Taxation (Urgent Measures and Annual Rates) Bill

May I comment in passing that that was the most extraordinary vote I have seen in many a year: that the Government of the day would put on a “hugely justified” financial veto, told the Parliament and the public that it would cost three-quarters of a billion dollars to protect poor New Zealanders—overwhelmingly and disproportionately Māori New Zealanders—from the negative consequences of this bill, and then, once it had secured the support of the Māori Party to ditch the interests of—

💬 Craig Foss: I raise a point of order, Mr Chairperson. We have moved on from Part 3; we are now on Part 4, which talks about KiwiSaver. I would ask that the member could bring it back to this part, please.

The CHAIRPERSON (Hon Rick Barker): The member makes a fair point.

The member makes a fair point. I confess my incredulity got the better of me, and I will move to Part 4.

Part 4 is the single most important part of this bill. It is the single most important part of this bill, because it contains the lion’s share of how it is paid for. $3.5 billion is being stripped out of KiwiSaver, and the Opposition parties will show in detail in this Committee stage of debate what is being done: precisely what changes are being made that cause KiwiSaver to be gutted; why once again the Government is not being full and frank in the way it is presenting these changes; the financial and economic effects of the change and the impacts on ordinary Kiwis; and, finally, why this is bad policy on any measure of the Government’s own objectives.

Let me begin with what is being done. In very, very simple terms, the Government is proposing to change the so-called minimum contribution from 4 percent to 2 percent. Now that, of itself, does not ostensibly sound bad, and it did not sound bad in the election campaign. At a lower threshold more people might come in and it might improve uptake, one might think. Does it sound good, so far? A number of Kiwis thought it was a palatable change. Here is the not-so-fine print: it is effectively not a minimum at all; it is an effective maximum. Why is that? Firstly, because the default setting for any new worker is not now 4 percent but, under this bill, it will be 2 percent. We know, and the data shows, that most of the 827,000—I think it is now—New Zealanders who are in KiwiSaver came there through the default option when they took a new job. So it is being prejudiced from the start-off.

The second, and perhaps most important, feature, is, of course, that the matching contribution is capped at 2 percent. So, technically, people could put in more than 2 percent, it is just that they would not get any return on it, because it would not be subsidised by either the Government or the employer. That accentuates the difference between the Australian scheme, which is a 9 percent—wait for it—purely employer-funded scheme, and the New Zealand scheme under this bill, which is now largely employee funded. Interestingly enough, the Government is also going to repeal the part of the KiwiSaver legislation that protects employees from the actions of employers who seek to offset against wages. It may come up with another solution to that problem, so I will not overemphasise that one. To make matters worse, when the Government realised that it had stuffed up in the campaign and over-promised to the tune of some $700 million because it finally figured out what had been obvious to Labour for months—that ordinary working Kiwis on low incomes would have their actual annual contribution cut from $1,000 to $520, and it decided to restore that very sharp-edged Christmas present—

💬 Hon Dr Michael Cullen: Not quite!

Not quite, as Dr Cullen says, but that move cost the Government $700 million. It then did the Grinch act with the $40 enrolment fee to save $200 million.

💬 Hon Lianne Dalziel: How miserable is that!

I hear people on this side of the Chamber outraged, and the well-suited gentlemen on the far side of the Chamber give not a toss. Why is that? Because for someone on the income of, I do not know, Steven Joyce when he sold RadioWorks, $40 is not a big deal. But for someone on a minimum wage of $12 an hour—or something closer to $9 after tax—$40 off savings is a significant disincentive. When that is combined with the fact that Government has just scrapped anything over a 2 percent contribution and one is going to get diddly-squat from one’s boss, suddenly it is not looking so attractive.

Now we come to the next point. The Government’s own analysis, provided in the introduction to this bill, was clarified by my esteemed colleague Dr Michael Cullen when he asked the question: “What provision has been made for further enrolments, in the financial estimates for this bill?”. The answer was “Nothing”. Why is that? It is because the Government is not expecting anybody else to enrol, because it has just gutted the scheme.

I want to cast our memories back to a particular moment for us—one of the most hopeful moments of the election campaign—which was the day the National Party announced its tax policy. Our tracking polls showed its support drop about 5 percent in a day, because this policy is a political lemon. It is a loser. A million Kiwis either enrolled in KiwiSaver or wished they could have. A million Kiwis thought it was great to have a nest egg, and mainly they are New Zealanders who are not of substantial means. Average-wage earners enrolling at 30 get about $420,000 when they retire. That is a big deal for them. That is the value of their home, and that, for many people I have talked to, is not only their principal saving vehicle, but also their hope for a better future. That hope has been taken away from them by a Government that does not seem to care.

Why? It has been done in order to fund a tax cut for the better off. Those who earn less than $44,000 and have kids will lose. Those on the average wage of $45,000 get $1.92 a week more. Whoopee! But those on three-quarters of a million dollars get $264 more a week. Wow! The Government is taking from the poor, gutting KiwiSaver, to give to the rich. That is fabulous stuff, and the Government has done that on its first day in the job! I could say: “Told you so New Zealand.” I wish I did not have to.

💬 Hon Bill English: So Labour got it wrong?

The current Minister—he may not last long, at this rate; a bit like Gerry Brownlee, the shortest-lived Leader of the House—Mr English tried to enter a financial veto. When he realised it was going public, he quickly withdrew it, but, sadly, the damage was done, because the public knows it was a $750 million stuff-up. That is the second $700 million stuff-up that that Minister has made in his first week with a warrant. I tell Mr English that it is not a good start. We wish him luck from here on.

Finally, if this is inequitable, and if this is a very unpopular move, it is also an economically fundamentally stupid move. It is stupid, because if Bill English had not noticed, there is a global credit squeeze on. Presumably, that is the reason he wants to tilt the New Zealand Superannuation Fund into loaning to itself by having both assets and liabilities. He wants more savings in New Zealand but he is gutting the best single savings vehicle the country has ever known. It is bizarre. The only other example I can think of was Rob Muldoon killing that superannuation fund of yesteryear—the Kirk fund—whereas he said he would not. So in a sense we are used to that kind of double-talk from that party, but it is none the less sad for New Zealanders whose hope for the future is being sold down the river.

I am intrigued by mention of the New Zealand Superannuation Fund, and I am looking forward to further debates on it with members opposite, although I cannot quite see it in this particular bill, the Taxation (Urgent Measures and Annual Rates) Bill. However, the member obviously has some strong opinions on it, as does New Zealand, because that matter was on the table before New Zealand again at the general election and people resoundingly endorsed the National Party’s policy of up to 40 percent of the New Zealand Superannuation Fund being invested in New Zealand infrastructure, as opposed to offshore infrastructure and being exposed to various risks. As the member is no doubt aware, the recent updates included quite an asset write-down for the New Zealand Superannuation Fund. Perhaps 40 percent of that risk would not have been there if the funds had been invested in New Zealand in the first place. But, anyway, that is a debate for another day.

