Bradford Sue: KiwiSaver Bill — First Reading 
Bradford Sue: KiwiSaver Bill — First Reading 
[Volume:629;Page:1690] 
SUE BRADFORD (Green) 
: 
 The Green Party supports this bill although we are aware that it can go only a small way towards solving New Zealand’s savings deficit and the difficulties that so many have in putting together a deposit for their first home. New Zealand superannuation is and should remain the bread and butter of our retirement income. For many people saving for retirement is difficult and for many others it is impossible and no single system or scheme will solve the underlying problems. 
The first and very obvious difficulty which several colleagues have already referred to is the simple fact that so many people are not on incomes high enough for them to pay even their basic living costs. Income inadequacy and job insecurity are major stumbling blocks to developing the kind of savings culture that Dr Cullen would like to help increase in this country. 
To address the stumbling block we need a whole range of measures including raising the minimum wage. As members are aware my youth rates bill the Minimum Wage (Abolition of Age Discrimination) Amendment Bill is currently before the House so the Greens are working hard on trying to lift minimum wages for young people. We also support the efforts of other parties to try to lift our minimum wage to at least $12 an hour as soon as possible and would like to see the Government bringing that measure forward a lot sooner than the planned 2½ years out—if we are lucky. We want to see an economy in which more New Zealand workers do earn a sufficient income such that they can make saving for retirement a practical reality. Unless minimum wage rates are addressed any scheme to encourage savings will have only very limited success. 
For years the Greens have been challenging the Government and employers to get serious about workplace savings schemes for those who can afford to save. Our colleague Rod Donald last year talked about the KiwiSaver scheme in a speech at the Association of Superannuation Funds of New Zealand national conference when he said it was high time for upfront incentives to give workers the encouragement they need to save rather than spend. The Government’s KiwiSaver scheme is a response to that call and we commend it. But it does have flaws. 
The scheme remains out of reach for far too many people not only for low-income wage earners but also for the many people now who have large student debts. This is a serious flaw as those groups are the ones most likely to have almost nil or few assets and to suffer real financial difficulties when they retire. Those are the groups that need the most assistance and they will not necessarily get it through this scheme. For those who can save we are pleased to see the $1000 Government contribution sweetener as a genuine incentive for people to save for the jam they would like to have to go on top of the New Zealand superannuation bread and butter. 
The scheme has two other added benefits. It is a first home buyer’s scheme and any impact it may have on lifting our national savings rate would therefore help to address our chronic current account deficit. From my work in the housing area I am well aware that our rates of home ownership are declining by the year. Anyone who has looked at the housing market lately even though it is in a so-called plateau will know that trying to address that gap for a home deposit is almost impossible for an increasing number of people. The small amount of money that will come from the scheme will help but when one looks at the price of houses—even in low-income and rural parts of the country—one sees that it is still just about an impossible feat. 
We need to keep looking at giving workers a serious incentive to save such as deducting superannuation contributions before PAYE. Incentives need to be more attractive. At June 2005 there were only 243970 employees and 453 employer-sponsored savings schemes. That does not compare well with the year before when there were 246000 members let alone with the year 1990 when there were over 300000 employees and over 2000 schemes. It is no wonder that the Reserve Bank reported recently that New Zealanders are expected to have a household savings rate of minus 12 percent for the year to March and it projects that rate to deteriorate to minus 14 percent this year. It is no wonder that our household debt-to-income ratio which was just over 60 percent in 1992 is now over 120 percent. It is no wonder that our national debt has reached $123 billion. 
The Green Party believes the Retirement Commissioner has a pivotal role to play in educating encouraging and enabling New Zealanders to adopt and embrace a savings culture. We would have preferred the commissioner to be an independent Crown entity rather than an autonomous one in order to give her as much independence as possible and we are pleased to have succeeded in getting in place a 3-yearly review process. But we still want to see a lot more resources made available in order to encourage a savings culture and to make it happen on a more serious scale. 
The KiwiSaver scheme will go some way towards increasing our savings records and providing further retirement protection for parts of our community that have not previously accessed it but the structural economic barriers remain in place. Income sufficiency and job security are as uncertain as ever and I would just like to echo the words of Hone Harawira and Gordon Copeland in relation to beneficiaries who simply cannot benefit from this scheme at all. Given that most beneficiaries do not get enough to live on as it is and that most of them are actually plunging deeper into debt every week they remain on the benefit it is quite hard to see how a scheme like KiwiSaver could be made functional for beneficiaries. 
Another barrier to trying to pull our economy out of its debt gridlock is the culture we have with our savings banks at the moment. Dr Cullen’s sweetener is tiny in comparison with the blandishments of our trading banks that we see and hear every day on TV in the media and when we go into the bank. Never have New Zealand consumers had debt shoved down their throats to the extent that they have it at the moment. 
We are given increased credit card limits at the drop of a hat. We have endless TV ads about using the equity in our homes for cars trips furniture—you name it. Even people who cannot afford any debt constantly receive those blandishments to take up credit cards to take on more of a home loan and so on. What is worse bank staff are even set sales targets to sell more debt to the public and we were disappointed to learn today that it is possible even Kiwibank is acting in this way. It is not only the sales staff of the banks who are set sales targets; we hear that other staff within the banks are set them as well. 
The banks make their money from debt. Over Christmas members may have heard of bank staff being encouraged to sell debt to their friends and family at the beach and at other camping facilities. Not only does that practice affect the workers’ performance bonuses but it also affects their basic rates of pay. If they meet the targets then their rates of pay are raised. If they do not meet the targets then they have a performance review. 
We would love to see this culture and the practice of the banks changed urgently. The trading banks are force-feeding the public with debt. They are putting their own staff under unreasonable stress and pressure which negates the Government’s policy on savings. We believe that the Government alongside the KiwiSaver scheme and other measures should be using every mechanism at its disposal to discourage the banks from their ever-increasing determination to push New Zealand households and individuals into deeper debt with every day that goes by.