Tolley Anne: Social Assistance (Portability to Cook Islands Niue and Tokelau) Bill — First ReadingText is incorporated into the Bound VolumeTolley Anne: Social Assistance (Portability to Cook Islands Niue and Tokelau) Bill — First Reading[Sitting date: 04 November 2014. Volume:701;Page:543. Text is incorporated into the Bound Volume.]Hon ANNE TOLLEY (Minister for Social Development):I move That the Social Assistance (Portability to Cook Islands Niue and Tokelau) Bill be now read a first time. I nominate the Social Services Committee to consider the bill. This bill seeks to provide greater pension flexibility for people who wish to retire in the Cook Islands Niue and Tokelau. This Government wants to ensure that New Zealanders have as many options as possible as to where they spend their retirement and we also want to make sure that those countries and territories that have close constitutional ties with New Zealand are recognised and that their ongoing economic and social viability is supported.Current pension portability arrangements allow people to take their New Zealand superannuation to one of 22 Pacific countries and territories including the Cook Islands Niue and Tokelau. The arrangement also applies to the veterans pension which is an alternative to New Zealand superannuation for eligible veterans. The provision that makes this possible is called the Special Portability Arrangement. Under the arrangement New Zealand superannuation is paid at a minimum of 50 percent after 10 years’ residence in New Zealand rising to 100 percent after 20 years’ residence. There are also general portability provisions that cover all other countries with which New Zealand does not have a social security agreement. The payment formula for the Special Portability Arrangement is more generous than the payment formula for the general portability provisions. This is because the Special Portability Arrangement is designed to recognise the contribution Pacific peoples make to New Zealand and the inability of Pacific countries and territories to fulfil the reciprocal obligations necessary to conclude social security arrangements with New Zealand. There are currently nearly 650 people receiving their New Zealand superannuation in the Pacific and nearly 300 of those people live in the Cook Islands.To be eligible under the Special Portability Arrangement at the present time a person must be resident and present in New Zealand on the date of his or her application. Consequently people who wish to retire and receive New Zealand superannuation in the Cook Islands Niue or Tokelau are not able to leave New Zealand until they are 65 which is the age of eligibility for New Zealand superannuation. Should they choose to return permanently to the Cook Islands Niue or Tokelau prior to age 65 they lose their ability to apply for New Zealand superannuation. This bill will remedy that situation by eliminating the resident and present in New Zealand requirement for the Special Portability Arrangement in respect of the Cook Islands Niue and Tokelau. The bill will allow persons to retire to those islands after reaching the age of 55 and to apply for New Zealand superannuation or the veterans pension from these Pacific islands at age 65.Why are they able to retire to only the Cook Islands Niue or Tokelau after reaching the age of 55? This is because there is a residence requirement for New Zealand superannuation and the veterans pension that will still apply to these people. In order to be eligible for New Zealand superannuation or the veterans pension a person must have lived in New Zealand for 10 years since the age of 20 5 of which must be after the age of 50. This provision applies to all applicants for New Zealand superannuation and therefore it would not be right to remove it only for people who wish to move to the Cook Islands Niue or Tokelau. The change is restricted to those three countries because this bill is about recognising New Zealand’s close constitutional relationships with these Pacific islands which enjoy shared citizenship with New Zealand and unique legal arrangements. Both the Cook Islands and Niue have adopted constitutions enabling self-government in free association with New Zealand. Free association is a status distinct from that of full independence in that it allows the Cook Islands and Niue to maintain New Zealand citizenship while administering their own affairs. Tokelau is a non-selfgoverning territory of New Zealand.As I said earlier this bill is also about trying to assist the economic and social viability of the Cook Islands Niue and Tokelau. Depopulation and its related social and economic consequences is a longstanding issue for these island countries. The current resident and present requirement has been described as a disincentive for Cook Islanders Niueans and Tokelauans established in New Zealand to return home before retirement age. Removing this disincentive has the potential to boost economic development and human resource capacity in these islands through an increased return of experienced persons able to apply skills effectively in their home communities. People returning at age 55 would have the capacity to contribute to the workforce 10 years in advance of the standard retirement age. As pension payments are paid in gross it is expected that local income tax and value-added tax will be paid by returning migrants to contribute to services received.The idea that otherwise eligible persons should be able to apply for their New Zealand superannuation or the veterans pension from the Cook Islands Niue or Tokelau has been around for some time. Pacific Island leaders view greater flexibility around pension portability as a driver for increased economic activity and have sought changes to the New Zealand scheme for many years. The issue continues to be raised in particular by the Cook Islands at senior Government levels.The issue of pension portability was also highlighted in the Foreign Affairs Defence and Trade Committee inquiry into New Zealand’s relationships with South Pacific countries which was presented to the House in December 2010. The committee noted the potential impact of experienced people with some capital on consumption business development and job creation in an island economy. The committee suggested that citizens of the Cook Islands Niue and Tokelau as New Zealand citizens should be eligible for a New Zealand pension in the same way as New Zealanders living in the Chatham Islands.Niue and Tokelau are facing particular depopulation problems and very limited options for development of a private sector economy. The committee favoured options involving the promotion of Niue as an attractive location for retirees noting that they would bring steady cash flow and contribute to stable employment options. Most important they could contribute to the viability of businesses providing goods and services to residents and visitors. It is important to note that this change will not be restricted just to citizens of the Cook Islands Niue and Tokelau. All New Zealanders who qualify for New Zealand superannuation will be able to make use of the provision should they choose to live in those islands.The economic implications of the bill for New Zealand are mixed. On the one hand there are fiscal costs to the Crown associated with payments to newly eligible superannuitants who have moved permanently from New Zealand before turning 65. In addition in the future those people who choose to leave New Zealand at age 55 will create a likely loss of economic input to New Zealand due to that earlier emigration. There will also be ongoing administration costs. On the other hand a range of indirect economic benefits and savings may be derived by New Zealand from the proposal. The potential benefits include increased economic activity in the Cook Islands Niue and Tokelau leading to a reduction in remittance payments and private transfers from New Zealand. Savings could also be accrued as a result of a lower burden on some New Zealand Government - funded services including reduced expenditure on health care. These benefits are difficult to quantify however and would depend on the response to the new arrangements.Officials have tried to estimate how many people might benefit from the new arrangements. Immigration data suggests that 245 people who emigrated from New Zealand to the Cook Islands Niue and Tokelau after the age of 55 would become newly eligible for New Zealand superannuation when the legislation is passed. The estimates also show that this is likely to increase by an additional 16 people in each subsequent year. This sounds like a relatively small number but taken in the context of small populations the implications of this are quite significant. I commend this bill to the House.