New Zealand Superannuation Amendment Bill

I move, That the New Zealand Superannuation Amendment Bill be now read a first time. At the end of the debate I intend to move that the bill be referred to the Social Services Committee for consideration.

This bill repeals the Retirement Income Act of 1993. That Act was passed in 1993 to give effect to certain provisions in the accord on retirement income policies. The accord proposed in the Retirement Income Act established the role of the Retirement Commissioner, and a requirement for 6-yearly periodic reports on retirement income policy.

In recent years several developments have occurred that have called into question the appropriateness of the Retirement Income Act. The first of these relates to the non-observance of the accord. The accord has fallen into disuse since 1998. Many of the processes established by the accord are no longer followed. For example, in the past, accord signatories would meet on an irregular basis, when there were issues to discuss. There have been no such meetings since 1999. The accord’s falling into disuse has created some practical issues in terms of the responsible Minister meeting his or her obligations under the Retirement Income Act. For example, when appointing the Retirement Commissioner the Minister must have regard to the accord and consult other signatories to that accord.

The second change has been the introduction of the New Zealand Superannuation Act in 2001. That Act provides for current entitlements to New Zealand superannuation, and creates the New Zealand Superannuation Fund. Schedule 4 of the Act allows political parties to indicate support for either or both parts of the Act. This provides a new opportunity for political parties to indicate their support for retirement income policies, and supersedes the need for the accord provisions currently set out in the Retirement Income Act. [Interruption] I do acknowledge the support of the Labour junior whip in this matter; he has just been away, increasing his erudition in Europe, and I see he has brought it to bear early on his return.

Finally, the continued need for 6-yearly periodic reviews has also been questioned. The most recent periodic report was completed by the 2003 periodic report group. This group recommended the establishment of an ongoing work programme to replace the 6-yearly periodic reviews. The periodic report group considered the 6-yearly policy reviews were too infrequent to adequately inform retirement income policy. The Government agrees with the removal of the 6-yearly review. Removing the requirement for periodic reports will ensure that the monitoring and development of retirement income policies is more flexible and responsive. Accordingly, the bill removes the requirement for 6-yearly periodic reports.

As a consequence of the changes I have outlined, the Retirement Income Act should be repealed. The provisions relating to the Retirement Commissioner will be transferred to the New Zealand Superannuation Act. Any reference to the accord or the requirement for 6-yearly periodic reports on retirement policy will not be transferred.

The bill also makes some changes to the existing functions, powers, and appointment of the Retirement Commissioner. This reflects the Government’s new framework for Crown entities, as set out in the Public Finance (State Sector Management) Bill that is currently before the Finance and Expenditure Committee. These changes will provide a consistent framework for the governance and operation of all Crown entities, including the Retirement Commissioner.

In addition, there is an implication for the term of office of the current Retirement Commissioner, caused by the removal of the requirement for 6-yearly periodic reports. Under the Retirement Act, the Retirement Commissioner’s term of office ends on the day on which a copy of the first periodic report prepared following his or her appointment is laid before the House of Representatives. It is therefore necessary to include in the bill a provision to fix the term of office of the current Retirement Commissioner to expire on 16 January 2010. This is based on the latest date that the next periodic report would have been presented to the House, under current provisions.

Consistent with the consultation requirements in the New Zealand Superannuation Act, I wrote to the leaders of the other parliamentary parties, advising them of the introduction of the bill and proposed amendments. Some parties replied in agreement, and others sought briefings. As required by section 73 of the New Zealand Superannuation Act, the Minister of Finance has provided a statement about the consultation process and its outcome. The statement is contained within the bill’s explanatory note.

The amendments contained in the bill will ensure that the retirement income policy framework more closely reflects the current environment. It will allow for a more flexible and responsive environment for retirement income policy. The bill will also consolidate key retirement income policies under one Act, the New Zealand Superannuation Act. My understanding is that all members of the House and all parties in the House are aware of the changes in this bill and are aware of the common-sense nature of them. I therefore look forward to, no doubt, debate but also agreement as this legislation moves its way through the House. I commend the bill to the House and to the debate.

National will be supporting the New Zealand Superannuation Amendment Bill as it goes through the Social Services Committee.