Part 4 brings in the 2 percent plus 2 percent option. It was interesting to hear the previous speaker, because as I noted in my first reading speech, I recall being at the Finance and Expenditure Committee when the original KiwiSaver legislation came through and there were strong submissions on it. It was agreed by the Green Party and the Labour members of the committee, and I think by the New Zealand First members, as well, that “2 plus 2” was very desirable and in fact, was quite pragmatic; it was not some political philosophy or anything like that. There was simply a recognition that many New Zealanders cannot afford to save 4 percent of their gross salary. It was as simple as that—about 5.5 or 6 percent net.

So I find it surprising that members opposite are arguing that it is a bad thing that we are going down to “2 plus 2”, particularly when some of the unions that contributed to their election fund were in favour of that at the Finance and Expenditure Committee. Business New Zealand was in favour of this at the Finance and Expenditure Committee. In fact, it is something that makes KiwiSaver—and it was Labour’s original policy—more robust, more durable, more sustainable, and more affordable for all New Zealanders. It is as if, somehow, any higher contributions have been banned. This measure does not ban any higher contribution whatsoever; it simply allows the entry level to, and the durability of, KiwiSaver to be much more robust and sustainable at 2 percent plus 2 percent. If individual organisations want to negotiate different agreements with their employers, so be it. What is the problem? There is an interesting silence opposite.

I imagine that the next speaker will be the previous Minister of Finance. In previous speeches he has talked about pension portability and about how at risk KiwiSaver is because of the agreement with Australia in relation to pension portability and the discussions on that. He said that the Minister obviously had not called Australia, that the Minister did not know what he was doing, and that it was all at risk simply because of this 2 percent plus 2 percent, rather than 4 percent plus 4 percent. If we read the press releases and watch television, we can see that, to quote the Australian officials, there is no problem whatsoever. The key to the agreement that the Australians had was the fact that KiwiSaver was locked away until the retirement age of 65 years, which is the same as their scheme.

It is interesting that the current Opposition finance spokesperson was trying to dissociate or separate the New Zealand KiwiSaver scheme from the Australian scheme, yet the previous Minister of Finance was obviously trying to bring the two closer. Maybe his hidden agenda was to income test superannuation, because that is what the Aussies do. I presume Dr Cullen will speak next, because we do not quite know about that. There is nothing at risk. Pension portability is not at risk. That is another red herring raised by that member opposite, who is trying to be clever. Obviously, he has far too much time on his hands, these days. I tell Dr Cullen to get used to it, but I am interested to hear his response, because to quote the Australians, again, there is no problem whatsoever with the changes that the National Government is putting before the Committee today to bring the minimum contributions to KiwiSaver down to 2 percent plus 2 percent—locked in. There is no problem about portability whatsoever. Thank you.

The point I was making was whether the Government had checked with Australia, which it had not. The Government drafted this scheme—or launched its policy—without thinking to ask the Australians whether it would affect portability. National did not even bother to ask. I know for a fact that no check was made with the Australians. I still think the previous speaker would be wise to wait longer for definitive statements from Australian Ministers, not from Australian bureaucrats, whom he was quoting in that particular respect.

Let me take another point. The unions were not asking for a “2 plus 2” scheme. The unions were asking for the retention of the “2 plus 2” entry point, which then goes up to “3 plus 3” or “4 plus 4”—

💬 Craig Foss: No.

Yes; over the next 2 years, which is what the current law provides, but is then phased out. The unions did not want to stick to “2 plus 2”; they wanted “4 plus 4”, but they wanted to make it easier for people to start in the scheme. The reason I said no to that was that it would have become much more complex for employers. If employers have to run 4 percent for them, and 3 percent for them, and 2 percent for them, it means large compliance costs for employers. But if the National Government had decided just to make that change, well, one would have accepted that it was always an arguable point. Nobody was arguing for a “2 plus 2” scheme, because it does not add up.

💬 Craig Foss: Yes, they were.

It does not add up to anything like enough to make a difference. Why do members think Sir Roger Douglas had “4 plus 4” in 1975! Why do they think the Australians are on 9 percent now and talking of going to 12 percent or 15 percent? The sums do not add up, particularly when the National Government has removed the fee subsidy, which was a flat-rate subsidy designed to ensure a higher net return for small savers within the KiwiSaver scheme, whereas that now has gone.

This is a scheme now that is so much less attractive. National opposed the KiwiSaver legislation when it was first passed. National opposed the extensions to KiwiSaver, and National has hated the success of KiwiSaver. The fact that well over 800,000 New Zealanders have joined KiwiSaver has got National members’ bitterness, their bile, their envy, and their jealousy wrapped up. We have just listened to a member who is eligible to join a superannuation scheme based on a salary of $131,200 with an 8 percent employer contribution. He gets up on his hind legs—he who is eligible for a more than $10,000-a-year employer contribution to his superannuation scheme—and tells people on 30,000 bucks a year that they cannot get a 4 percent employer contribution for $1,200 a year. That is his idea of equity. No doubt it is because he thinks he is a hard-working New Zealander, whereas people on $30,000 are not hard-working New Zealanders. Talk about the politics of envy!

Why are those members over there always envious of those on low incomes? A kind of strange reverse envy always comes across from them. Those members think that low-income earners do not do any work because they do not earn as much. They grade people according to their income—the more one earns, the harder one must be working. Well, I tell Mr Foss that, in the real world, life does not work like that. A lot of people on low incomes work a lot harder—and at much less attractive jobs—than a lot of people on higher incomes. That is the reality. KiwiSaver has been hugely successful.

Mr Key has gone around the country in the last few years saying that New Zealand does not have a debt problem. Actually, we have the second-highest national debt as a proportion of GDP—after Iceland—in the developed world. What has happened to Iceland? It has gone down the tubes. The way that Iceland has gone over the last few months, Icelanders are almost hoping that the ice cap will melt so that half of them will drown. We will probably end up being the outstanding country in terms of national debt. We have an appalling savings record. We have had a net dissaving for year after year after year at the household level, and all that has disguised that in the last few years has been the strong growth in house prices. Now that that growth has gone, the reality is being revealed very, very clearly that New Zealanders are, as a collective, divesting themselves of assets at a fairly substantial rate. That is why so few people in retirement in New Zealand have any significant additional income. Some have a lot, but most people have next to nothing in addition to superannuation. They may get an extra couple of thousand dollars a year—that is all.

