Parker David: KiwiSaver Budget Measures Bill — First ReadingText is incorporated into the Bound VolumeParker David: KiwiSaver Budget Measures Bill — First Reading[Sitting date: 21 May 2015. Volume:705;Page:3778. Text is incorporated into the Bound Volume.]Hon DAVID PARKER (Labour): We have got a Minister of Finance who cannot merely not balance a Budget—seven deficit Budgets in a row—but he cannot address the long-term challenges of the economy. The greatest failure of the Minister of Finance and his offsider Steven Joyce is that after 7 years in Government the fundamental indicators of this economy are still going backwards. We have had reports from the likes of Paul Glass at Devon Funds Management in the New Zealand Herald recently showing how real per capita GDP when you strip out Christchurch has been increasing at less than 1 percent per annum. So when you take out the effect of Christchurch and the effect of the huge rapid increase in population caused by immigration real growth is less than 1 percent per annum.The export target is trashed. The export targetwas to increase exports from 30 percent to 40 percent of GDP. This year exports have been 27.9 percent of GDP—Dr David Clark: How much?Hon DAVID PARKER: —27.9 percent—and next year they are predicted to be 26.4 percent of GDP and they do not get over 27 percent of GDP until the end of the forecast period. So much for the target of growing exports as a percentage of the economy!In respect of New Zealand’s net liabilities to the rest of the world as a percentage of the economy as a consequence they keep growing. New Zealand’s net international liabilities are currently about 69 percent of GDP. They grow every year from here on to 75 percent of GDP. When you have got long-term problems like that you do not reduce your savings because the savings are the key to investment.Let us look at a bit of history here. When KiwiSaver was first planned John Key said this—this is his release on 24 August 2006—and this is confirmation that National was right all along: “The scheme’s initial design lacked the incentives needed for people to change their savings behaviour.” Well we have heard from Dr Clark about how the scheme has increased savings but now we have got National reducing the incentives that John Key said then were inadequate.What has this Government done so far? First off on 9 December 2008 this Government decreased the minimum contribution rate for members from 4 percentto 2 percent. John Key had already criticised it for being too low at 2percent as it happens. Then on 1 April 2009 the National Government cut the member fee subsidy of $40 per annum. Then the third thing it did was to change the compulsory employer contribution and capped that at 2percentas well. So it cut the employer contribution. Next it took away the tax credit that applied to the employer contribution. That was cut No. 4. The fifth thing it did was to reduce the member tax credit. It halved it from $1042 to $520 per annum. Then the sixth thing it did was to change the taxation treatment of the employer contribution to the detriment of savers. The seventh thing it did having cut the contribution rate was to increase it from 2 percent to 3 percent so it reversed its reversal.Now we have got it doing away with the $1000 kick-start contribution. How does this work in practice? The Government says that this is going to save $500 million and it will. It is removing $500 million of incentives for the scheme. What is the effect of this? I will give you a real example of this. This is the example of my daughter. She is in a middle-class family she is not hard-up she is a 15-year-old and she has got a job working in a cafe as a waitress. She gets a $1000 kick-start payment because she signed up recently and she adds to her savings by about $2 or $3 a week and she follows that. If you are a young person and you are starting at $2 or $3 a week and after the first few months you have got less than 20bucks it seems like nothing—it seems like nothing. If you are a part-time worker as most young people are when they first enter the workforce and you are saying that you want to encourage them to get a savings habit for a lifetime and they are saving at $2 or $3 per week it really seems like nothing for the first few years. But because of the incentives in the scheme currently she sees a balance of $1002 and then $1004 and then $1006 and she feels really successful and that she is embarking on a savings pattern that will see her right for life. And it will.Everyone else who is in that situation will be so much better off when they get to the age of retirement if they have started to save. But now a lot of those kids instead of having $1000 which will grow by a small amount every month or every week that they get paid are going to have only that small amount. This is stealing from the next generation in order to get to a make-believe surplus. That is what this is—[Interruption] It is. This is in the face of dropping exports rising international debt and the failure of the Government to make its own targets.Hon Todd McClay: Why wasn’t the speech yesterday as good as this one?Hon DAVID PARKER: It was better than this. It was better than this.The record of the Government in every area of superannuation and the record of the Government in savings and superannuation is worse on every front. Do you know that it canned contributions to the New Zealand Superannuation Fund—the New Zealand Superannuation Fund which Bill English when it was set up said was a dog. Those are the exact words he used only to be embarrassed last year at the 10th anniversary when he turned up and celebrated it as being one of the best sovereign wealth funds in the country—in the world in the world. It is the only one in the country of any significance but it is one of the best ones in the world.Do you know what happened in the meantime? In the meantime the Government ceased contributions in 2010 at a time when the world’s interest rates were at the lowest that they had been in many generations. It said: “We are not going to incur that small amount of Crown debt at historically low interest rates to invest.” Well what has happened to the superannuation fund since? Well you know the Guardians of New Zealand Superannuation estimate it—this is not controversial—and show their rates of return every year and they show how much would be in the fund if the Government had made these contributions. The capital contribution is $16.3 billion worse—New Zealand is $16.3 billion worse off—than if it had contributed to the scheme as it was meant to do. On every front the Government gets it wrong.Then members on the Government side pretend that they are good managers of the economy. Why did they get cleaned out in Northland? Why did they get cleaned out in Northland? It is because the people know that that is just rubbish. That is rubbish. Exports as a percentage of GDP are down. They have got no long-term plan.A good Government builds a country. Everywhere you look National cannot build a country. It cannot build a country metaphorically; nor can it build a country physically. It does not know how to build houses and it does not know how to build an economy. National tears away at the foundations of future growth. National did eventually get to the point—and the Minister was good enough to say this in his introduction—of saying that KiwiSaver is a good scheme that it still believes in; just not enough to keep it working properly.This sort of short-termism is awful: no solutions despite the fact that National’s own Budget documents released just this week show exports dropping this year and next never getting much over 27 percent never hitting 28 percent of GDP to the end of the forecast period. Look at those members. They are quiet now. They know that they have not met their target of raising exports to 40 percent. It is a failing Government: no ideas on exports—no ideas on exports. Debt is rising. New Zealand has got high international liabilities and yet those keep rising too because we do not cover the costs of our imports and our interest bill and our outgoings for dividends through the value of our exports and our overseas earnings. As long as we have got a Government that will not invest in production that trend will continue.