In my opinion the demographics of this nation in terms of superannuation is one of the most important issues we face. Most New Zealanders will be aware that there is a huge demographic avalanche of aging population coming down the wire, so to speak. It begins in 2011, when the first of the baby boomers start retiring, and moves out until the end of the 2020s, when the likes of myself—a late baby boomer—will be starting my retirement, which will no doubt be well earned. The interesting aspect of that avalanche of older New Zealanders coming down the wire is the demographic implications it will have on the number of people working. If we sit back for a moment to contemplate, we are talking about the current situation where one in eight New Zealanders is aged over 65, but within about 30 to 40 years that number will move to one in four New Zealanders aged over 65. To put it another way, the number of New Zealanders supporting somebody on the New Zealand Superannuation Fund will decline rapidly, and it will become increasingly difficult to fund that pension. So the whole issue of New Zealand superannuation and demographic changes is extremely significant.

As the Minister quite correctly pointed out, this bill looks to repeal the Retirement Income Act of 1993, and its main provisions are to move the functions, powers, and appointment of the Retirement Commissioner to the New Zealand Superannuation Act of 2001. The Retirement Commissioner’s present functions are extremely significant because of the changes that are taking place. One of the issues the Retirement Commissioner needs to look at is the impact of New Zealand superannuation. The issue of whether New Zealand superannuation can fund a lifestyle for those who want to have retirement, is really driven by whether one believes that its current funding—at about $20,000 per annum for a married couple or $12,000 for an individual—is enough to sustain a long-term retirement, and what would be the implications of growth on those payments.

I say this because New Zealand superannuation is linked solely to the payment of the average wage, so if the average wage increases on a relative basis, the amount of funding going to the elderly in the community goes up. If New Zealand continues to grow as predicted by Treasury in its long-term forecasts at about 1.5 percent, then in 20 years from now, average married couples will receive $27,000, as opposed to the $20,000 they receive today. Yet if New Zealand could grow on average just 0.5 percent more, year in, year out, on a per capita basis, then that $27,000 would move up by over $8,000 to $35,000 a year.

It may seem a little strange that I am making the case for growth, when theoretically we are in a Parliament that signs up to growth and the Government tells members that it is pro-growth, but I say it because the Budget that the Minister of Finance is about to deliver in just a few weeks’ time will do absolutely nothing for growth in New Zealand, and the Treasury forecasts tell him exactly that. This is why, under the Official Information Act, he tried to stop me from getting the recent document of Treasury’s own assessments of growth forecast for New Zealand. That is why he prevented me from having that document, even though he got Treasury to sneak it out on its website on a Friday afternoon, hoping we would not see it. I hope the Minister of Finance will address the issue of growth in his up-and-coming Budget, so that New Zealand superannuation can be given the treatment that it really deserves, and our elderly can have a higher standard of living in their retirement.

💬 Darren Hughes: National Party policy on the hoof!

That is what we would like to see, not a redistribution on the basis that no doubt Mr Hughes would be asking for.

One of the things that the bill also looks to do is to repeal the 6-yearly reviews—there have been two of them—by the periodic report group. That group did some very good work in looking at the overall impact of superannuation issues. In fact, when the Minister appointed the most recent group, he said he had asked it to focus on ways to improve, amongst other things, the private provision for retirement income. Most people will know that the recent periodic report group was headed by Vance Arkinstall, who did a good job of presenting the issues as they related to the industry. The reason that overall stocktake review is being repealed is simply that it has been decided that an ongoing work programme is more necessary and beneficial on a yearly basis, as opposed to 6-yearly review of the overall stocktake.

When the National Party received a briefing from the Minister’s officials, we made it quite clear that we supported this ongoing work programme because of the importance of the superannuation issue, but we did make the point that there were no provisions, as we currently see it, for an overall stocktake, and no provisions at all to demand that it actually took place. There is a risk that when one has an individual work programme looking at individual silos as they operate within the superannuation area, the overall review of issues facing New Zealand is not addressed fully. We have asked the officials and the Minister to consider this issue. It is noted in the explanatory note of the bill, and National will make sure the issue of overall stocktake and overall review of the provisions is addressed in the select committee.

As I said earlier, there is no doubt that New Zealand superannuation is one of the heftiest bills the Government faces, and it will increase dramatically. It is so hefty that it currently costs $5 billion to provide New Zealand superannuation to superannuitants in this country, and that is an amount equivalent to 4 percent of gross domestic product (GDP). As the demographics I discussed earlier change, and as the baby boomers retire and the bulge flows through, there will be a huge increase in the cost of New Zealand superannuation. We will see that increase go up to about 8 percent of GDP, which will be a massive nominal amount of spending on behalf of the Government.