KiwiSaver was going to give ordinary people the chance to get into a subsidised superannuation scheme, lift New Zealand’s saving rate, and change our whole psyche about savings in New Zealand. But National members are again telling us that we can consume our way to victory. It is as though we are in World War II and are being told we should—not dig for victory but—eat potatoes for victory. That would have been the National Party’s slogan in the United Kingdom during World War II. People would not have grown things; they just would have been told to eat more because that would, somehow or other, solve the problem. National says we can solve New Zealand’s economic problems just by consuming more—much of it produced offshore—rather than producing more and exporting that. We have to save more in New Zealand to produce more of our own capital for investment both here and offshore.

There is nothing wrong with New Zealanders owning more offshore, as that spreads the bets for our future retirement income within New Zealand. That income should not all be based on the New Zealand economy. In that respect, it is wise for us to spread our bets internationally. Sir Roger Douglas agrees with that. National is cutting the possible KiwiSaver contribution from both employers and employees from 4 percent to 2 percent. Employers will initially not be able to take the percentage off gross wages, but National will change the law again so that from next year employers can give employees who are in KiwiSaver a 1 percent pay increase and those who are not in KiwiSaver a 3 percent pay increase. Because National is taking away the employer tax credit, there is no incentive at all for any employer to contribute 4 percent.

Finally, let me deal with the question of the $20 a week employee tax credit. National has worked a con job on the media by convincing them that everyone will get the $1,040 a year—rubbish. National has said that if an employer is contributing 4 percent—that is, above the 2 percent—it will match that dollar for dollar up to $20 a week. But if an employer is contributing 2 percent, National will still match it dollar for dollar up to $20 a week. So those on $26,000 a year will see their employee tax credit halved from $1,040 to $520. The media have completed misunderstood that. The Minister of Finance has done a con job in that regard. For ordinary employees, the total contribution to KiwiSaver has gone from 4 percent plus 4 percent plus $1,040 to 2 percent plus 2 percent—and they may pay the lot themselves—plus something less than $1,040. Their savings have effectively been halved, and in many cases they will be paying the same amount they were paying previously. In practice, they will end up paying 4 percent to get a bit over 4 percent, when they would have been paying 4 percent to get something like 10 percent. Is this addressing New Zealand’s savings problems? Is this building a habit of capital accumulation? Is this a property-owning democracy? Is this driving stronger growth? Is this turbo-charging New Zealand? It is nothing like that, at all. Like the research and development tax credit, this is, yet again, a short-term gain for long-term pain. It is the exact opposite of what Sir Roger Douglas used to argue for. To be fair, he did get the long-term gain eventually; it is just that we had to undergo a lot of short-term pain.

This provision is fundamentally wrong. It fails to address one of our most important structural economic problems in New Zealand—it has gone into the air as if, somehow or other, it is not important. It is crucially important in this country. We are in the middle of an international financial crisis, in part driven by the growing gap between savings countries and spending countries. National says we should be a spending country, continue on this huge, long, historic shopping binge, and not worry that someone, some day, will call in the bill. We have to get off that shopping binge. We in New Zealand have to start working, saving, producing, and exporting, but this bill—and this part, in particular—will help to destroy that ambition and destroy this programme that has not been given the chance to work.

It was interesting to hear the previous Minister of Finance recast a number of his arguments. Today is the first time I have heard him describe KiwiSaver as the equivalent of the original Douglas scheme or the Australian scheme. Well, New Zealand has quite a different context from the Australians, of course. They have a sharply income and asset tested public pension; we do not. We have a relatively generous—by international standards—universal pension, and we are one of the only countries in the world to have that. On top of that, we have the Cullen fund—named after Dr Cullen—which has been pre-funded on a scale matched only by Norway, with its oil reserves. It is not matched by Ireland, despite the Irish economic miracle. Its pre-funding is about half the size of ours.

In terms of public provision for pensions, we already have universal national superannuation, which is paid to everybody regardless of income, and we have pre-funding—which, I might say, for the next 5 years will be funded from borrowed money. Now Dr Cullen has said that, on top of that, he meant KiwiSaver to be the equivalent of the Australian scheme. Well, the Australian scheme is designed to replace public superannuation—that is why the employer contribution is 9 percent. Dr Cullen did not go around the country telling the public that it was always Labour’s intention to replace national superannuation. That is a new rationalisation he has dreamt up today to criticise this policy. The fact is that New Zealand is providing adequately for retirement income, with a universal pension, which the Aussies do not have, with pre-funding, which the Aussies do not go anywhere near, and with the significantly subsidised KiwiSaver.

In fact, the jury is still out on KiwiSaver. A lot of people have signed up, but it will take time to see whether it achieves what Dr Cullen claims it will. Dr Cullen says that, unlike almost all other incentivised schemes in the world, it will unambiguously lift private savings. Well, it is not clear that it will. I hope it does—I surely hope it does—because the taxpayer is contributing billions of dollars to KiwiSaver to incentivise savings. But the fact that 800,000 people have signed up does not of itself mean that private savings have increased. They are increasing, because the cost of debt is high.

Well, here is one thing that Labour has not thought of: KiwiSaver takes away from people their choice to repay debt. If they join KiwiSaver they reduce their ability to repay their debt. People are not just some kind of automaton. They make complex financial choices across their consumption, their investment, and their debt. If many New Zealanders have a top priority now, it is to address directly the problem that Dr Cullen diagnosed—and I agree with him—and that is very high household debt. How do we get debt down? We pay it off. That is what we do. That is why this Government is putting tax cuts back into people’s pockets, and reduced subsidies for KiwiSaver will make up for some of the reduced tax take.

New Zealanders have the option to spend more. Well, to keep the economy ticking along they do need to spend something, or to pay off debt. Most assuredly, they should pay off debt. Why would the Government automatically make a better choice than everyone else about whether to pay off debt? New Zealanders now understand the risks of debt. They have dropped their consumption remarkably, and with lower interest rates they will be able to pay off debt. In fact, one of the problems that this economy will have is everyone paying off debt instead of spending money. That will hold growth down in the shorter term, and cost people their jobs, but in the longer term it is an adjustment that may well be good for the country, because people will pay off debt. The simplistic notion that putting big subsidies into KiwSaver will fix everything is wrong.

The other argument is that KiwiSaver provides a pool of capital for local businesses. How many local businesses got $1 out of a KiwiSaver provider’s investment? None, actually, and none will for some time, because a lot of providers, like a lot of Kiwis, rightly see that as somewhat risky. Let us have a more nuanced and intelligent debate about savings in this country, instead of these mindless slogans.

I think the public would be surprised to know that the Minister who has just resumed his seat was the last Minister in this country to cut the pension. He reduced the floor below which superannuation could fall; he reduced it from 65 percent of the average wage to 60 percent of the average wage. I know that there is a word we are not allowed to use in this Chamber, but I would use it happily to describe what that Minister just did. He talked about what would happen to people under a particular position that has never been a proposition put forward in this country, and that is to do away with our national superannuation scheme. New Zealand superannuation has been designed to provide across-the-board access to support at age 65, and it is protected at its percentage of the average wage. The last time that was adjusted downwards, it was done by that very Minister when he was a Minister of Finance.

