McLellan TraceyEMPLOYMENT RELATIONS (PROTECTION FOR KIWISAVER MEMBERS) AMENDMENT BILLSecond ReadingDr TRACEY McLELLAN (Labour): Thank you Mr Speaker. When KiwiSaver—ASSISTANT SPEAKER (Greg O'Connor): You are moving.Dr TRACEY McLELLAN: Oh sorry I haven't got the motion. I move—ASSISTANT SPEAKER (Greg O'Connor): So just move the bill.Dr TRACEY McLELLAN: I move That the Employment Relations Kiwisaver Protection Amendment Bill be now read a second time.Pardon me Mr Speaker. Thank you. When KiwiSaver was first introduced it was recognised as world leading. It's fair to say I think over the years it has suffered quite a few setbacks. The National Government's 2011 Budget reduced the maximum available tax credit; an employer superannuation contribution tax was introduced the next year which effectively reduced the contribution; and the minimum employee and compulsory employer contribution was then set at 3 percent reducing it from the 4 percent that was always intended a year later. And finally the kick start payment stopped a couple of years after that.So Mr Speaker KiwiSaver has certainly been through a lot and there have been several changes over the years and there are several changes that we should probably make now if we are truly concerned about the state of the scheme and if we are truly concerned that the KiwiSaver scheme actually achieves the outcomes that it was intended to when it was first devised.But this member's bill before the House today by virtue of the fact that it's a member's bill is offering a small but important measure to remove at least one of the barriers that exist towards saving for our retirement and restore some of the glory to what was once a world-leading piece of savings scheme.Currently employers and—the crux of the matter is that currently employers are not legally obliged to offer KiwiSaver workers the same terms and conditions as workers who are not enrolled in the scheme. They can effectively offset their compulsory employer contribution in a number of ways most commonly by rolling the employer contribution into a total remuneration approach or even withholding other benefits or other terms and conditions such as pay increases.So these legislative loopholes that have been created on purpose that have been created by design have the potential now to significantly disadvantage New Zealanders who are saving for their retirement. Quite frankly I think as has been said by the Retirement Commissioner and several other experts it is against the spirit of the KiwiSaver Act. It effectively removes an incentive and as we know when we think about incentives incentives are there to prompt behaviour in a certain direction to provide incentives so that people do the intended behaviour that affects the decent outcome. These moves effectively remove what is a simple and an explicit and a salient incentive that is the employer contribution made towards retirement savings that is on over and above salary and wages.This bill therefore seeks to restore the protections afforded to KiwiSaver members by the Employment Relations Act 2000 before it was amended by the Employment Relations Amendment Act by the National Government in 2008. It aims to ensure that workers can't be discriminated against because they're members of KiwiSaver or a complying comparable scheme and it does so via a mechanism a simple mechanism of being able to raise a personal grievance which is the way that employees can seek redress and rectify that grievance. I'd like to acknowledge the Finance and Expenditure Committee and all of the people who submitted to the Finance and Expenditure Committee and also acknowledge the officials who took that information and garnered the expertise of those people and made some valuable changes and improvements to the bill as introduced.So there were four main changes made to the bill as introduced. One was simply just changing the title so that it made it explicit that it was to include other complying superannuation funds as well as KiwiSaver. The second was to amend clause 18 of the KiwiSaver Act to clarify what is the interaction between the KiwiSaver Act and the Employment Relations Act when a total remuneration approach exists. And that is that parties can still agree to a total remuneration approach but not one where the member of a KiwiSaver is paid less than a comparable employee who is not a member if the difference is because the employer has taken into account the employer's compulsory contribution. So that just clarifies the interaction between those two Acts.Thirdly the select committee recommended that we replace the transitional provision with a new clause 24 also to clarify that an employee who is a KiwiSaver member would be able to raise a personal grievance if their employment agreement was entered into or varied after the effective date regardless of the date a comparable employee entered or amended their agreement assuming that that comparable employee is receiving better terms and conditions than the KiwiSaver member. So that just again clarifies that whilst there must be an effective date sometimes things can change before and after the effective date while after the effective date that impact people beforehand.And also clause 24—it was recommended that we add that a KiwiSaver member can raise a personal grievance if an employer offers better terms and conditions to a non-member after the effective date because they are not a member. This would apply even if the KiwiSaver member's employment agreement had not been varied after the effective date which makes sense. I know that's incredibly wordy but these are really good amendments and effectively they are tidying up what was always the intention of the bill but specifying it very clearly so that there's no confusion.So this provision is intended to mitigate the potential risk that discrimination could occur through employers giving salaries or wages to non-members after the effective date whilst not varying the KiwiSaver member's salary or wages.The retirement commission and the retirement commissioner have been quite vocal on various things that need to change with the KiwiSaver scheme. And again the intentionality behind this is always to look at ways in which we can improve it for the benefit not only of people but for the economy as well. And I think that it's fair to say that whilst the majority of employers act responsibly when it comes to employees' KiwiSaver membership—and I know that that was an issue for the Government parties in so far as their differing view—it's also fair to say that the retirement commission survey showed that 25 percent of employers do include employer contributions to KiwiSaver as part of total remuneration. So whilst the majority do act responsibly 25 percent is a sizeable proportion of employers who are rolling up the KiwiSaver contribution in that total remuneration package. And for employees who don't know that or don't know that that's not how KiwiSaver was intended to be there's not a lot of wriggle room there in terms of negotiating individually to have that rectified. So I think that it certainly deserves a legislative fix and a return to the way it was intended.The purpose of the KiwiSaver Act was to encourage long-term savings so as to increase individuals' wellbeing and financial independence in retirement. And we know that retirement can be really tough for a lot of people. And we know that most people—most people that swap their labour for wages which is most of us—are not in a position to enjoy the same standard of living in retirement as in pre-retirement times. Ensuring we get the most out of KiwiSaver is not only good for people and people in their retirement it's actually really good for the economy. KiwiSaver is an asset of national significance and we should be doing everything we can to remove any barriers that we come across—there are several of them but this is a really obvious salient one—any barriers to participation to keep the effective and simple incentive salient and simple.And for that reason I would again like to reiterate my thanks to all of the members of the Finance and Expenditure Committee who worked on this and provided really good feedback and to all of the official officials who very diligently offered suggestions on how this could be improved. I commend this bill to the House.ASSISTANT SPEAKER (Greg O'Connor): The question is that the motion be agreed.