It is one of the reasons why the periodic report group suggested three possible outcomes to address the sustainability of the issue, and they were: increasing the age of eligibility, altering the way that New Zealand superannuation rates are set, or means testing of entitlement. They were the three options that the periodic report group gave, and I have made a number of public comments related to those. It is my opinion that at some future date the age of eligibility is likely to increase in New Zealand, irrespective of which political party is in power. It will come, quite simply, because New Zealanders will continue to live a lot longer, and, in my opinion, they will demand more of their own capital so that they can enjoy retirement.

I say that because The Economist ran a very interesting review on retirement savings recently. It pointed out that longevity has been going up at the rate of 2½ years per decade. It has certainly been increasing, and currently in New Zealand the average age of longevity for a man is 76 years, and for a woman 81 years. Those numbers will flow further out, and I do not think it is too hard to believe that in 30 years from now the average age of longevity for a New Zealander will be somewhere around the late eighties to 90 years of age. New Zealanders will live a lot longer in their retirement, they will need a lot more of their own private sector capital, and the fact that people will want to retire slightly later and have more private sector capital makes a great deal of sense.

National will support the bill, as I said earlier, but we will monitor it as it goes through the select committee process. We will ensure that this very important issue of national significance gets the treatment that it deserves under the new New Zealand Superannuation Amendment Bill.

It is a pleasure, on behalf of the Labour-Progressive coalition Government, to follow a self-confessed late baby-boomer. I can assure him that if this legislation is followed through—and I listened to his support—it will provide a further step in the safety and security of our superannuitants, and it was good to hear him acknowledge that.

The Progressive party strongly supports the legislation, because it aims to give back to New Zealanders the security of mind and finances that previously they had a decade ago. A decade ago the Progressive leader, Jim Anderton, successfully promoted the multi-party accord on retirement income, to which all responsible parliamentary parties were able to pledge their support. That accord had the solemn commitment of the major parties in Parliament. It set a minimum threshold beyond which pensions would not fall, and to which all responsible parties could commit. At the time that Jim Anderton promoted the accord it was a political lifeline to both National and Labour, because both parties had made, then broken, commitments to the public of New Zealand regarding superannuation, and regarding surtaxes in particular. I must say that it was a very different Labour Party from what it is today.

It is, of course, an outrage that the National Party of New Zealand, which signed the accord in the early 1990s to get out of an electoral hole, in recent years has ripped it up. National used an Asian financial crisis to abrogate its commitment to the accord. In recent times National has added insult to injury. National now states that there can be no guarantee that the current relative level of superannuation will be available in coming years to those aged over 65. National is a fair-weather friend, not only to the retired of this country but to every New Zealander who works in anticipation of one day retiring with dignity. National is still playing the awful games that it played with New Zealanders in 1990, when it went into an election specifically promising to get rid of the surtax, only to do the opposite once elected. That is a lesson for New Zealanders to remember—National promises one thing before an election, then does the opposite after it.

In 1990-91 I was a member of the NewLabour Party. One of the great outrages back then was that we actually had a treasury department, working on instructions from its political masters in the then National Government, that studied ways of severely restricting access to pensions. Treasury was busy working on ways to raise the age of entitlement to pensions to well over the age of 70—that is right; well over the age of 70. If the National Party had had its way, no one would have received a pension until aged 70, 75, or even 80. It said that would be fiscally responsible because the overwhelming majority of Pākehā males, Māori males, and Māori females would never reach the age of entitlement. That is the callous policy that was relied on: the people in those groups—Pākehā males, Māori males, and Māori females—would not have reached those ages, and therefore the pension would not have had to be paid to them. In 1991 the non-Māori male life expectancy rate was 73.3 years, and the Māori male life expectancy rate was 67.9 years. Māori females lived, on average, until 72.9 years of age. Progressive forces rallied, however, to put an end to the new-right madness in the early 1990s, and we must do it again at the next general election, as I am sure people realise. Never again, in my opinion, must the National Party and its friends be allowed to abandon those in need.

