KiwiSaver Bill

I have found it very interesting to listen to members of the National Party commenting on the KiwiSaver legislation. I have been trying to understand what they are trying to say, but the message seems to be so fundamentally mixed. They have missed the point of the effect of their Government’s decision in 1975 to end a superannuation scheme that might have made John Key’s comparisons with Singapore sound sincere—we might have been in a similar position to Singapore today if a superannuation scheme had been allowed to continue since 1975. But, no, National Party members have always known better than everyone else in terms of what will do and, talking about buying elections, that 1975 decision will stand this country in ill stead for a very, very long time.

This is about making a difference. It is about turning things around. The scheme that Dr Michael Cullen introduced in order to smooth out the superannuation scheme that exists for all of us was the first big step this Government took to right the wrongs of the past. This bill is the next big step that we are taking. I cannot understand why National Party members are so opposed to a scheme that will enable people who have the opportunity to save to actually become savers—a scheme that will inculcate a savings culture in this country that we lost the opportunity to pursue in 1975 with an outrageous promise we could never afford to keep.

Pansy Wong and Katherine Rich both talked about families who do not earn enough to save. Both ignored the Working for Families package, which was the alternative under our Government to a pack of tax cuts that would have destroyed those families once and for all. Pansy Wong and Katherine Rich also ignore the impact of the Employment Contracts Act on ordinary working people in this country who, throughout the 1990s, saw their pay and conditions of employment slashed. We saw wages and conditions of employment coming down in New Zealand, as they went up in Australia. National Party members ask why people went from New Zealand to Australia. They went because the Employment Contracts Act drove them overseas.

National Party members talk about the lack of depth in our capital markets, and then watch with envy Australia, which is awash with money because of a compulsory superannuation scheme entered into a number of years ago. What I think is incredible about the National Party’s absolute gall in terms of the position it has adopted—I am not allowed to use the “h” word to describe it—is that it ignores the reality of the opt-out provisions for new employment. The opt-out provisions are there for new employees so that they do not have to stay in the scheme if they do not want to. But National Party members completely ignore the fact that this legislation enables any New Zealander to opt in. All National Party members want to do is bag us and bad mouth us. They have done the same with superannuation; they have been making it into a political football ever since I was 15 years old. I hope this is the end of that.

Not one single National Party member has stood up and said that the party will get rid of this scheme if it ever becomes the Government. I believe that the Labour Party will be in Government long enough for this scheme to become completely part of the New Zealand psyche. Everyone will want to have a KiwiSaver account. I agree entirely with contributions that have been made in this Chamber that have suggested it is parents who will tell their kids not to let it happen again, and to get themselves a KiwiSaver account as soon as they start a job and never let it go. The reality is that KiwiSaver will give people the base for their first home. But it will also give them the base for a retirement income that will supplement New Zealand superannuation. New Zealand superannuation will still be in place when they are older, and the simple reason is that this Government has taken responsibility for it once and for all. I am really proud to be part of a Government that has made superannuation part of its commitment to New Zealand, and will continue to do so.

The only thing worse than Charles Chauvel’s best speech so far, which we heard a few moments ago—“I move that the question be now put.”—was Lianne Dalziel’s speech just before. She told us she was opposed to New Zealand superannuation. It is no wonder that Labour spent $882,000 trying to buy the last election—if it had come in with that policy, it would be spending $3,882,000 of taxpayers’ money. Lianne Dalziel told us she did not like what the National Government did when it came into office in 1975. It got rid of the scheme that was in then, and introduced New Zealand superannuation. It is a universal scheme that all New Zealanders can access, it is world-acclaimed for being elegant in its ease to look after, and it does not differentiate between people in and out of the workforce. It is a scheme that works tremendously well, and Lianne Dalziel just told us she does not like that scheme. That is very interesting from a Labour Minister. It is no wonder that Labour stole $882,000 of taxpayers’ money to buy the last election.

