KiwiSaver Budget Measures Bill

On behalf of the Minister of Finance, I move that the KiwiSaver Budget Measures Bill be now read a second time. New Zealand is emerging strongly from the economic turmoil following the global financial crisis and the effects of the Canterbury earthquakes. If we are to withstand future microeconomic shocks, we need to ensure that Government spending is prudent and well targeted to where it is most needed. Removing the kick-start will achieve significant fiscal savings and enable the Government to meet competing policy and fiscal strategy objectives. The removal will also have the effect of lowering the cost of KiwiSaver and therefore improving the value for money of the KiwiSaver scheme.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Can I just ask the Minister to resume his seat. I noted at the beginning of his speech he said he was moving the second reading on behalf of the Minister of Finance. The bill is in fact in the Minister’s name, so I think what he might want to do is just correct that.

Thank you, Mr Assistant Speaker. I move, That the KiwiSaver Budget Measures Bill be now read a second time. Removing the kick-start contribution will achieve significant fiscal savings and enable the Government to meet competing policy and fiscal strategy objectives. Removal will also have the effect of lowering the cost of KiwiSaver and will therefore improve the value for money of the KiwiSaver scheme. KiwiSaver remains an attractive scheme and the Government is committed to it.

I would like to point out that KiwiSaver members will continue to receive employer contributions and Government-provided member tax credits. It will remain an important vehicle for saving towards homeownership. Since 2011 there have been more than 9,500 withdrawals from the scheme, totalling more than $0.5 billion, as people use their KiwiSaver contributions to buy their first home.

I note that more New Zealanders have joined KiwiSaver under this National Government than under the last Labour Government. New Zealanders did not have faith in the scheme under Labour, but they do have faith under National, and they will continue to have that faith. The change proposed in this bill will help ensure KiwiSaver is sustainable and represents good value for money. I therefore commend this bill to the House.

This bill is the most symbolic of all the Budget legislation going through the House. Apart from one other, it is the most symbolic of the measures in the Budget. After 7 years in office, the National Party has discovered poverty in New Zealand. After 7 years, it has discovered that there are people who have been struggling and doing it really hard. The Government has helped and has given them $25 a week, but it has taken everything else away from those hard-working, hard struggling Kiwis—and this is just one of them. This is the most symbolic.

When it was first started, under the last, progressive Labour Government—the last Labour Government—the purpose of KiwiSaver was to help savings, because everybody identified that New Zealand had a major savings problem. People were struggling to put money aside, and they needed a scheme in which they could save so that they could live in just a little extra comfort in their retirement. But ever since this Government has been in power, it has hated KiwiSaver. Actually, it hated KiwiSaver at birth, and it has hated KiwiSaver ever since. Every opportunity National gets to hack away at it, to cut it, to undermine it, to destroy it, it takes that opportunity. The Government did this when it cut the member tax credits and undermined that contribution. That helped hard-working Kiwis! And now it is having another go—now it is having another go. It is taking away the kick-start. It is taking away the kick-start, because this is a National Party and a National Government that hates KiwiSaver. It cannot leave it alone. It cannot keep its hands off it—a bit like the Prime Minister and ponytails. It cannot keep its hands off it.

So now the Government has taken the kick-start—the very thing that helps many people. For many workers, I know the one thing that got them into the scheme when the scheme first came in was that kick-start—the thousand bucks. They thought: “I know I’m going to have a little bit of a struggle to get into this in the next few years until my pay increases, but because I’m part of a good union and I know I’m going to get good pay increases, I’ll make the contributions, and I know I’ll get the $1,000 kick-start, and that’ll get me into the scheme.” That is why 2.5 million Kiwis are in the scheme—that is why 2.5 million Kiwis have made that decision. They knew that they could get that help, and they were getting the member tax credits as well until this mob cut them and made that harder. They all got the kick-start—the $1,000 payment. Those who were thinking about their kids and their kids’ future thought: “Yep, we’ll make sure they get in and get a good savings habit started early.” So the mums and dads signed their kids up too, and they got the kick-start as well. Well, all that is going.

It may have been lost on the National Party and its great planners—oh whoops, it does not have any, because it does not have a plan. It has never had a plan for the good of New Zealand. But let us do what economists do; let us make an assumption that the National Party has somebody who does planning. When National planned this, it may have forgotten that, actually, kids are going to carry on being born in New Zealand. New Zealand parents will continue to have children. I think that we can safely make that assumption. So as more children are born, as more children come into New Zealand, and as they enter the workforce, they might want to start their KiwiSaver account. They might need a bit of help, and a $1,000 kick-start would be that help. Well, it would have been that help, but National has destroyed it because, again, it hates KiwiSaver. It is bad enough that the Government is running down New Zealand superannuation. Oh yes, 7 years in office and not a single effort has been made to make sure that the future of New Zealand and New Zealand retirees is safe and secure. Government members just live in splendid ignorance of the biggest issue facing the country. They just bury their heads in the sand. They do not want to touch it. It is bad enough for a country that is desperately trying to grow its own capital base and that is desperately trying to create the foundation for future wealth through things like KiwiSaver that this party in Government just continues to run it down.

Government members sit there shamefaced—the only respectable look they have shown in the whole Budget debate. They sit there shamefaced because they know the damage that they are bringing on this country. They know the damage they are doing. It is just like the rest of the Budget, actually, because they do not have a plan, they do not have a vision, they do not know what they are doing. It is Budget by Budget, and broken promise after broken promise. They are doing this because they have discovered poverty and they are desperate to do something to give the appearance that they are doing something. So they will crib it out of KiwiSaver, take it off the future generations, and try to kind of look after those who have been struggling for so long and give them a slight bit of reprieve now. But it is not a way to run a country, it is not a way to build a foundation, and it is not a way to improve the long-term interests of all New Zealanders and all New Zealand. They do not have an answer. They do not have a clue. They do not have a plan. They do not know what they are doing. They are out of touch, out of ideas, and rapidly out of time. They do not know what they are doing.

Demolishing KiwiSaver, taking away the kick-start, is just another measure to further erode the strength that New Zealand desperately needs in its economic base. They have got nothing at all—they have got nothing at all to add to the long-term future economic base of New Zealand. Here was something—encourage people to get into savings, encourage people to get into KiwiSaver, give those kids a chance, give them a start. And those workers who are on low and medium incomes, give them help to get into KiwiSaver to build up their long-term savings and, hopefully, to give them a bit of dignity in retirement. But no, Government members cannot look much further than the next balance date. And then they have to make up a fictional surplus as well to get them that far—to convince themselves that they know what they are doing, to convince themselves that they have got a Budget that is going to make a difference. Well, the only difference it is making is to make it much harder for hard-working Kiwis who just want a bit of help to get their savings under way. They just want a bit of help to get their KiwiSaver going, and now it is being ripped from under them because this Government is desperate, is out of ideas, does not know what to do, cannot manage the economy, and is leaving all the problems built up for the next Government to have to fix and address.

The problems are all mounting and this will be just one of them—the ongoing shallow capital base of New Zealand encouraged and fomented by this Government because it does not know what it is doing. It is thrashing around looking for an answer. It is thrashing around trying to convince itself that what it has done is going to be good for struggling, hard-working New Zealanders, and it is not. But the Government has got to do this. Government members have got to convince themselves that if they give the appearance of doing something and if they pat themselves on the back for discovering poverty, then maybe they will be able to get through the next year, as they rush around trying to find a solution to the other bigger problems.