This bill consolidates the law relating to New Zealand superannuation by repealing the Retirement Income Act, which was passed in 1993 to give legal effect to the accord on retirement income. The bill continues the Office of the Retirement Commissioner, and makes provision for the appointment of the commissioner, qualifications for appointment, disqualification from appointment, and conditions that must be satisfied before a person can be appointed. This Labour-Progressive coalition Government has provided a further step toward fairness for superannuitants, with this legislation. The Progressive party is proud to be associated with such a progressive step.

On behalf of New Zealand First, I want to say that we will support the New Zealand Superannuation Amendment Bill to the select committee. I remind the House that until New Zealand First arrived on the political scene, no Government in this country had ever really confronted the problem of funding or creating a long-term savings base for the future of all New Zealanders, regardless of gender or economic background. Instead, Governments relied on ineffectual political devices like the superannuation accord, which we have just heard about—which New Zealand First refused to sign—an equally ineffectual superannuation task force, and expensive public relations campaigns. Unfortunately for the elderly, successive Governments have tinkered with the standard of living of elderly New Zealanders. Many citizens who have made their contribution and who are entitled to live in some degree of financial security now live in a state of insecurity because the State cannot be trusted to treat them fairly in their declining years.

During the first term of the present Government, New Zealand First voted to support the “Cullen fund”, which was set up to help finance the pension bulge in about 20 years or so. It was a long way short of what we as a party wanted, but it was a start and we hope to do better after the next election in 2005. Our debt level and balance of payments problems will never be overcome until we accept that national savings are critical to our future economic development and the eventual freedom from dependence on foreign money.

The bill consolidates the law relating to New Zealand superannuation by repealing the Retirement Income Act and transferring certain provisions—notably those relating to the Retirement Commissioner—to the New Zealand Superannuation Act. I look forward to sitting on the select committee—if the bill comes to the Finance and Expenditure Committee—in order to see that it becomes good legislation that is worthwhile to vote for. We support this bill to the select committee.

The Green Party will be supporting the New Zealand Superannuation Amendment Bill to the select committee. This bill recognises that the accord between the Alliance, Labour, National, and, later, the United Party is now very much part of our history and that, therefore, that part of the Retirement Income Act is no longer functional.

On that particular point, of course, this amendment bill will now become part of the New Zealand Superannuation Act. It is well known in this House that the Green Party strongly supports Part 1 of that Act, which guarantees the universal public provision of superannuation to New Zealanders of retirement age—in other words, those people who reach the age of 65 years. What is more, we support couples who reach that age receiving 65 percent of the average wage after tax and individuals getting 60 percent of that amount. We also made it very clear during the debate on that legislation that we did not support Part 2 of the legislation, which is the introduction of the New Zealand Superannuation Fund, because we have grave fears that investing our savings—our taxes—on the overseas sharemarket will not give New Zealanders the certainty and security in retirement that they deserve.

I could talk at length about that—and inevitably will when we come to the Budget—but today, in relation to this bill, I want to focus on the fact that I listened very carefully to the speech made by John Key of the National Party to see whether he would use the opportunity of debating the New Zealand Superannuation Amendment Bill to make a commitment on behalf of the National Opposition to Part 1 of the Act, which is about to be amended by this bill. We did not hear a single dicky bird from the National Party. What we heard was that it wants people to have security in their retirement. What we did not hear was that the National Party will finally sign up to Part 1 of the New Zealand Superannuation Act.

So we are in the extraordinary position whereby the second-largest party in this House—the party that is the pretender to Government—is not prepared to guarantee New Zealanders certainty in their retirement. I think it is worth highlighting the point, given that we are introducing a bill that will repeal the accord, that Part 1 of the legislation that has in effect replaced the accord has not been supported by National. There is an inherent contradiction within the National Party, because former leader Bill English made the commitment during the third reading debate on the New Zealand Superannuation Bill that National supported Part 1. He made that commitment because, he said, “New Zealand can afford the payment of 65 percent of the average wage to married couples at age 65.” National’s new leader, Don Brash, has instead said that those of us who are under 50 will look forward to having to work beyond the age of 65. He is not being specific about how far beyond, because we have learnt, in relation to nuclear ships and other issues in recent days, that the leader of the National Party is not prepared to be specific about anything that he knows will be unpopular. It is certainly very unpopular amongst New Zealanders that National plans to lift the age of retirement.

