Burns Brendon: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
Burns Brendon: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
[Volume:672;Page:18972] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I hope that I might get a chance later in this debate to talk about the Working for Families components of Part 2 of the Taxation (Annual Rates and Budget Measures) Bill. 
Hon Member 
: That’ll be a good call. 
BRENDON BURNS 
: I hope so too. I will focus my first comments on the changes to KiwiSaver. I note the press release from the Minister of Finance and the Minister in the chair the Minister of Revenue about how changes to KiwiSaver “will encourage a higher level of private savings.” That is the opening line of the media statement accompanying the Budget yesterday but I will refer to the regulatory impact statement prepared by Treasury and the Inland Revenue Department that analyses this bill. I note this comment on the opening page of the regulatory impact statement: “Our analysis of the options is therefore dependent on behavioural assumptions for which there is minimal empirical evidence about individuals’ and employers’ responses to changes in saving incentives and other regulatory requirements.” In other words Treasury and the Inland Revenue Department say there is no empirical evidence about the changes made in this bill or the impact the bill will provide in terms of the overall savings of New Zealanders. I note further their comments that “KiwiSaver is less than five years old. Since its launch … there have been several significant changes to contribution requirements”—and I tell members that most of them have been made by this Government—and KiwiSaver has not had the time or “any period of stability in which to establish its core products and this uncertainty and unpredictability is not helpful to either the industry or savers.” That was Treasury and the Inland Revenue Department commenting on this bill and officials never highlight their comments. They do not put them in strong language but we can read the tone of those comments. They are saying that they have severe doubts about this bill and its impact on national savings. 
I will quote further from the regulatory impact statement. On page 5 it is stated: “The objectives for any changes to KiwiSaver are: to help return the Crown to surplus sooner by reducing the fiscal costs of KiwiSaver and; to continue to encourage increased levels of private household savings … Each of the options for change … was assessed against a matrix of criteria:”. But then the regulatory impact statement states: “In making this assessment the strongest weight was given to measures which reduced fiscal costs”. So the Government has really put to one side the questions about what impact the cuts to KiwiSaver will have both to KiwiSaver and to overall savings by New Zealanders—not the Crown’s savings but the savings regime of New Zealanders. 
Treasury and the Inland Revenue Department go further. They have analysed the impact of the halving of the minimum tax credit which until next year New Zealanders enjoy under KiwiSaver. They say that it “Will make KiwiSaver less attractive”. They say it “May mean fewer savings directed from other forms of savings”. They say in respect of increasing the employer contribution upwards to 3 percent that an “Increase in employer costs [is] likely to lead to reduced business profitability in [the] short term and lower wages over the longer term.” 
If we want evidence of that we should look at  
One News 
 from last night. Alasdair Thompson from the Northern Employers and Manufacturers Association said that employees will meet that increase out of any wage increases. When employees are already facing 5 percent inflation at the moment they are going to be told: “Sorry the Government has told us that we have to contribute more to KiwiSaver. You are going to pay the cost.” What does that say to people who are living on the margins? What does that say to them about encouraging them to invest in their future by putting something aside? The whole damn basis of this Budget was supposed to be to stimulate savings but Treasury and the Inland Revenue Department are saying that we will see that come only at the cost of lower wages. Where is the gain in that? 
I will make a final comment from the regulatory impact statement. Treasury and the Inland Revenue Department say that the increase in employee contribution rates to 3 percent may make some people “stop contributing”. That is Treasury’s and the Inland Revenue Department’s analysis of this bill. They say in essence that there are some high risks the bill will discourage people from saving. We know and this Government puts at the centre—[ 
Interruption 
]—Mr Chair Mr Chair— 
The CHAIRPERSON (Eric Roy) 
: Look do not yell at me. I am allowed to ponder to make sure I get it right. 
BRENDON BURNS 
: Thank you Mr Chair. I promise Mr Chair I will never shout at you again because you are a Chair who makes excellent judgments—almost all of the time. 
The CHAIRPERSON (Eric Roy) 
: Careful! 
BRENDON BURNS 
: I make reference to another aspect of this Budget. Supposedly we are trying to get to a position of better national savings but the Budget figures show that instead of seeing a decrease in the growth of national debt—that is the money borrowed by New Zealanders overseas and repatriated by companies making investments here and repatriating profits—this Budget’s figures show an increase from this year’s minus 78 percent of GDP to minus 85 percent of GDP in 2015. So where is the gain for us? 
I note the comments of Ganesh Nana from Business and Economic Research Ltd this morning. He analysed the Budget. He looked at the fact that in its text there were 19 references to “debt” and 2 references to “exports”—19 references to “debt” and 2 references to “exports”. The whole focus of this Budget is on cutting not growing. It is on cutting not growing. I refer to the comments just received from the Manufacturers and Exporters Association: “The Budget has targeted balancing the books but missed out on balancing the economy by sparking growth in the tradables sector. The Budget focused on cutting costs through to cuts to KiwiSaver and Working for Families.” That is what the national organisation said; it is based in Christchurch but represents manufacturers and exporters nationally. It said there are cuts to the costs of KiwiSaver and Working for Families but little detail on how to increase growth or shift the balance of the economy towards savings and exports as the Government has talked about. 
We are getting the rhetoric about growing the productive sector and growing the economy but in fact the Government is coming back to the traditional Tory method of cutting and cutting back on those who are least able to contribute. It is cutting back on working families on people who have been encouraged supported and told they needed to save. They have been encouraged to do that through KiwiSaver yet there is nothing in the Budget to encourage them; in fact it is absolutely the opposite. We will see I am sure a downturn in people joining and contributing to KiwiSaver which will be to our net cost as a nation. 
I will comment further and on the sale of State-owned enterprises. I say that not only do I believe that we will see asset sales of State-owned enterprises if a National Government is re-elected but also I note that in the Canterbury Earthquake Recovery Act there is a capacity for the sale of assets that are held currently by the Christchurch City Council. The issue has been aerated publicly over the last couple of weeks. Minister Brownlee confirmed that the capacity is there; it is included in the powers of that Act for the sale of Christchurch’s $2.2 billion worth of assets including our power company Orion our port and our airport. But I say to the Government that if it starts to look to those assets in terms of sales it will be doing a disservice that will completely undermine the efforts made on the other side of the ledger in terms of the recovery of Christchurch. 
We acknowledge that the Government has stepped up and is putting in place a regime to rebuild Christchurch. That is welcome. But I put this rider on it: if a re-elected National Government starts to use the powers in the Canterbury Earthquake Recovery Act to start selling off the assets of Christchurch it will have a civil outbreak on its hands that it would not believe. The people of Christchurch know that those assets have delivered over the long term. One of them alone Orion has delivered $980 million in dividends—nearly $1 billion in dividends—to the ratepayers of Christchurch over the last 20 years. We know through this Budget explicitly that a National Government if re-elected will embark on an asset-sales programme next year. It is there in black and white. If members think it is bad enough putting into hock State-owned enterprises like Meridian Energy Might River Power and Genesis they will see nothing in comparison in terms of public revolt if the Government tries to sell the assets of Christchurch.