Government members talk about leakage. This is about their answer to leakage, because apparently they are saying that the kick-start is not targeted at the right people. Well, KiwiSaver is actually targeted at everybody. That is the whole thing about KiwiSaver. It is about giving every New Zealander a chance to have their savings. It is about giving every New Zealander a chance to get their savings habits under way from a young age—from a working age. But here National goes again. It never said this at the election. It never went into the election and said “That’s it.” The world knew they hated KiwiSaver. We thought the hatred had come to an end. We thought that they might do something constructive. We thought that they might do something to build New Zealand’s economic base. We thought that they might do something for the good of New Zealand’s economic future. But still they will not.

💬 David Bennett: Too little, too late.

David Bennett thinks that the Waikato Expressway is doing something for New Zealand’s economic future. Well, that is not enough—that is not enough. That is about ferrying people out of Auckland, because they are desperate to get out of there and to get somewhere they can drive their car. It is not about building the economic base of New Zealand. National has got nothing to say about helping New Zealanders with their savings habits. Now we see that the most symbolic gesture of this Budget—the most symbolic gesture of this Budget—is yet more “short-termism” and ripping away the opportunity that hard-working Kiwis would have had to start their savings habit. Here National members are, doing it on Saturday morning of Budget weekend. Here they go, ripping away an opportunity for hard-working Kiwis who just want a chance to save and who just want a chance to contribute to the nation’s savings and to the good of the nation. Well, here they go again. Here is the National Party again.

The National Party, as we know, does not like KiwiSaver, hates workers, does not want to give them a hand, and does not want to give them any support. It is pulling away the one chance they have got—the one bit of help they get—to get their savings habit under way. Here National is, in Budget 2015, pulling it out from under them—ripping it up. National does not like working Kiwis trying to get ahead. It is the way the National Party operates—it has done so for the last 70 years. It is doing it again in office. It is about to come to an end. It will be the next Labour-led Government that restores KiwiSaver and that gives working New Zealanders a chance to get ahead, for the good of all New Zealand.

That is the sort of speech you give when you come to the party 43 years late. That is the sort of speech you give when you have got no ideas to offer the country at all. What we heard from Mr Little was that apparently there is no plan. Well, I tell you what, there are a lot of people in this country who think that the Government of the day is doing an extremely good job, and they are very, very happy about the Budget that has been brought down in the last few days.

What we heard from Mr Little in a policy sense in that short speech was his reconfirmation that under Labour, the retirement age will go up, not to 67, not to 68, not to 69, but most likely to 70. That at least is something that Labour is standing for. Secondly, we have heard that when people do get to what is a nominal retirement age, if they are still working, then there will be a means test applied to them. When you look at the Labour record for spending in Government, everyone knows that it will not stop at just the earnings over and above wages; it will be everything for anyone over the age of 65 under a Labour Government.

I find it really staggering, too, that Mr Little expects to be taken seriously when he talks about fiscal matters by offering the really insightful piece of information that if a Government makes a grant to someone so that that person might start some savings, it is somehow the basis for having an expanding fiscal foundation for the nation. Well, I do not mind saying that I have never really understood how someone can say that they are wealthier by virtue of their borrowing. That is fundamentally wrong, and that is the sort of rubbish that Mr Little is going around saying on the stump at the moment, trying to convince New Zealanders of the insightful idea that the Labour Party can somehow conjure up out of nowhere the money to make life better for everyone.

The other point that was really interesting was the attack that Mr Little managed in this KiwiSaver bill to mount on this Government’s record when it comes to New Zealand superannuation. This Government has raised the superannuation income for superannuitants repeatedly over the last 7 years—repeatedly—and not just in the context of the Consumers Price Index but in other things as well. Although the numbers are not in front of me, I can tell you that those increases are well in excess of $100 a fortnight in the last 3 years. That is real work by a Government. That is not some sort of penny-pinching.

It is also extraordinary that in a Budget where there has been a big move to raise the benefit incomes for those New Zealanders who require that assistance that Labour members, of all people—

💬 Hon Ruth Dyson: You’ve just cut 40 weeks of it in this.

—Ruth Dyson and the exiting crew from the back row—are all out there, waving a bit of paper and asking: “Where’s the surplus? Where’s the surplus?”. So what we know is that a Labour Government will always put a surplus ahead of the needs of New Zealanders—it will always do that. That is its record. That is its record. That is why for so many of those 43 years since 1972—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I know that this bill has not been to a select committee and, therefore, the debate can be broader than normal, but I am just going to ask the Minister to—

💬 Hon Annette King: Mention it.

The ASSISTANT SPEAKER (Hon Trevor Mallard): —well, that is what I was going to say—try mentioning it, rather than having the entire speech as a prelude to his contribution to the Budget debate.

💬 Phil Twyford: He’s a senior member. He should know better.

That is right, I should know better, but I will also resist any temptation to note that at a very, very salient point in my contribution to this debate there could well have been a partisan intervention, but I am not going to say that.

Just think carefully about what KiwiSaver does. KiwiSaver says to anyone coming into the workforce: “Sign up to this particular proposal, put a sum of your money into the scheme, and there will be an employer contribution plus a $521-a-year contribution from the Government as well.” None of that changes. That all remains in place. The really interesting thing is that young people going into the workforce and signing up to save in this way will now have access to those KiwiSaver funds for the purchase of a first home. These are not small grants—$5,000 per individual if it is a second-hand home, $10,000 if it is a brand-new home, or $20,000 for a couple who have saved through this system—so it is utterly ridiculous for anyone to suggest that the incentives for young people to sign up to KiwiSaver are in any way at all damaged by this particular prospect.

I heard the most interesting thing on TV the other night. It was a vox pop in the street where clearly someone from the Labour Party had managed to get themselves in front of a camera—[Interruption]—yes, true; well, it is a rare thing for someone from the Labour Party to get in front of a camera—and they were saying: “This is a terrible thing. I had hoped that I would be able to use my KiwiSaver and that $1,000 to go towards my first home.” Well, get real—get real. Saving over a 5-year period is going to see more than $2,500 of Government grant going into that account, plus up to $10,000 at the time that the house is bought. People understand that. People understand that well.

I can tell our opponents on the other side that there is a whole industry of people out there encouraging young people to join KiwiSaver under those conditions. That is why the number is at 2.5 million, and why it will not fall is that young people actually do have aspiration. Young people do want to make the most of their lives. Young people will see that their getting up to $15,000 worth of Government grant when they come to buy their home makes it well worth their while being in KiwiSaver, regardless of this $1,000.

This is a Budget of broken promises. It is short on vision and it fails to deliver a surplus. People around the country watching that speech from the Hon Gerry Brownlee will be saying to themselves: “I wonder—did those Ministers on the National benches take that $1,000 themselves before they cut it off for hard-working families around the country?”. They will be asking whether the member for Ilam banked that $1,000 before he cut it off from his hard-working constituents. They will be asking whether he encouraged his family members to take that $1,000 before the Government cut it off from hard-working constituents. They will be talking to the member from Hamilton West and asking whether he took the $1,000 before he cut it off from his hard-working constituents.

💬 David Bennett: He wouldn’t take a thousand bucks.

