Fenton Darien: Taxation (Urgent Measures and Annual Rates) Bill — In Committee Third Reading 
Fenton Darien: Taxation (Urgent Measures and Annual Rates) Bill — In Committee Third Reading 
[Volume:651;Page:248] 
DARIEN FENTON (Labour) 
: 
 It is a pleasure to make my first contribution on this bill. I would call this a very disastrous bill particularly Part 4. This is a bill that gives big tax cuts to people on high incomes but increases in taxes to people on low incomes. Part 4 which I will endeavour to address—unlike lots of members of the Government—guts KiwiSaver by halving employer KiwiSaver contributions. It caps workers’ contributions at 2 percent rather than the choice that workers had before of 2 percent or 4 percent under the Labour-led Government. Of course employer tax credits are abolished. I want to explain to Government members who have tried to say this is about helping low-paid workers and who have terribly misrepresented the union movement’s position on the 2 percent contribution that what the unions were advocating was an option of 2 percent as a minimum. No one supported removing the 4 percent minimum. What happens under Part 4 of this bill is that employers will not be contributing 4 percent. They will be contributing 2 percent. 
Hon Member 
: As a maximum. 
DARIEN FENTON 
: That is right. Over a lifetime that adds up to hundreds of thousands of dollars for many low-income and indeed many higher-income workers. That is the objection that members on this side of the Chamber have to the changes to KiwiSaver. There are many others but that is the main objection I want to point out. 
The problem with this is that many unions and employers have already gone in and made agreements around the previous KiwiSaver scheme. Many have agreed to 2 percent plus 2 percent with an agreement that in future it will go to a 4 percent contribution. The problem with this bill is that in the future it will be really hard to persuade employers to contribute more than 2 percent. It will mean that some employers are going to put pressure on workers to fund the employer contribution out of a wage increase. Workers should be able to choose a 4 percent supported option and already hundreds of thousands have. The implementation of the changes under this bill will mean that these workers will be significantly disadvantaged. 
Let us talk again about low-income workers the workers who are going to be paying more under National’s tax plans. These are the workers that I am particularly concerned about; for example the caregiver in aged care who earns $12.50 an hour who is going to pay more in tax in 2010 and 2011 under National. Now those workers’ chance of having a savings scheme that will help them when they are older is being gutted. 
I do not accept the argument that low-paid workers have not signed up for KiwiSaver. In fact there has been specific research done on it by the Inland Revenue Department. That research is on the website if members choose to look at it and it shows that a large number of low-paid workers have signed up to KiwiSaver. Do members know why? It is the only chance they have ever had to have a superannuation fund where the employer is making a contribution. I know that thousands of workers have tried for years and years to negotiate an employer contribution in their bargaining. Those workers who do not have any power and who struggle to get a decent wage increase year in and year out have suddenly thanks to the Labour-led Government had an employer contribution that was going to see them enter their old age with a decent pension on top of the State pension. As I have said those workers stand to lose hundreds of thousands of dollars over a lifetime of saving. 
To add insult to injury we now find out they are going to have to pay the fee of $40. How mean how miserable is that! It has taken years and years to get this scheme. When was the last one? Was it 1975 the one that Muldoon abolished? 
Hon David Cunliffe 
: About then. 
DARIEN FENTON 
: They have waited all of those years to get a compulsory workplace savings scheme and here it is being gutted by the National Party in its first week in Government. It is absolutely shameful. 
The other thing that is very concerning is National’s intention to allow employers to take KiwiSaver contributions out of wage rises. That will result in employers putting more pressure on workers to forgo wage increases in order to cover the employer contribution.