Smith Lockwood: Taxation (KiwiSaver and Company Tax Rate Amendments) Bill — First Reading 
Smith Lockwood: Taxation (KiwiSaver and Company Tax Rate Amendments) Bill — First Reading 
[Volume:639;Page:9384] 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 We have just been listening to Dr Michael Cullen. We have heard all of that bitterness and all of that nastiness. I want to remind him that in 1990 when Labour was losing the plot—the last time it was thrown out on its ear—he spent money illegally. He was prepared to do anything to retain power. He was the Minister of Social Welfare in the Labour Government leading up to the 1990 election and he illegally spent unappropriated money—money that had not been appropriated by this Parliament—to try to buy votes. Cullen and Goff—Goff did the same thing in education spending. I know that because I followed Goff as Minister of Education and I had to make legal the illegal spending of Phil Goff. And Jenny Shipley had to make legal the illegal spending of Michael Cullen. 
The bitterness and vitriol that we heard in the House this afternoon was from Michael Cullen when he is losing. He does not know what to do. Economic growth is down to under 2 percent a year yet inflationary pressures are so high that the Reserve Bank is putting interest rates up all of the time. The exchange rate is crippling exporters and Dr Cullen does not know what to do about that. He has referred that issue to the Finance and Expenditure Committee. 
I want to refer to something highly relevant to this Taxation (KiwiSaver and Company Tax Rate Amendments) Bill that Dr Cullen said in his Budget speech just a little while ago. I think it is very pertinent. Dr Cullen said: “This Labour-led Government wants to see more people not fewer sharing in the wealth that we create.” Dr Cullen thinks the Government creates the wealth in this country and that his job is to share it out to everyone. He is so wrong—so deluded—about that. The Government does not create the wealth; hard-working New Zealanders create the wealth and they are finding it harder and harder to do so under this Labour Government. It is a stunning statement from the treasurer that he thinks the Government creates the wealth. 
The explanatory note of this bill says that one of the reasons why the Government is going ahead with all of these incentives around KiwiSaver and the other measures is to increase productivity and improve our international competitiveness. Productivity right now is a huge issue for this economy. When Dr Cullen and this Labour Government came into office productivity in this country had been growing throughout much of the 1990s at 2 percent per year. In the time that Dr Cullen has been Minister of Finance in this country the average productivity growth rate has dropped from 2 percent per year down to under 1 percent per year—down to 0.7 percent per year. It is only one-third of what it was during the 1990s. Now the latest estimates on productivity growth in this country have it as being almost stalled. 
If Dr Cullen thinks that this bill will suddenly turn around the massive decline in productivity that we have had under this Labour Government then he is deluded. One of the reasons why productivity has collapsed in this country is that the Labour Government has brought in 2000 extra pieces of regulation and legislation since it has been in office and that makes it more expensive to do business in this country. Our productivity has fallen off because all the regulation means that an employer must employ a whole lot more people in order to get the same outputs. That amongst other reasons is why productivity has fallen off. This bill does nothing to address that. 
As I look at this bill and after hearing Dr Cullen’s Budget speech this afternoon I am reminded very much with regard to this Labour Government that Dr Cullen and Helen Clark think they know best. They will not trust Kiwis by giving them back any of the hard-earned money that they earn—oh no this Government knows best. It thinks that big government is good for New Zealanders because it does not trust New Zealanders to have more of their hard-earned money. So the Labour Government says that the only way people will get back any more of the money they earn is by putting money into its scheme—the KiwiSaver scheme it has dreamt up. In fact the “chewing gum” tax cuts that were promised are gone. They are sacrificed because this Government which knows best is not prepared to give ordinary New Zealanders a chance to actually do what they think is best for them and their families. 
We have the incentive of a $20 per week tax credit—up to a bit over $1000 per year—if people do what Dr Cullen and Helen Clark dictate that they should do. What is very unfair about it is that the low to average wage earner will not get any benefit from that—the very people whom the early Labour Governments genuinely represented before we had academics—like Dr Cullen in Labour. They do not actually represent working-class people at all. In the old days of Labour it actually cared about low-income people. Today we have a measure that low-income people will not be able to get any benefit from at all. How will someone who earns $20000 or $25000 a year say be able to put 4 percent of his or her income into the KiwiSaver scheme? How can people on $25000 a year get the benefit of the tax credit by putting money into that scheme? They will not be able to. 
Only some will benefit from the scheme—and when I say “benefit” let us not forget that it is their own money that is being given back to them. It is a bit like the Labour Government’s Working for Families package. The Government says it is giving families all that money but the families earned it in the first place. It is all their money. They pay it in PAYE the Government puts it into a great merry-go-round and then the Government gives it back to them. Families have to apply for it though. They have to go crawling to the Government to actually get it back. 
Now we have another merry-go-round. If people earn enough to be able to put money—4 percent of their earnings—into the KiwiSaver scheme the Government will give them some of their own money back. But of course it will give it back to them only once they are aged 65. 
Hon Trevor Mallard 
: Twice. Put a green one down and you get two on top of it. 
Dr the Hon LOCKWOOD SMITH 
: I ask Trevor Mallard who is interjecting whether he honestly believes that low-income wage and salary earners—those on $20000 to $25000 a year—who pay 20 percent of their income in PAYE if they have no children will be able to put 4 percent of their income into KiwiSaver. 
Hon Trevor Mallard 
: Yes they will. 
Dr the Hon LOCKWOOD SMITH 
: Of course they will not. So they will get no benefit whatsoever. And what is worse is that not only will they get no benefit but when they come to their annual wage negotiations their bosses will say: “Uh-uh! The Government has already forced us to put money into its scheme and there is no money to increase your pay.” So the low-wage earners will miss out twice. They will miss out twice because they will not get any pay increase. 
Let us remember that when people do not get an increase this Labour Government has a habit of calling that a cut. Members will recall Labour said that with regard to national superannuation. When the rate of increase was reduced in the late 1990s by not linking it to the movement in the average wage Labour called that a cut. So if Labour members are honest they will call this measure a measure to cut wages as well. Low-income people will not get the same wage increases that they would otherwise have received and they will not be able to put 4 percent of their incomes into the KiwiSaver scheme. They will not get the $20 a week tax credit and they will hurt. They are hurting already. Working for Families does nothing for low-income people with no children and what is more they pay significant tax. At $25000 a year of income as I said 20 percent goes in PAYE. Those low-income people have to pay a lot of tax. 
This Budget does nothing for low-income people. Their costs have gone up very much in the last few years. The cost of housing has gone up hugely. This Budget does nothing and this bill will do nothing for the low-income New Zealanders whom Labour once used to believe in and used to support and help. It is little wonder that ordinary New Zealanders are leaving the Labour Party in droves.