The member from Hamilton East: did he take it from his family members for himself before he cut it off for the rest of hard-working New Zealand? They will be going into the office in Rodney and saying to the member there: did he take the $1,000 before he cut it off from his hard-working constituents? There are some guilty faces opposite, and I am not surprised. They will be going into the Rotorua office and saying to the Minister: did he take the $1,000 before he cut it off from hard-working families? And I would be interested to hear what answers they get. I wonder whether the journalists will ask members opposite whether they took the $1,000 KiwiSaver kick-start before they cut it off from hard-working New Zealand families. Over there, they are quite happy to cut out the lunch for everyone else when they have got a big lunch for themselves, and that is indicative of this Government’s attitude to the future of New Zealand.

The Government has hit the panic button. It has hit the panic button, and we can see it right there in the regulatory impact statement, on the front page. On the front page: “The advice was requested in advance of Budget 2016 and therefore has been prepared urgently.” How long has the Budget been coming? Why did it need to be prepared urgently? The analysts have “not focussed on the effect of policy options on national saving”. They say it there in paragraph four. In paragraph two it is urgent; in paragraph four they have not focused on savings. And then paragraph five, if we skip forward: “There has been only limited consultation”. And now we are passing it through urgency. Members opposite know what answer they would get. They know the hard-working New Zealanders who come into their offices would be furious that they took the $1,000 and then said it is gone. It is gone. But it is what we get from this Government. It is out of touch. It has lost touch with middle New Zealand. It is looking after the interests of a very wealthy few, and it is robbing Peter to pay Paul.

Although there are a few good things in the Budget—and we on this side have acknowledged some good changes in the Budget—we see that there is sleight of hand and they are taking with the other hand, and middle New Zealanders are the ones who are squeezed yet again. The Government is robbing Peter to pay Paul. Those improvements should not come at the cost of those who are just one or two rungs further up the ladder, but that is what we see from this Government—a Government short on vision. There is no doubt that this change will reduce savings for New Zealanders, and at the very time we need to be increasing them. This is a short-term plan and not a long-term vision. But it is what we have come to expect from this Government: a Government that is neglecting the regions, that has failed to diversify the economy, that has failed to address the housing bubble in any meaningful way, and that has failed to diversify the skills of New Zealanders to prepare for tomorrow.

We know—I remember, from my time in Treasury—that one of New Zealand’s challenges is capital debt. It is actually having enough money for businesses to access, for them to grow. That is a very serious problem. Treasury had an analyst on it in the 1970s. Treasury has still got an analyst on it, and members opposite are doing nothing about it but cut, cut, cut when it comes to savings. They do not care about business in New Zealand—not small businesses and not medium sized businesses anyway. Across there, all we see them doing is cutting. They have cut the contributions to the Cullen fund. They have cut the contributions to KiwiSaver on several occasions. This is one of a number of cuts. Last night my colleague David Parker outlined seven or eight cuts, I think it was, that they have made to KiwiSaver. This is a Government that does not care.

In Australia they have got a superannuation fund that has got $1.3 trillion in it. That would have happened across here if Muldoon had not cut it. This is the same attitude as the Muldoon Government—this Government, though, has borrowed more than Muldoon. It is up to $88 billion in debt. It is drowning us in debt, because $10 million a day is spent just paying off debt. Taxpayers are paying $10 million a day just to pay off the Government’s debt. That is the attitude it has. That is short-term thinking from a Government that is out of ideas.

Half a million Kiwis are going to miss out on this $1,000 over the next 4 years. Those are the Kiwis who should be going into the offices of those members opposite and saying: “Did they take the $1,000 before they cut it?”. Did they take the $1,000 before it was cut? I will be interested to see. I would like them to put up their hands to show that they took the $1,000. I would be interested to see whether members opposite have the courage to put up their hands to show that they took the $1,000. Let us see: how many of them took the $1,000? How many took the $1,000 across there? None of them! They are all saying that none of them took the $1,000. I bet that is wrong. I bet we will learn, in coming days, that that is wrong. Those members opposite should own up. They took the $1,000 and then they took the ladder away. That is just typical of this Government.

We know this plan works. That is the crazy thing—2.5 million Kiwis have signed up for KiwiSaver; 2.5 million Kiwis have signed up for Labour’s KiwiSaver programme. And the Inland Revenue Department says, in its recently released, fairly thick, and comprehensive evaluation report, that this is an excellent scheme, basically: 36 percent extra savings on top of the savings that would ordinarily have happened in our economy. It is because, of course, there are member contributions that encourage people to get involved. There is an opt-out clause, so people are in the scheme and there are no overheads, no hassle to get involved. People find themselves saving before they know it. Of course, they are encouraged, because there is a thousand bucks in there to start with.

As my colleague David Parker outlined last night, that makes a difference for somebody on $15 an hour with a part-time job, when they are saving a couple of bucks a week: $1,002 is much easier to be proud of than $2 in your account. It makes you feel good. Behavioural economics have happened. We are not still in the 1980s. Those people over there need to read a few new economics textbooks, get the Hayek out from under their pillows, get a few new books under their belts, and get the spray-misters out to dry them off. Those people opposite need to have an up-to-date understanding of just how economics works. Thank goodness the Inland Revenue Department has a few insights, because it is telling the Government that this policy works. This policy works.

The beautiful thing, of course, is that people are signed up to the scheme already. A lot of people have got this and they will be thankful. But it is the half a million Kiwis who are going to miss out over the next 4 years we should be thinking about. Those half a million Kiwis—I hope just a few of them go and ask these National MPs and Ministers opposite whether they took the thousand bucks before they got rid of the scheme. They already cut the member tax credit in 2011, cutting savings. Cutting savings is not the way to manage the economy. It is what Muldoon did, and this is the Government that has created more debt than Muldoon. It is the same plan, and it did not work then, and it will not work now, and Kiwis can see that.

We do not even know whether it can be implemented. The Inland Revenue Department says it is going to cost $210,000 to implement this scheme. That is 210 Kiwis who could have had the extra thousand bucks. And will the Government be able to do it? Or will members opposite be coming back again, like they have done with so many bills that have adjusted the tax system—to reverse the changes out because they cost so much under the old system in the Inland Revenue Department that they still have not fixed, after nearly 7 years of Government? Seven years, 7 long years, and they still have no new ideas. They have not fixed the tax system. I doubt very much whether they will be able to do it.

They are costing New Zealanders’ future. They are stealing from the future generations, from the pockets of kids. This is what it has come down to. Members opposite will claim high and mighty. They will say they have made some positive changes, and no one on this side of the House begrudges them that. But we do not want to do it by stealing out of the pockets of those who are one or two rungs further up the ladder. It is always the middle class and the lower class, those who are struggling, those who are really working hard, those who go out to work every day on modest wages, those who are on median incomes, who are feeling the squeeze. It is not those at the very tip-top, not those who benefited from the 2010 tax package, not the top 1 percent.

But we will see. Let us see whether Mr Bennett stands up shortly to say that he took the $10,000 and he is proud to see that no one else—[Interruption] Sorry, $10,000—whatever, even better. Let us see whether he took the $1,000 and then cut the scheme. I bet Mr Bennett will tell us that he did take the $1,000, and that he encouraged everyone he knew. This is retrospective legislation, because members opposite know that if they pushed this out a whole bunch of people would sign up, no matter what they say. This is a Government that is out of vision, out of ideas, and out of touch.

