KiwiSaver Budget Measures Bill

I move, That the KiwiSaver Budget Measures Bill be now read a first time. The bill proposes to remove the $1,000 KiwiSaver kick-start contribution paid to all new enrolees in the KiwiSaver scheme. The KiwiSaver scheme has been a very successful scheme, attracting new enrolees into the scheme. The scheme now boasts over 2.5 million members, but this has come at a cost to the Government and to the taxpayer, because for every one of those KiwiSaver accounts, in addition to the funding of the member tax credit, the Government has contributed $1,000 as an inducement to enrol.

KiwiSaver was launched over 7 years ago in different circumstances. The original objective was to assist individuals who are not in a position to enjoy standards of living in retirement similar to those they enjoyed pre-retirement. However, the scheme subsidies had not been very well targeted at those individuals, and many have reallocated other savings. Today, in our post - financial crisis world, Kiwis are paying down household debt and successfully saving, with almost $30 billion in KiwiSaver. The incentive payment to join KiwiSaver is no longer necessary. Since KiwiSaver’s launch the Government has paid in over $6 billion to KiwiSaver members’ accounts, much of that through the kick-start incentive. The scheme is an expensive way of promoting savings among the target group.

A set of evaluation reports based on evidence progressively drawn together over the first 7 years of KiwiSaver’s life has just been published by the Inland Revenue Department. It indicates that although KiwiSaver has achieved a number of its goals, it is continuing to have a relatively small effect in promoting additional savings, and a considerable fraction of subsidies go to those outside the likely target group. A priority for the Government is cutting back on low-value spending and restoring its balance sheet. It is estimated that removing the kick-start will save the Government over $500 million over the next 4 years. That is money that could more usefully be used elsewhere. Other features such as the annual member tax credit and the minimum employer contribution rate of 3 percent will continue.

The kick-start is currently paid following a 3-month wait period. The effect of this bill is to ensure that the 3-month wait period may start before 2 p.m. on 21 May 2015 but not after. In other words, if a new enrolee has begun the 3-month wait period just prior to the announcement, they will still be eligible for the incentive payment on or after 21 August 2015, as long as they meet all other relevant criteria. A person who becomes a KiwiSaver member after that date may not be eligible.

The Government remains committed to KiwiSaver but needs to ensure that subsidies provide a prudent use of taxpayer funds. The proposed measures in this bill will help achieve that. I now commend this bill to the House.

National has hit the panic button in its seventh Budget. It has failed to reach surplus, and it has failed to outline a plan. It is stealing from future generations, through this measure, by taking the $1,000 kick-start programme out of action. This is a Government that is going to ensure Kiwis miss out, that is going to ensure kids miss out.

The Government has said that it will increase benefits in this Budget, but it is giving with one hand and taking away with another. It is helping to lift the most vulnerable people—sure—and it should get some credit for that, but it should not have to come at the cost of taking down those who are just a few rungs higher on the ladder.

This is a Government that has broken promises before—we know that. We have heard about the GST promise that John Key made—that there would be no GST increases. Next thing, it is up to 15 percent. We have heard about the 40 percent economic growth target. He said that we want to grow the economy so that exports are 40 percent of it. Well, they are down to 30 percent now, and they are going backwards. We have heard about the promise to increase wages by $7,000 by the end of next year for ordinary workers. Well, we know that that has just been kicked out in this Budget by 3 years, to 2019. We also know—biggest of all—that this Government promised a surplus, which it has failed again to deliver. The one that it is projecting for next year is wafer-thin. It is less than a rounding error.

This is a Government that has produced no surpluses in 7 years, after a Labour Government that produced nine surpluses in 9 years. This is a Government that is failing. This is a Government that has no vision and no plan for the future. The Government has broken its promises to grow jobs, to lift wages, and to not impose any new taxes. Cutting KiwiSaver will reduce savings at the very time when we need to increase them. We need long-term thinking, not short-term thinking. I am sure that Mr Bishop will try to argue that cutting the contributions to those who are starting to save for the first time is somehow a long-term plan. But the people at home will not be convinced of that; I do not believe that they will. They would not have signed up to it in the first place if they thought it was a bad idea. We know that already 2.5 million Kiwis have signed up to Labour’s KiwiSaver programme.

The Government cut the member contributions last time round. This Government halved the employer contributions in the last Budget in 2011, and we know that it has a plan to cut it back further. It is weighing up the options. How do we cut it further? In Australia they introduced a KiwiSaver-like scheme, shortly after the Labour Government introduced one here, in the 1970s, and they have kept that scheme. Australia now has $1.3 trillion in retirement savings. This KiwiSaver scheme is growing. It is a proud scheme, but it is only in its infancy, and the Government wants to cut it again. The Government has cut the superannuation fund contributions, and now it is cutting the KiwiSaver kick-start. It is a Government that is out of ideas, it is scrimping and saving, and it is costing middle-income Kiwis as it tries to prove that it can get to a surplus eventually, and it is failing. It is failing to do even that—even to achieve its own biggest election promise.

