Dunne Peter: Taxation (KiwiSaver and Company Tax RateAmendments) Bill — Second Reading In Committee Third Reading 
Dunne Peter: Taxation (KiwiSaver and Company Tax RateAmendments) Bill — Second Reading In Committee Third Reading 
[Volume:639;Page:9429] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill be now read a second time 
. Let me recap briefly the two main features of this bill. I refer first to the change in the current company tax rate from 33 percent to 30 percent starting from a company’s 2008-09 income year. I note that despite the votes we are going to see against this bill no one is actually opposed to the company tax rate being cut. That is the one point of unanimity in the House so far. We are dividing on an issue that everyone agrees on. The public of New Zealand will draw their own conclusions about that. There is also broad agreement on why we are cutting the company tax rate—to improve New Zealand’s international competitiveness by aligning our company tax rate with Australia’s making New Zealand a more attractive country in which to do business. 
I know Mr Assistant Speaker that it is probably a breach of the Standing Orders to refer to the debate immediately passed but I was intrigued by Mr Groser’s comment that the biggest company tax rate cut—in fact the only company tax rate cut—in the previous 20 years is a minor measure. I say that if this measure is a minor one and if a business tax reform package that brings in $3.4 billion of business tax adjustments over the next 4 years is a minor measure then let us have many more of them. I am very happy to be associated with the measure. It is something that New Zealand will benefit from and it is extremely positive. 
Equally beneficial is the enhancement of the KiwiSaver scheme and if one looks at the commentaries overnight one sees that it is viewed in a similarly positive way—I gather even by the leader of the National Party. The enhancement to the KiwiSaver scheme is the introduction of a further incentive for people by giving them a tax credit of up to $20 a week for contributions to a complying KiwiSaver scheme fund from 1 July this year. Yet again we are going to have the House dividing on something that everyone agrees on and on something that regardless of the outcome of this vote and this bill today and regardless of the outcome of future elections will become a feature of New Zealand’s savings system long into the future. Again the public of New Zealand will draw their own conclusions about what is going on here. The excuse that the Opposition parties are opposing because that is what Oppositions do has limited currency in an environment where people are expecting a positive contribution from this Parliament. 
The KiwiSaver tax credit will be available to everyone over the age of 18 years and up until the age of 65. The scheme is designed to help people build their retirement savings faster. In turn it is about giving them greater security in retirement and helping to contribute to a stronger economy. The good news is that it applies from 1 July this year. One of the reasons the publicity about KiwiSaver has been a little coy to date has been the development of this dramatic new proposal. The reaction overnight shows how positively it is viewed by many people—and by young people in particular. They see this as an important opportunity to get a good start in life and in a working career. 
In addition to those principal changes this bill brings in several amendments that are part of the building blocks of those changes. I think it has been overlooked but it is a very important move that the reduction in the tax rate for certain savings vehicles from 33 percent to 30 percent from the beginning of the 2008-09 income year—so that people who are saving through entities such as unit trusts and widely held superannuation and group investment funds will also benefit from the 30 percent rate applying for those funds—levels the playing field even further in terms of encouraging a savings culture in New Zealand. The bill also includes a number of amendments to the portfolio investment entity tax rules to ensure the smooth introduction of KiwiSaver later this year. 
Members will be well aware—and indeed supportive—of the idea that these changes need to be made at this point to ensure the smooth implementation of KiwiSaver and to ensure that where interest has been shown people can effectively apply from the start of July. Already the initial estimates from the Inland Revenue Department and Treasury about the likely uptake of the scheme are being revised upwards as people hear more details about it. It is with great pleasure that I recommend the passage of this bill through the House as quickly as possible and I am very happy to move its second reading this morning.