Returning to the bill and the other key feature within it, I point out that the consultation process spells out that the Green Party was consulted—and indeed we were—but it also states that no concerns were raised about the proposed amendments. I must say that it was a verbal conversation before the adjournment, but my recollection is that we did raise some concerns about abolishing the periodic report groups.

I think the explanatory note in the bill is a little disingenuous in stating that the Government has decided to accept the recommendation of the Periodic Report Group 2003 to remove the periodic reporting function, when in fact the periodic report group actually said that a policy review only once every 6 years was too infrequent to adequately inform retirement income policy. Our position on that, which is one that we are looking forward to exploring further in the select committee process, is to ensure that there is an ongoing work programme and that there is some consultation with independent experts. We cannot do better at this stage than what the periodic report group proposed in its own report, which was to establish a work-based savings group and a process for the ongoing monitoring of savings, tax, and regulatory issues. That was coupled with an advisory group to create a mechanism for stakeholders to provide comment and input into the work programme.

We saw great value in an advisory group, or in a periodic report group, that included employers, unions, finance industry representatives, and other experts. I certainly enjoyed making a submission to that group and I very much enjoyed the searching questions that it asked of me. I am sure that other parties and other submitters found the experience equally valuable. More to the point, I hope that the group made good use of our input, and indeed I believe it did in its report.

The main benefit that I felt came from the periodic report group 2003 was the fact that it got around one table all the key players and representatives of all the key sectors that have an interest in retirement. There were representatives of working people with the combined trade unions, representatives of employers, representatives of the Government, the Retirement Commissioner, and people such as Vance Arkinstall from the financial services industry. That led to all the benefits of the dialogue and the discussion that come about when people who have a common cause up to a point but differences in ways of achieving it can have a meaningful dialogue, discover what they do have in common, recognise, perhaps, where there are opportunities to achieve a change in position without necessarily sacrificing anyone’s principles, and also, perhaps, occasionally agree to disagree. Out of that flows a whole lot of benefits that cannot easily be quantified in a report, but that, I believe, are benefits we would lose if this bill proceeds as it is and abolishes the Periodic Report Group.

So, with that one change to the legislation that I would like to foreshadow, I confirm that the Green Party will be voting for the first reading of this bill.

We should say, as MPs, that the pension, at 65 years old and of 65 percent of the average wage, for a married couple is not sustainable in New Zealand. We can show that very simply by going back just about 30 years to Sir Robert Muldoon winning the election in 1975 by making an unsustainable election promise, which was retirement at age 60 with a pension of 80 percent of the average wage for a married couple. That entitlement works out to be twice what the entitlement is for a retired person now. If we take that 5 years, and go from 65 to 80 percent, the entitlement is double what it is now. So over 30 years the pension entitlement of New Zealand citizens has been halved. Sir Robert Muldoon campaigned through the country and said for people not to worry; his promise was sustainable. Well, it was not. It was not then, and it is not now. A lot of heartache was caused for a lot of people.

💬 Jill Pettis: Yes, and we lost the election.

Yes, I hear what Jill Pettis said. She called out that they lost the election—because the National Party and Sir Robert Muldoon stole the election with an unsustainable election promise and did away with the Norm Kirk scheme. He said: “Oh, don’t worry about Norm Kirk’s scheme. I will give you the benefit of 30 years’ saving now.” That was the promise, and so New Zealanders believed it.

What happened? Subsequent politicians, through various political manoeuvrings, had to reduce the entitlement. Why? Was it because politicians are hard-hearted and do not care about the elderly? No! Every political party cares about the elderly in New Zealand. But the problem was that since Robert Muldoon’s day—1975—the number of New Zealanders over the age of 60 has doubled. That was the problem. It was not whether MPs cared, or whether political parties knew how tough it was to live in New Zealand on a pension. It was a problem of arithmetic; twice as many pensioners require twice as much money. So there was hardship, social upheaval, and political squabbles as we saw the pension entitlement reduced by shifting the age of retirement out and having the level of the pension itself reduced.

Let us be honest here: not one political party covered itself in glory—not one. In the heat of election campaigns, politicians made promises they could not meet and, in office, they changed them. The political imperative is tonight’s Holmes show, tomorrow’s debate in the House, and the coming election. That is how far ahead we look, as politicians. But for working people, and for the elderly, pension policy is about the next 30 years, 50 years—our children’s entire lifetime. That is the time frame they are looking to. So working people who voted for Sir Robert—believing him—now retire to find that that promise was worthless.