Half a million Kiwis—that is 500,000 Kiwis—will be deprived of the $1,000 KiwiSaver kick-start payment over the next 4 years. That is a shocking statistic. KiwiSaver is growing in popularity, and the number of people opting out is reducing over time. Many members of the House, I am sure, will have studied the Inland Revenue Department’s evaluation of KiwiSaver, its final summary report from 2007 to 2014. The department examined KiwiSaver, and its estimate in the 2010 survey was that additionality—i.e., extra savings on top of what people would ordinarily have saved—was 36 percent. Then in 2013 the department said that had not significantly changed.

💬 Hon Todd McClay: Not true.

It is a fact. The Minister shakes his head. It is his department. He shakes his head. He is out of touch.

This is clear—and the scheme is working. I know plenty of people who have signed up for the scheme because of the $1,000 kick-start. In fact, if the Government really believed that it had no effect it would not make this legislation retrospective. There is silence on the other side of the House. The Government would not make this legislation retrospective if it did not believe it worked. The Government has no answer to that. It cannot have it both ways. If the Government really believed it did not work, it would not make the legislation retrospective; it would allow people to sign up for it while the bill was being passed through the House. But Government members know in their heart of hearts that that is not true. That incentive is there, and it does encourage people to save, and it does encourage people to join the scheme.

This cut is stealing from kids’ pockets. It is robbing the savings of future generations. It is a short-sighted attempt to somehow plug the $1 billion hole in the Budget that has emerged in the last year. This is a Government with $88 billion in debt—let us not forget. The Government pays about $10 million in interest a day—$10 million in interest a day. This is a Government that is failing to manage the economy. It has already halved the member tax credit, in Budget 2011. It is cutting savings further. This is the kind of economic mismanagement that has seen the Government run up more debt than Muldoon did. Those Kiwis who will miss out will be at home, watching this. They will hear that they have missed out, and they will be sorry—certainly the ones who voted for this Government will be sorry. This is not something that was talked about. These kinds of cuts were not talked about in the last election—taking away half a million Kiwis’ access to the $1,000 kick-start grant that comes with the KiwiSaver scheme.

This is a country that has struggled with capital debt. We know that is a problem for this country—having enough savings as a pool for investors to call upon to grow new businesses, and that pool of savings is essential if we wish to diversify the economy, and if we do not wish to be for ever dependent on dairy prices and on commodity price cycles. The dairy industry does what it can, and it contributes to our economy in good measure, but we actually need a number of other industries. We need clean industries. We need growing industries. We need innovative industries. Those industries need to be able to access savings so that they can grow. We need an economy that is diversified and that is sustainable so that New Zealanders can enjoy in the future the prosperity that they enjoy now.

Cutting savings is not a vision. Yet that is the vision that this Government has come up with. It has failed the test it has set itself to achieve surplus, and now it is trying to plug the hole by cutting savings. That will not do. It is retrospective and it is unfair. Good on those Kiwis who have already accessed it, but think about the ones who have not. I say to those people at home who are watching this late at night—as we pass this legislation under urgency because the Government knows that if it did not pass it retrospectively and quickly there would be outrage—if your colleagues join KiwiSaver on Wednesday and you at home send in the form today, they can join the scheme and get a thousand bucks but you cannot. That is the change that this Government is bringing in. It has chopped the member tax credit, and it is now chopping the $1,000 kick-start payment.

This is a Government that is out of ideas and that is trying to fill a hole. It will claim that it will not have an effect on enrolment rates. If it really believes that, it would not make the changes retrospective. There is a Supplementary Order Paper that suggests that the date be pushed out, and I challenge the Minister of Revenue, if he really believes that it will not have an effect, to adopt that Supplementary Order Paper and to let people have that $1,000 if they want to sign up in the next wee while, but I am pretty sure that he will not. He knows in his heart of hearts that that 36 percent figure from the Inland Revenue Department—that “additionality”, the additional savings that this scheme has enabled—is a number that is real.

I will read from the Inland Revenue Department report here, where it says that using a flow measure of savings, the estimated level of “additionality” rather than substituting from other forms of saving was 36 percent. The main reason that people join the scheme is that it is “an easy way to save”—well, that is not rocket science. “The second reason was the contributions from the Crown and their employer.” These are incentives, and if they believe in economics they will believe that incentives matter. “There is likely to be an interaction [effect] between these two reasons with the contributions also making it easy to save more.”

Those are the key findings from a report that this Government is ignoring. Instead, it is ensuring that half a million Kiwis will be deprived of the $1,000 KiwiSaver kick-start payment over the next 4 years, and this is a disgrace. Labour’s policy is to restart this programme. We would not do such a thing; we would not be so mean to the kids of the future. This retrospective legislation is robbing future savings in a short-sighted attempt to pay for the $1 billion Budget black hole that the Government has dug.

