Foss Craig: Government Superannuation Fund Amendment Bill — Second Reading Third Reading 
Foss Craig: Government Superannuation Fund Amendment Bill — Second Reading Third Reading 
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CRAIG FOSS (National—Tukituki) 
: 
 Mr Speaker— 
Hon Ruth Dyson 
: This will be better than David Carter’s speech. 
CRAIG FOSS 
: It may be better than the speech made by the previous speaker. I would like to acknowledge Dr Michael Cullen. The speech we have just heard actually summed up the issues very very well. I acknowledge in particular the points made about the very contentious issue of moving from “exempt/taxed/taxed” status to “taxed/taxed/exempt” status. If members want to learn about that they should go back and look at the particular  
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 because in this case it is exactly that argument as well. No doubt that will be coming before various members as the year progresses. 
I am speaking on the combined second and third readings of the Government Superannuation Fund Amendment Bill. As the previous speaker noted this is the Government Superannuation Fund which is not to be confused with the New Zealand Superannuation Fund or New Zealand superannuation which are entirely different matters. Again the member explained quite well why people are in this scheme and how it works as opposed to New Zealand superannuation. I thank the member for that. 
A few thanks are needed here if the House would bear with me for a moment. First of all I acknowledge the previous Minister of Finance for getting this measure off the ground in the last Budget. It seemed to disappear around election time. It is a tribute to all members involved that this bill managed to cross the election cycle and a change of Government but all parties did pick up on the importance of particularly the 1 April kick-off date in the bill here and also on the fairness of the issue. Mr David Thorp and the Government Superannuitants Association have been avid campaigners for this particular issue. I acknowledge the work that Mr Thorp and his board have done. I also acknowledge their suggestions in various forms at their annual conference where I spoke last year. I think the previous speaker spoke at the conference last year as well. I am quite sure that various members will be invited to speak there again this year. The main issues are raised at the association’s annual conference—in particular the one the previous speaker alluded to. That is the association’s biggie and it is an ongoing issue. But is very good to have the issue that this bill addresses satisfied. 
Prior to the election National committed itself to following on the intent of this bill and we are here in the Chamber tonight not only following that intent but enacting the bill. I acknowledge all of those involved. I acknowledge the officials for helping to get this bill to this point. I particularly acknowledge the members of the Finance and Expenditure Committee. This bill went through the committee relatively quickly but that was driven by the urgency to put the matter into place and for no other reason than that. I acknowledge for the public record for  
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 the full and total cooperation of all members of that committee from all parties in the House in getting this bill to the point it is at here tonight in the second and third readings. I also acknowledge the various officials who got us to this point. It would have been very easy for this bill to get lost but those people pushed the right buttons to make sure that it came to this point. I acknowledge all members across the House for their cooperation—perhaps we could see more of it. 
A particular point was alluded to by the previous speaker. I think I might have mentioned it in my first reading speech on this bill but I cannot quite remember. He pointed out that the CPI adjustment for a certain group—he and members of other parties said this—had moved from 80 percent to 90 percent in 2005 and that a move from 90 percent to 100 percent was announced in 2008. Those happened to be election years. When the various speakers went to the association’s annual conferences in between the election years that measure did not seem to be announced or changed but it was delivered. Having said that I am not a cynical chap and I say this measure is good and fair. The total—the quantum—here is about $34 million. That is over the life as well as the liability of the fund in the future. This measure is all very good. We are moving to 100 percent on 1 April 2009 with the will of the House if this bill goes through its third reading tonight. 
I have one final thankyou. The House gave leave for the second and third readings of the bill to be combined so I acknowledge and thank the House for that. Many many pressing matters are facing New Zealand—there is the standard politics of course—but the House saw the urgency fairness and necessity of getting this bill through. Again I acknowledge the other members across the House and previous Ministers. I thank them very much. 
Another reason this bill is here is that the original report-back date for the bill crossed—or came very close to—1 April. The problem for members of the fund was that they are sent a mail-out of what they will receive: a schedule of payments etc. I think it is mailed out in March; it is about to go out. That mail-out costs about $30000. If this bill is not passed in time by the House then another mail-out will have to go to members costing the taxpayer and the fund another $30000. So there is a dollar reason to put beside the fairness and eminent common sense of getting this bill through. I acknowledge all those concerned. 
Another issue is of interest to the members of the fund and Mr Thorp and his board raise it occasionally. Perhaps they will raise it again when this bill goes through. They talk about the timing of their payments—the actual timing of the new index payment. That is a component of inflation; it is indexation. We all understand that. To be fair with inflation being quite aggressive for in particular the last 6-odd years that has been quite an issue for the members of the fund. 
Hon Dr Michael Cullen 
: The last year or so; not the last 6-odd years. 
CRAIG FOSS 
: The member says the last year or so. Well let us say the previous 4 or 5 years but inflation is currently heading south. It has been an issue for them; it still is an issue for them. But the cost of that for them is going down as inflation heads down. As the National Government has come in and as inflation is heading towards below 3 percent—back inside the range set for the Reserve Bank which is wonderful for these people and for all of New Zealand—inflation is not quite the issue that it was when the rate was 4.5 or 5 percent. I think it was heading towards 6 percent actually—I stand to be corrected—in one forecast I saw along the way. That rate is important to those who are receiving annuities; as the previous speaker noted some people are on quite low incomes from their annuities from the fund. 
I will just put the issue in context. What used to happen is that the December quarter’s CPI was published sometime in March and the adjusted annuities were paid in April. As information exchanges have become better and as the Reserve Bank and Statistics New Zealand have measured inflation quicker and been able to report back faster the December quarter’s CPI is known about in mid to late January but members of the fund are still paid the adjusted rate in April. Some of the members thought that that was an issue and they should have gained their payment a month or so earlier when the report on inflation came out. On the face of it maybe that is a fair issue and maybe there needs to be a little more work done on it. But if one looks at the numbers—unless I am mistaken—one sees that the difference in those 2 months is really only the annual CPI divided by 12 months times 2 for the 2 extra months times the interest rate—the funding rate—which is 7 percent or something like that. Although on the face of it that could be significant and maybe seems unfair actually when the numbers are crunched on that part of the payment and indexation I do not think it is very significant. 
I will touch on the drafting error that the bill corrects because again the previous speaker raised it. It is very curious and somewhat worrying to be honest that the error sat on the books for about 19 years. Yes payments were made as intended. Yes other documentation under the legislation was made available as intended. But still for 19 years the statutes of this House were wrong. That is a very good case I guess for introducing the ongoing testing of various pieces of legislation and particularly of older legislation with perhaps some kind of warrant of fitness 15 or 20 years after its enactment. For goodness’ sake—this error was there for 19 years! 
I make one final point. The previous speaker alluded to and pointed out correctly the difference between the superannuation schemes but he kind of shied away—his colours showed through again there—from saying National’s ongoing programme of personal tax cuts will help those who are on New Zealand superannuation. Many of the people in the Government Superannuation Fund are probably or most likely also on New Zealand superannuation so as the ongoing programme of tax cuts kicks in their incomes will increase. As the superannuation rate is 66 percent of the average wage the married couple’s superannuation payment rate will actually increase. Perhaps the previous speaker’s true colours are coming through and that tax cut denial is still coming through—I am not quite sure whether that is the case. Having said that I do not want to finish on a note like that. Again as I started I thank the member.