The speech that we heard from Andrew Little today was much better than 2 days ago. I think that was actually a better speech than the one he delivered on Budget night. It was too little, too late, but it did come from a member of that party. And in that speech, he talked about how the Labour Party felt that there were shamed faces in this Chamber. The only shamed faces are over there. Those were the shamed people on Thursday, because they realised that for over 43 years they have not delivered for the people who need help—43 years that will go down in the history of New Zealand politics. Forty-three years, and not one Labour Government did a thing for those people. Every day they come into this Chamber and they preach high and mighty and they say how they are looking after people in need and in vulnerable communities—all that stuff. Do they deliver for them? No, they do not deliver. Andrew Little does not want to do that.

What does he want to do, though? What does Andrew Little want to do? He wants to take superannuation away from hard-working New Zealanders—hard-working New Zealanders who have spent a lifetime working. When they retire, they look forward to their superannuation. And Andrew Little wants to take that away. He wants to take superannuation away from New Zealanders. He has had 2 days to reflect on that, and he still believes in it. Today in this House, this morning, he said that he would take that superannuation entitlement away from New Zealanders—from hard-working New Zealanders who have spent years in the workforce. They are going to lose it under Labour. New Zealanders understand and expect that from the Labour Party now.

Labour’s grand plan is to give you $1,000 in your KiwiSaver. Grant Robertson said that he would do that. He would reinstate that policy. This morning the Labour Party has said that it would reinstate this policy, but its reason for reinstating this policy is that in good economics it makes you feel good if you have got $1,000 in your account. Good economic policy, according to the last speaker, Mr Clark, who did not come back to Hamilton after his last visit, is that if you feel better for having $1,000 in your account, then that is good economics. Well, where does that money come from, Mr Clark, when you have got Budget deficits? You have to borrow that $1,000 to put into somebody’s account to make them feel good. Is that good economics?

Maybe if you had actually run a business, you would understand that you have to earn the money and then put it in your account rather than put it in there just to make you feel good. But that is the feel-good factor that you get from the Labour Party. Grant Robertson said after the Budget that the Labour Party is going to reinstate the KiwiSaver kick-start. He did not talk to his colleagues. He did not talk to them at all. He just came out and said it. He said it. That means that Labour has committed another $400 million in the next Budget and future Budgets—$500 million. So when we come to 2017, you can put another $500 million on what it promises in the election campaign.

💬 Hon Member: Whack it on the bill, Phil.

Whack it on—that is right. Whack it on the bill, because that is what Labour has done.

Mr Little, when he was talking, mentioned superannuation constantly during his speech. He talked about it constantly, because he wants to attack the very people who have made this country strong—the very people who are in this room. I bet you that “Professor” Fletcher Tabuteau over there will not be agreeing with that. I bet you that “Professor” Tabuteau, when he talks to his boss, will know that New Zealand First is not supporting any changes to superannuation, because for all of the faults that there are in New Zealand First—and there are many, and you will see them lined up there now—there is one thing it has got, and it is that its leader has a sense of the superannuation debate. He knows that it would be the end of the world for the Opposition to go out there and actually promise changes to superannuation. But the Labour Party is high and mighty and will do that. It is a bit like a capital gains tax. A member of the Labour Party promised a capital gains tax. Then they lost the election. Then they said no, we are not having a capital gains tax.

💬 Dr David Clark: I raise a point of order, Mr Speaker. I appreciate that my own contribution was somewhat wide ranging, but I did try to tie it to the bill. If the member is trying to say that the cuts that he is making are tied to the bill, then that might be in order, but it seems it is going a bit far.

The ASSISTANT SPEAKER (Hon Trevor Mallard): The question of relevance is one that is purely for the Chair, and although I accept that I received some criticism from the Leader of the House when I attempted to narrow the debate earlier, as a result of the advice that I have had from him, I have let this member run a bit wider than would normally be the case.

I do not know why the Labour Party cannot give dignity to people in retirement and why they want to attack the hard-working New Zealanders who have spent years working in our workforce to pay for those members to be in this room—to pay for them to have those grandiose ideas, to pay for them to go around the country as if they are some kinds of lords and ladies of the world who can tell us what to do. And then when it comes to those workers’ retirement, they are going to take superannuation away. They are going to take away hard-working New Zealanders’ entitlements in their retirement. But they want to give those workers $1,000 now to make them feel happy. That will make them feel happy, and they will be all right. When they retire, they are going to lose more than $1,000; they are going to lose their entitlements. They are going to have to wait until they are 70. Under Labour, those people working on the outside of this building, doing the hard brickwork on this building, will have to work until they are 70—70 is the age Labour is going to make them work until. But those workers will get up each morning and they will do that work because they know that they got $1,000 when they were 21, and they will remember that and think: “I am happy. I am a happy person because I got that thousand bucks.” That is what the Labour Party economic theory is all about.

It is great to see, and it is great to see Andrew Little smiling. It is the first time that I have seen him smile in 2 days. It is hard for him. It must be very difficult being the leader of a party that does not really exist any more, and also a party that he does not have support from. The rest of them show more animation when a National Party member speaks than they do when their own leader speaks. It was really sad to watch them on Thursday night. When you look at a Budget, you should attack a Budget if you are in Opposition.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! [Interruption] Order! I think that even my sort of liberal approach is now being tested when the member talks about other debates on which he is yet to speak. So the member will now address the KiwiSaver Budget Measures Bill.

Thank you, Mr Assistant Speaker—and a very good Speaker as well. For 43 years we have delivered the Budget—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! [Interruption] Order! The member will resume his seat.

Thank you for the opportunity to speak on the KiwiSaver Budget Measures Bill. I am going to take, I hope, a slightly different approach. I would like to start by acknowledging both Mr Brownlee and Mr Bennett for actually taking full calls on this bill, and actually providing some form of argument in this debate, because during the previous Budget debates over the last few days Government members have not actually even bothered to speak to their own bills. They have not actually bothered to lay out their case; they have just relied on their numbers. So I do appreciate the fact that Mr Brownlee and Mr Bennett did actually take full calls on this bill, even if they relied more on volume than reason to make their arguments.

There are a number of key points that I would like to address, and I am inviting the Government to respond directly to these points because I have not yet heard any real arguments—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! Sorry, there is noise from both sides at the moment and it is a bit hard to hear the member.

I was just saying that I am actually inviting the Government to respond specifically to these points.

The first one is around New Zealand’s savings rate. We are still 22nd out of 24 OECD countries in our savings rate, which, even given the success of the KiwiSaver scheme over the last few years, is a shockingly low rate of savings. We are a country that relies more on debt than we do on savings. We have weak capital markets, partially as a result of this. National’s Savings Working Group itself said that our foreign debt is too high. This makes us vulnerable, and our domestic savings are essential to try to redress that. Our investment needs to be funded from offshore because we do not have the domestic savings to provide those sorts of capital markets. Removing the incentive from KiwiSaver and reducing the likelihood that more people will be joining the KiwiSaver scheme reduces our domestic savings rate. So I would like to know, absent the incentive, what the Government’s plan is to increase New Zealand’s savings rate. That is the first point.