What a great week. This Budget has consigned the Labour Party to the irrelevancy that it deserves. This is a Budget for all New Zealanders, which shows a Government that is committed to New Zealanders in the most difficult of times. It is the first time in 43 years that core benefit rates have been increased. The National Government has delivered for all New Zealanders at the most difficult of times, and this KiwiSaver Budget Measures Bill is part of that.

Look at the comparison with Australia’s Budget the week before. Their deficit is $41.1 billion; our deficit is $684 million. GDP growth in Australia is under 3 percent; in New Zealand it is over 3 percent. As for net migration, for the first time, New Zealanders are coming home and staying home. The unemployment rate is over 6 percent in Australia, and under 6 percent here. New Zealand is doing well and it is doing well because we are making good decisions, like this bill does, which deliver for all New Zealanders in the right way. Thank you.

We have got a Minister of Finance who cannot merely not balance a Budget—seven deficit Budgets in a row—but he cannot address the long-term challenges of the economy. The greatest failure of the Minister of Finance and his offsider Steven Joyce is that after 7 years in Government the fundamental indicators of this economy are still going backwards. We have had reports from the likes of Paul Glass at Devon Funds Management in the New Zealand Herald recently, showing how real, per capita GDP, when you strip out Christchurch, has been increasing at less than 1 percent per annum. So when you take out the effect of Christchurch and the effect of the huge, rapid increase in population caused by immigration, real growth is less than 1 percent per annum.

The export target is trashed. The export target was to increase exports from 30 percent to 40 percent of GDP. This year exports have been 27.9 percent of GDP—

💬 Dr David Clark: How much?

—27.9 percent—and next year they are predicted to be 26.4 percent of GDP, and they do not get over 27 percent of GDP until the end of the forecast period. So much for the target of growing exports as a percentage of the economy!

In respect of New Zealand’s net liabilities to the rest of the world as a percentage of the economy, as a consequence, they keep growing. New Zealand’s net international liabilities are currently about 69 percent of GDP. They grow every year from here on to 75 percent of GDP. When you have got long-term problems like that, you do not reduce your savings because the savings are the key to investment.

Let us look at a bit of history here. When KiwiSaver was first planned, John Key said this—this is his release on 24 August 2006—and this is confirmation that National was right all along: “The scheme’s initial design lacked the incentives needed for people to change their savings behaviour.” Well, we have heard from Dr Clark about how the scheme has increased savings, but now we have got National reducing the incentives that John Key said then were inadequate.

What has this Government done so far? First off, on 9 December 2008 this Government decreased the minimum contribution rate for members from 4 percent to 2 percent. John Key had already criticised it for being too low at 2 percent, as it happens. Then on 1 April 2009 the National Government cut the member fee subsidy of $40 per annum. Then the third thing it did was to change the compulsory employer contribution and capped that at 2 percent as well. So it cut the employer contribution. Next, it took away the tax credit that applied to the employer contribution. That was cut No. 4. The fifth thing it did was to reduce the member tax credit. It halved it from $1,042 to $520 per annum. Then the sixth thing it did was to change the taxation treatment of the employer contribution, to the detriment of savers. The seventh thing it did, having cut the contribution rate, was to increase it from 2 percent to 3 percent, so it reversed its reversal.

Now we have got it doing away with the $1,000 kick-start contribution. How does this work in practice? The Government says that this is going to save $500 million, and it will. It is removing $500 million of incentives for the scheme. What is the effect of this? I will give you a real example of this. This is the example of my daughter. She is in a middle-class family, she is not hard-up, she is a 15-year-old, and she has got a job working in a cafe as a waitress. She gets a $1,000 kick-start payment because she signed up recently, and she adds to her savings by about $2 or $3 a week, and she follows that. If you are a young person, and you are starting at $2 or $3 a week, and after the first few months you have got less than 20 bucks, it seems like nothing—it seems like nothing. If you are a part-time worker, as most young people are when they first enter the workforce, and you are saying that you want to encourage them to get a savings habit for a lifetime, and they are saving at $2 or $3 per week, it really seems like nothing for the first few years. But because of the incentives in the scheme currently, she sees a balance of $1,002, and then $1,004, and then $1,006, and she feels really successful and that she is embarking on a savings pattern that will see her right for life. And it will.

Everyone else who is in that situation will be so much better off when they get to the age of retirement if they have started to save. But now a lot of those kids, instead of having $1,000, which will grow by a small amount every month or every week that they get paid, are going to have only that small amount. This is stealing from the next generation in order to get to a make-believe surplus. That is what this is—[Interruption] It is. This is in the face of dropping exports, rising international debt, and the failure of the Government to make its own targets.

💬 Hon Todd McClay: Why wasn’t the speech yesterday as good as this one?

It was better than this. It was better than this.