This is very interesting. I draw members’ attention to the contribution rate in Part 3, which is either 4 percent or 8 percent. Maybe someone would like to explain to me how someone in New Zealand earning $43,000, the average wage, and who is getting overtaxed, will be able to afford to put in 4 percent of his or her gross income. The fact is that that person will not be able to make that contribution, and the Minister and the Government know it. That is why the withholding tax that currently earns the Government about $550 million will be reduced by only $35 million once KiwiSaver comes in. The Government knows that the only people who will take up KiwiSaver are higher-income New Zealanders who will use this scheme to drain out a little bit to repay their mortgage through mortgage diversion and who will actually have the higher tax benefit when they either pay it themselves or pay it through the scheme.

A second group of people will use clause 87, which is all about how to apply for a contributions holiday. This is the way it works. Employers have to tell people that they have been compulsorily opted into the scheme. The Government thinks the reason people do not save is that they have inertia. I have a different theory on that.

💬 Hon Lianne Dalziel: No, no.

Yes, it is. That is what the Government thinks. It thinks people do not save, because they have inertia. Actually, I have a different reason. I think the reason people do not save, at least in one part, is that they do not have enough money to save. They have to pay their taxes, their rates—which have gone up—and their mortgage rates, which are very high because we have a Government that would rather go out on a hiring binge and hire huge numbers of people from hell—

💬 Hon Maurice Williamson: Helengrad.

—Helengrad. Those are reasons why those sorts of people are in that position. They cannot afford to save. Now the Minister is telling us they will save. They will go along to their employer, who will have to offer them the scheme, and this is what will happen. My view is that the vast bulk of people will immediately tell their employer that they want to opt out. Those who go into the scheme will then be locked in for 12 months unless they can prove financial hardship. That will be a very interesting situation. The Finance and Expenditure Committee never really got an answer on the way the courts will determine financial hardship. My guess is that financial hardship will be tested. Some people’s definition of financial hardship is not paying the Visa bill. Some people’s idea of financial hardship is not having a holiday. For other people it will be when they cannot afford to put food on the table. It will be up to the courts to decide how financial hardship is actually interpreted. My view is that that will be pretty interesting. Those who do go into the scheme will seek to have a contribution holiday. They can do that after 12 months and can do it for 5 years. Why will they seek to do that? In part it is because they will decide they want to use the money.

This is the interesting thing. Many people who are working for an employer and who change company to one that does not have a KiwiSaver match contribution will, in my view, drop out.

Earlier, I took a call on Part 2. I would have liked an extended call, but I was closed down by Charles Chauvel’s speech, which was the best speech he has given in Parliament, so far. I thought the Dominion Post was a bit cruel. It stated that Mr Chauvel’s maiden speech was nothing flash—that there was nothing special in that speech. It sort of cuts to the quick when one is first in Parliament and comments such as that are written, but after a while one gets used to it. It is no big deal.

Let us consider again the parts of this bill. We heard Minister Dalziel, the Minister in the chair, suggest that this bill is not supposed to be compulsory, but compelling. Again this begs the question. If the Minister means “compulsion” but is using “compelling” as a device, then it is a sham. It is not an inducement, it is, on the Minister’s own admission, dependent on inertia. The problem with that is that if inertia does not work—and it will not work—what will come then?

Minister Dalziel gave a personal indication of a series of recollections of her own savings habit and used the phrase “against a rainy day”. Well, that used to be the philosophy, then along came a previous Labour Government with Rogernomics. We were told, in a business sense, that stacking money away was an improper use of funds, it was wasteful, it should be put into assets, debt levels should be lifted, and we should get our money working. In my own case we used to scrimp and save as we established our own private company. We tried to avoid taking drawings in our first year’s trading to build up a reserve against a rainy day. But the emphasis on rainy days is not what we are talking about here.

The purpose of the bill is establishing a savings habit to benefit those in retirement, etc. It is about establishing a personal system of wealth accumulation. The recent inclusion of mortgage diversion, the opt-out system, and the holiday provision all auger ill for the success of the system. That is why so many comments are coming from this side of the Chamber.