The second point is around the loss of the incentive. I would like to thank David Clark for his contribution before about behavioural economics, which is a more recent evolution in economic thinking. The question here is: why would you take away the incentive? Absent compulsion, why would you take away the primary incentive? It is the one that most people know about. The ANZ chief economist, Cameron Bagrie, said in this morning’s Dominion Post that he himself—ANZ’s chief economist—would not have put his kids into KiwiSaver if it was not for the $1,000 incentive.

So the $1,000 incentive is the most well-known component of the whole scheme. There are other incentives still contained in the scheme, as Mr Brownlee said, which include the tax rebate, the matching contributions, and so on. But, actually, my belief is that the Government would have been better off to cut or remove the tax rebate than the $1,000 contribution. That would probably have had more fiscal impact, but it would have retained the $1,000 incentive. That is what people think of when they think of the incentive of this scheme. As far as I can work out, what you are going to see is a reduction in the percentage of people who are taking up the scheme. So I would like to know what the Government’s response is to the loss of that incentive. How does it actually expect the same percentage, or equivalent, of people to continue to join the scheme, absent the $1,000 incentive?

The third question is around the timing of the loss of the incentive. If, for example, you had said that this would take effect in 6 months, 12 months, or 2 years, there would have been a window where people said: “OK, there is still an incentive, but I have got to get in now or it is going to be lost.” Even if you had given it a week, you would have seen a rush of people joining the scheme. One of the previous speakers on the Government side said: “Well, look, if people have not joined the scheme now, what is the likelihood that they ever will? Given that we have had the incentive for all these years, what are the chances that they are going to do that?”. If there had been a time limit—and if my reading of behavioural economics is anything to go by—there are a lot of people who are out there thinking: “Oh, yeah, I will get to it one day but it is a bit complicated. It is a bit hard. I do not have enough money quite now. I will get to it.” If you had left a window and said: “Let us give this 6 or 12 months and then the incentive would go.”, yes, it would cost you a bit more money, but you would get that tail of people who just had not quite got around to it. But instead, by cutting it off immediately, there is no chance for people to get it who were thinking about it but had not gotten around to it. I would like a response to that, please, as well.

The next one is about intergenerational equity. The current generation of parents with young kids who are working are paying for their kids’ education through the high tertiary fees and costs. They are paying for their own retirement because they know that by the time they get to retirement age there is not going to be enough cash in the kitty to give them proper superannuation, and they are paying for their parents’ retirements through taxation in the form of the existing superannuation scheme. So the current generation of families who are working are getting squeezed in terms of paying for three generations at once. In removing this incentive you are actually making it even harder for intergenerational equity to take place. I would like some kind of sense of what your plan is to redress some of the intergenerational issues that arise out of this.

The fifth point is around the short term versus the long term. I think Labour have already made this point very well and frequently in the course of this debate, which is that every time the Government gets concerned about its short-term books it relies on kicking the can down the road in terms of the long-term fiscal sustainability of the country. They cut the contributions to the superannuation fund in order to try to maintain the books now. Now they are cutting the KiwiSaver incentive, basically balancing the books from New Zealand’s superannuation schemes and retirement schemes. I would like some sense of what your long-term plan is. How are you going to fix the long-term future rather than just deal with the short term?

Those are my main points. What is the Government’s plan to deal with New Zealand’s savings rate? What is the Government’s plan to deal with the loss of the incentive that then happens, and how do they expect the rate of take-up to stay the same or even increase? What is the impact on the rate of take-up of KiwiSaver when the incentive is lost? Why did they not consider a window to get people in who were thinking about it—the third point? The fourth point is around intergenerational equity. The fifth point is around the long term versus the short-term nature of this decision. There are five questions there that I would like answered during the course of this debate, more bombastically or less bombastically, as takes your pleasure. But I would like to hear those.

Middle to low income earners are struggling to save. We know that. Under National, those who are saving are the people who really can save—that is, upper-middle and upper-income families. What this legislation does is this takes away the incentive and a little bit of savings for people at the bottom end of the pile, people who could not get a thousand dollars together. What is your plan for the impact on inequality that the loss of this $1,000 is going to have?

We have got a number of Supplementary Order Papers that will come up during the next part of the debate, which are in relation to restoring or retaining the $1,000 kick-start for people who have got community services cards, which would deal with some of those issues. We have got the Kids’ KiwiSaver programme that we launched a couple of weeks ago, with a progressive savings component to it—all of which is designed to deal with some of the issues that I have raised during the course of this debate. I just wanted to flag that we will be speaking to those soon. We have got some ideas about how to deal with some of those issues. I would like to hear what the Government’s plan is for dealing with those kinds of issues. Thank you.

If I could continue along the same vein as the previous speaker, James Shaw, and bring some facts and some intelligent discussion rather than abuse into this morning’s proceedings. Let us take an example used yesterday. Take a 15-year-old who is about to open a KiwiSaver account today. If they had done it before this $1,000 incentive was removed, that $1,000 would actually be—and these are not generous calculations, they are quite modest—at the time of that person’s retirement given a 10 percent return, which is actually reasonable considering the annual rates of return of KiwiSaver funds at the current moment, over 50 years the calculation is about $117,000 to $145,000 at retirement.

💬 Clayton Mitchell: How much?

It is $117,000 to $145,000 at retirement.

I said yesterday that we might be balancing the books at the moment. It might look like you are balancing the books now, but what you are doing is robbing those sums of money from future generations. That range, like I said, is modest, and the multiplier effect on your annual returns, the compounding interest effect, is such a powerful thing. It has been spoken about in this House many times.

Consider the reality out in the typical Kiwi household. The median income for a Kiwi is still less than $30,000 per annum. That $1,000 was not only a drawcard, it was a real and meaningful sum of money. At the end of its investment life it was—it really was—going to make a huge difference in the enjoyment of life for those retiring. The Government has taken away $145,000 in real terms from our future generations, for those who would like to retire with some dignity, from every person who missed out under this retrospective piece of legislation. This Government’s vision stretches only to the end of today. Mr English is literally robbing our children’s piggy banks.

This surprise bill opens up questions about uptake, the impact on our national and individual savings, and, as mentioned already, the fairness, or lack thereof, across generations. The advice given to the Government on this bill was, “The analysis has not focussed on the effect of policy options on national saving”. I will just repeat that: “The analysis has not focussed on the effect of policy options on national saving”. Here we are talking about $1,000 contributing to national savings, but the advice given to the Government, the analysis of the policy itself, does not take into account national savings. It beggars belief. In the first part the officials have admitted that the bill ignores the problems of savings and then they say “the analysis is concerned with addressing the poor”—supposedly I would put—“value for money and target effectiveness (leakage) of KiwiSaver subsidies.” Apparently we are told that the value for money and target effectiveness of KiwiSaver subsidies just is not there any more. The $1,000 is not much of an incentive any more. I will come back to that.

Earlier I highlighted that although $1,000 may seem like a small sum, we are talking about people on the median income in New Zealand of less than $30,000. It is actually around $28,000. I know the National caucus will not understand what that means, but $28,000 and trying to save $1,000 from that—try to do that in a year. No, I do not think you could. I have been there; you cannot do it. Try to do that over 10 years, and, actually, you will not get a chance to grow your savings pool on the New Zealand median income, and the Government has now taken away that little incentive, that difference we spoke about last night and today—motivation for savings. Now the Government is taking it away. What the Government has not discussed is the future value of $1,000 at retirement age. I will say it again: $145,000.