The record of the Government in every area of superannuation, and the record of the Government in savings and superannuation, is worse on every front. Do you know that it canned contributions to the New Zealand Superannuation Fund—the New Zealand Superannuation Fund, which Bill English, when it was set up, said was a dog. Those are the exact words he used, only to be embarrassed last year at the 10th anniversary when he turned up and celebrated it as being one of the best sovereign wealth funds in the country—in the world, in the world. It is the only one in the country of any significance, but it is one of the best ones in the world.

Do you know what happened in the meantime? In the meantime, the Government ceased contributions in 2010 at a time when the world’s interest rates were at the lowest that they had been in many generations. It said: “We are not going to incur that small amount of Crown debt at historically low interest rates to invest.” Well, what has happened to the superannuation fund since? Well, you know, the Guardians of New Zealand Superannuation estimate it—this is not controversial—and show their rates of return every year, and they show how much would be in the fund if the Government had made these contributions. The capital contribution is $16.3 billion worse—New Zealand is $16.3 billion worse off—than if it had contributed to the scheme as it was meant to do. On every front, the Government gets it wrong.

Then members on the Government side pretend that they are good managers of the economy. Why did they get cleaned out in Northland? Why did they get cleaned out in Northland? It is because the people know that that is just rubbish. That is rubbish. Exports as a percentage of GDP are down. They have got no long-term plan.

A good Government builds a country. Everywhere you look National cannot build a country. It cannot build a country metaphorically; nor can it build a country physically. It does not know how to build houses, and it does not know how to build an economy. National tears away at the foundations of future growth. National did eventually get to the point—and the Minister was good enough to say this in his introduction—of saying that KiwiSaver is a good scheme that it still believes in; just not enough to keep it working properly.

This sort of short-termism is awful: no solutions, despite the fact that National’s own Budget documents released just this week show exports dropping this year and next, never getting much over 27 percent, never hitting 28 percent of GDP to the end of the forecast period. Look at those members. They are quiet now. They know that they have not met their target of raising exports to 40 percent. It is a failing Government: no ideas on exports—no ideas on exports. Debt is rising. New Zealand has got high international liabilities, and yet those keep rising too because we do not cover the costs of our imports and our interest bill and our outgoings for dividends through the value of our exports and our overseas earnings. As long as we have got a Government that will not invest in production, that trend will continue.

Two people in the Labour Party have been very prominent in the debate so far on the Budget legislation—David Parker and David Cunliffe—and we wonder why that is. The Leader of the Opposition gave the worst Budget reply speech this House has seen for many a year, and Cunliffe and Parker are doing the numbers, and we know on this side of the House that the Labour Party is in disarray tonight because of the good Budget being promoted by this Government. I was meant to be at a Shihad concert tonight in Auckland. Sadly, I am in the Chamber but I do have the call, and it is good to see you again, Mr Deputy Speaker.

The Labour Party wants to say “gimme, gimme” to the $1,000 kick-start for KiwiSaver, but, actually, on this side of the House we think it is a “nice to have”. When 2.5 million have signed up for KiwiSaver already, in today’s economic climate it is a “nice to have” but it is not necessary. I will tell you what is necessary. What is necessary is to raise benefits for the first time in 43 years. Was it not interesting during the debate on the Budget, when John Key announced that it was a National Government that was raising benefits for the poorest and the most hard up in our society? The silence and the looks on the faces of members on the Opposition benches were priceless, because it is only the National Government that is delivering for those most in need in our society.

💬 Dr David Clark: I raise a point of order, Mr Speaker. I am sorry to interrupt the member. I appreciate that it has been a somewhat wide-ranging debate so far, but in my contribution, when I talked about those benefits I linked them to the cuts in this bill. Is that what the member is doing, or is he really off topic?

Speaking to the point of order, I point out that it has been a very wide-ranging debate, and Mr Parker’s speech was far more wide ranging than my speech.

💬 Mr DEPUTY SPEAKER: I do not need any more advice on this. It is robust, it is late at night; some people will think we are clowns for still being here. In actual fact, we are having a bit of fun. It has been wide ranging. The member himself uses wide-ranging interjections, to the extent I was considering bringing my own earmuffs. I will monitor this very closely. Mr Bishop should continue but stick to the point.

At the risk of never being allowed to speak in the House ever again, all I would like to say in closing is that I commend the KiwiSaver Budget Measures Bill to the House.

Tēnā koe, Mr Deputy Speaker. I rise on behalf of the Green Party to speak on the KiwiSaver Budget Measures Bill. We will be opposing this bill. This bill is one of five pieces of legislation introduced under urgency to give effect to particular elements of yesterday’s Budget—and what a Budget! What a Budget! Billed as a hardship Budget it included—let us be gracious here—a $25 a week benefit increase for families with children, which we applaud; a Working for Families increase, which we applaud; and an increase in childcare assistance. After 7 years in Government, National has finally realised that it can no longer ignore increasing public alarm at the broadening and deepening of child poverty rates in New Zealand.

