 percent. That is slightly higher than rates the Treasury predicted. Why? Because self-respecting State servants who have half a brain know that when the Government wants to match their savings dollar for dollar it is called a pay rise and it is not a bad idea to take the money. Now let us compare that to KiwiSaver. What will anyone get under KiwiSaver? At the most they will get $1000. 
The minimum contribution is 4 percent of a person’s wages. Let us take the average New Zealander. The average New Zealander earns $42400. He or she will get a $1000 contribution. In year 1 that 4 percent is $1600. That is matched on year 1 on the basis of approximately 50c in the dollar—not dollar for dollar like the State Sector Retirement Savings Scheme and not at 4 percent of wages in excess of the average wage but at 50c in the dollar for year 1. When year 2 rolls around that person gets zero. That might be the reason why the Retirement Commissioner—the person charged with leading the debate on retirement in New Zealand—said that New Zealanders should look carefully at the KiwiSaver account because it may not suit all of them. 
It probably happened to be the reason why the commissioner went on to say that those New Zealanders who have a mortgage would probably choose to pay down their mortgage before they save. I hate to point out this fact to Dr Cullen but a third of all New Zealanders have a mortgage. Inevitably they are the people who have the least ability to save and I strongly suggest are probably those who have lower incomes. Therefore the very people he will be targeting—those who do not have savings today—do have a mortgage and the Retirement Commissioner is telling them not to worry about KiwiSaver because it is not for them. If he thinks that 25 percent of all New Zealanders will have an account that is not dormant—an active account—I would strongly suggest to him that he is dreaming. 
Of course he should not take my advice. I heard Brian Easton saying on the radio the other day that this was a world-leading policy. I am sorry but he is wrong again. If he has a look at some real economics he will find that the equivalent of KiwiSaver was rolled out in the UK and in Ireland and guess what in Ireland 92 percent of the accounts were dormant just like they will be in New Zealand. So yes some New Zealanders will put money into KiwiSaver. They will be New Zealanders who are seeking to have a first home buyer’s grant. If that is what this is—if it is a first home buyer’s grant—then it is a pretty poor one because in Australia people get $15000 up front. However if it is a first home saver’s allowance then that is no problem. 
Michael Cullen should come down here and tell me whether that is right. I can see members nodding over there on the back benches of the Labour Party. It is a first home buyer’s grant. It is a really poor one because people get $5000 in 5 years. As Jo Doolan from Ernst and Young said one will not get a park bench for $5000 in 5 years’ time. However if that is what the KiwiSaver account is that is cool but let us not call it a long-term savings account. What will happen is that those New Zealanders will save $1000 a year for 5 years they will take their money out—Darren Hughes looks confused but this is the way it will work—and they will buy a house. When they have bought a house like every other New Zealander out there they will have a mortgage and the No. 1 thing they will do is repay their mortgage because otherwise they have to make 13 percent in KiwiSaver and they will not make that. Mark my words if this Government gets the chance it will change the functions and the criteria around KiwiSaver because if it does not it will be remembered about as lovingly as David Benson-Pope is.