What do we have now? No one disagrees with this analysis. The number of elderly over the next 30 years is set to double again. In fact, it is set to more than double—from about 470,000 over the age of 65 to 1.3 million. The number of retired people is set to more than double. We can stand here today in Parliament and say: “65 percent at 65 years old” safe in the knowledge that the decision makers in the Government will not be in Parliament when that hits. [Interruption] Well, Darren Hughes thinks he might be. I ask him, then, to surrender his MP’s pension and survive on the pension that every other New Zealander has to look forward to.

It is not in dispute, either, that if we are to keep that pension—all things being equal—the amount of income tax we will have to raise increases by 25 percent. That is, every rate of tax has to go up by 25 percent. The 39c-rate must go up. The 33c-rate, the 21c-rate—every rate of tax must go up. So what did Prime Minister Helen Clark do at the last election? She said: “Don’t worry. Vote for me and I’ll put it back to 65 percent, and in 2 years’ time you’ll be $23 a week better off.” That is what the Prime Minister said, and they asked how she was going to pay for it. She said: “Don’t worry. We’re going to have this big fund, and the Government is going to tax the rich and save the money and look after you in your retirement.” Baloney!

💬 Jill Pettis: What a good idea.

Jill Pettis says that that is a good idea. It might be a good idea if that is what the Prime Minister and Michael Cullen were doing. But the amount of money they are putting away—a couple of billion dollars a year—will provide on average for only 10 percent of the cost of pensions in the future. Is that true or false, I ask Ms Pettis?

💬 Jill Pettis: We have provided our answer; you provide yours.

She will not even tell us whether a simple piece of arithmetic is true, or false. I tell the member not to worry. Treasury has done the numbers and Michael Cullen has confirmed it: the pension saving scheme of this Labour Government will provide for only 10 percent of the cost of the pension in the future. Well, that is funny, is it not? That might be all right if the number of elderly was going to go up by only 10 percent but—whoops—it is going to go up by 120 percent.

💬 Darren Hughes: I’m going to vote for Muriel Newman. I’m donating $10 to her.

I know that Darren Hughes does not think that the pension of elderly people in New Zealand is very important and is something worth joking about, and that the rip-off of the working people of New Zealand is something to interject about. But I tell him that it is a cheating system. It is cheating to put aside 10 percent and say that will cover an increase in costs for a rise of 120 or 130 percent. I know that this Government does not like to discuss people’s pensions—

💬 Darren Hughes: Oh yes we do.

Oh well, what we are going to do is—yes—support this bill going to the select committee, but I want Darren Hughes and Ms Jill Pettis to front up and provide some explanations of what pensions will be for New Zealanders in 20 years’ time and in 30 years’ time. While they might laugh about it, and while they might be happy to have their MP’s pensions, why do they not think about ordinary New Zealanders for a change?

I must say it is something of a hardship to follow on from the previous speaker. He took his full 10 minutes, and if any pensioners were listening to that speech they would not have heard one thing that would give them reassurance about this superannuation issue, or a good night’s sleep. It was a definition of the obstacles and problems, but offered no solutions whatsoever.

💬 Rodney Hide: I raise a point of order, Madam Speaker. If that member wants to concede 3 minutes I am happy to tell him what needs to be done.

💬 Madam DEPUTY SPEAKER: That is not a point of order. To interrupt a member’s speech like that is not correct.

I think there is some hope on the horizon for our elderly people, and United Future has some answers to the kinds of problems that have been outlined by Rodney Hide, even though he has not been able to come up with any answers. First of all, I would like to say that United Future deeply regrets the collapse of the superannuation accord. It was a very good attempt by the parties of the day to try to take this whole question out of the party political arena and to come together in unity so that we could give some assurance to the elderly people of this country that we had the means and a viable plan to provide for their pensions in retirement. Right now I still hope that in this Parliament the various parties can also agree on one or two things that need to be done, and quickly, if we are to achieve that goal.

The first issue is that we need to do more to encourage people to make private provision for their own superannuation. I agree with Rodney Hide that we have to ask New Zealanders to do their bit personally if they are to have a reasonable standard of living in their retirement.

