Donald Rod: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Instruction to CommitteeCWH In Committee 
Donald Rod: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Instruction to CommitteeCWH In Committee 
[Volume:613;Page:10110] 
ROD DONALD (Co-Leader—Green) 
: 
 I will return to Part 2 if I may. As I said when I last spoke— 
Hon Dr Michael Cullen 
: That was Part 1 we were just discussing. 
ROD DONALD 
: Yes I know. I did not want to point that out to Mr Hide because he might have delayed things even more. We are actually dealing with Part 2. 
Hon Dr Michael Cullen 
: Your responses slow down under certain conditions. 
ROD DONALD 
: Far be it from me to comment. As I said when I last spoke on this part employers deserve—I would say need—an incentive to provide subsidised superannuation to their employees. There are some good measures in the Business Law Reform Bill to reduce compliance costs and I see that as an indirect incentive. Obviously I see the good news in this part about eliminating the tax penalty as something of an incentive. But employers need a real incentive which is what my amendment is all about. It says to employers that if they give their staff subsidised superannuation the staff will get an extra 6 percent added to their savings which they would not get if employers paid it in the form of salaries. Surely that is a good thing because we need to shift money away from consumption and into saving. 
I believe that that is one of the major problems the country is facing. It is confirmed when we look for example at net household wealth which has declined 33 percent in the last decade in terms of personal disposable income. So while the value of our financial assets has gone up 39 percent in that period our household financial liabilities have gone up 146 percent and I think that points to a real problem. 
It is a dramatic and disastrous trend that this Government I believe has the opportunity to reverse. Yes the Government is shuffling in the right direction but it should be taking positive steps by providing employers and employees with real tax incentives to encourage people to save for the future. I know that the Government is looking at the “t’s” and the “e’s” and where they should go and I will wait for the Minister to make some announcements in that regard. But it certainly makes sense to me to defer some of the revenue the Government is currently making—at the point where people are making a contribution to their savings and employers are making a contribution—and to pick that up at the point where people are drawing down on that contribution when they retire. 
That would help solve two problems. It would reduce the embarrassingly large surplus the Minister is currently facing and it would also lead to more Government revenue being available in 20 30 or 40 years’ time when he is going to need it. Whatever the Minister does it is time for the Government to face up to the savings crisis. It is time we tackled the problems I was outlining. The Government claims with one breath that it needs to put money into the New Zealand Superannuation Fund but it is not doing enough to change the tax structure to encourage more second-tier saving. That is certainly what we want the Government to be doing. There are a lot of benefits in addition to that deferred income: the Government would help to facilitate households to get their net debt down; if more money is going into superannuation schemes there would be less need—hopefully no need—for foreign investment; and people would be more comfortable in their retirement. They are all good steps that I hope this Government will give serious consideration to now that it has exercised— 
John Key 
: What is our savings rate compared with Australia? 
ROD DONALD 
: I do not know but perhaps we could ask the Minister to comment on that. Certainly our savings rate is not good because if we look at the last Reserve Bank of New Zealand figures for the 2003 year we see that not only did we have negative savings of 4.5 percent I think but our household savings rate was minus 4.25 percent. But wait the news only gets worse. The rate is projected to be minus 7 percent for 2004 minus 6 percent for 2005 and minus 5.5 percent for 2006. It is time for the Government to reverse those disastrous trends. 
John Key 
: Our debt levels are the same as every English-speaking country. 
ROD DONALD 
: That may well be but I would still say to the Government: let us not follow the sheep let us plot our own path let us shift from consumption to savings and let us shift from speculative investment to productive investment.