Jones Shane: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — Second Reading 
Jones Shane: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — Second Reading 
[Volume:643;Page:13410] 
Hon SHANE JONES (Minister for Building and Construction) 
: 
 Tena tatou katoa. I make this speech as the person who chaired the Finance and Expenditure Committee for the majority of the process of the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill. The chairmanship of the committee has been taken over by my colleague Mr Chauvel. I wish him luck and hope that he strikes a degree of camaraderie with all members of the committee. As is usually the case we must acknowledge the work that Mr Robin Oliver and the hard-working team of tax officials put into the construction of the bill. All tax legislation is a mixture of technical improvements and turning policy into programme and it falls on me as chair at that time to acknowledge the work that they did. 
There are three themes that I want to accentuate following on from Mr Dunne and an uncharacteristically temperate contribution from Mr English. Firstly this bill builds on the major changes that relate to announcements we provided for through the Budget. Mr English and Mr Dunne have outlined the changes in respect of the research and development tax credits. A most important development has been the actual provision of this type of assistance to emerging and growing businesses. An area that caused the committee some angst was the extent to which the programme could be monitored and managed without opening up the tax base unwisely to unsavoury practices from either tax advisers or businesses hoping to gain access to the research and development credits by putting in proposals or expense claims relating to stuff they would be doing ordinarily. 
I have no doubt that the programme like all systems will be improved as we go along but it is an important step. It is an important step if we are to maintain productivity and if we are to allow our companies to not only put capital at risk but also do it in such a way that their forays overseas are well funded in terms of good ideas that have been well researched. As Mr English said a number of the innovations are not confined to New Zealand and our companies need to link up with those centres around the world where they are already well known for their resourcefulness and their deep pockets to drive technology improvements and productivity changes through research and development. I dare say we will see a great deal of that in the dairy industry and our other export industries which really need to move us from out of the commodity trap through using research and development initiatives to move us into a higher level of return. 
In respect of savings we in the Government have recited at great length that we believe savings will actually address macroeconomic problems and create a pool of resource in our own country. Sure parts of these savings will be handled by a host of managers dedicating them to overseas investments but a growing amount will be available for our own Kiwi projects—our own people. We will create a greater sense of security through a savings scheme where the State takes a very proactive role. 
An area that caused a number of us some concern which was amplified by various submitters was the pace at which we will introduce savings changes and how this will affect people who are currently involved in KiwiSaver and those who are about to be involved through the current KiwiSaver model. We were concerned No. 1 that people actually make a contribution that is meaningful and No. 2 as we step away from the 2×2 method with the contribution from employers and the contribution from the State that they get up to a 4:4 ratio. We have extended the transition process so that people can remain on a 2 percent contribution for a bit longer. Initially the period of time at which that cut off was 2008 but now it will be extended. For those extremely diligent and delighted listeners who are celebrating the fact that they are hearing this speech of mine the contents page for the details is page 11 of this rather large tax bill. 
The KiwiSaver scheme is being taken up by growing numbers of people—Dr Cullen will outline more of that information very shortly—and it is proving to be a highly popular scheme up and down nga hau e wha. 
Hon Member 
: What will the National Party do with it? 
Hon SHANE JONES 
: I think we know that the National Party will strip away the Government’s contributions to the scheme. Ordinary garden variety Kiwis many of whom are our supporters from time to time find themselves in “Struggler’s Gully” but we will look after them. We know what it is like in “Struggler’s Gully”—not just in the rarefied air of elevated heights. We go low we go high—we find our supporters everywhere! A lot of people were concerned when they came before the committee about whether KiwiSaver will have a future. With this bill and the improvements that are made not a single person following the debate of KiwiSaver or studying the law should have any doubts that for as long as Dr Cullen and our team are driving forward with the leadership of the Prime Minister KiwiSaver will be a permanent feature of our macroeconomic infrastructure. And the reality is I suspect that that will be the nature of the change from the other side of the House. 
Referring to the business tax reforms I think it remains to be said that those people who doubt the Government’s credentials in relation to lessening the tax burden need simply to read this legislation. Tax for companies has come down. It is important to bear in mind that the direct cost of moving from 33 percent to 30 percent is about $2 billion. There will probably be an additional $130 million or $140 million if my figures are not incorrect—and I am sure they are very accurate—over the next 4 years in terms of transitional packages. 
But it is important to remind everyone that as a consequence of this bill it is not only company tax rates that will be cut. People who save through KiwiSaver for example will enjoy a maximum tax rate of 30 percent. As the value grows and compounds year by year that 3 percent will be an invaluable wedge. The other thing we need to bear in mind is that 19.5 percent will be the lowest rate depending on the actual status of the income earner. 
The skills base is an area that not surprisingly was referred to in respect of how sophisticated the savings industry is. My senior colleague Mr Swain drawing on vast levels of experience posed this question to the savings scheme providers who came promising the committee that once we get the savings regime bedded down we will see growth take place. We were very keen to know from them that the growth would not be in their personal fee structure and that there would be transparency and competitiveness in terms of the services they are selling. So to that end we have ended up providing a $53 million fund for industry training initiatives. I relate that to KiwiSaver because we need to be damn sure that the people who are supplying these products the people who are advising Kiwi employers and employees raise their levels of performance are transparent and give a clear and lucid account as to what their services are costing. If there is one thing that unravels trust and confidence it is people feeling they are not getting value for money. That is something we have learnt from experience in Australia. 
In summation the savings story has been a good one through the passage of this legislation which will pass very shortly. Secondly there are contributions to research and development which will grow the capital base and technology of our enterprises. Kia ora tatou.