When I was campaigning in Wellington Central in 2011 and going to the meet the candidates evenings, I would talk about the 250,000 children living in poverty. I kind of got that sort of blank look you get when you know that people do not really know what you are talking about. Three years later in 2014, when I was campaigning to the same people in the same halls around Wellington Central, and I was talking about the 275,000 children who were living in poverty, I got absolute recognition and nodding heads. People really knew it was an issue, and I will tell you why. It is because for the intervening 3 years, that is what we campaigned on. That is what we talked about. We never shut up about it and a huge range of civil society organisations from Barnados, Unicef, Save the Children, and others have made child poverty the political issue that it deserves to be.

So we are going to claim some credit for the Budget—for actually making it a political issue, for getting child poverty up on the agenda to the point that the Government has had to listen. It is great to see this Government adopt this as an issue, even if it is a “weak tea, just might work, maybe” kind of approach. If you want the real thing, then in 2017 I recommend you vote for the Green Party, because we have been championing this cause for years and years and years. National has done what it has done not because it wanted to but because it had to, because it became such an important issue.

So I come to the bill at hand—what does the bill do? It removes the $1,000 KiwiSaver kick-start contribution, making it effective from the delivery of the Budget yesterday. The Government’s argument for this is to achieve fiscal savings and improve the value for money of the KiwiSaver scheme by lowering the headline cost. OK, that is a fair enough objective, but, as has already been remarked on tonight, this is a wildly successful scheme. About 15,000 people a month sign up for KiwiSaver, and they do so in large part because of the incentive scheme that is in place. That sign-up rate has slowed down not because the incentive is not working but because the rates of adoption are getting to saturation point. More than half of the eligible population is now a member of KiwiSaver, but we also know that the group hardest to get to are the most disadvantaged, right? These are people at the bottom end of the scale, and these are the people who need the incentive more than anything. So although we understand that the Government wants to pay for the extensions to benefits that it described yesterday, it is taking that money out of KiwiSaver and essentially moving it around in the same pot.

Let us take a little bit of a closer look at some of the other things that happened in yesterday’s Budget. The jobseeker support and emergency benefit were down 5.7 percent. Supported living payment was down 1.2 percent. The sole parent support was down 1.5 percent. The accommodation assistance was down 0.8 percent. The hardship assistance was down 1 percent—and this, one of the most successful schemes that we have to address poverty in this country, is losing the main incentive to get people into the scheme. It is a “Peter and Paul Budget”. We are taking money from one and moving it around, largely, the same group of people.

What we are proposing later on in this debate is putting in a Supplementary Order Paper, the intention of which is to keep the $1,000 kick-start payment for people who have a community services card. What we are suggesting is that we can meet the Government halfway. We are saying: “OK, we understand that you want to eliminate what you see as a middle-class subsidy. You want to help to cut the costs of what is a pretty expensive scheme. We understand that. But if you really believe that yesterday was a hardship Budget that was designed to reach out to the most vulnerable people, then support our Supplementary Order Paper to retain the $1,000 kick-start for people who are on a community services card.”

Why a community services card? Because that is the easiest, simplest way to implement a proxy for people on low incomes. It does catch a wide array of income bands, but we believe that it is the simplest, best way to retain it for the people who need it the most, who actually need that incentive the most. We also know that the overall cost of that to the Government will not be that great because it is adoption at the lowest end, which is the hardest to get. We think that if you keep the incentive in place for the people who are at the low end, you are going to continue to keep it for that vulnerable group. And because we know that without the element of compulsion, rates of adoption will be reasonably low. The overall headline costs to the Government will not be nearly as great as they would be if you kept the overall scheme.

Our preference, of course, is to retain the overall scheme. In fact, Metiria Turei only a week ago launched a proposal for a kids KiwiSaver scheme, which would also ensure that the most vulnerable children in society had a nest egg of up to $12,000 by the time they got to the age of 18, which they could use for tertiary education or for a house deposit or similar purposes.

Given that the Government has the numbers to pass this bill and to remove the $1,000 kick-start contribution from KiwiSaver in its entirety, what we are proposing to do is to limit the harm of that and to support the Government’s notion of yesterday’s hardship Budget by retaining the kick-start contribution for people who have a community services card. We believe that that will not be as expensive for the Government. We believe that that will be in line with the Government’s intentions yesterday of producing a Budget that is orientated at the poorest in society, and it keeps in place the principles of what has been a wildly successful scheme. We do hope that the Government supports us on that. Thank you.

All this Budget did was remind me of the movie Groundhog Day. It was the same old promises and the same old apathetic thinking that we have come to expect from this Government. This is the same Budget we have seen for the last 7 years. I believe—I genuinely believe this—that the former National leaders who ran this country in their time are turning in their graves right now. Although those former leaders rose and fell on their principles and on what they believed in—what they believed in—this Prime Minister plays the politics of focus groups and plays superficial lip-service to what are critical issues in New Zealand. He is doing all he can to appease the masses. He compromises what was once, a very long time ago, actually, a great party.

