Cunliffe David: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — First Reading 
Cunliffe David: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — First Reading 
[Volume:659;Page:8299] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Thank you for the opportunity to take a call on the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill and I thank the Minister of Revenue Peter Dunne for his introduction. Labour is supporting the bill at least to go to the Finance and Expenditure Committee. We will be interested to see what technical arguments are raised by submitters at that point. 
It is interesting to note the context in which we are debating this bill. Yet another important step in the great tax debate has unfolded before us in the last couple of weeks. It pays to recall some of the salient events that have led us to this point today. First there was the great global financial crisis that begun in September 2008. Then there was an election in November in which the incoming National Government promised 3 years of income tax cuts. Then in December of last year the House was thrown into urgency to pass the first step in a change that would result in the top 3 percent of New Zealanders getting 30 percent—one-third nearly—of the tax reduction. 
Then Budget 2009 effectively gutted the New Zealand Superannuation Fund with a decade of deferrals of contributions which no amount of papering over the cracks as is being attempted in this bill can disguise. That fund is now projected to be some $35 billion in arrears by the time those deferred payments are lost. A new survey put out by ShapeNZ has told us that 53 percent of New Zealanders—which is more than half—do not believe John Key when he said that it is possible to both defer payments to the Superannuation Fund and maintain existing levels of entitlements. It is a mathematical nonsense unless the Government is saying that in addition to writing off tens of billions of dollars of pollution subsidies on our young people it will also make them catch up the difference that it alleges today’s taxpayers cannot afford at a time when half the taxpayers per capita or per retiree are trying to pay those bills. 
Retirement savings portability is a good idea in principle subject to the detail being worked through. Labour is prepared to support this provision going to the Finance and Expenditure Committee. But New Zealanders are right. They are deeply concerned about the provisions that this Government has instituted that undermine the security that they will have in retirement and that will undermine the New Zealand Superannuation Fund. 
It is an irony that in the Crown accounts released last week the Government’s bacon has been saved by the increase in value of assets of the two funds that it has alleged were in crisis and that it has ceased paying into—the New Zealand Superannuation Fund and accident compensation. Were it not for those the Crown’s books would be in far worse shape. The excuse from the Government is that it does not have a cash surplus so it cannot afford to invest. Well that is great. It says that people will invest only if they are in cash surplus situations notwithstanding the rate of return. That is clearly nonsense because the New Zealand Superannuation Fund’s long-term average rate of return is 10.25 percent according to its latest annual report. The cost of capital to the Government is around half of that figure. So the Government is foregoing— 
Charles Chauvel 
: Doubling its money. 
Hon DAVID CUNLIFFE 
: It is just about doubling its money because of this vain principle that is really disguised as something else which is that it never believed in the Cullen fund. One can only ask whether if the National Government had changed the name to the “English fund” it would have discovered a newfound love for it. It is petty politics and no amount of papering over the cracks with this worthy attempt at a bill will change the fact that National has gutted New Zealand superannuation and that a majority of New Zealanders no longer believe John Key. They did not believe him on the 3 years of tax cuts they were not surprised when the promise was broken and they did not believe him when he said that he could maintain entitlements to superannuation and cease pre-funding. 
Savings and KiwiSaver which this bill deals with are important topics to all New Zealanders or at least they should be. This Government said that it cares about the fact that our tradable sector is in decline yet it turns a blind eye to the biggest part of our current account deficit: the financial deficit. There is an outflow of funds because our financial sector does not save enough—and New Zealanders do not save enough in it—and the profits are flowing out of the country to those who own our financial institutions. All New Zealanders should be concerned that we have to borrow more to cover that deficit and they should be very worried that this Government’s only solution is to flog off what is left of the family silver to try to fix up that gap rather than address it at source. I would have thought there was little doubt that KiwiSaver was a step in the right direction—not the last word but a very healthy step in the right direction—of lifting New Zealand’s savings rate. 
So what has this Government in its wisdom done? When it came into office it cut by half the incentives for New Zealanders to increase their savings through KiwiSaver. It was a short-sighted and ridiculous policy that went back to 1975 and the ghost of Muldoon which by the way stalked the 2025 report. In the last week we had Don Brash rising from the crypt again and we have John Key ritually disowning the product even as he invests another $300000 in paying for it. That report said it was not enough to have a 30c top tax rate because that would be too timid. I see Roger Douglas nodding vigorously or maybe he is just asleep. No he is awake; he is smiling I think. I say “Well done” to Sir Roger. 
Hon Trevor Mallard 
: Awake and alive! 
Hon DAVID CUNLIFFE 
: He is alive and he is smiling because he knows that one day when the Maori Party has what it wants the Government will have to fall back on the ACT Party to pass legislation. Then he will drag the 2025 report and all it contains out of the closet and say to the Government: “That is the price of doing business.” I ask what that is. It is a 20 percent flat tax rate and a cut of the minimum wage by a quarter. For a Cabinet Minister that equals $600 extra a week. For a worker on the minimum wage that equals $100 less a week when he or she is already struggling—down from $500 to $400 per week. 
I say to Bill English who was sitting here showing great interest in this debate—yes I see the Minister of Revenue Peter Dunne straining his head towards the boss and wondering where he is but I cannot refer to that. Bill English is taking a great interest in this debate. We know he is so fiscally prudent that he believes it is impossible to live on $400 a week—goodness me! 
So here is that Minister presiding over a bill that papers over the cracks of fundamental contradictions in this Government’s tax policy. It has gutted KiwiSaver it has gutted the New Zealand Superannuation Fund and it is trying to place a veneer on it whereby people can just take their money across the Tasman retire in sunny Queensland and it will all be all right. Is the Government’s solution to closing the gap with Australia to export older New Zealanders? Will it try to raise the national IQ or the national income by exporting our senior citizens? Is that what lies at the heart of this debate? Is that what is behind this bill? We have seen nothing more sensible out of the 2025 Taskforce report at all. It is a return to the failed policies of the past. It is an absolutely shameless shift of net income from the poor to the rich and at the same time a gutting of the New Zealand Superannuation Fund and of KiwiSaver just when the assets in those funds have saved the Crown’s bacon as was revealed in the last monthly Government accounts. 
This bill deserves to be scrutinised. Labour will support it going to the select committee but it can do little to save the contradictions already built into this Government.