Foss Craig: KiwiSaver Bill — Third Reading 
Foss Craig: KiwiSaver Bill — Third Reading 
[Volume:633;Page:5001] 
CRAIG FOSS (National—Tukituki) 
: 
 I rise to speak to the third reading of the KiwiSaver Bill. First I want to thank the members of the Finance and Expenditure Committee from both sides of the House and the officials too. They look as fresh now as they did late last night when members were debating—or racing through—the Committee stage of the bill. Secondly I also want to acknowledge the previous speaker’s list-ranking speech. It has been noticeable that the only Labour members speaking to the bill are list MPs. In fact Mr Jones has been the only speaker from the Labour Party other than the Minister in the chair at the time. Mr Jones is the chairman of the select committee and is a list MP. 
In his speech Mr Jones revealed something interesting when he talked about mortgage diversion. I will come back to that issue but I am sure he said something like: “From the dark hole suddenly there appeared a mortgage scheme.” That says it all! That says he did not know about the provision. In the Committee stage we said time and time again that Mr Jones had no idea in advance. We could probably bet dollars to doughnuts that National members knew in advance of Labour members what Mr Cullen had announced and negotiated with Mr Copeland who is sitting over there in the corner. One day we will get to the bottom of it. Perhaps the Official Information Act requests I have put in will be quite revealing. I am looking into the time frame around the various emails between Ministers. 
The bill was introduced in February. The select committee spent many many months studying it with officials submitters and representatives and notably when the bill was in its original form or slightly drafted form. We spent a long time and I thank submitters for the time they spent on it. The purpose of the bill is to try to address New Zealand’s retirement savings deficit. That is fair enough; it is a nice intention. I would like to correct the Minister of Finance. National is not voting against the intentions of the bill but against its execution and implementation and the environment and distortions it will create. We should remember that it goes hand in hand with the taxation legislation before the Finance and Expenditure Committee right now. 
 We acknowledge that there is a retirement savings deficit in New Zealand but it is only part of the problem or perhaps it could be part of the solution. Like all good socialists Mr Cullen started out with wonderful intentions but of course all socialist execution is totally lousy and hopeless as evidenced by all the other failed States behind the Iron Curtain—perhaps they are trying to resurrect one here! 
In preparation for this third reading speech I looked at the first reading of the bill. In fact I went to Mr Cullen’s introductory first reading speech and the speech that he just gave I could have given myself because most of it was verbatim from that speech at least the introductory part. But he raised six points. He noted that the bill has six features so I would like to go over those again and give them a tick a cross or a “perhaps try harder”. 
The first feature he noted was that the scheme tilts the playing field towards establishing a long-term savings habit. Well perhaps when it was first introduced yes that may have been true. But in fact as Mr John Key pointed out and as members will see as we go through our speeches that is not necessarily so. As many submitters noted it will move savings; it will not necessarily create savings. Mr Cullen’s second point was that the bill locked in savings for use in retirement. No that is no longer true. He went on to talk about the hardship provisions. Well actually the hardship provisions etc. have been softened quite radically and we are still to see further detail. It will be interesting to see how the Inland Revenue Department will interpret those. 
The third point Mr Cullen made was that KiwiSaver will provide members with choice regarding how their savings will be managed. OK perhaps but what he does not address is the first mover advantage around the somewhat shonky process of the default provider scheme which is mentioned in the commentary on the bill and on which we spoke last night. The fourth feature that Mr Cullen pointed out was that the scheme minimises compliance costs to employers employees and providers. Well when Mr Cullen mentioned that my good friend and colleague Mr Tremain almost fell out of his chair. Having been involved in many small businesses he knows exactly what it is like on the ground. I tell Mr Jones that those small businesses are private enterprises not the public sector version. 
The fifth feature Mr Cullen announced was that the bill provides prudential oversights of schemes and allows existing fund managers to join. Perhaps OK. The jury is out on that feature. The sixth and final feature Mr Cullen noted in his first reading speech on the bill in its original form back in February was that it includes a mechanism to encourage homeownership as an important element in long-term financial security. Well here we go let us just look. Because as my other colleague Phil Heatley discovered today during question time the other programmes and schemes to help homeownership that have been talked about and talked about are still on the shelf with very very little action and loads of talk. What the bill does not address is why homes are so expensive in the first place and on the other side of the balance sheet is the affordability or lack of affordability of houses in New Zealand. 
The haste in which this bill has been introduced pushed through and bulldozed through Parliament particularly in the last few days and the haste in which the last two major amendments were brought in last Thursday could well be its undoing. Many submitters and officials expressed a lot of concern about the tight time frame within which they are supposed to implement this bill and get their back office etc. ready because it makes quite fundamental changes. That was before the mortgage diversion facility and the specified superannuation contribution withholding tax exemption as announced last Thursday were even talked about. Everyone involved perhaps with the exception of Mr Copeland was under the impression that those measures would not be introduced. 
This bill is being rammed through in haste to perhaps get some good headlines over the weekend to try to counter some of the appalling polling that Labour is getting at the moment. Look at the press release I have here from the Association of Superannuation Funds of New Zealand—“The KiwiSaver Bill—an SOS call”. It states that those who are on the ground in the superannuation industry are calling on the finance Minister with an SOS because its members are struggling in the wake of his announcements last Thursday that “tax concessions are to be made available in respect of certain employer contributions to KiwiSaver schemes”—that is they have been left out in the cold. That is absolutely appalling. There are people on the ground and they are struggling. They have been in the industry for a long time and they have been left out. 
When I looked at Mr Cullen’s first reading speech there was no mention whatsoever of the policy of the mortgage diversion facility. There was no mention whatsoever of any exemption or the specified superannuation contribution withholding tax exemption scheme—none whatsoever. I almost fell off my chair when he said earlier that the Finance and Expenditure Committee had given the bill close and intense scrutiny. We did not because we did not even know about those two quite fundamental changes to the bill. 
Mr Cullen in his first reading speech spoke about the default provider process and he was worried that this would be running in parallel and he was worried about the constitutional objections. He was quite keen to point out that everything was above board. Then last Thursday he whipped out Supplementary Order Paper 52 which again fundamentally changes the scheme. KiwiSaver and the taxation legislation go hand in hand. They are supposed to create savings but they actually create contradictions. Here is an example: a Council of Trade Unions member on $50000 decides to invest 4 percent of that money into a new KiwiSaver scheme and the fund invests in United States shares. Well he will be taxed on the dividends and 85 percent of the capital gain times his marginal tax of whatever those shares move by. Yet if he goes and invests directly he will be taxed only on the dividends. The taxation legislation is totally contradictory to the KiwiSaver Bill. How on earth will that provide an incentive for that person to save for his future retirement? 
I would just like to end with a quote from the Council of Trade Unions which really addresses what we need with courage boldness vision and perhaps even a bit of brashness as we find a vision and get New Zealand going again. The quote from the Council of Trade Unions member whose name slips my mind at the moment states on KiwiSaver: “It is vitally important that in addition to employer contributions we see a continuation of wage rises so workers are better able to afford workplace savings.” That says it all in an absolute nutshell. The problem is not savings the problem is income and earnings. I seek leave to table the press release from the Association of Superannuation Funds of New Zealand which sends an SOS out to the Minister of Finance to reconsider some of the changes he announced last Thursday. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Is there any objection to that course of action being taken? There is.