Chauvel Charles: Taxation (Annual Rates of Income Tax 2007-08) Bill Taxation (Business Taxation and Remedial Matters) Bill Taxation (KiwiSaver) Bill — Third Readings 
Chauvel Charles: Taxation (Annual Rates of Income Tax 2007-08) Bill Taxation (Business Taxation and Remedial Matters) Bill Taxation (KiwiSaver) Bill — Third Readings 
[Volume:644;Page:13780] 
CHARLES CHAUVEL (Labour) 
: 
 I am going to take a brief call on these bills that enact promises outlined in the 2007 Budget and which are the latest example of this Labour-led Government keeping its promises to continue the process of New Zealand’s economic transformation. 
In this third reading speech I want to address three of the matters that are dealt with in this legislation—KiwiSaver the company tax cut and the research and development tax credits. I will start with KiwiSaver. An important aspect of these bills is the enhancement made to KiwiSaver first in the Budget secondly in the recommendations coming from the Finance and Expenditure Committee and thirdly in the Minister’s Supplementary Order Paper. To refocus KiwiSaver definitions have been reviewed loopholes have been closed and general submissions as to the burden on companies and individuals have been considered and dealt with. This bill will ensure that the original aims of KiwiSaver will be met in the fairest and most efficient way possible. 
The enhancements to KiwiSaver introduced by this legislation will make it even more attractive to New Zealanders and they certainly come in a timely fashion. If anyone doubted the need for this scheme he or she should consider the statistics that I found the other day when I was considering the remarks that I would make on this occasion. Members opposite might be interested to know that in the year to March prior to the opening of the scheme savings from all sectors in New Zealand fell to $1.3 billion. This was down from $5.9 billion in 2005 and $7.4 billion in 2004 and our household savings rate remains very poor. New Zealanders spend $1.15 for every $1 saved. Just this month a World Economic Forum report ranked New Zealand 108th out of 131 for our national savings rate. Those are historical scandals. 
We simply must do something to address those dreadful savings rates and KiwiSaver starts us along the road. The public understand this. They have embraced the scheme. As the Minister of Finance and the Minister of Revenue observed over 300000 New Zealanders have enrolled in the scheme already after only 6 months of it being open for enrolment. Finally 32 years after the Kirk Labour Government first sought to guarantee retirement peace of mind to New Zealanders and after all the years after National dismantled it and put nothing in its place KiwiSaver along with the New Zealand Superannuation Fund accomplish that goal. I cannot describe how proud I am to be about to cast a vote for that future. 
I want to speak briefly also about the company tax rate and the research and development tax credits. I am not one of those people like members opposite who believe in cutting tax for the sake of it. Frankly anyone who does is a fool. Depriving a State—distant from its markets and with a history of under-investment in infrastructure—of revenues can be downright dangerous as the 1990s showed us. I am not one of those like members opposite who think that tax rates by themselves are the only determinant of where companies choose to base themselves. If they were no company would ever elect to base itself in the United States with a federal company tax rate of 39.3 percent or Japan 39.5 percent or Germany 38.9 percent. For the foreseeable future clearly we will never compete nor should we with ultra-low corporate tax regimes in nations like Singapore and Hong Kong. 
Having said all that though it is clearly desirable to maintain rates of taxation that are broadly competitive with those jurisdictions in our neighbourhood and with those with living standards with which we like to compare ourselves. Australia is obviously relevant in this regard having cut its corporate tax rate last year to 30 percent. Even though we have to treat comparisons with Australia with some caution as we have a very simple tax system unlike Australia’s system with its payroll tax superannuation levies Medicare surcharges and stamp duties it was clearly important to consider following suit and to make the necessary amendments. We now do so and as Dr Cullen said we are doing it in the first cut in corporate tax rates in New Zealand since Labour was last in office in 1988. 
The value of these tax cuts to New Zealand business next year will be $2.1 billion. Astonishingly members opposite whose rhetoric is all about cutting tax—indeed it seems to be their only policy—are voting against this legislation. This legislation also introduces a 15 percent research and development tax credit to bring us into line with the many other developed countries that invest in building know-how in this way. 
Just as KiwiSaver is addressing our abysmal savings record so too research and development tax credits will help to raise the level of private sector investment in research and development in New Zealand. It will benefit business to the tune of $630 million in its first year of operation. I really do believe that this measure will help New Zealand businesses to expand domestically and overseas to improve their ability to research and develop new products and to invest in skilled staff. All this will drive higher productivity with internationally competitive firms selling products for which international consumers will pay a premium. These outcomes are absolutely key to our future economic success. 
I say in conclusion that New Zealand is enjoying the longest period of economic growth in 30 years. Since 1999 our average growth rates have outstripped those of Europe Japan the US and the UK. Company tax returns show that recent profit growth has averaged some 20 percent per annum. We continue to rate highly in terms of international competitiveness openness freedom from corruption and ease of doing business. Unemployment at 3.6 percent is at record lows and labour force participation is at record highs. None of this is happening by accident. It is in very large part a legacy of Michael Cullen’s excellent economic management typified by the measures contained in this legislation. Long may that continue.