Yet again we were promised a surplus. When the Rt Hon Winston Peters was speaking earlier yesterday, I put it to some of the backbench National MPs that the finance Minister will never actually reach a surplus during his time serving in that role. I made the challenge, and what was the answer? Well, it was quite similar to now. I was expecting more of a response. Those National MPs went quiet. They went very silent. The derogatory shouting evaporated. It became a very quiet House to be in.

This bill, the KiwiSaver Budget Measures Bill, is a simple one technically, but the repercussions of it are quite significant, and they will have huge consequences into the future. Without doubt, this country will be undermined by yet another short-sighted decision, supposedly to save on the bottom line in the moment. We are saving on the bottom line in the moment. What confused a few people who were listening yesterday, and I was one of them, was that in Mr English’s speech—[Interruption] I will get to that, Mr Seymour. In Mr English’s speech in the House he spoke of how providing an annual contribution of $521 per year and a kick-start of $1,000 for new members would—and I quote for the members opposite—“provide a strong reason to join KiwiSaver.” “Yes, fair enough,” I said, “I couldn’t agree more.” But then in his very next breath, the Minister makes the statement: “Removing the kick-start payment … [will have] little or no effect on the number of people expected to join the scheme.” Which statement does the Minister stand by? Which one is true? They completely contradict one another. Let me tell you, he should stand by the first statement because the second is patently wrong.

As a lecturer in economics, I would like to take the opportunity just to point out a few facts that Mr Seymour may have missed when he used the Coase theorem to debate in the House earlier tonight. Coase said himself that, actually, it was not really his theory at all. But more apt for this night’s discussion was that he said that his theory—like the ACT Party itself—actually bears no resemblance to reality and cannot be used in reality, and that it is an economic theory that cannot be used in that way. What I would tell my students, more specifically, is that if we undertake an action, we must consider its consequences. What consequences is this party hoping to achieve when it looks to remove the kick-start contribution from the KiwiSaver savings scheme of everyday New Zealanders? What is it that it is hoping to achieve? What it is doing is robbing from the next generation. Why are we robbing from the next generation? What is the justification? As far as I can see, probably the only justifiable reason in their minds is to try to reach that mythical surplus, which, like Groundhog Day, never changes year after year. Promises are made and promises are broken.

The Minister actually spoke so eloquently in his speech about spending wisely in order to generate significant long-term savings in the future, and I will quote him: “Its social investment approach”—

💬 Dr Megan Woods: I raise a point of order, Mr Speaker. I was reluctant to raise this point of order, but I am having trouble hearing the speaker. We are not having contributions to the debate from members opposite, but what we are having is a raucous racket that is only bringing this House into disrepute.

💬 Mr DEPUTY SPEAKER: The point is very well made. The members on my right should tone it down a bit. Carry on.

I was quoting from the Minister: “Its social investment approach, which is about targeted, evidence-based investment to secure better long-term results for the most vulnerable New Zealanders. We’re willing to pay a bit more up front,” he said, “to get real, sustainable change, and in doing so we can generate significant long-term savings for the Crown.” It is pretty infallible logic, but it is not being applied in this case. Why is that logic good in one circumstance but not good in this?

For decades, New Zealand First and those with common sense have been talking about the benefits to the individual and to the country of saving. Why? Because, as was debated in the House just several weeks back, we were told by this very Government how wonderful the Cullen fund was, for example, and how the asset of this Government was growing and circling that wonderful $30 billion mark. That kind of growth and those kinds of sums—well ahead of projections, actually—are what a small country like this needs to help our people. This provides a financial stability and a confidence as we move forward with proportionately more New Zealanders moving into retirement. That large sum of money is working for the people of New Zealand. The KiwiSaver funds that are invested create so much wealth within New Zealand. The Minister is simply—as has been said so often tonight—robbing Peter to pay Paul. Well, actually, so he thinks. It is not as simple as that. Although a few balance sheets today may be changed around, what he is doing is robbing from future generations to attain this mythical Budget surplus, and he is removing a huge, huge driver in the New Zealand economy.

The point I make to this House today is that this is a disincentive. It is plain and simple. It was noted earlier that the Prime Minister himself, at the inception of this wonderful scheme, said there were not enough incentives in the programme and that New Zealanders needed more to get involved. New Zealand First argues that the Government is giving away too much. National will argue that it costs too much. The Government said that it has spent $2.5 billion on this scheme since its inception and that removing this initial lump-sum contribution will save approximately $120 million a year. That is over only the next 4 years, actually. As the fund reaches a critical mass, in terms of the people subscribing, contributions will decline fairly rapidly over time. So these minuscule savings are in the now and, actually, do not go on for much longer. We are robbing billions of dollars in supplementary retirement income from our next generation. This small cut has a giant multiplier effect, which has not been taken into account; and if it has, it has been ignored. New Zealand First cannot support such short-sighted change that saves next to nothing today but costs so very much for our future generations tomorrow. It is an incalculable potential that the growing pool of wealth could have contributed to the New Zealand economy, as investors sought to grow their returns. New Zealand First does not support this bill.