I noted the statement in the explanatory note of the bill—and some Government speakers have talked about this—that the Government is committed to keeping the KiwiSaver scheme and making it an enduring and affordable scheme for members, employers, and taxpayers. But I think that is an absolute nonsense. I think that the lie to that statement in the explanatory note of the bill can be found in the reality that these changes have been designed only to pay for the promised tax cuts, which have been subsidised by some of New Zealand’s lowest income earners.

Actually, no one out there can understand why National has taken the knife to this scheme. It has been the best chance New Zealand has had for decades to foot it with other countries that have recognised the need to encourage a savings culture over many years. Those who have been committed to growing the depth in our capital markets, for example, were hugely welcoming of KiwiSaver when it was first announced. No one thought that National would take the knife to this scheme, under urgency straight after the general election, and ram through the changes without consulting anyone in our capital markets, without consulting anyone in the industry more broadly, and also particularly without the scrutiny of a select committee to consider the detail of the bill in order to take the time so that the National Party could be persuaded to soften the position that it is taking.

I say this is an ill-conceived policy, and it is not one that is supported by the business community generally. Sure, some small-business employers will be happy to see the end of the 4 percent contribution. But they are not paying the 4 percent contribution at the low end of the income level, because there has been a direct subsidy to employers in return for that. In actual fact, the smaller employers were always going to find the 4 percent manageable under the scheme. The reality is that those who run our capital markets are absolutely devastated that this change has occurred to KiwiSaver.

I listened to National candidates say that this measure has been designed to encourage more people to join KiwiSaver. After all, with over 800,000 people enrolled it is only about 150 percent more successful than Treasury originally forecast it would be. But the point has been made that nowhere has National budgeted for an increase in enrolments, because the bottom line is that it is not expecting any more enrolments.

This measure is not about encouraging low-income people to put aside 2 percent of their income and have it matched by a further 2 percent from their employers. It is not about developing a savings culture in New Zealand. It is about chipping away yet again at a Labour Government’s attempt to get New Zealanders saving. The sooner the National Government realises that savings are important to the future of our economy, the better it will be. There is, as Michael Cullen pointed out before, extreme dishonesty in the way that National has pretended to keep the Government contribution at $1,000 a year, because of course it is not $1,000 a year if people are contributing only 2 percent of their income to the scheme as lower-income earners.

I too am concerned about the situation, in terms of our trans-Tasman arrangement, over the question of portability. Why did the National Government not think to speak to the Australian Government before announcing these changes?

I would like to bring the debate on Part 4 back to where Dr Cullen was going with it. He talked about the real world, which he likes to speak about, although I am not too sure he inhabits it. It is certainly not a world he inhabits on the campaign trail—that is for sure. When we were out on the campaign trail in provincial towns like Napier, KiwiSaver was one of the key things that hard-working Kiwis wanted to ask about. They wanted to know what National’s position on it was. I visited many, many businesses, such as Reinforcing Steel and Mesh, Brebner Print, Napier Engineering and Contracting, and AllBrite, and talked to lots and lots of employees at the coalface.

First and foremost, before touching on that, I congratulate the 800,000 people who have signed up to KiwiSaver. I think that is a good start to the scheme. Congratulations and well done! But Mr English is correct. The count is out as to how successful it will be. On a number of occasions when in Opposition I asked written questions of the Minister of Finance. I wanted to know how many of the 800,000 people who are in the scheme are on $50,000 or less a year.

💬 Hon Annette King: About half.

Oh rubbish! Half are on $50,000 or less? How many are on $40,000 or less? I asked written questions of the Minister but I did not receive any replies. He could not give me any answers.

💬 Hon Annette King: You can have those answers.

Can I? There were no answers to those questions.

When I was on the campaign trail I was out in the real world, talking to hard-working Kiwis. Guys at AllBrite, for example, are on $12.50 an hour, $13.50 an hour, or $14 an hour. They are hard-working Kiwis, working 50 to 55 hours a week. It is hard out there. I asked in the canteen how many of them were in KiwiSaver. Only one or two, out of 20, put up their hand and said that, yes, they were in KiwiSaver. I asked whether it was the 4 percent contribution that had put them off. Most of them said that, yes, they cannot afford it. People on $30,000, $35,000, or $40,000 cannot afford to contribute 4 percent of their income. When I asked them whether they would join up at a 2 percent level, not everyone in the canteen said yes—that would be exaggerating—but certainly a significant number above two or three said they would be interested.

Why it is important that those guys at that end of the income scale get into KiwiSaver? Because right now they are missing out on that tax advantage. Right now they are missing out on the $1,040 that Labour is saying we are trying to cut out from under their feet. Actually, we are giving them access to it.

💬 Darien Fenton: Rubbish!

Rubbish? I say to Ms Fenton that one has to be in the scheme to get access to the credit. She should understand that. If one is not in the scheme, one does not get access to the credit. What we are doing is helping hard-working Kiwis to get into the scheme and get that tax break.

💬 Hon Annette King: What a load of rubbish!

Rubbish? People have to be in the scheme to get the credit. Unlike the Labour Government, we are out there trying to help hard-working Kiwis. On the campaign trail, it was clear that Kiwis want the opportunity to be in KiwiSaver. People on under $40,000 want to be in it, and now we are delivering that opportunity. Just 32 days after the election, we are in the House, giving those Kiwis the opportunity to get into the scheme at 2 percent—

💬 Hon Darren Hughes: So why isn’t the Government budgeting for an increase in savings?

They can voluntarily put in 4 percent of their income, I say to Mr Hughes. They can go up to 8 percent—so can the employer. They will get access to the credit. Employees around the country on low income levels will get a significant tax break. That is great. I am proud of what we are doing here today. We are delivering what we said we would. We were totally transparent throughout the election process about what we would do. Now we are delivering on our promises going forward. Thank you, Mr Chair.

It is a fact that more than 800,000 people have signed up to KiwiSaver. I have just heard my colleague from Napier talk about going to workplaces and seeing only one or two people put their hands up to say that they have joined KiwiSaver. There are 800,000 people who have put their hands up.

It was fascinating to listen to the Minister of Finance’s assumptions about those who save. He said that our superannuation scheme is generous. It is generous if people are at the top end of the scale of pay and have a life whereby they can save. But for the 73 percent of Māori in this country who get nothing out of this tax adjustment, this is a sad, sad day. It is a sad day for Māoridom. I am really sad that the Māori Party has supported this measure. I know that Hone Harawira knows better. I was pleased that, at least, he was on TV tonight talking about the next exercise, which is the 90-day stand-down period bill. Every member of KiwiSaver is worse off under National’s adjustment.