There is a truism that applies to public policy: if the Government encourages something, we get more of it; if the Government discourages something, we get less of it. Right now the Government is discouraging New Zealanders from making private provision, by virtue of the fact that the funds they earn on their pension schemes are taxed at a flat rate of 33c in the dollar, even though 45 percent of New Zealanders are paying income tax at less than 33c in the dollar. That is a positive discouragement to save for retirement, and I for one would continue to challenge the Government to address that issue in this year’s Budget and to ensure that marginal tax rates for those who pay tax at less than 33c in the dollar—normally at 21c in the dollar—will be reduced accordingly on the earnings of their pension fund. Going back to that truism, we can then confidently expect that we will see some increase in private provision for retirement.

I also think the Government needs to continue to give a strong lead in encouraging employment-based schemes to that goal. It is already doing that by again adopting—and I applaud that move—employer-subsidised schemes within the public sector. We now need to have companies and all other New Zealanders following suit and beginning to squirrel funds away for their own retirement.

Notwithstanding the collapse of the superannuation accord, I suggest that those parties in the House that have yet to make up their minds about Parts 1 and 2 of the New Zealand Superannuation Act should come to a decision rapidly. Like Rod Donald, I listened to John Key from the National Party. I heard no commitment to Parts 1 or 2. Between now and the next election, which is probably about 18 months away, we need to see the National Party come out very, very clearly and say that it will support those two parts. If it will not support them, it should give people something a lot better than just simply saying that they may have to work a bit longer until they get a pension.

That is the only concrete proposal that we have heard from the National Party so far. We have heard nothing in terms of solutions, except: “You’ll just have to stay in the workforce longer.” That is not good enough. It behoves the National Party, if it will not support Parts 1 and 2, to say so, and say so quickly, and come up with some viable alternatives. Otherwise, again, we will have our elderly people—that great number of New Zealanders, as the baby-boomers start to hit 65—right now starting to think very seriously about hitting that age and how they will survive during their retirement. Time is short, and we need to move, and to move on it quickly.

One other point occurred to me while John Key was speaking. He said that at the moment the New Zealand taxpayer pays $5 billion a year to meet the cost of pensions. He then went on to say that that would double. It is an interesting figure, because our party has calculated that family breakdown is costing the New Zealand taxpayer $5 billion a year. We hear gloom and despair from Rodney Hide and others about superannuation, but we need to look for positive solutions. That piece of arithmetic tells me that if we can put some real effort into rebuilding and strengthening families over the next 10 to 15 years, and therefore reduce the cost of family breakdown—which will take a generation to achieve, so it fits with the subject of superannuation—then from those savings we could sign off and say: “Yes, we can undoubtedly afford the “65 at 65” principle.

That is a goal we should all look to achieve, and look for some positive and innovative solutions, rather than throwing up our hands in despair and filling the minds and hearts of a lot of Kiwis with much gloom and doom, quite unnecessarily. There are ways forward. We need to find them, and we need to work on it urgently as a Parliament.

United Future will support the first reading of this bill.

I rise in support of the bill. The need for it arises from the fact that the accord on retirement income has fallen into disuse. The Retirement Income Act, which this bill repeals, has become redundant through the passage of time.

I agree with Gordon Copeland that it is important to plan properly for superannuation savings so as to make it more likely that future State-funded schemes are able to be funded, but also to enable them to be supplemented by private contribution-based schemes. I also agree with him that the lead taken by the Government, in introducing contribution-based schemes partly funded by employer contributions, goes some way to meeting that need. A lot more has to be done. I am keen to see this bill proceed to the select committee, so I recommend it to the House.

The National Party will support this bill to the Social Services Committee. However, I would like to point out that the explanatory note of the bill, under the heading: “Results of the consultation”, states that the National Party was very serious in raising the issue of the desirability of requiring the Retirement Commissioner to undertake a regular, overall, stocktake of retirement income issues, and then to report it, preferably with that reporting timetable linked to the statement on long-term fiscal position proposed in the Public Finance (State Sector Management) Bill.

Some of the previous debates have been wide of the mark. This bill acknowledges that the superannuation accord has not been in operation for many years, and that it transfers the Office of the Retirement Commissioner to the jurisdiction of this bill. I have some concerns, and the National Party raised the very good point about this retirement office, that in order to be seen to be independent and have integrity commenting on the various retirement income policies it has to report directly to Parliament and be subject to public scrutiny.