Let us reflect again on our actions when we were young and at the stage of building systems of wealth creation. I well recall that when I was 12—I remember being 12—I confidently put my holiday pocket money of 5 shillings on a horse being ridden by a young jockey called Lester Piggott. I was shocked to find, when he did not win, that I did not get my money back. I have never bet on a horse since.

The next venture was later in life—and this one is pertinent—when I was contract milking cows in Whangarei with two of my brothers and we actually had money surplus to our requirements.

💬 Darren Hughes: Where’s this in Part 3?

I am coming to that. Part 3 talks about compulsory deductions. I took out a life insurance scheme that, after 20 years, would yield enough to buy a farm freehold. It did not take into account the various things that would happen to inflation in that time. But I guess that scheme, and other schemes I have taken out since, were really ways of taking compulsory deductions from my bank account. During my early married life, once my insurance scheme had accumulated a reasonable nest egg, it became an item to be surrendered to meet whatever need the family had at that time.

I think the KiwiSaver Bill is weak in that direction. It does little to address the central question of savings habits. Surely, it needs to be accompanied by a much wider review of tax adjustments. It needs to be accompanied by a system to address the huge private debt that currently exists. We have a fat chance of people saving when they have such debt burdens to clear, and I think everybody knows that the most efficient way we can use our money is to clear our debts. People will probably always find that they are paying more interest than they would ever get for saving.

All the time we have a Minister of Finance who feels that the country has achieved wonderful things by retiring all Government debt. I suggest that that has been at the cost of private people—a cost equivalent to their level of personal debt. If the Government had not been acting as a robber baron, perhaps people may have had some money to use in discretionary saving.

It is not just income tax, it is the whole gamut of this socialist Government’s economic policy, from the Resource Management Act and business compliance costs to imposed costs on councils. There seems to be an illusion on the part of the present Government—and we have heard it today—that what it is doing is acceptable to the majority of people. It bases this on the illusion—

I wonder why more Labour members are not speaking to this bill, apart from the Minister in the chair, the Hon Lianne Dalziel. If this bill is supposed to be such a flagship, if it is supposed to be such a platform, and if it is supposed to take pride of place on the illustrious pledge card, why on earth are we not hearing more speeches from the Labour MPs? I can see only one Labour member of the Finance and Expenditure Committee on the other side of the Chamber at the moment, and I think that speaks volumes.

I guess it is because Labour members do not actually understand the bill because it keeps changing. The bill they studied, the bill they examined, the bill that was taken to the Finance and Expenditure Committee in the first instance, has radically and fundamentally changed. For example, when I picked up Supplementary Order Paper 52, which sets out the Minister’s amendments, off the table, it was still hot. The ink was still smudgy—that is how fresh it is. That is how much the legislation has been changed and it is an example of the haste with which the Government is trying to push the bill through.

I invite any member opposite to take a call to speak for the bill, not just to waste time trying to get this thing passed and get it into tomorrow morning’s papers, so that there are no more Taito or pledge card stories in the papers. Members opposite should have faith in their party. I guess it is a credible indictment of the confidence and faith they have in their Minister of Finance that they are not speaking on the bill into which he has put so much political capital.

A lot of people have said that it is better to pay off a mortgage than to invest. That is not absolutely true. Sometimes it is true, but if people have a mortgage at 5 percent and they can invest it at 10 percent, then it is a bit of a no-brainer to me to string the mortgage out. There is an inherent conflict between saving, in a financial asset sense, under a superannuation scheme and a first home buyers scheme. That confusion has been compounded by the mortgage diversion scheme that has been put into place.

Why on earth would people try to build up financial assets when inflation is out of control? Inflation is through the band of 1 to 3 percent. Inflation has been north of 3 percent for the last 18 months and it will be near 4 percent for the next 18 months. Those who have done Econ 101 somewhere along the way will know how corrosive inflation is to financial assets, but how beneficial it can be to fixed assets such as property. Within the environment in which this bill is trying to encourage New Zealanders to save for their superannuation there is the disincentive out there in the real world of inflation bursting out of the band north of 3 percent for the next 18 months—an anticipated consumer price index of 4 percent, or even up to 6 percent in some projections.