Consider those living in the regions of New Zealand—the productive heart of this country—who are currently not able to share in the wealth they create. Just think how hugely they will be affected by the removal of this incentive. Look at the unemployment rate in provincial New Zealand, remembering, actually, that an hour of work per week is measured or ticked in the employment column. An hour of work a week is considered as being employed. It is 9.9 percent in Northland, 7.8 percent in my home region of the Bay of Plenty, and it goes on. On top of this the Government must acknowledge that regional incomes are well below the national average. What is the Government doing to our regions? It really is such a small amount of money now compared with the value that it presents in the future.

I said yesterday that the supposed savings on the Government’s books today for every individual Kiwi still not signed up will be approximately $120 million a year for the first 4 years. As the fund reaches critical mass in terms of people subscribed, contributions will decline. So these miniscule savings are short term and short-lived. They are not actually saving this country anything at all.

The Minister has removed the incentive to save. Actually, do not think about the regions now; think about this in the context of Auckland. People are not going to save. That $1,000 was a real and meaningful incentive. People in Auckland are living day by day. The costs of living in our biggest city are just gigantic, and the Government has taken away the opportunity or incentive of Aucklanders to get into a savings scheme where they might have been able to subsidise their superannuation. It has taken it away.

We have been speaking to Grey Power members, and they noted: “The axing of the $1,000 start-up boost for KiwiSaver contributors means that many New Zealanders will be much poorer when they retire as it removes a vital incentive for workers to join up and means more people will be dependent solely on their superannuation on retirement.” They go on further to say: “Many New Zealanders currently aged 45 to 65 do not own homes and those who do are actually still paying mortgages. They are on low incomes and are not enrolled in KiwiSaver. They are already facing increasing rental costs in a tight housing market made worse by the removal of many State houses across the country.”

Even though many Grey Power members have missed out totally on the KiwiSaver programme they know that this Government is robbing from their children and their grandchildren. This bill does nothing for the children of this country in a time of Generation Rent, skyrocketing house prices, high student fees, and the loans that go with that. This bill is not fair or reasoned. I can expect soon that everyone will be automatically enrolled, with the rest of New Zealand made to compulsorily join the scheme. I suppose this bill makes compulsion cheaper. The cynicism is hard to take, to be fair. Thank you.

I quite like Fletcher Tabuteau, but I have to say that if I were a pupil in “Professor” Tabuteau’s economics class, I would be quitting and asking for a refund, because that speech was woeful. But I do like Mr Tabuteau.

What a contrast it has been between last night and this morning. Last night at 5 to midnight the Government benches here were full. We had 30 or 40 Government MPs here backing our Ministers, backing this Budget, and backing these important bills that we are passing this morning and last night. There were only three or four Labour MPs last night at 5 to midnight. Something has twigged in the Labour Party overnight, and that is that Andrew Little’s leadership is in mortal danger. What do we see this morning? They have flooded the Opposition benches—[Interruption]

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I would actually like to hear what the member is saying.

💬 Hon Annette King: Yes, but he should be talking about the bill.

The ASSISTANT SPEAKER (Lindsay Tisch): If I could hear what the member was saying, I would know whether he was talking on the bill.

Thank you very much, Mr Assistant Speaker. I was making the point that when we were debating the KiwiSaver Budget Measures Bill last night, the contrast with this morning is very, very stark. The Labour Party twigged overnight that Mr Little’s speech in the Budget reply debate on Thursday was so woeful that his leadership is now in danger. The Labour members have had to come down here this morning for this KiwiSaver bill and flood the Opposition benches to hear another appalling speech from Andrew Little about matters that are important to the country.

It was an interesting contrast with the Budget and this bill, was it not? We had the members on the Government benches outlining a clear programme of action, including for this bill, and the members on the Opposition benches had nothing to say—absolutely nothing—about the benefit increases the National Government is passing. The party of the dispossessed, the party of the disenfranchised, the party of the working poor, the party of the workers, and the party of beneficiaries—what did it have to say about the National Government’s increase in benefit levels? Not a sausage. It is disgraceful. Then the Labour members come down here for this bill and they cry crocodile tears about the prudent and sensible—prudent and sensible—cuts that the Government is making to KiwiSaver.

Let us get some facts on the table. No. 1: there are 2.5 million people in KiwiSaver already. OK? That is fact No. 1: 2.5 million people in KiwiSaver. It has proven to be very, very popular. When Michael Cullen set up KiwiSaver back in 2006, by this stage the prediction was that there would be 700,000 people in KiwiSaver. That target has been smashed, absolutely exceeded. It has been a huge success. It has been extraordinarily successful—far in excess of what the architects of the scheme would ever have predicted.

But that leads to the second fact, and this is the second fact that is important to remember. No. 2: the $1,000 kick-start contribution has been very expensive. The Government has spent $2.5 billion over the last 7 years on the kick-start contribution. At the time of the global financial crisis and the Canterbury rebuild, and at the time at which, as the members opposite rightly and adroitly point out so often, we are trying to get the books back into the black, $2.5 billion is a decent chunk of change. The ongoing fiscal costs of that are also very expensive. It is very expensive and KiwiSaver has been proven to be popular.

What that means now—and this is a very important point about this bill—is that this is now a “nice to have”. It is not necessary. There are 2.5 million New Zealanders in KiwiSaver already. Let us not forget the existing incentives that remain to continue in KiwiSaver—the member tax credit of $521 a year, the employment contributions that employers are required to pay. So there are plenty of good reasons to join KiwiSaver and we on this side of the House are sure that we will continue to have it.

Members opposite cry crocodile tears and there are huge amounts of hyperbole about how we are taking the ladder away. Well, sorry, but removing the $1,000 kick-start contribution for joining an already generous scheme that will provide for people’s lives in the long term is not taking the ladder away from somebody. Taking the ladder away might be opposing important changes to benefit levels like the first ones that have been made in 43 years. The party of the dispossessed and the poor has nothing to say about the fact it is the National Government that is actually making life better for those least well off in our society.

Then we get to what Labour has promised and the schmozzle it has had in the last couple of days about its stance on superannuation and its stance on KiwiSaver. Grant Robertson, in one line, spent $500 million of the next Labour Government Budget, which, hopefully, will never happen. In the unlikely event that it does, he spent $500 million in one line when he was asked on the Stuff chat website whether he would commit to bringing back the $1,000 kick-start contribution, and he said yes. OK, that is fine. You can make that choice. It is the role of the Opposition to outline alternative fiscal spending plans. But that one line, those three letters typed away—or that a staffer had typed on the Stuff chat website—cost the Government $500 million over 4 years, and it is just in line with the Labour Party’s big spending agenda. You can add it to the very long spreadsheet that exists of Labour Party spending promises that Mr Cunliffe promised at the last election, that Mr Shearer promised at the election before that, and that Phil Goff promised at the election before that: the promise to start the Cullen fund superannuation contributions again, the promise to bring back Moroccan cooking course subsidies.

Remember that? Remember when the Labour Party was outraged about the fact that we were making middle-class people who wanted to do macramé classes and Moroccan cooking classes at their local high school actually pay for them themselves as opposed to getting money from the taxpayer for them to go and learn how to rub spices on chickens. How ridiculous! So we are going to add this very expensive promise to bring back the KiwiSaver kick-start contribution to the very long list of promises that the Labour Party has made. Labour members have absolutely no fiscal credibility whatsoever. They took us into recession before the global financial crisis, they left us with a decade of deficits, and now they have the temerity to come down to this House and complain about debt and about how we are not back into surplus. Well, their record speaks for itself. It is appalling and they should be apologising to New Zealanders for it.