I raise that because section 93, “Functions”, in new Part 4 inserted by clause 6, states that the functions of the Retirement Commissioner include: “(a) to develop and promote methods of improving the effectiveness of the retirement income policies from time to time implemented by the Government in New Zealand …”.

Another thing I observed was that in section 95(2) the Retirement Commissioner may, if he or she chooses, “(b) deliver to the Minister a report in writing on any retirement income that he or she considers the Minister should be advised of.” Subsection (3) goes on to state that the Minister must, after receiving such a report, present a copy of it to the House of Representatives. But as that requirement is qualified by the words “as soon as practicable”, there is no guarantee that the Retirement Commissioner, after choosing to table the report or to bring it to the attention of a Minister on any retirement income-related policy, will do so in order that it might reach the House of Representatives in a timely fashion. Also, in the bill we find that when the Minister requires it, he or she can ask the Retirement Commissioner for a report. Once again, the time and the speed of that report being made public by the House of Representatives is not guaranteed.

So I think that a provision that the select committee should look at adding is one that requires, at a regular interval, the tabling by the Retirement Commissioner of a stocktake of the overall Government retirement income policy. This would add credibility and integrity to the independence of that office.

I raise that matter, because I think various speakers have acknowledged that the Labour Government’s current superannuation fund has actually led to a reduction in overall savings by individuals. The reason is that there is a misleading impression that the retirement issue has been resolved, leading to various independent reports stating that the amount of private savings has reduced. This matters, because for various lifestyle reasons, or necessity, individuals are well advised to supplement the State pension with their private savings.

Let us look at the type of Labour Government policies that hinder that, or that are detrimental to it being possible. Last weekend’s Sunday Star-Times, as I think most people would now be aware, reported the case of a high school teacher in a one-income working family who earns $55,000 and, with four children, finds it difficult to make ends meet. In effect, the parents are now thinking about moving to Australia to improve their situation. They have written a letter to the Prime Minister, the Rt Hon Helen Clark, asking her to explain and help them resolve their dilemma. They do not want to go on the benefit or become a low-income family. The husband earns $55,000. I thought it was quite a depressing picture, with the mother having to go without purchasing any new personal items for herself.

Let us look at what happened under this Labour Government. First of all, we find that for individuals to be able to save, they have to earn enough. We know that right now with the Labour Government giving up on economic growth, that New Zealanders earn, on average, $180 less a week than the Australians. That is per week! Apart from that, there is the amount of tax that has to be paid. Ever since the minority Labour coalition Government came into power, taxes have increased. Fifteen new taxes have been introduced—not only the marginal high personal income tax but various taxes, such as tax on petrol and liquor. Anything that moved, the Labour Government seemed to whack a tax on, and it has forgotten that individuals also have to pay GST, meet local government rates, and so on. It is not only individuals who are paying more in taxes but also companies.

There is also the way in which our tax money is being spent. Increasingly we hear horror stories about money going towards funding junkets overseas, such as looking at some hip-hop music, or in providing community education courses. There has been an astronomical growth in so-called community education courses being offered by institutions, but one would doubt very much whether they will improve any individual’s earning capability. At the same time we are finding that our hospital waiting lists are growing, and people increasingly are not getting the medical treatment they expect to receive.

So tax is a real issue. It is an issue that affects an individual’s capability to earn and it also means we are losing our potential high-income earners. Every day constituents are telling us how their children are going overseas, to Australia, Britain, and the USA, because they perceive that the opportunity in those countries is much greater than in New Zealand. The difficulty in getting a job is also due to changes to our employment law.

Most of the small business employers we talk to, employ only up to five people. They cannot afford to improve or increase their businesses because of difficult employment law. We saw the saga of the long weekend at Easter—the Labour Party’s so-called gift to the working people. The Restaurant Association told us that during that weekend 30 percent of restaurants and cafes chose to close. Twenty percent opened with fewer staff. It therefore led to less employment and fewer opportunities for these people to save.

Now we know that the minority Labour Government—[Interruption]—if the junior whip would listen. If he wants to take a call we would be happy to hear him in his own time. In the coming May Budget the minority Labour Government will be trying to buy votes. It says it will be giving money away to the low-income working family. It needs to be warned that if it further erodes the differences between wages and benefits, then that will be a further disincentive for hardworking individual New Zealanders to work.

Bill read a first time, and referred to the Social Services Committee.