Donald Rod: Taxation (Annual Rates GST Trans-tasman Imputation and Miscellaneous provisions) bill — First Reading 
Donald Rod: Taxation (Annual Rates GST Trans-tasman Imputation and Miscellaneous provisions) bill — First Reading 
[Volume:609;Page:6663] 
ROD DONALD (Co-Leader—Green) 
: 
 The Green Party will be supporting this bill going to the select committee if for no other reason than that it includes a significant victory for the Green Party. We have long campaigned to force the Labour Government to look after hardworking New Zealanders by giving them an incentive to save for their retirement. In March 2000 the Greens supported a tax bill to bring in multi-rate fringe benefit tax because it was a great help to employers with staff earning less than $38000. At that time we called on the Government to introduce the same multi-rate mechanism for the specified superannuation contribution withholding tax. The Government said it was too hard but we did not give up. We kept the pressure on as Dr Cullen acknowledged in his speech today. I do acknowledge the resistance that he faced from officials but I am glad that on balance he has moved in our direction. 
We were keen to keep the pressure up because we were concerned that Labour was penalising the very people it claims to represent—the hardworking low-income families of New Zealand. The vast majority of the people who vote for Labour were being rewarded for their support with a large tax penalty imposed on their employers and what is more Labour doubled the insult to its traditional supporters by introducing a 6 percent tax incentive for well-paid salary earners when the marginal tax rate increased to 39 percent and the specified superannuation contribution withholding tax remained at 33 percent. That meant that employers got a 6 percent tax rate on any subsidy they offered to their well-paid workers which is a great incentive to provide staff with subsidised superannuation but only those staff earning more than $60000 a year. Meanwhile good employers were penalised if they provided superannuation to staff earning less than $38000 and employers who were not offering any superannuation to staff earning less than $38000 were being given absolutely no encouragement by this Government to help those people save to have a more comfortable retirement. 
It is therefore no surprise that the number of employer-subsidised superannuation schemes is plunging and that the number of people who are members of those schemes is also plummeting. As I said in the debate on the Business Law Reform Bill earlier this week it is a sad indictment on successive Governments that at the end of June last year only 245003 people were members of employer-subsidised superannuation schemes—down from 310741 only 12 years ago. That is a drop of 65000 in workers who are members of employer-subsidised superannuation schemes. That is of significant concern to all of us in this country at a time when our saving rate is negative. Indeed the negative saving rate is actually getting worse. 
It is not that I am excusing employers from helping their staff to save for their retirement—and the pressure will now need to come on them—but I am simply saying that successive Governments have put too many impediments in the way of employers. There are others that are now also being removed. I acknowledge the Government for introducing Parts 10 and 12 of the Business Law Reform Bill which will also reduce compliance costs for employers in terms of both prospectuses and annual reports. Together these three moves are very much steps in the right direction. We acknowledge and support those steps because the Government is partially removing the disincentive to employers to offer subsidies to their staff. But the Government has introduced only a two-tier optional system not the progressive system that it is claiming. That means that workers earning between $9500 and $38000 will not be penalised any longer because the new rate applying to them will be 21 percent but anyone earning less than $9500 will still be paying a 6 percent penalty—or their employers will—on any contributions made to their retirement savings. 
Treasury might say that anyone earning less than $9500 cannot afford to save in the first place but we say why penalise them if they can. There are good people mainly women who work part-time to bring a second income into a home and who want to save for their retirement and they deserve the chance to do so without their boss losing 6c on every dollar he or she provides in subsidised superannuation. This bill discriminates against those people and must be changed. 
We look forward to working with all the parties on the select committee to amend the bill accordingly. Even the ACT party which says it will vote against the bill has highlighted—in the speech of its member—this discrimination. I hope the ACT member on the committee will stand by what Stephen Franks said in the House and will support an amendment to remove the discrimination against those earning less than $9500. I do not expect the cost will be significant. In fact I expect the cost will be minimal but the result will be beneficial. 
I will also seek multiparty support to extend the 6 percent superannuation savings tax incentive which is currently available to those earning more than $60000 right across the board to all income brackets. I note that the speeches made today by National New Zealand First United Future and ACT members give me confidence that we could have the numbers to have an amendment on that go through. I hope that parties will support such an amendment. Indeed I hope that the Government will have second thoughts on this matter and concede that that is a worthy measure. It is a measure that would bring in some equity and would not count against those people who are on middle or low incomes. I look to the members on the Government side and ask how in all honesty they can offer people who are earning more than $60000 a 6 percent tax incentive to save for their retirement and not offer the same incentive to those earning less than $60000. Why should every member in this House be in a position to benefit from that 6 percent incentive but the people who voted for us be forced to miss out on it? 
When we think about the money that is involved we realise it will not cost the Government a lot to make this change. Dr Cullen conceded today during question time that it would probably cost only about $54 million a year to extend that 6 percent incentive right across the board. That is a small price to pay to give employers a real incentive to provide their staff with subsidised superannuation. 
That is a very small cost when compared with the cost of the New Zealand superannuation scheme. The Government currently has $1.9 billion sitting in the bank for that scheme. Fortunately it has not started to gamble it on the casino economy yet. All one would need to meet this year’s cost of extending the 6 percent incentive right across the board is 2.8 percent of that fund and ongoing one would need less than 3 percent a year to do the same. We say that is a much safer bet in terms of tackling the negative savings rate in this country which is around 4 percent now and expected to climb to 6 percent in the next few years than to gamble that money on the international sharemarket. We have only to look at what has happened to the Government Superannuation Fund. It has lost hundreds of millions of dollars in the last couple of years because it invested in the sharemarket and now the New Zealand Superannuation Fund is about to jump over the same cliff. 
Make no mistake the Green Party supports universal provision of superannuation. We believe that every New Zealander is entitled to superannuation when he or she retires. We are concerned about providing certainty and security in retirement. We believe that the New Zealand Superannuation Fund will achieve exactly the opposite outcome because of the way that the Government plans to invest that money—putting it on a fragile and volatile overseas sharemarket. It makes far more sense to use a small proportion of that money to ensure that there are tax incentives right across the board to help all people save for their own retirement and to try to reverse the situation we are in now where net household debt accounts for 120 percent of annual income. That is an extraordinary indictment on this country.