Copeland Gordon: KiwiSaver Bill — First Reading 
Copeland Gordon: KiwiSaver Bill — First Reading 
[Volume:629;Page:1687] 
GORDON COPELAND (United Future) 
: 
 Since I spent my Budget Policy Statement speech yesterday criticising the Government’s big-spending plans in no uncertain terms I would like to begin this speech by congratulating the Government and Dr Cullen in particular on the KiwiSaver initiative. I was asked a couple of years ago by a leading businessman why United Future was working with the Labour Government and whether I was proud of anything Labour had done in recent years. Let me give credit to Dr Cullen and the Government for the New Zealand Superannuation Fund and the Working for Families package. 
I would like to say to members of the National Party that when they without any intellectual rigour whatever label 193000 working families who receive considerable tax relief under the Working for Families package—some 65000 to the point where they pay no tax at all—as welfare recipients they insult those people and they will pay a heavy price at the next election if they keep going down that road. If we apply that logic then under National’s own tax reduction plans we could say that everybody in this country would become a welfare recipient—it is nutty and National members should stop saying it. 
As I mentioned I congratulate the Government on the KiwiSaver initiative. United Future backed all three of those Government policies because it is our conviction that they are good measures for New Zealand for its families and its elderly both now and importantly in the longer term and into the future. Of course United Future would like to see the Working for Families package complemented and completed by income splitting for couples with dependent children. As I mentioned this afternoon we also have some reservations and questions about KiwiSaver. But I set those aside for the moment and look at the big picture and we are delighted to give our support to the first reading of this bill. 
New Zealanders need to save more. Perhaps more important is the fact that New Zealanders need to get back to a precise saving ethic. I must say to the previous speaker from the Maori Party Hone Harawira that one of the things that we did during the election campaign was to speak to some Maori in Opua and they agreed strongly that there is a need to get back to a good saving ethic in this country. 
Shane Jones 
: Hear hear! 
GORDON COPELAND 
: That is because saving is the route to prosperity. Shane Jones was at the same meeting I recall and he will back up what I have said. Saving is the route to prosperity and security in retirement. We all know that New Zealand superannuation is aimed at just covering the bare essentials during the retirement years and most of us demand a somewhat higher standard of living than that. We want to spend the eventide of our lives without financial worry and without financial stress. By encouraging everyone to join KiwiSaver and to join immediately when they join the workforce we will simply unlock the power of compounding interest to ensure that retirement aspirations can be fulfilled for more and more New Zealanders. 
Based on the Australian experience where people have compulsory superannuation savings accounts Kiwis I think will actually get addicted to and really enjoy their KiwiSaver accounts. Australians have told me that every year now when they receive their statements showing that they have increased their savings—and furthermore when they see the effect of compounding interest—they get quite a kick out of it. They feel that they are getting somewhere in life and have something tangible they can look forward to. They can see that they are saving towards their retirement. A lot of Kiwis actually feel guilty that they are not doing that and this scheme will make a positive contribution in that regard. 
However allow me to express my disappointment with one aspect of the KiwiSaver scheme that is not contained in this bill. When the scheme was announced in the 2005 Budget the scheme would have seen the Inland Revenue Department as the central administrator able to transfer money deposited into the fund to pay off a mortgage. But that facility has been omitted from the bill. I think that is a pity. Let us take the example of people on $40000 which is around the average wage in this country. Their 4 percent contribution every year will be $1600. Some of those people will look at their mortgage commitments and say to themselves that they cannot afford to put aside $1600 a year at this stage. I myself remember as a young father and husband in my 20s not being able to join a superannuation scheme because I simply could not afford to do so given the outgoings I had on mortgages feeding my family and so on and so forth. But although those people may not be able to put aside $1600 a year it is possible they may be able to afford say $600. 
The scheme as announced originally in the Budget would have seen people on $40000 a year paying $1600 into KiwiSaver with $1000 of that going out to service the mortgage and the other $600 remaining. I think it is worthwhile to have that $600 there for the reason I mentioned: compounding interest. It would actually make a great difference to people’s ultimate lifestyle and retirement because the earlier one starts to save the better it will be and the more that can be put aside at an early age the better it will be. Most New Zealanders get to about 55 and suddenly panic because they have no money for retirement. They really have almost run out of time to save then because of course compounding interest depends on a long membership of a savings scheme to really make it effective. It would have been worthwhile to retain that part of the scheme and that is something that I would like to see revisited at the Finance and Expenditure Committee. 
It is quite interesting to reflect that when the scheme was first announced National quickly put it about that the scheme would not work because people would want to use the money to repay their mortgage. I was able to counter that at the time and say that that was not quite right because people could actually join the scheme and still service a mortgage. The point I made quite validly then has now been chopped out of the bill and we are back to I think National’s correct argument that it is quite a negative thing if people cannot do that. What we have done has given people an all-or-nothing situation and I think we could have done better than that. 
United Future is strongly in support of the provisions in this KiwiSaver Bill for first home buyers. The dream of owning a house is now becoming more remote for a growing number of New Zealanders. It is far far more difficult now to get one’s first home than it was for my generation back in the 1960s which had so much support in terms of low interest wages and of course the ability to capitalise on the family benefit. I know that Jim Anderton and many others of my age group in this House who were in the same boat got their first homes through capitalising on the family benefit. That has disappeared from our society and as a result we see the figures for homeownership gradually deteriorating year by year in this country. This legislation has the potential to make a difference for thousands of people in terms of getting into their first homes. It is difficult I know when one is paying rent to also save for a deposit on a house. 
I would also like to say in response to a point that Hone Harawira made that of course single people before they marry and before they even start their families will have a tremendous opportunity under this legislation to start putting money aside. When two single people come together in marriage they will receive a $10000 contribution towards their first home provided they have been in the scheme for 5 years. I think that is a great thing. 
Craig Foss is quite wrong when he says that the market price of housing will simply go up by 10 grand. No it will not— 
Craig Foss 
: Five grand. 
GORDON COPELAND 
: The member says five grand; it will go up by five or 10. It did go up in Australia because the Australian Government said it would give seven grand which later became 14 grand to every first home buyer. Of course the market just went up by seven grand and then it went up by 14 grand. KiwiSaver is different. It is unashamedly targeted to the most needy people so it will have little impact on the price of housing and it will certainly—I have no doubt at all—become a bridge towards homeownership for a lot of people who would not otherwise be able to get into their first home. That I think is great. 
There are other points that I think we should question during the select committee process and Hone Harawira also said that the Maori Party has some questions. I want to ask the Government whether we can find a way to bring beneficiaries into the scheme. We may conclude that beneficiaries cannot afford to save. I would say that that is a generalisation—some can save and are prepared to tighten their belts today for the sake of their future and that of their children. So I think the scheme could be easily extended to beneficiaries through the Ministry of Social Development. Also I think we need to look carefully at the criteria around the actual use of the deposit for a first home. I want to go into the nitty-gritty of that and I do not see much of that explained in the bill at this stage. 
However I say once again that we are pleased to support this bill on its first reading.