Why on earth in the real world would people save for a superannuation fund as a financial asset? We know that consumer price index inflation is corrosive for financial assets and that this bill could have the exact opposite effect to what it intends to do. It could pour more money into the property market and increase the base level for first home buyers’ homes because of the taxpayer subsidy and the incentives this bill gives some first home buyers, and all it will do is raise the floor.

Frankly, when we look at the $1,000 per annum provision, or at the $3,000 or $5,000 provision after 5 years, we have to consider that the average price of a house in Hawke’s Bay, for example, is something like $280,000 or $290,000, which means $30,000-odd for a 10 percent deposit. How on earth will this bill help in that instance when we remember that inflation is going through 4 percent? Property inflation will go to 5 or 6 percent, increasing the value of the properties that this bill is supposed to be encouraging people to buy. It is such a vicious circle.

The Minister is screwing up her face—perhaps she does not understand it. This is a simple, real-world example. I will give an example about ice skates in a minute, I guess.

Part 3 is about contributions, etc., but it has been mentioned that this bill goes hand in hand with the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill, which is also before the Finance and Expenditure Committee. In the words of the Minister of Finance, the KiwiSaver Bill has to be in place for the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill to go through with the changes he wants to bring in. But let us make an example here, because the previous speaker spoke of low-income New Zealanders. The KiwiSaver Bill is in conflict with that taxation bill.

I think that if anybody wants an example of why the Finance and Expenditure Committee is such an interesting place, they need only listen to that last speech from Craig Foss. As I said while in that committee—which is a committee I did not particularly want to be on; I regard it as a punishment, as a matter of fact—I take a great deal of interest in looking across the table. I watch my National colleagues looking at these sorts of bills and money matters, and I can just about hear the cash registers going “Chonk! Chonk!”. It is all very predictable. I admire these gentlemen, but they have a one-track mind—financial investment at a very high level or, in the case of Chris Tremain, real estate. So the question is: what they are going to do—what are New Zealanders going to do—about bills and money matters? How can they avoid them? How can they leverage off them, or get around them? Or how can they not pay them? Those are the questions that go through National members’ heads.

I want to tell my colleagues in National yet again—and I suspect that this will be a recurring theme—that 98 percent of New Zealanders do not think that way. Ninety-eight percent of New Zealanders think about saving. They think about putting a little bit aside each week and each month, and slowly building it up over the years. They are still trying to instil the habit of saving into their children and families. If—God bless them—some people can aspire to having a pool boy, lawn boy, tennis boy, cleaner, or all the things John Key takes as normal family add-ons in his life—

💬 Hon Maurice Williamson: Doesn’t everybody?

R DOUG WOOLERTON: Well, exactly. As Maurice Williamson said: does not everybody? That absolutely explains why National members are not only opposed to this bill but why they cannot even get their heads around it. It is not about stacking up numbers or even about an algebra equation; it is about investing slowly for the long term and the future, and about getting something in people’s psyche.

National members also do not mention that the bill can be changed. A person can make a joint contribution of 4 or 8 percent. They can go along with that, give notice, and go back down again.

💬 Hon Maurice Williamson: Is this a leadership bid?

R DOUG WOOLERTON: No, it is certainly not that! They can put some money into a mortgage diversion scheme. They can do all of those things. The problem that National has at this point is that it has Mr Auchinvole saying that the first thing a person should do is pay off the mortgage—which is pretty straight-line financial advice—but then it has John Key saying that he would not advise people to do that, and that he would advise them to take out the $1,000, or whatever it is. So there is a conflict in the reasons why National is opposing this bill.

