Carter John: Social Assistance (Payment of New Zealand Superannuation and Veteran’s Pension Overseas) Amendment Bill — Second Reading In Committee 
Text is incorporated into the Bound Volume 
Carter John: Social Assistance (Payment of New Zealand Superannuation and Veteran’s Pension Overseas) Amendment Bill — Second Reading In Committee 
[Sitting date: 20 October 2009. Volume:658;Page:7285. Text is incorporated into the Bound Volume.] 
Hon JOHN CARTER (Minister of Civil Defence) 
 on behalf of the  
Minister for Social Development and Employment 
: I move  
That the Social Assistance (Payment of New Zealand Superannuation and Veteran’s Pension Overseas) Amendment Bill be now read a second time 
. The National Government is committed to ensuring that older New Zealanders have more freedom in their retirement and I understand that this bill is supported right across the House. The purpose of the bill is to make amendments to the New Zealand Superannuation and Retirement Income Act 2001 and the War Pensions Act 1954 to make it easier for superannuitants and veterans pensioners to live or travel overseas. 
At the moment there are a variety of ways in which New Zealand superannuation and the veterans pension can be paid overseas depending on where a superannuitant or a veterans pensioner intends to go for how long and for what purpose. Superannuitants and veterans pensioners leaving New Zealand temporarily can receive full payment for up to 26 weeks and are not affected by the amendments in the bill. 
There are currently three methods for paying superannuitants and veterans pensioners who wish to leave New Zealand to reside in another country. First there is a provision for payment under the reciprocal social security agreements with other countries. These allow superannuitants and veterans pensioners to receive up to the full rate of payment depending on how long they have resided in New Zealand. We have agreements with Australia Canada Greece the Netherlands Jersey Guernsey Denmark Ireland and the United Kingdom. Second there are special provisions for people heading off to live in most Pacific countries that also allow them to receive up to the full rate of payment depending on how long they too have lived in New Zealand. 
Finally there are provisions for people moving to all other countries. These are known as the general portability provisions. Superannuitants and veterans pensioners who leave New Zealand to live in one of these countries are currently paid a flat rate of 50 percent of the gross rate of the pension that would be payable in New Zealand except that there is no additional payment for a non-qualified spouse or partner or a living alone payment. The amendments in the bill relate solely to the general portability provisions and will not affect New Zealand’s social security agreements or the special provisions for Pacific countries. 
This bill is necessary because the general portability provisions are preventing many of our superannuitants and veterans pensioners from moving to a country of their choice or travelling overseas. Two main issues will be addressed by this bill. The flat rate of 50 percent provides insufficient income to allow a reasonable standard of living in many countries. Therefore it is unrealistic for many pensioners to consider retiring to another country. The general portability provisions restrict the ability of superannuitants and veterans pensioners to reside in one country and then move to another country to live because payment overseas is linked to residence in one particular country. This also means that superannuitants and veterans pensioners who want to head off on the OE of their golden years cannot continue to receive payment. 
Consequently the bill will make two changes— 
Grant Robertson 
: When’s the member going to go? 
Chris Hipkins 
: His retirement OE. 
Hon JOHN CARTER 
: Of course it affects the likes of myself and I might say that it will not be long before it will affect the members opposite who interject. The key change is a new payment rate. Instead of the current flat 50 percent of the domestic rate the superannuitant or veterans pensioner will be able to receive up to the full rate of New Zealand superannuation or veterans pension depending on how long he or she lived in New Zealand between the ages of 20 and 65. There continues to be no entitlement to any additional payment for a non-qualified spouse or partner or to a living alone payment. 
The second change is that the bill will free up the rules restricting the ability of superannuitants and veterans pensioners to move around once they get overseas. The bill will allow payment of New Zealand superannuation and veterans pensions to superannuitants and veterans pensioners who want to live in more than one country with which New Zealand has no social security agreement whether they remain in the country they first move to reside in or move to reside in another country. In addition the bill also allows for the payment of superannuation and veterans pensions to those who leave New Zealand to travel in or between any countries for more than 26 weeks but to not live outside New Zealand. 
The new provisions represent a modernisation of the payment overseas policy that has been in place since 1990. The rate was originally set at 50 percent partly because the superannuation surcharge was not applied to payment overseas. Now the surcharge has gone and therefore it has no relevance to the amount of pension we pay overseas. Forcing older people to remain in one country or preventing their ability to travel serves no particular purpose and it is not in tune with what today’s retirees want to do. It is not the philosophy of this National Government to do so either. Actually I doubt whether it is the philosophy of this Parliament. 
The bill had its first reading on 31 May 2009. It was then referred to the Social Services Committee which reported back to the House on 18 September 2009. The select committee received 99 written submissions on the bill with the majority in support of it. The committee received many submissions that did not primarily address the subject matter of the bill but focused on the direct deduction policy set out in section 70 of the Social Security Act 1964. That policy is not within the scope of the bill. 
Chris Hipkins 
: The audience is giving up. 
Hon JOHN CARTER 
: Well it will affect them in due course; it will be a little time before they take a direct interest in it nevertheless. 
The select committee has made some technical changes and one substantive change. This amendment will ensure that if someone is out of the country for a while but is still counted as being present for the purposes of fulfilling the residential qualifications for superannuation then he or she will be counted as residing in New Zealand for the purpose of the proportional payment formula. Examples of this would include those who are outside New Zealand for special medical treatment or medical training those who are serving on a New Zealand - registered ship or serving in the armed forces those who are undertaking Volunteer Service Abroad work or missionary work and those who are employed in New Zealand embassies overseas. 
Some submitters asked that people be allowed to apply for New Zealand superannuation while residing overseas. The select committee noted that allowing applications from overseas would change the parameters and costs of the bill’s proposal significantly. Therefore it recommended no change in this regard. 
The select committee noted—and this is quite an important point—that the Income Tax Act 2007 does not differentiate between the tax treatment of people living overseas and people who are travelling. As a result payments made to overseas residents and those who are travelling would be exempt from New Zealand tax under the general portability provisions in the bill. However although overseas residents are subject to taxation in their country of residence Kiwis travelling overseas would not be subject to any tax liability. For this reason the committee considered that the Income Tax Act 2007 should be amended in order to remove the tax exemption for people who are travelling. Such an amendment would require a substantive amendment to the Income Tax Act 2007 which has not been amended substantially by this bill as originally introduced. The committee was therefore prevented by Standing Order 299 from recommending such an amendment without the leave of the House. It instead suggested that the Government give consideration to this issue in depth if a review of the relevant legislation is undertaken. 
I agree with the committee’s view that the New Zealand superannuation and veterans pension paid to travellers should not be exempt from income tax. The Government will therefore be seeking to make amendments to the Income Tax Act 2007 to ensure that New Zealand superannuation and veterans pensions paid to travellers is subject to income tax in the same way that those payments are taxed while they reside in New Zealand. 
Another theme raised by submitters was the concern that current recipients of New Zealand superannuation and veterans pensions paid overseas under the general portability provisions would be disadvantaged by the proposed savings provisions. I can assure the House that no superannuitants or veterans pensioners will receive less under the proposals in the bill than they are receiving currently. In fact many will receive more. 
The introduction of the bill to this House is very timely. Our society is becoming increasingly diverse and Kiwis are travelling and living in other countries more often. It should also be noted that the attitude towards older people in this country is changing and needs to continue to change because the contribution of us baby boomers will be far greater than has previously been anticipated. 
In conclusion I reiterate that this bill is part of the Government’s commitment to ensuring that older New Zealanders are free to decide how they spend their retirement. I commend this bill to the House.