It is easy to see why the members on the other side of the House are so glum. They are so glum after yesterday’s Budget because there are tens of thousands of families across the country who are going to benefit from the package this Government has put together. The half a billion dollars of savings through this bill will enable us to deliver $790 million of funding to the children in this country who are most in need.

I can tell those members that there are families and there are parents in this country who are saying: “I would rather have $25 a week in my pocket now, than $1,000 that can be used in 30, 40, or 50 years’ time.” When we consider the Budget and we consider what New Zealanders need right now, what they need right now is family support for those in hardship. It might cost half a billion dollars in savings to do this, but ultimately there are 190,000 children who will be better off through these changes and those members need to realise this. I commend this bill to the House.

A 5-minute call—Jan Logie.

I am a little bit at a loss as to whether it is even worth standing up to speak when all I can hear from that side of the House is a barrage of laughter and heckling, and a round of applause for a speech that I think took less than a minute defending a policy that I think is actually indefensible. The last speaker, Jami-Lee Ross, stood up and tried to tell this House that the Government is being beneficent by taking half a billion dollars from some, including very low-income people, in this country who otherwise would have no savings whatsoever and are trying to survive and feed their kids while it gave tax cuts to the wealthiest people not that long ago and increased taxes by increasing GST on every New Zealander. This was not: “Take from here—this is the only place we can take it from to be able to give to this group.” There are other places. The Government could be more creative, but it has not been. It has gone for the very easy option.

I will say—and I have said it before—that when the economy is not working for everyone, it is not working. We know this economy is not working when a quarter of a million children in this country are in poverty and when a measure, which the Government is so proud of, purporting to be $25 a week will not in fact be $25 a week in the hand for beneficiary families because they will be losing it through accommodation cuts and money being taken off in health costs and other abatements. So the Government is giving with one hand, saying it is being so generous, while it is taking with the other.

I want to talk a little bit about inequality, which is a real problem in this country. People in New Zealand are increasingly concerned about it. There are two types of inequality. It is a basic thing. There is inequality in relation to income, and then there is inequality in relation to wealth. Income is pretty easy to understand. Wealth is something we do not talk about as much, but in New Zealand, the last survey that we—[Interruption]

💬 Mr DEPUTY SPEAKER: Order! If members want to maintain a discussion, can they go to the lobbies.

Thank you, Mr Deputy Speaker. I do not think they care. I do not think they care what other people think. I think they are just so pleased and proud of themselves for taking this money away from people that they do not need to listen.

In 2003 and 2004 the top 10 percent of New Zealanders owned 51.8 percent of the net wealth of all households in New Zealand. Those people in that category averaged about $835,000 worth of wealth each. The top 1 percent had 16.4 percent of the wealth in this country and averaged about $2.6 million each in their wealth, and yet the bottom 20 percent of New Zealanders had zero or little wealth, and some were in debt. This policy, which provided $1,000 in savings for people, may have been the only wealth they had—the only chance they had to have some savings. That has been taken away by this Government. It will have a compounding effect on inequality in this country.

The Government is saying: “We can’t. We’ve got no choices if we’re going to give $25 a week to people who have children who are dying through income-related poverty.” I would remind this House and members on that side that the wealth of the richest person in New Zealand is worth $7 billion, while 20 percent of this country have zero or little wealth, and many of them are in debt. This is at the heart of what this bill is about—the Government contribution to KiwiSaver enables some people to actually get some savings. We know that KiwiSaver can contribute to increasing inequality, because people who are earning the most will get the most from their employer contributions, and therefore they are able to go ahead, and their wealth will breed more wealth, and it grows. However, for the people on the lowest incomes who are not able to afford those weekly contributions to KiwiSaver, their wealth, or lack of wealth, will stay there. This bill does not help inequality in this country.

A 5-minute call—David Seymour.

I greatly enjoyed listening to the contribution of Fletcher Tabuteau. He told us that he was a lecturer in economics. Between you and me, I think he has been telling a few bedtime stories. His declaration also reminded me of a quote by Margaret Thatcher: “If you have to tell them that you are a lady, maybe you are not.” If you want to quote economists, then maybe we should start with the wonderful Henry Hazlitt, who said that the good economist looks at the long term and an average for all groups; the bad economist looks only at the short term for some. When we talk about this shift in resources within the Budget, we are reminded of another thing that Fletcher Tabuteau said. He said it was a “Peter and Paul Budget”, taking money from one person and giving it to another. Well, I hate to tell you, but that is what Budgets are about. If everyone was just going to keep the money that they already had, we would not need to do any of this. We could just keep our own money and not have a Budget. But I know that members are very eager to get home, so I will be as short as I can.

The fact is, that what this Budget has done is take money out of middle-class welfare—2.5 million New Zealanders; $2.5 billion—into savings and put it into another form of investment—that is, investment in human capital, the most important investment that any country can make in the long term.

💬 Clayton Mitchell: Are you getting a sore neck from all this bobbing around?