In actual fact, this bill will allow people to do all those things that National members are talking about. If it is an advantage for people to put some money into the mortgage diversion scheme, they will do that. If it is to their advantage to put in 8 percent instead of 4 percent, they will do that. They can change up and they can change down. But behind all of that is the fact that it is in people’s interest to stay in the scheme. They can get out of the scheme, but it is in their interest to stay in it. I suggest to members that people in New Zealand—average New Zealanders—will be encouraging their children to join the scheme, to stay in the scheme, and to take advantage of the options the scheme offers.

Just to follow on from the comments of the last member, Doug Woolerton, I agree that parents will continue to encourage their children to consider some kind of superannuation or savings programme. The issue, though, is actually getting younger people to take one up. Going back to my own experience, I recall that when I first worked for a Government department we had a superannuation scheme. There was a great incentive to join the scheme: basically, one doubled one’s money. If employees put in $1, the Government put in $2. But even with the best incentive, younger people decided that they wanted to have their own cash and to have a bit more to go out with on the weekend. Even though the incentives for them to take part in that scheme were put in black and white, the employer still could not get people to join up, to have a vision of what their life would be like when they turned 65, and to put money aside for their retirement.

We need to talk more about the cultural change that needs to happen, but I do not have the same faith that the Government and the previous speaker do that this bill will change culture, at all. KiwiSaver is quite a complex system. The Government will argue that the incentives are there, but actually they are not. The system is a pretty loose arrangement whereby one can opt out if one wishes. It is a pretty loose arrangement whereby one can decide to have a contributions holiday. Well, we all know that people will go and do that. They will dream up some reason why they have to postpone putting away a nest egg and have a contributions holiday. A number of people will opt out right from the start.

As we have heard from John Key, there is no incentive for employers to put this scheme in place; there is no incentive for employers to offer a scheme to their staff. I will get on to the subject of what this bill will do for small-business owners in New Zealand. This bill will impose upon them a very complex system. I would like to hear the Minister Lianne Dalziel talk about the complexity that a small-business owner will face when he or she sits down at the end of every pay period to work out whether it is 4 or 8 percent of an employee’s wages that goes into the scheme. In many cases the amount of wages will change over pay periods, so the contribution will often not be just a direct credit—it will have to be changed for every period. Small-business owners will have to monitor whether someone has opted out and will have to keep tabs on who has made a request for a contributions holiday over a period of months—not to mention do the PAYE and GST. And what happens if an employee has a student loan to pay off, or is paying child support or some other court debt? It just adds to the complexity that small-business owners will face when they are just trying to work out what to put in their staff members’ pay packets at the end of every pay period. It will not be easy.

We assume that people are aware of the laws of this country, but I know one thing for sure. Here we are passing a bill that is 205 pages long. We cannot hope for one moment that the knowledge of what is in here will be firmly implanted in each small-business owner’s head. It will not be, so this will be fraught with difficulty. I would like to hear the Minister talk about what kind of education programme will be in place and what ideas she has to try to minimise the complex nature of this bill so as to make it easier for small-business owners to implement it within their workplace. Employers will try to establish what to pay someone at the end of a week, a fortnightly period, a month, or whatever it is, but that amount will change, and it will take a lot longer for some small-business owners to work the process out. I think that is something we should talk about here.

It was interesting to hear the Minister talk about the dancing Cossacks of 1975. It was quite a long bow to draw to suggest that that is the key reason the savings culture has died in New Zealand. Some of the members across the way were not even born in 1975, so it is hard to imagine how their attitude to saving has changed. For us to hear lectures about National buying elections is ironic, coming from a Government that spent billions of dollars on the student loan scheme.

I rise to speak to the amendment in my name to clause 55. The Finance and Expenditure Committee considered the question of whether a 4 percent contribution rate would be beyond the scope of people on low incomes to afford, and particularly the young people whom we are trying to encourage into this scheme. They are, of course, at the low earning end of their careers and may well find that 4 percent is more than they can manage. I presented the case for an option of a 2 percent rate, as in fact did a number of submitters. A number of union groups in particular argued that their members would find 4 percent difficult, and that if we wanted to get them into the scheme we needed to give them the option of 2 percent. The contrary argument was that if they were given a 2 percent rate, people who could quite well afford to save 4 percent might save only 2 percent and that would be a negative consequence.

