Key John: KiwiSaver Bill — In Committee 
Key John: KiwiSaver Bill — In Committee 
[Volume:633;Page:4952] 
JOHN KEY (National—Helensville) 
: 
 One of the things that is pretty obvious about KiwiSaver is that the Government is not confident at all about this legislation. It was not confident when it took it to the Finance and Expenditure Committee although over the election campaign Michael Cullen tried to tell the people of New Zealand that it would be very successful. But the truth was that the Government was not confident about the scheme at all and knew that it would not work in its existing form because it had no incentives at all for New Zealanders to change. There was no incentive for a change in behaviour by the overwhelming number of New Zealanders who do not save today. There are lots of reasons why they were not saving—mostly because New Zealanders do not earn enough and they are overtaxed. It is not because of inertia. 
About the best thing one could say about KiwiSaver was that people might put in some money receive $1000 back and maybe over 5 years they could pull their money out and have a first home-buyer’s grant—but the scheme was never going to work. It was a load of dormant accounts that were never going to work. Michael Cullen knew that. He knew that it would not work but the plan was this. It was a pretty simple plan: the Government would tart the thing up and make it look a little bit better but it would do that during the next election campaign—which could be sooner as opposed to later. But let me assume for the purposes of the debate that it will be in 2008. That was the plan. The plan might still be to do that—to extend the contribution of around $1000—and the plan might still be to change a few areas. Michael Cullen made it clear in his remarks in his second reading speech that he was far from ruling out compulsion and that may or may not happen. But basically the plan was that the scheme was to be tarted up. 
The only reason the changes happened—right after we had heard 71 submissions the committee had voted unanimously against mortgage diversion and all those things—is that this Government has its back to the wall because it stole $882000 of taxpayers’ money to pump itself up to steal an election. And the Government has a member it is very embarrassed about. On Monday morning there was so much distance between Taito Phillip Field and the Prime Minister that he could have been on Pluto which is not even a planet any more. That is how much distance there was. 
So Michael Cullen thought that he had to do something and Gordon Copeland’s mortgage diversion scheme was about the best he could come up with in a rushed period of time. So he agreed to it. But it did not even tally with his question and answer—he knows that. Interestingly enough if this scheme is to be overwhelmingly successful then it is an interesting sort of Minister of Finance who rolls it out and says: “I guess we will suck it and see.” He then went on to tell people that despite the fact that the Government collects well over $500 million currently from the contributions made by employers—specified superannuation contribution withholding tax which employers currently pay on any matched contributions they have—the initial estimates of KiwiSaver are $35 million. So it is hardly going to be an overwhelming success. And yes I accept that the specified superannuation contribution withholding tax contribution will be larger by 2011 and 2012—it will be up around I think from memory $140 million—but the reason will be that more and more schemes will convert over to be in KiwiSaver because why would people want to have their money in an existing scheme that is non - KiwiSaver-compliant if they do not receive the tax benefits? So those schemes will convert over; I have no doubt about that. But will it increase the national pool of savings? 
Hon Trevor Mallard 
: Of course it will. 
JOHN KEY 
: I say to the Minister and the Labour Government that no it will not. In fact not only is there no agreement between the Government and United Future over mortgage diversion—but Michael Cullen had to do something—there was no agreement between Michael Cullen and his next pretender Trevor Mallard who said on  
Agenda 
: “I actually kind of favour compulsion.” and he favours State-owned enterprises being able to do anything they feel like. So that was his sort of tilt at the top job when it comes up for him in a few months’ time which it will and that is OK. So there will be lots of changes with KiwiSaver but we do know that for the overwhelming bulk of New Zealanders who currently do not save in any material form KiwiSaver will not change that. 
One of the fundamental points Michael Cullen Gordon Copeland and the Government have missed is that the only way schemes like this one work is when employers buy into them. So we agree on that point probably and the change of specified superannuation contribution withholding tax helps the employees. It does nothing for the employers. If Michael Cullen and the Labour Government were really serious about giving a leg-up to young New Zealanders and those who are in the scheme then they would have made it more attractive for employers to be in the scheme. The only way that will happen is if employees put huge pressure on their businesses and that will not happen in an overwhelming way. So any New Zealanders who take up this scheme who are not matched by their employer now will not be matched by future employers either.