There will be trouble with portability. It will be very interesting to follow up Mr Foss’ statement that he has it organised. That is hard to believe. Who was he talking to? The bureaucrats or the Ministers? It cannot be sorted out, because there is an incompatibility between the structure and design of the two schemes. I think he was telling a short one.

People are worse off. A Māori who worked in the 1950s, the 1960s, and the 1970s could never save because he or she was on a low income. The last time Māoris ever got into saving was in the 1950s and 1960s when we had the little pink Squirrel savings books at school. I think Pākehā had them too. Children had to take their threepence, or whatever it was, along to school every Wednesday and put it in. That is a similar alignment to the design of the National Government’s KiwiSaver programme.

I go back to the statements made by the leader of the National Party. They were very, very interesting. What did he say? He said he was and continues to be supportive of what Labour was doing in relation to KiwiSaver. I am not too sure, but I wonder whether the Minister responsible for this measure is waiting for him to trip up. Mr Key said in May 2008: “We haven’t finalised our KiwiSaver programme yet, but there will be compulsory employer contributions. They’re likely to be at pretty similar levels to what is outlined in the legislation at this point.” That is what people talked to Chris Tremain about in those coffee shops during their lunch breaks. They talked about those levels. Then Mr Key said: “Well we’ve always said that we’ve got concerns about certain aspects of KiwiSaver, we’ve also said that there would be a KiwiSaver. I didn’t like the first version that Michael Cullen had, because there wasn’t really much in it, and that’s why he beefed it up in Budget 2007.” This is a sinister, manipulative, calculated move to undermine one of the best schemes in this country.

Let us talk about low-income people who have never saved. What is wrong with contributing 4 percent? Mr Tremain’s mathematics are quite interesting. He talks about the $1,040, but what he does not talk about is the fact that he has taken 50 percent of the injection into the accumulated figure. He has taken it away. He has flogged it. That will put pressure on low-income people, who will get nothing out of this. There was a culture that was delivering. People knew that in 7 to 10 years they would have a pūtea, a nest egg, that would help them to go forward. Now there is an assumption that if we stimulate business and keep it all up in the macroeconomic area, around the big-business boys, they will trigger activity down at the bottom and everybody will be right. Never mind the poor people. Never mind the low-income people. That is what Bill English has done. He has gutted KiwiSaver, without going to the people, without declaring it—

💬 Hon Bill English: We had an election.

Yes, National won the election—that is dead right. But that is the sort of arrogance that is starting to spurt out in this House. It is sheer arrogance. They are taking from the poor and giving it to the rich.

I think that when we look at this part of the Taxation (Urgent Measures and Annual Rates) Bill and the KiwiSaver aspect of it, it is important to look at the general nature of the bill and the general nature of what we are dealing with in the economy. We are dealing with an economy that is in recession. It has had 9 long years of poor economic management. It is an economy that needs new direction and leadership in a country that needs leadership.

There are young people out there who are training in New Zealand. They want to make New Zealand their home but they want to see a future in this country. They want to see a Government that will deliver a future for them so they can stay and work here. They want to see some reward and some incentive for their hard work and their direction. This bill does that. Not only does the independent earner tax credit do that but the KiwiSaver changes do that for young New Zealanders. Young New Zealanders who would not have joined KiwiSaver before because 4 percent was too high now have a chance to be part of that scheme. Young New Zealanders who want to make their future in this country now have a reason to stay here. They have a reason because we are giving them the ability to get into a savings regime that will deliver a future for them. Young New Zealanders will see a future in this country. They will believe in this Government, and they will see that we are delivering for them. We are giving substantive delivery so that they can make a constructive future in New Zealand. That is the heart of this legislation. That is the heart of what the National Party is about.

National is here to deliver for New Zealanders. We want to bring a new vision. We want to create an economy that is strong and growing. This measure will actually deliver that growing economy. It is the first step in delivering that growing economy, because it will send the right signals and give the right incentives to those young people to stay in New Zealand. If they know that they can be part of a savings regime, they will stay here and be part of the New Zealand dream that they want to buy into. We are giving them that chance—a chance the Labour Government did not give them. That is why they were leaving in droves. They did not see a direction or a future from the previous Government. But this Government is giving them that direction and future. We will not just say the scheme is a Government-knows-best scheme, as the Labour Government did. We will give them the opportunity to partake in that savings regime. It is important that we do that. It is important that we give people that chance to invest in the future of their country. That is what we are doing through this KiwiSaver regime. The reduction from 4 percent to 2 percent gives people that opportunity. It gives them the chance to have a savings scheme.

The worst thing that can happen is to have a scheme here that means the low-income people in New Zealand do not get the chance to save. If we have a scheme that is just for middle New Zealand, or for high-income earners, it leaves a whole generation of low-income New Zealanders without savings to top up their superannuation when they retire. That will be the dilemma that will face this country. The National Party does not want to see that. We do not want to see young New Zealanders on low incomes who do not have a savings regime, and cannot therefore supplement their superannuation in the future. We want to see them have their homeownership, we want to see them supplement their superannuation, and this is the opportunity to do that. This gives a chance to young New Zealanders to have a future here, to get into a savings scheme so that when they actually need that money it comes to them.

The Labour Party does not care about them. Labour members do not care about the people who do not go into the savings schemes. As long as they can be in a savings scheme, that is all they care about. They do not care about the people who do not get into a scheme. They do not care about the low-income earners who cannot give 4 percent. They never have and they never will, because that is not how they think. But the National Party will deliver a structure that will benefit all New Zealanders. It is a structure that will deliver, and it is the structure the public wanted at the election. They wanted a chance to be part of the future of this country, and that is what this measure will do. We are giving more New Zealanders the opportunity to be part of a savings scheme and to build a better future for themselves. That is what National is doing, and it is something that Labour would not do.

I want to start by referring to a statement made by the Hon Bill English in his last contribution, which stood in stark contrast to things he has been saying outside the House recently. In response to Dr Cullen’s point highlighting the importance of KiwiSaver in improving the savings of New Zealanders, Bill English said that the effect of cutting KiwiSaver was being fed back to people in tax cuts that they would use to retire debt. I thought that the National Party was saying that the tax cuts were part of the fiscal stimulus that would increase economic activity. Mr English cannot use the money for two purposes. It is either a fiscal stimulus or it is being used to retire debt. It cannot be both. That will be recorded in Hansard, and I think it ought to be remembered next time National members point to tax cuts as being part of their fiscal stimulus package.