In my view, though, the important thing is to get people started on saving while they are young and not wait until their income is such that they can manage to put aside 4 percent, because at that stage they do not have a savings habit. At one stage it appeared that the select committee had accepted my arguments, but then somehow the position changed and in the end nobody else was advocating for this point of view.

I want to give the House the option of reconsidering that and I will be moving an amendment to clause 55, to insert at the beginning of subclause (1)(b), before the words “8%”, the words “either 2 % or”, and in subclause (2) to insert 2 percent into the range of options to which employees may change their contribution rate. I hope members will consider again the reasons behind this amendment. I do not believe it makes the bill too complex to administer if there are three rates rather than two and savers are allowed to select their contribution rate to suit their own personal circumstances.

It is true that the mortgage diversion scheme the Government has proposed and the employer contribution scheme, both of which came up right at the end of the discussions, have gone some way towards these. If an employee is trying to pay off his or her mortgage and also wants to save, he or she can contribute 2 percent to each and if an employer is prepared to put in 2 percent, then that reduces the employee’s contribution to 2 percent to qualify. Both of those are steps forward.

However, it does not cover the situation of an employee who cannot even afford a mortgage or a house at all, and wants to save 2 percent but works for an employer who is not interested in contributing in this way. An employer who is simply paying the minimum wage, and would pay less if he or she had that option, is certainly not going to add a 2 percent contribution to an employer’s superannuation. I hope the Committee will consider this amendment and look at improving this otherwise pretty good bill even further.

I take this opportunity to canvass Part 3, and three clauses in particular—the contribution rate; clause 72, which covers interest on money in the holding account with the Inland Revenue Department, which I will start with; then the contributions holiday.

I would like the Minister to give New Zealand a commitment regarding clause 72, which covers interest on money in the holding account. What happens is that from the start of contributions, money from the employer is put into the Inland Revenue Department. It sits there for 3 months before it is passed on to the default provider that the particular employee has chosen. I want the Minister to give us a commitment that the Inland Revenue Department will not be taking the margin on that interest. I want New Zealanders to know that there is no margin on the money going into that account for a 3-month period, and that the full amount, plus interest that the Inland Revenue Department provides, will be going into the accounts of the KiwiSaver scheme providers. I am looking forward to an answer on that point.

What I would like to canvass in particular in Part 3 is the contribution rate. It was an interesting issue that vexed the Finance and Expenditure Committee, and Jeanette Fitzsimons has raised it today, as well. Clause 55(1) focuses on that contribution rate. The key point with this bill is that there will be two contribution rates—firstly, a default rate of 4 percent, and, secondly, an 8 percent rate, which employees can choose to contribute against. I would like to talk members through the different submissions that the select committee received on these rates. Mr Woolerton was present for these, but Mr Hide was not available.

The first submission we received was that employer contributions should be supported, if not required. We heard that from a number of union organisations—from Eriksen and Associates, and a number of different submitters. I guess that is why we have ended up with clause 56, which states that contribution rates may be changed by Order in Council. So at any time we could see a change to this bill, to make employer contributions compulsory. I want employers out there to know that that clause is there, and that at any time this bill could be changed, simply by Order in Council and not by an Act of Parliament, to make employer contributions compulsory.

I come back to the submissions. The second submission was that a more flexible range of contribution rates should be supported, to allow more choice and to encourage greater participation, and Jeanette Fitzsimons has come to the Chamber this afternoon with her amendment to add a change to 2 percent. A number of submitters stated that 2 percent would be a rate that many employees could afford. In fact, the Hon Mark Gosche was an advocate of the 2 percent rate, and stood up on many occasions to fight for it. But there are a number of reasons why the 2 percent rate was not put into the bill, and I will go through them. Firstly, it was felt that a greater number of small savings accounts with very small totals would eventuate, and that was a concern. The second point is there was a concern that a greater number of people would take up the account in the first instance, with only a small amount, just to get the $1,000 incentive payment. That is where the committee spent quite a bit of time deciding—and Jeanette Fitzsimons put this forward—whether we should be putting up only a $500 incentive instead of a $1,000 incentive for people who save at the 2 percent rate. We basically decided it was getting too difficult at that point and on the principle of “keep it simple, stupid” we focused on two contribution rates—4 percent and 8 percent.

