Burns Brendon: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — In Committee 
Burns Brendon: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — In Committee 
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BRENDON BURNS (Labour—Christchurch Central) 
: 
 As a member of the Finance and Expenditure Committee I am very pleased to contribute to this debate and to support the amendment in the name of my colleague Stuart Nash in respect of some effort—some small effort—at some relief for the modest and low income New Zealanders who will be walloped by the increase in GST from 1 October. Those sorts of people such as those in my electorate of Christchurch Central 76 percent of whom earn less than $40000 a year are the sorts of people who need every bit of assistance they can get. This amendment is very timely and appropriate for assisting those people most in need. It acknowledges that those who have the money in the bank can pay their rates on 1 July and pay them at a GST rate of 12.5 percent but that most New Zealanders cannot do that. They will pay on a rates instalment system so they will be subject to a rate of 15 percent for GST across the balance of the year. Obviously this amendment provides a sensible mechanism for acknowledging that many New Zealanders are under very real pressure at the moment—very real pressure. We are feeling it across the country. The recession is still with us and the economy is still not in real recovery so we need to assist those on middle and lower incomes across New Zealand and do all we can to make sure they can survive. This amendment is a very appropriate and modest measure and I urge the Government to consider supporting it just as we in Labour are supporting the Minister’s Supplementary Order Paper. That is a very small method towards providing some relief for low and middle income New Zealanders. 
I will comment for a moment that of course the Minister in the chair the Hon Peter Dunne is a great fan and supporter of the whole process of income splitting and is obviously moving that forward as much as he can at the moment. That is a measure that particularly assists those in higher-income brackets but this amendment is about assisting those who are in the middle and lower income brackets. They are the ones most deserving of assistance. 
The primary function of this bill is to allow the flow of savings generated in Australia by New Zealanders who have been resident there for some time to be brought back home. I applaud and encourage this bill in respect of that. It makes absolute sense when our economies are very intertwined and when many New Zealanders have spent a considerable portion of their working lives in Australia. They have contributed of course to that country’s compulsory superannuation scheme at the rate of a 9 percent employer contribution. That is a fantastic savings record. Those people can bring back earnings that are many multiples of what many New Zealanders are able to save towards their retirement. That will be a very good cash-flow back into the New Zealand economy so this bill is very very appropriate in that respect and very important. 
I note that the Government is now finally recognising the importance of savings. It is finally recognising the importance of savings. The Minister is now setting up a working party on savings but I note that that working party has been told overnight—and certainly the public has been told—that there will be no Government contribution to any proposals for compulsory superannuation emerging from the working party. So having set up the working party the Minister of Finance is now prescribing to that working party that it go away and look at the issue then come back with a comprehensive report. Already he is starting to ordain what the shape of that report should be and is removing any prospect of there being any Government contributions to a compulsory savings regime. Well we have to ask what the heck is the point. What the heck is the point of going into the establishment of a working-group to look at the very important issue of compulsory savings? It is the sort of scheme whereby through this bill we are allowing New Zealanders who have been resident in Australia to bring their savings back from Australia in order to generate some investment in our economy and to support and assist people who have lived in Australia but who have come back to New Zealand with their Australian-generated schemes. Why on earth is the Government saying now that we should not consider whether there will be any Government contribution to a compulsory savings regime? It is a daft idea and it really fires a shotgun at those who have agreed to take part in that working party. I think it is very very short-sighted thing. 
The other issue I need to comment on is the fact that the Government has called this review on compulsory savings at a time when it has instigated two rounds of its own tax cuts in our economy the most recent of which will take effect in October. It has done that without any consideration of whether it might have been appropriate before it embarked on handing over tax cuts to look at what the Australians did when they set up their compulsory savings regime. The Australians very cleverly constructed a deal where there was a forgoing of wage rises for a period of time by Australian workers. I believe there was also some consideration of tax cuts but they decided to put their money into a savings regime. 
But not this Government. This Government went to the polls promising a new wave of tax cuts and introduced a second wave to take effect from 1 October and now it is scrambling around realising that it needs to have some form of savings to stop us becoming as the Prime Minister puts it tenants in our own land. We do need a savings regime but he squandered the opportunity to consider whether some of the two rounds of tax cuts might well have been better directed to a savings regime rather than giving them to people in a way that will obviously only add to inflationary pressures and will not contribute to anybody’s savings regime. We need a balanced approach to this matter and this Government has squandered two opportunities to consider whether some of those tax cuts might have been directed towards a compulsory savings regime. 
It is typical of this Government. National wrecked the first contributory scheme that this country ever saw which was established by the Kirk-Rowling Labour Government in 1972-75. Muldoon went to the polls and completely shafted that scheme abolishing it by executive fiat then had to put through amending legislation to enact what he had already announced. We then saw in the 1990 election campaign a “no ifs buts or maybes” promise by the then National Party leader Jim Bolger in respect of the national superannuation surcharge which he had to later back away from. Here we have another National Government coming into office and squandering the opportunity to have tax cuts considered as part of a savings regime putting on hold New Zealand Superannuation Fund contributions and axing 2 percent of the 4-percent contribution that employers were starting to make towards the KiwiSaver regime which was the first thing we had done in respect of savings since Muldoon axed the Kirk-Rowling scheme in 1976. 
This bill is exempt from the Government’s record on savings as it introduces a very sensible measure to encourage New Zealanders to return from Australia by being able to bring their savings back. But what we are doing is relying upon the largesse of Australian tax authorities and employers to build savings for New Zealanders who live there. We are doing nothing towards the building of savings for New Zealanders. That is what we should be debating in this Chamber. What we have instead are proposals on income-splitting an increase in GST with no relief for middle and lower income New Zealanders and an attempt to have a working party review of superannuation. But on  
Morning Report 
 this morning the Minister of Finance ruled out any Government contribution to a savings regime which really pulls one leg away from the stool and makes it very much harder to get savings up and running. 
This bill is a sensible move in respect of bringing back savings that were made in Australia under a scheme that the Australians had the wisdom to set in place. We are going in the opposite direction. We have seen KiwiSaver cut we have a freeze on the Superannuation Fund which Michael Cullen established and we are going backwards in terms of savings. Although it is a step forward in respect of savings generated by New Zealanders living in Australia this bill is doing absolutely nothing towards the savings that New Zealanders need to be making so that we do not become tenants and peasants in our own land. We need a savings regime that encourages New Zealanders to invest and create the funds so that we do not need to go overseas cap in hand every time we need funds.