Donald Rod: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Instruction to CommitteeCWH In Committee 
Donald Rod: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Instruction to CommitteeCWH In Committee 
[Volume:613;Page:10107] 
ROD DONALD (Co-Leader—Green) 
: 
 I am delighted to speak to this part of the bill because this is the good-news part of the bill. I can see from Dr Cullen’s smile that he agrees with me on that. This is the part of the bill where the Government has finally succumbed to pressure from the Greens and others to end the taxation penalties on low and middle income workers who are saving for their retirement. I think all parties in the House would applaud that because it is totally unfair that anyone earning less than $38000 a year who is a member of an employer-subsidised superannuation fund should be faced with the employer component of that fund being taxed at a higher rate than the marginal tax rate of the employee. So I give a big tick to the Government for removing the tax penalties and also an acknowledgement and a note of gratitude to the Government for supporting the further Green Party initiative to include a 15 percent rate for those earning less than $9500 a year. I know that not many people are affected by that that it will cost the Minister only $1 million a year and that he is very cash-rich at the moment. But it does make this a genuinely progressive specified superannuation contribution withholding tax and that is a good thing. 
I would also like to acknowledge that the Government is prepared to back something that was I think originally a United Future initiative to ensure that the taxation rate on superannuation is set at the level of a person’s salary rather than his or her salary plus superannuation. That measure helps those people earning just under $38000 who are currently receiving superannuation or who may be eligible for it. Those are very important steps in the right direction and I would like to hear from the Minister to make sure that he is in planning to take a lead by ensuring that the superannuation contributions to Government employees will be taxed at the lower rate. He may be able to clarify whether that will apply to anyone in GSF New Zealand given its defined benefit scheme. Certainly for anyone in the National Provident Fund I hope the Government will opt to make sure that those employees are taxed at the lower rate. I hope that the Government will provide a lead to all employers to opt to pass on the tax savings to their staff. What is in this bill is optional; it is not compulsory. So I hope that employers will take that option will be generous and will give their staff an early Christmas present even though that measure does not kick in until some time in the future. 
That is end of the good news. The bad news is that Dr Cullen is keeping the taxation penalty in place. My amendment in Supplementary Order Paper 171 addresses that issue and it is unfortunate that the Minister has invoked the financial veto provision in order to stop my amendment proceeding. All that it would have done was to simply extend the current 6 percent specified superannuation contribution withholding tax rate concession enjoyed by employees earning over $60000 to low and middle income earners. In practice that would have reduced the 15 percent rate to 9 percent the 21 percent rate to 15 percent and for those earning between $38000 and $60000 the 33 percent rate to 27 percent. It would have cost the Minister and this Government only $77 million a year—a fraction of the $1.88 billion that the Minister wants to put into the Superannuation Fund which in turn will be gambled on the overseas sharemarket. 
I would like to thank the officials at this point for their drafting assistance with regard to my amendment. They did a sterling job and I am grateful for that. I would like to thank National members for supporting my amendment at the Finance and Expenditure Committee and I would have hoped that they could support me here in the Committee had the Minister not vetoed my amendment. I was disappointed that ACT United Future and New Zealand First did not support me at the select committee. I thought they were all family-friendly parties but never mind that. 
I do challenge Dr Cullen having vetoed my amendment to propose an alternative because New Zealand is in the grip of a savings crisis at the moment. The number of Kiwi workers in employer-subsidised superannuation schemes has plummeted from just over 310000 in 1990 to a mere 246946 as at 30 June this year. That is an indictment on employers but it is also an indictment on the Government for not providing an incentive to employers to provide subsidised superannuation to their staff. I believe my proposal was a serious solution to that problem and it was a solution that should have been adopted.