This is an important part of the Government’s post-Budget measures to continue this economy on its growth track and to continue to provide support to the most vulnerable New Zealanders. It is telling that on a Saturday morning the Government is removing, essentially, a form of middle-class welfare, a “nice-to-have” but something that is not necessary any more. We are removing that and instead we are supporting beneficiaries and the working poor. We find ourselves in this weird parallel universe where the Labour Party is supporting $1,000 for people who, frankly, do not need it and opposing more money for the working poor whom they have liked to cry crocodile tears about for the last 9 years—disgraceful!

Order! The next call is a split call. [Interruption] Order! The next call is a split call. Jan Logie—5 minutes.

I rise to take a call on the second reading of the KiwiSaver Budget Measures Bill. Traditionally in Parliament second readings are the time when we reflect on the select committee process, when we feed back what submitters have raised with the committee. After consideration and debate within the committee we reflect on those discussions in the House and the amendments to the bill that have happened as a result of that. Of course, because again this is happening under urgency, this speech is not able to be as fully developed as it would have been otherwise, and the public have not had that opportunity to have input.

So what I would like to focus on in this speech are the few comments I have been able to gather from people in New Zealand, through Facebook, on their views on this initiative.

💬 Hon Annette King: Real submissions.

Yes, some actual submissions. That is what I am going to do in this speech. The first one is actually not necessarily disagreeing with the Government’s view and what it is doing here. This is an academic whom I know, who is saying: “I am in mixed minds. I think it’s very disappointing they have further downgraded the incentive for people to save for their old age. But at the same time I’d be interested in seeing the demographics of those enrolled in KiwiSaver, to know whether the kick-start was effectively operating as a wealth transfer from the poor to the rich, in which case removing the kick-start would bother me less than if it was operating the other way. Now, I’d like to see that evidence from the Government so that, actually, this country and this Parliament can make a considered decision around that.”

Some of the other comments from now on are a bit clearer on their view about this initiative. Brenda Pilott, ex-head of the Public Service Association, is saying: “It’s an inexplicable move. We’re told that it’s vital people create savings for their retirement, and KiwiSaver has been a great success, partly due to this incentive. It makes no sense to cut it.” Another person, Jacob, is saying: “I feel like it’s making things harder for us future generations to save up for housing and retirement. This was a positive boost from the Government, which I saw as a good incentive to join, but now I’m like ‘Why join?’ I might as well just put my money into a savings account and then I can use it when I want, however I want, and it won’t be there for retirement.”

Another person is saying: “Before KiwiSaver was introduced I’d never saved a cent in my life. I decided to join because of the kick-starter and have now got a tidy wee sum accumulating every month and I feel proud of that.” So the incentive, the kick-start, was an incentive for somebody to save for the first time in their life, and that is backed up by policy advice from the Inland Revenue Department.

Another person was saying: “They should have given 3 months for those of us who were halfway through the paperwork for our kids to have a chance to get this incentive.” So the fact that this has been brought in without any notice means that some people were halfway through the paperwork to get this incentive for their children, and they have missed out. So again, as raised by my colleague, I would like to hear the justification for that.

We have heard from Government members that “Two and a half million people have signed up. Really—how many more people are going to do it?”. Well, some people were halfway through doing it. Somebody else is saying on that point: “Glad I took advice from the bank when I opened up an account for my daughter. But I hadn’t got on to it for my baby. Gutted she missed out.” One other person says: “Yeah, working for the people, huh? Note the kids these days just got set back yet another grand to buy that house they’ll never have because some old dudes in Parliament wanted a teeny surplus. Pathetic.” Another person is saying: “So this cut’s going to fund our $200 million fight against ISIS. What are you not telling us, John?”.

These are some of the views of New Zealanders, and, again we have been told by this Government that there is no choice but to do this if it is going to be fiscally responsible. It is interesting what it focuses on and what it is not focusing on in that discussion.

The Hon Damien O’Connor—5 minutes.

There is an old saying “Follow the money.” and so too with this piece of legislation. This country was built on capital from England coming into this country and we have been told for many, many years that we have been very poor savers. So, that terrible Tory Robert Muldoon destroyed what was a Labour Party initiative through the good work of Kirk and Rowling to build up a superannuation scheme and savings that would have given our country proper savings and proper investment funds. The terrible Tory Muldoon destroyed that and so too does this Tory Government intend to destroy the savings scheme we have. Michael Cullen brought in KiwiSaver, Kiwibank, and the Superannuation Fund to offer us security in superannuation and to encourage savings that would have given this country real investment capital—and indeed that has occurred. But what we have got now is a Tory Government intent on destroying that savings ethic. It is not the $1,000 that has given real effect here to the cuts; it is the disincentive to the hundreds of thousands of Kiwis out there who have wanted to get into KiwiSaver. This will destroy that incentive. Why? Well, follow the money.

If we have, as we do now, a building capital fund to invest in our future, to take ownership of our own assets, we can control our own destiny. But I will tell you what—if you are a Tory, a money trader, or a traitor you do not want that. You do not want that. So what we have got is Jenny Shipley, Chris Tremain, and Don Brash in charge now of Chinese banks that are coming in to this country with trillions of dollars available to invest in New Zealand. KiwiSaver, the Superannuation Fund, and Kiwibank are the only fair, honest New Zealand players to counter that investment. What this bunch of terrible Tories is doing is exactly the same as Robert Muldoon did: undermining the ability of New Zealanders to invest in our future through a building capital fund that has real wealth and real capability.

I think it is an absolute outrage that the Government is taking from New Zealanders, from young New Zealanders, the incentive to invest in the future, not just in their own personal accounts but in the building of a capital fund that can invest in the value-added investment we need. In fact, we have got Ruth Richardson in the ANZ bank trotting around the country at the moment saying two things: firstly, that cooperatives are no good, so get rid of Fonterra; the second thing she is saying is that we need billions of dollars to grow this economy into the future. And who is going to provide that? Oh, your mate Jenny Shipley through her Chinese bank, your mate Chris Tremain through a Chinese bank, and Don Brash as well. The Tory Government in power now wants to undermine the growing focus on savings and investment from within this country. I think it is an outrage and I think this is a treacherous act that might seem on the face of it just fiscal responsibility.

As the bill says quite honestly, this “will achieve significant fiscal savings”, but then it goes on to say a ridiculous statement that cutting back this $1,000 “will therefore improve the value for money of this KiwiSaver scheme.” This is about undermining the objectives of the KiwiSaver scheme. It is about undermining the savings ethic of a country that has just started to realise the value in that. And the Tory mates in here and the ones out there are conspiring to ensure that we are fed a diet of foreign investment in capital rather than that built up by our own people for our own future. This is an outrageous piece of legislation, and I am sure Nick Smith is going to get up on his hind legs and say it is wonderful. Justify what Jenny Shipley is doing. Justify how you can take a $1,000 incentive away from the young New Zealanders who want to own their own future.