“Going for growth” was the slogan yesterday and it is but a slogan. National wants to improve productivity in New Zealand. New Zealand workers already work very hard. We work longer hours than Australian workers. We work longer hours than most people in OECD countries. Our problem is not how hard our workers work, it is how productive the output of their labour is. Total factor productivity in New Zealand is poorer than in Australia because we have lower savings than Australia, and, in addition, so many of our important assets are owned by overseas owners because we do not save enough money to own our own assets and we are reliant on overseas capital to fund our assets. KiwiSaver was the key to fixing that. It made us more like Australia, where Australians have a 9 percent contribution to their savings scheme, all paid by the employer. The “4 plus 4”—4 percent from the employee and 4 percent from the employer—under KiwiSaver, plus a $1,040 tax credit to the employee was pretty similar. New Zealanders would have started to accrue savings so that we could own more of our own country, so that we could invest in increasingly sophisticated plant and equipment so as to improve total factor productivity to add to the very hard work that is already done by New Zealand workers.

But, oh no, that sensible prescription for economic growth has been ruined by the National Party as a result of turning it from a “4 plus 4 plus $1,040” scheme into a “2 plus 2” scheme. National members say that the scheme will be more accessible to people, yet they have admitted that their projections are that no more people will enrol in the scheme. So the same number of people will be in the scheme but they will be saving less. How does that improve the wealth of New Zealand? How does it improve the productivity of New Zealand? The answer is that it does not. It does exactly the opposite.

💬 Hon Darren Hughes: No go for growth!

That is right, there is no go for growth. As a result of this, 800,000 New Zealanders—the 800,000 people who are already in the scheme—will be worse off. But even more significant is the difference between us and Australia. For a long time the National Party has been rattling on about people moving to Australia for higher incomes. Australians have higher incomes because they have higher total factor productivity and they own more of their own country. If we have less sophisticated plant because we cannot afford as much, because we have a higher cost of capital in New Zealand, or because we do not save enough, productivity in New Zealand will never get towards the productivity increases seen in Australia and the income gap will continue to grow. That gap stopped growing under the Labour Government. We had it halted, but, just watch, it will grow again.

It was strange coming into the Chamber tonight and hearing Michael Cullen look for Roger Douglas’ endorsement of what he was saying. I do not think I have seen that in 20 years. I thought that I must have walked into some sort of time warp, because Michael Cullen was citing the approval of Roger Douglas for what he was saying.

The other thing I was concerned about was that I wondered whether Labour members actually realise why they lost the election. It was because they stopped listening to New Zealanders. One of the things they stopped listening to New Zealanders about was KiwiSaver. On the subject of KiwiSaver, up and down this country stacks and stacks of hard-working New Zealanders were saying to politicians who would listen that they could not afford and did not want to put 4 percent of their income into the scheme. Up and down the country people were saying that to all the politicians who would listen. Unfortunately for the country the only ones who were not listening are the ones who are not listening now, and that is the Labour members. The reality is that a lot of people are saying: “Give us a 2 percent scheme. We will participate and join in a 2 percent scheme.”

💬 Hon Darren Hughes: Who is saying that?

The people who were talking to the politicians who were listening before the election were saying that. Labour members were not listening and that is why they lost. There is still an excellent chance for people to contribute to their superannuation. The $1,000 has improved the whole scheme. As Mary Holm said today, it is a very good scheme now for both employers and employees.

The more important thing, which the Labour Party does not want to think about, is the long-term economic growth in this country. That is the bit it does not want to think about. It successfully drove long-run productivity growth in this country right down, over the 9 years it was in Government. Labour successfully drove down our economic growth projections, over the time it was in Government, and it does not know why. It simply does not know why. The reason it happened was that, fundamentally, Labour tried to control too much of people’s incomes. Whatever way Labour did it, it put taxes up, it spent people’s money, and it refused to give back to people more of their own money so that people had their own incentives to control their own lives, to work hard, and to get ahead under their own steam. That was the problem, and that is, ultimately, why the people of Auckland, in particular, voted the Labour Party out. Labour was imposing high tax rates on ordinary Aucklanders and people up and down the country, and 82,000 people voted with their feet and left this country because Labour would not listen and realise that people wanted the right to spend more of their own money, to make their own decisions on whether they would save or consume. “Nanny Labour” was not the deal for controlling their income and the way that they spent it.

There is only one solution to the economic challenges that we face in this country, and that is to grow a whole lot faster. The only way we will grow a whole lot faster is not by sitting here in Wellington and arguing over which percentage of people’s incomes we will control; it is by reducing the amount we control, and giving people the opportunity to work and get ahead under their own steam. That is the only way we will do it, and that is why we have made the choices that we have made about KiwiSaver and the research and development tax credit—to give New Zealanders a chance to have more of their own money.

They are not the easy calls. They are the calls that were never made by the New Zealand Labour Party while it was in Government, and that is why the growth rate was so low when it left, and that is why the long-run productivity growth was so low. Frankly, we could not afford to have those members any longer. The people of New Zealand knew that. They voted for change because they wanted a crowd that would listen to them and understand.

This has been an extremely insightful discussion—insightful because of the complete claptrap that the Government is reciting, having dredged the barrel for anything resembling an economic argument. David “Cliché” Bennett fell back on the last press release that he read, which must have been a pre-election one, and then his lookalike twin brother, the Parnell yuppy, rehearsed his Crosby/Textor lines. This, apparently, is the man who is the king of listening: whatever the punters want, give it to them. What they did not want was their superannuation contributions, their savings future, capped at 2 percent. Nobody asked the National Government to cap employer contributions, nobody asked it to take away the $40 overhead subsidy, nobody asked it to take away the superannuation tax credit, and nobody asked it to take $3.5 billion out of the best savings scheme New Zealand has ever had. The ghost of Muldoon is stalking the Government benches: “Find a good savings scheme and scrap it—heh, heh, heh!”.

To get back to economics for a moment, we have witnessed tonight David Bennett saying that the whole reason he is in this House is to care for low-income New Zealanders.

💬 Hon Darren Hughes: And a brighter future.

And a brighter future. It almost brought tears to my eyes, but my enthusiasm for his religious conversion was tempered by the fact that the Minister of Finance not an hour ago had to withdraw, through embarrassment—his butt having been saved by Hone Harawira—a financial veto relating to a $750 million kick in the guts for low-income Kiwis just before Christmas. So when David Bennett goes home and rereads his clichés, he should think about how what Mr English has done affects the people he purports to serve.

But, getting back to economics for just a second, I wonder whether anyone on the Government benches understands the savings gap. I hate to do Economics 101 on my first week in this job, but it seemed to me that the fact that Kiwis were spending $1.20 for every $1 they earned, because they thought they were becoming wealthy because their house values were going up—that is called dissaving—was offset by the surpluses that our Government was running. If members opposite do not run Government surpluses, and are now spending us into debt, they are borrowing to pay for these tax cuts. If Kiwis are not saving, do members know what happens? Our current account blows out even further. Our current account deficit is the difference between what Kiwis are borrowing overseas, and what we are earning through exports, and what the Government is saving on Kiwis’ behalf. So the consequences of this ill-fated move go beyond taking away ordinary Kiwis’ nest eggs. They gut the Government saving on Kiwis’ behalf, and KiwiSaver was the one tool that was fixing that long-run problem. And now, by National members’ own admission, they have killed it, because their own books make no provision for new enrolments, and they are too scared—where is the point of order for my saying they lack bottle—to put the future debt track out there so that all New Zealanders know how far in the shtook this is going to get us.