Maybe just wait your turn. Oh, wait, you have had your turn, and it was not very good, was it? The fact of the matter is there is a real problem with this policy, and I am sorry to disappoint members to my immediate left, but this Government has shown tremendous courage in removing a middle-class welfare transfer. Would it not be nice—would it not be nice—if this Government could show the same courage when it comes to superannuation? Because the benefit that so many older generations got, it is more than happy to take it away. It is more than happy to take it away from younger New Zealanders, those who might have been enrolling for KiwiSaver in the future. It is more than happy to do that, but it will not bite the bullet when it comes to the future liabilities for New Zealand superannuation, which those same young people will now have to pay. This is the same $1,000 that, not so long ago, National wanted young people to put into the same housing market that the Reserve Bank Governor is doing everything he can to deflate because he says that it is dangerous. So this cuts both ways. It is an admirable policy. It is an economically literate policy, unlike what I hear from my right. It is a policy that I will be supporting. However, would it not be nice if this Government had a little bit more of a long-term view and was a little bit more prepared to look into the future, confront the challenges that this country faces, and take on long-term superannuation reform? Thank you, Mr Deputy Speaker.

What a wonderful night to be here, is it not? That was a fabulous speech. Unfortunately, it was slightly confusing at points, but it was a great start. And that lesson on economics, I have just so much enjoyed that.

All I want to say tonight is that I think that we should be celebrating that 2.5 million—2.5 million—people have joined KiwiSaver and got their $1,000. They have got success, but everyone still gets the $521 every year and, through our generous home loan package, they can still join up and enjoy and go forward and buy houses. I believe that this is a good thing, and I commend this bill to the House.

I am delighted, at this peak listening time, to have the opportunity to speak in opposition to the KiwiSaver Budget Measures Bill. This bill is clearly the result of the panic that Bill English went into when he got into his final preparation for the Budget and realised that there was going to be, yet again, for the seventh year in a row, no surplus. He did everything he could to try to get some money together. Some of those measures were understandable; some of them I feel so strongly opposed to that I will be putting my vote against the bill—and this is included in the one that we are debating now.

For many people, they will never have the opportunity to have $1,000 in their savings account, and it is sickening, actually, to listen to members opposite who earn $150,000 a year—and all that they have done for the last 3 days is stand up and say “I move that the question be now put.” For that, they earn $150,000 a year—and additional expenses on top of that, of course. And yet when we leave tonight, we will have people come in and clean our offices who earn less than $15 an hour and who are expected to keep their families on that sort of income. For those people, who work as hard or harder than every member of Parliament, and who have had the opportunity to have $1,000 put into their savings accounts once they start contributing the little bit of money that they have—and some of them do not have it to spare; they have had to cut something in order to put money into their KiwiSaver accounts—to have that $1,000 taken away from them, and, even more galling, to have the members of the National Party laugh and say that that is a good thing is, I think, wrong. I do not agree with it as policy. I think it lacks vision, it lacks compassion, and it lacks any empathy at all in understanding how many members of our society have that inability to save for their future. When you are on $150,000 a year, you just take it for granted, but if you are on $14 or $15 an hour, you are not able to put that money aside for the future.

It is a sort of vision that we should have for older New Zealanders. It is a sort of vision that we should have. We would like to see older New Zealanders being able to retire and have security in their income, and more than just the basic superannuation. We have got a better superannuation scheme in New Zealand than in many other countries, but a married couple still gets only 66 percent of the average wage as their total superannuation income. I would challenge members opposite to try to live on that without any other savings to fall back on. For day-to-day living, it is OK, except for when something goes wrong, when your roof needs replacing, when your washing machine breaks down, or when you need to fix your car—big expenditure items. If there is no money in the bank, those are the people who suffer. That is why I have always supported that kick-start payment being made to people who join KiwiSaver.

KiwiSaver itself was a fantastic scheme, and I want to pay credit to Dr Michael Cullen for his vision in saying that we need to change the savings culture in New Zealand, and this was his way of doing that. Since it has been introduced, we have seen the National-led Government make cuts to the integrity of the KiwiSaver scheme year after year after year. At every opportunity, Bill English and John Key have weakened what was a very strong scheme—weakened the integrity of the KiwiSaver scheme. The minimum member contribution was reduced. We have had the fee subsidy discontinued, the compulsory employer contribution capped, and the employer tax credit discontinued. It is not that we have suddenly decided to weaken the KiwiSaver scheme. This measure tonight, in the KiwiSaver Budget Measures Bill, is a desperate attempt to try to cobble together a little bit of extra money to make the surplus, but it was—

I am sorry to interrupt the member. The time has come for me to leave the Chair. I want to thank the House for the collegiality of the debate and for the spirit in which people have engaged tonight. I must admit that we have all learnt an awful lot, specifically about the King of Belgium.

Debate interrupted.

Sitting suspended from 12 midnight to 9 a.m. (Saturday)