Another reason why the 2 percent rate was not considered was that a very accurate table the officials gave us showed us the contribution rates needed to achieve a 70 percent income replacement in retirement. That also takes into account New Zealand superannuation, which my colleague John Key pointed out was introduced by Mr Muldoon in the 1970s and we still have it to this day, albeit somewhat changed. The table conveys important information. It shows us the contributions that employees would need to make to get to a level that would give them 70 percent income replacement in retirement.

I move, That the question be now put.

Thank you for the call on Part 3. I start by saying that Lianne Dalziel and Doug Woolerton have both lamented the fact that we do not have a savings culture in New Zealand society. I say to them that is why I was such a strong supporter of Lianne Dalziel’s speech, when she told us about her savings scheme for her skates. That was the savings culture this country had—and Doug Woolerton knows that. If we work hard and put a bit of money aside, we save. But the point is that it is called personal responsibility. That is what is lacking at the moment—personal responsibility.

Some members of the Government know about that. Taito Phillip Field understands personal responsibility. He understands savings schemes. He is working towards his own benefit. He is working hard, and he is making sure that every bit of money that comes into his electorate office goes into his savings scheme. I tell members that Taito Phillip Field is doing his bit for international relationships as well, by trying to send some of our money and hard-working labourers off to Samoa. And do people know what? There are members of the Government who have actually taken the time to go to Samoa to see that savings scheme in action. I have to say that it is a first-class scheme—if one is a rogue.

But I tell people that other members of the Government think that savings scheme is pretty good as well, because they have an adjunct to it. Rather than wasting the Labour Party’s own money on electioneering, they decided to save it $886,000 by spending taxpayers’ money on its electioneering. So I tell people that those guys have worked out personal responsibility—when it suits their own purposes.

I now turn to clause 55, “Contribution rate”. In particular, I will look at subclause (1)(a), which states that 4 percent of employees’ gross salary or wages can be used for contributions. I ask my colleagues to keep that figure in their minds and to overlay that fact with this: when we talk about mortgage contribution rates, or diversions, those are capped at 2 percent. If we contribute 4 percent, we are allowed to use 2 percent, with the exception that we are only allowed to use 50 percent of that amount. So the mortgage diversion component is only 1 percent. Doug Woolerton knows that a 1 percent diversion into anything is hardly a workable figure. I mean, that is about the support that New Zealand First has. He knows that is not critical mass, and that it simply will not work.

There is more of an inherent contradiction in the Government’s position, and it is this: was 2 percent not rejected by the Government as the entry level into the scheme? Jeanette Fitzsimons has picked that up. She has put an amendment before the Committee for consideration, and the National Party is thinking long and hard about supporting that amendment. But the Government said that 2 percent would not provide enough money to develop a savings culture in this country. That, of course, contradicts the very thing the Government is setting out to do under this legislation, which is to create a savings culture. But Government members just do not see the inherent contradiction.

Still, Doug Woolerton maintains that members of the National Party do not get savings cultures. Well, I say to that member, there are members in this party who have developed their wealth by working hard and saving hard—by taking that 40c an hour and turning it into good money by the sweat of their brow—and we do not want to see that culture undermined by the Government’s putting in place a savings scheme that simply will not work.

Michael Cullen knows that KiwiSaver is flawed. When he ran off and did his deal with Mr Copeland, he overlooked the fact that in his haste to put together a 2 percent cap on mortgage diversions, he badly undermined his own policy.

I move, That the question be now put.