💬 Hon Steven Joyce: The debt track’s yours.

Oh no, sir! When we were elected we inherited a gross debt to GDP ratio of—wait for it—35 percent. We got it down by half. Can Mr Bakshi do those sums while he is still here? That is half. My great fear for New Zealanders is that through the ill-fated efforts of the new Government, the debt track will go back to the 35 percent that we inherited in 1999.

💬 Craig Foss: Decade of deficits.

It was not a decade of missed opportunities, because we did a hell of a lot to cut the ratio in half, but members opposite have squandered in a week what it took New Zealanders 10 years to build up. And why? The media, the press gallery, and the public know that the real reasons for this bill are not economic, and they have nothing to do, I say to Mr Bennett, with helping low-income New Zealanders, because those members have just kicked them in the guts by three-quarters of a billion dollars at Christmas. This bill has everything to do with rewarding constituencies. That is why the lion’s share of the tax cuts go to the best-off—they happen to be the voters who are the most faithful to the National Party—and that is why those members have penalised real businesses and rewarded the financial sector’s soft-shoe guys. The games that have been played to cover this up, the half-truths that have been told, and the rubbish economics that have been paraded would make one wince.

Some of those members cannot tell the difference, but I fear for New Zealand, because I know that the Minister of Finance is better than that. He can tell the difference, but he did it anyway. He knew all along that there was a billion-dollar kick in the guts in this bill, but he did not tell us until Dr Michael Cullen forced him to by putting an amendment that asked him to insure low-income New Zealanders against the effects of his policy. And then he said: “Oh, you got me. OK, I will veto it. Here is the financial veto.” Stupidly, he made it public; stupidly, he signed it; and, stupidly, he gave us the number. It is now on the Internet—$750 million, with the Minister’s signature beside it. You are too late—sorry, not you, Mr Chairman. The Minister of Finance then withdrew it, throwing National’s new coalition partner deeper into mana-depressing territory, because its mana was used to bail out your lack of honour. You did not tell New Zealanders what was coming. You surprised them—

💬 Hon Bill English: I raise a point of order, Mr Chairperson. The Chair is obliged to enforce the conventions of the House. This member has been using the term “you” incorrectly, as have other members of the Opposition yesterday and today. I suggest that you let the Opposition members know that they are not to bring you regularly, and generally in a derogatory way, into the debate.

The CHAIRPERSON (Lindsay Tisch): I thank the member.

Mr Chairman, I certainly withdraw and apologise for drawing you into the debate. There was no intention to do that, and it was quite inadvertent.

The Minister of Finance is the one who has trashed the mana of the Māori Party. Our team has tonight provided to New Zealanders the fact that something like 71 percent of all Māori earn incomes of less than $40,000. That means some 71 percent of Māori people, if they have children, are in the category of people who are net losers from this bill. They are part of the crew that is paying the $750 million bill.

💬 Chris Tremain: I raise a point of order, Mr Chairperson. The member is an experienced former senior Minister. We are talking to Part 4 of this bill, and he has gone back to Part 3. I ask you to ask him to talk to Part 4, which has the provisions relating to KiwiSaver.

Speaking to the point of order, Mr Chairperson, I respectfully submit that earlier there was a very similar point of order from Mr Foss on exactly the same point. Because of the interdependencies between the spending provisions of this bill and the funding provisions, your alternate Chairman ruled that it was in order to draw those links.

The CHAIRPERSON (Lindsay Tisch): Continue.

Thank you, Mr Chairman. New Zealand has a historical problem of a savings gap. It was held off by the fact that the Government was saving on New Zealanders’ behalf. The structural solution to that problem was KiwiSaver. It has worked a dream. It has exceeded all expectations. There is no justification for the Minister of Finance to even raise the suggestion that it has not increased net saving, because 827,000 New Zealanders who were not saving are now saving massively through this scheme. OK, there may be some diversion, but the chances of it being 100 percent are nil—absolutely nil. That is a red herring, one of many floated by the Government tonight, because it knows that it is on very shaky ground here. It knows there is no economic justification. There is no logical linkage between undermining one’s savings programme and one’s incentives for innovation in order to fund a short-run consumption increase.

💬 Hon Ruth Dyson: So why would they do it?

Well, the politics are plain. National does it because it rewards constituencies that have been faithful to it. Upper-income earners and the financial sector are the beneficiaries, and they just happen to be the main donors to the National Party. Do we see any potential connection here? After years of trying to get National elected, they have finally got that, and on National’s first business day it has put the interests of its core constituencies ahead of the interests of the many New Zealanders who are going to pay the bill.

The strategic mistake that National has made is that it is just a bit too obvious. If National members had waited until some time next year to introduce this measure, perhaps they would have snuck it through with less public concern—but actually I think we would have called them on it. The fact that they are trying to ram it through without select committee consideration, with an enormous lack of mana—in fact, lowering the mana of this whole House and of every Minister of Finance who has gone before Mr English—is what is truly sad about this legislation. It is bad economics; it is bad, I say to Mr Bennett, for many low-income New Zealanders, because many of them will lose; and it is bad for Māori.

I move that the motion be now put.

It is a pleasure to make my first contribution on this bill. I would call this a very disastrous bill, particularly Part 4. This is a bill that gives big tax cuts to people on high incomes but increases in taxes to people on low incomes. Part 4, which I will endeavour to address—unlike lots of members of the Government—guts KiwiSaver by halving employer KiwiSaver contributions. It caps workers’ contributions at 2 percent, rather than the choice that workers had before of 2 percent or 4 percent under the Labour-led Government. Of course, employer tax credits are abolished. I want to explain to Government members, who have tried to say this is about helping low-paid workers, and who have terribly misrepresented the union movement’s position on the 2 percent contribution, that what the unions were advocating was an option of 2 percent as a minimum. No one supported removing the 4 percent minimum. What happens under Part 4 of this bill is that employers will not be contributing 4 percent. They will be contributing 2 percent.

💬 Hon Member: As a maximum.

That is right. Over a lifetime, that adds up to hundreds of thousands of dollars for many low-income and, indeed, many higher-income workers. That is the objection that members on this side of the Chamber have to the changes to KiwiSaver. There are many others, but that is the main objection I want to point out.

