Key John: KiwiSaver Bill — Second Reading 
Key John: KiwiSaver Bill — Second Reading 
[Volume:633;Page:4847] 
JOHN KEY (National—Helensville) 
: 
 I rise on behalf of the National Party to engage in the second reading of the KiwiSaver Bill. Let me say that a Government that has its back to the wall makes policy on the hoof. Just 2 weeks ago I sat in the Finance and Expenditure Committee when the issue of mortgage diversion was raised by Gordon Copeland the United Future member. Mr Copeland told the select committee that he wanted to introduce the concept of mortgage diversion. 
When we discussed that concept in the select committee at that stage not only did Labour members find no favour with it—in fact they rejected it out of hand—but on top of that the officials told us that it was not possible to report back in any reasonable time frame on mortgage diversion because it was too complex the systems were too extreme and the analysis was far too weighty to be able to make that decision in a 2-week period. 
Hon Mark Gosche 
: The member’s making it up. 
JOHN KEY 
: The member is not making it up. The member sat there and heard the Labour members saying they could not vote for mortgage diversion and that it was not a good idea—from the chairman down that is what they said. The officials said they could not cope with mortgage diversion now. They were not ready and it would take a long time to come up with that information. 
So when a Government starts getting accused of corruption because it went out and spent $882000 of taxpayers’ money to buy an election campaign; when it has a member who is so guilty he will not go before any other reasonable tribunal to let it hear his actions and the Government cannot toss that member out even though it knows he is guilty because Labour has a one-seat majority; when the Government sees its own internal poll ratings coming down—and it is all relevant—when the Government has tried to buy an election with taxpayers’ money and wants to validate its own expenditure retrospectively; and when it has a member who is in serious trouble and a poll rating that is going south then it will make policy on the hoof. It does not matter that 2 weeks ago Government members did not want a bar of diversion and it does not matter that the officials themselves could not provide the information—it was not going to happen. Today lo and behold Michael Cullen has dropped this thing on them. 
I will make the prediction that the first time the chairman of the Finance and Expenditure Committee none other than the Hon—or someone who will one day be the Hon—Shane Jones— 
Chris Tremain 
: Right honourable! 
JOHN KEY 
:—yes well he wants to be Rt Hon—heard about these mortgage diversion provisions was when he read them in Michael Cullen’s press release which came right off the “policy on the hoof” document that he made in the last few weeks. 
Let me say that a number of things are going on here. Interestingly enough if we take a scheme like the State Sector Retirement Savings Scheme at the moment we see that it operates in exactly the same way that KiwiSaver will now operate going forward but the differences are that the State Sector Retirement Savings Scheme has a 3 percent contribution rate and a 3 percent matched rate from the employer. So if we take the example of KiwiSaver as it has been outlined this morning by Dr Cullen we see that it will be able to have a 2 percent contribution rate matched by 2 percent as an example or maybe a 4 percent contribution matched by 4 percent. What in fact will happen with people currently in the State Sector Retirement Savings Scheme who have 6 percent of their income currently being saved and tracked is that that will now allow them to have half of those savings automatically diverted to their mortgage. 
So we are now turning KiwiSaver a savings account into a checking account. That is what it will be—a checking account. People can put in some money the Government can take it all out to pay for the deposit of their accounts and then people can take half of it out to pay their mortgage—which tells us a couple of things. The first of them is that Kiwi workers are so overtaxed they cannot pay their mortgages without robbing their savings accounts. That is how overtaxed they are by this Government; they have to go and rob their savings accounts to do that. 
But interestingly enough if people are wondering why I am a little concerned about it then they should just pop up to the seventh floor and see the Deputy Prime Minister Minister of Finance Attorney General and Leader of the House—the man who tried to intimidate the  
New Zealand Herald  
all last week. They should just pop in and while they are in there having a tea or coffee and biscuit with him they should ask Dr Cullen while he is putting the jug on why if he did not want people just to save 2 percent—because that will be the net effect; a worker will now put in 2 percent and be matched by 2 percent because 2 percent will be automatically diverted to his or her account so that he or she saves 2 percent—did he say in his question and answer sheet that he does not support 2 percent contributions because the accounts will be too small too hard to administer and will not solve the issue of retirement planning? So he does not support a 2 percent contribution but interestingly enough if people take out 2 percent and put it into their mortgage what are they left with but 2 percent! But Michael Cullen does not like it according to his question and answer sheet. 
The problem is that when one’s party owes $882000 of taxpayers’ money and when one has not told one’s chairman of the Finance and Expenditure Committee and when one is making policy on the hoof one has the problem of sometimes not getting the questions and answers lined up with the policy. That is because the policy is moving so fast Dr Cullen does not actually know what it is. Nor do the poor people who have to write the questions and answers—the officials. They are the ones who have to write the questions and answers; the very men and women who 2 weeks ago told us that we did not have a dog’s show of having a diversion—that we could not possibly work on that. I feel sorry for the default providers who wanted an extension of time because they could not even cope with what they got. 
By the time we have finished with this legislation this is the way the scheme will work. The savings accounts will turn into checking accounts. People will put their money in and they will take it out to pay their deposits. Then they will put their money in and they will take it out to pay their mortgages. Then they will put the rest in to take it out to pay for their food which is going up in price and for their petrol the price of which has just gone through the roof. It is no wonder Dr Cullen thinks it will be a popular account. If he keeps having tax-free incentives in it it will be unbelievable. I am going to put my entire parliamentary salary if he ever lets me into KiwiSaver and then I am going to take it out and pay for absolutely everything I feel like—because that is where we are going. It is unbelievable! 
The second point that is worth noting on a very serious note is that some employees tonight will watch their television screens and believe that somehow they have got a pay rise—that somehow their employer is magically going to match their savings and give them a pay rise. Well the effect will really be that some employers through coercion from unions or whatever will have matched savings schemes. Then when they renegotiate future pay rounds they will take into consideration the total cost of those employees. There is every risk that those employees will in fact end up paying for their own contributions to their own accounts and I say that that is something those workers need to consider. That is something I think is of some significance. 
Let me say from National’s position that we opposed the KiwiSaver Bill and we opposed it because the incentives to go in the account were non-existent— 
Hon Mark Gosche 
:When was this? 
JOHN KEY 
: In the first reading and the whole way through actually I tell Mr Gosche. We opposed KiwiSaver because it did not have incentives. The Government told us we were wrong. Its members got themselves into all sorts of trouble so today they have made some changes. National will continue to oppose this bill in its second reading. We will take the course in the next week or so of fully reviewing what exactly the ramifications are of what the Government has done. Unlike Labour members who did not even know that it was coming we would like to have a consideration and a think about it. 
If Dr Cullen really believed these were great ideas and really cared about them maybe he would like to answer for the benefit of the National members why he made all those people parade through an extensive process of select committee hearings and then did not even bother to give them the decency to comment on the very things he had to change. The answer if I can end with this is that those changes were not going to happen this week; those changes were going to happen sometime around September of 2008. They would have been part of the goody bag that will get rolled out before the next election. But when a party has its back to the wall is going south and owes $882000 without having the money to pay it back it gets desperate.