The problem with this is that many unions and employers have already gone in and made agreements around the previous KiwiSaver scheme. Many have agreed to 2 percent plus 2 percent, with an agreement that in future it will go to a 4 percent contribution. The problem with this bill is that in the future it will be really hard to persuade employers to contribute more than 2 percent. It will mean that some employers are going to put pressure on workers to fund the employer contribution out of a wage increase. Workers should be able to choose a 4 percent supported option, and already hundreds of thousands have. The implementation of the changes under this bill will mean that these workers will be significantly disadvantaged.

Let us talk again about low-income workers, the workers who are going to be paying more under National’s tax plans. These are the workers that I am particularly concerned about; for example, the caregiver in aged care who earns $12.50 an hour, who is going to pay more in tax in 2010 and 2011 under National. Now, those workers’ chance of having a savings scheme that will help them when they are older is being gutted.

I do not accept the argument that low-paid workers have not signed up for KiwiSaver. In fact, there has been specific research done on it by the Inland Revenue Department. That research is on the website, if members choose to look at it, and it shows that a large number of low-paid workers have signed up to KiwiSaver. Do members know why? It is the only chance they have ever had to have a superannuation fund where the employer is making a contribution. I know that thousands of workers have tried for years and years to negotiate an employer contribution in their bargaining. Those workers who do not have any power and who struggle to get a decent wage increase year in and year out have suddenly, thanks to the Labour-led Government, had an employer contribution that was going to see them enter their old age with a decent pension on top of the State pension. As I have said, those workers stand to lose hundreds of thousands of dollars over a lifetime of saving.

To add insult to injury, we now find out they are going to have to pay the fee of $40. How mean, how miserable is that! It has taken years and years to get this scheme. When was the last one? Was it 1975, the one that Muldoon abolished?

💬 Hon David Cunliffe: About then.

They have waited all of those years to get a compulsory workplace savings scheme, and here it is being gutted by the National Party in its first week in Government. It is absolutely shameful.

The other thing that is very concerning is National’s intention to allow employers to take KiwiSaver contributions out of wage rises. That will result in employers putting more pressure on workers to forgo wage increases in order to cover the employer contribution.

I move, That the question be now put.

The Taxation (Urgent Measures and Annual Rates) Bill is another example of a bill the Opposition has received just as the debate has started. If there is not going to be select committee consideration of these bills, and if the Opposition is not going to get the opportunity to read them before the debate starts, it is important that we get the chance during the Committee stage to ask questions of members and of the Minister in the chair, Bill English, in particular. If we cannot do that, it will mean these important bills go right through the legislative procedure with no proper scrutiny—because we can guarantee the Government caucus will not have asked any questions when Cabinet took it to the meeting. There will have been no proper chance for transparency on this legislation. We need to use this opportunity to do that.

I have some questions to ask the Minister of Finance when he has finished sending text messages and smiling about how smart he is. My first question to him asks how many extra people will join KiwiSaver because of this change in Part 4. I am asking the Minister of Finance how many extra people will join KiwiSaver because of the changes he is introducing in Part 4. Can he give me a number?

💬 Chris Tremain: How are you going to know that?

Chris Tremain asks how we are going to know that. Every single speech that National Party members have given tonight, including the speech made by Chris Tremain, has said that halving KiwiSaver contributions will open the floodgates to low-income workers wanting to join KiwiSaver. When I ask Government members whether this will lead to 10,000 or 20,000 extra people joining a year, they laugh and say nothing about it. They have no answer. Chris Tremain used the basis of his speech to tell us that this change in Part 4 will make sure that lots of other people will be able to join, but those members will not answer the question.

💬 Hon Bill English: Ask the question again.

I have already asked the Minister the question. The Minister knows what it is.

💬 Hon Bill English: How many people voted against you in the Ōtaki seat?

Not many. I tell the member that, yes, I was defeated. Oh yes; “Mr Comedy Show” over there thinks he is David Letterman, but that is about half an hour away. The only joke Bill English knows about defeats is the 2002 one, because out of every member sitting in here, there is only one man who had the worst defeat in 100 years, and it is not me; it is Bill English.

💬 Hon Bill English: I’m back.

He says he is back. He thinks he is the leader of the Government. He thinks he is the Prime Minister of New Zealand, but we know he is not. He is the also-ran, and when I asked him a serious question about people joining KiwiSaver, he had nothing proper to say, at all.

The KiwiSaver scheme is the one that National members said was nothing more than a glorified Christmas club. They voted against it in droves after we introduced it. John Key said that the only person it would be good for was his pool boy, which I thought was an extraordinary revelation. Those members said the scheme was a glorified Christmas club and not worth anything whatsoever. Then New Zealanders joined, and they joined not just in the numbers we thought they would—and we were an optimistic Government, a sunshine Government; we looked at things and said this would work—but in numbers four times that amount. Tonight the number of New Zealanders who have joined the KiwiSaver scheme stands at 827,000.

We are told that if the benefits of KiwiSaver are reduced, if the entitlements people get from KiwiSaver are halved, as in Part 4, then, somehow, more people will join. National has no answer, except to say that halving the contribution will make more people join—and Annette King said that if it is zero plus zero, then even more people will! If four plus four is so terrible that two plus two is better, then maybe zero plus zero would be better, or, even better, maybe 2 percent from the worker and 4 percent from the boss. But National members did not want to go for that one, either. Why is National not giving a choice in Part 4? I thought National was the party of choice. It could have said it would introduce a third level into KiwiSaver, which could be either “2 plus 2”, “4 plus 4”, or “8 plus 4”. National could have put more choice into KiwiSaver, but, instead, it is shutting the door on it.

This whole bill is a disaster. We are opposed to the whole thing. It is amazing that some of the parties in Parliament are voting for it. It is amazing that the Māori Party is voting to put taxes up for some people. It is amazing that the ACT Party is voting for it. Roger Douglas wrote books about the fact that the scheme he helped with back in the 1970s was abolished. He said it was one of the biggest missed opportunities, yet, on his first week back in Parliament, he is voting out another scheme that is for savings, for the economy, and for working families across our country. So it is amazing to see the number of parties that are lining up to vote against it. What they are doing is a mistake.

Out of all the parts in the bill, this part is the worst. The reason is that this part will have an effect on New Zealand for the worst in 20 years’ time. This part of the bill changes the choices people can make in their working lives, and in 20, 30, or 40 years’ time they will not be able to go back and change those choices. People cannot go back and save more once their working lives are over. Tax rates go up and down, of course, with political debate. We know that. That will happen throughout political history. But those members opposite are shutting the door on a chance for working people to build up their savings over their working lives

I move, That the question be now put.

I raise a point of order, Mr Chairperson. The closure motion, of course, is in your purview, and yours alone. I make the point—

The CHAIRPERSON (Lindsay Tisch): It is. I refer to—

My colleague Moana Mackey has been calling all evening trying to get a call.

The CHAIRPERSON (Lindsay Tisch): I refer to Speakers’ ruling 60/7.