That speech from Damien O’Connor was another speech that shows just how financially illiterate people are on the Opposition benches. Here is their line: you borrow to save, because the only way the Government, in the next year, would be able to provide the $1,000 kick-start for KiwiSaver is to borrow the money. The members opposite have got this sort of smoke and mirrors approach that if the Government goes and borrows money to save, somehow you are better off. That is a loopiness that reflects why they are on those benches and we are over here.

The second point I wish to make is in respect of the issue of New Zealand’s net foreign investment position. I agree with Mr O’Connor that it is absolutely critical that we grow the net wealth of this country, but I want to invite the member to have a look at the Budget tables. What they show is that over the course of the years that Mr Damien O’Connor was in Government, New Zealand’s net investment position declined in every single year. In fact—

💬 Hon Damien O’Connor: How much did you borrow, Nick?

In fact, Mr O’Connor, look at the figures for 2008, in which New Zealand’s balance of payments was a record worst in 50 years of minus 9 percent. Look at what New Zealand’s net investment position was when you left the Treasury benches, where we had reached the point of minus 100 percent of GDP, a figure that has consistently improved, and these Budget documents show that it is continuing to improve.

Let us come to KiwiSaver. When I sat where Damien O’Connor sits, on the Opposition benches, the Government of the day said that it had a target that by 2015 there would be 700,000 people in KiwiSaver—700,000. Do you know how many people are in KiwiSaver now as a consequence of the changed savings culture? There are 2.4 million in KiwiSaver—2.4 million. So how can the members opposite bleat, whinge, and moan that we have not changed the savings culture of New Zealand when we now have 2.4 million people, over three times as many—three times as many—as the architect of KiwiSaver promised us back in 2007 when the scheme was launched?

But I want to talk about broader superannuation issues. I listened to the radio yesterday and heard the Leader of the Opposition say that it is now Labour Party policy to means test superannuation. I was saying to myself: “Well, that sounds a little bit like policy on the hoof.” I could hear the jitters right through Labour’s ranks as it realised that its latest Leader of the Opposition had suffered a severe dose—

💬 Kris Faafoi: This Budget is policy on the hoof.

I am sorry. Does that member support the means test for superannuation? Answer the question. Answer the question. Does the member support his leader’s statement yesterday that Labour wants to means test superannuation? You see, what we know is going on is that Andrew Little has a secret plan for New Zealand and he will not come clean. We found out yesterday. We got a window into his ideas for New Zealand. He has got a sneaky plan to change New Zealand superannuation, which I know in my electorate in Nelson will see support for Labour further plummeting from the lowest levels ever that it achieved in the 2014 election.

You see, the problem is that members opposite know how to moan. They are quite good at it. They know how to whinge. They know how to criticise. But they are absolutely blank when it comes to a positive plan to take this country forward. It is illustrated by what has happened with the bills flowing from this year’s Budget. You see, they have criticised the support we are providing in our children in hardship package, and then voted for the bill.

But here is the contradiction. Members opposite cannot vote for a bill that provides for more support for New Zealand’s poorest families in one breath, then in the next breath vote against the changes that will enable us to fund that, and then in the third breath criticise us because the surplus is not big enough. Well, I am sorry, it is time for them to go back to primer 1 or year 1 maths. Your numbers have to add up. Budgets are about choices. We are making wise choices that enable us to support those families that are most in need, while at the same time being fiscally responsible.

My very last point is this. I have heard in this Budget debate the whingeing and moaning about the variation of the Government’s Budget figures that showed that over the last year, rather than receiving a surplus of 0.4 percent of a billion dollars, we have a deficit of 0.6 percent of a billion dollars—a variation of 1 percent. I would remind members opposite, before they give one of those chest-pumping, vein-breaking speeches about the evils of that, of what happened in Labour’s last Budget. It promised a surplus of $1.3 billion. It actually delivered a deficit of over $3 billion and was out by over $5 billion. That is, it was out by 8 percent in its numbers. Bill English was out by 1 percent.

Members on this side know the definition of good fiscal management. We are the first OECD country to be back in the black. We have got increasing surpluses into future years—increasing surpluses into future years. That is a fiscal record to be proud of, and if any member doubts it, I just ask them to have a look across the Tasman, where last week the Australian Government delivered a Budget with a $40 billion deficit—a $40 billion deficit—and deficits out into the next 3 years. That just illustrates how well we are doing.

The final proof of the pudding is this. New Zealanders know we are doing well. That is why this month, for the first time—

💬 Hon Damien O’Connor: No, they don’t.

No, they do not? Well, explain this. Why is it that for the first time in 20 years there are more New Zealanders choosing to come home than leaving? Are they wrong? They are absolutely right. They know that this is a country that is doing well, a country that has a plan, a country that has a Prime Minister and a Deputy Prime Minister who mean what they say and do what they say, as illustrated in this Budget. I am proud to be part of it and part of this bill, which is part of ensuring fiscal discipline and the right choices for our country.

Would you really believe the numbers coming out of the head of that man, Nick Smith, the “Minister for Housing Inflation”? Here is a number for you: $800,000—$800,000. That is the average price of an Auckland home today and that has occurred under that man’s watch. So when he stands up and tells you about numbers, do not even believe it. The worst inflation in New Zealand’s housing history has happened under his watch.

If there is a Budget that separates this side of the House from the other it is this Budget, and it is about “short-termism” versus putting something away for the future. This change to KiwiSaver is exactly—exactly—what I am talking about in terms of good fiscal management. It is about broken promises. Here is a promise I want to read out to you. Here is a promise I want to read out to you: “The $1,000 kick-start for KiwiSaver’s members will remain as it is now.”—will remain as it is now. Who said that in 2011? Well, the Prime Minister said that—the Prime Minister said that. It is another broken promise.

This Government is going down the same track as its ancestors did back in the 1970s when Muldoon came in and killed the superannuation budget that was around then. He pulled it apart. People had accepted it. People believed and knew that that was going to ensure that their savings were protected and that New Zealand would have a pool of investment for the future. That pool, if that vandal Robert Muldoon had not pulled it apart, would have been worth $280 billion today—$280 billion. The big point about this is not just about the ability to save and to ensure that that is there for the people in the future. It is also about ensuring that that money, that $280 billion, is able to be invested into the New Zealand economy. It does not require us to sell off our assets. It does not require us to go into debt—and this Government has gone $70 billion into debt. It enables us to invest in our future with our own money. This Government axed that. It poleaxed that.

Let us look at what has happened. In the same tradition as the Muldoon Government and the same tradition of not looking at the future and looking at cynical, short-term, smart alec Budgets, what has happened here over the last few years is this Government has gone on and progressively cut and chopped KiwiSaver. Let us go back and have a look at what the legacy of this Government is with regard to KiwiSaver, because this is not the only time it has stepped in and had a chop at KiwiSaver and tried to vandalise it. The minimum member contribution—remember that? That was 4 percent. That got cut to 2 percent in 2009. It was a cut. There is the first one.

The second one is the member fee subsidy. That was cut in 2009—another cut to KiwiSaver and the incentives of KiwiSaver. Here is a third one: compulsory employer contributions. They were cut by that Government in 2009. That is three—three cuts to KiwiSaver since this Government has been in power. Four: employer tax credits—cut. Employers no longer have an incentive. That was cut and taken away. There are four changes to KiwiSaver that this Government has brought in. Five: the member tax credit—cut by $500 to members who used to get that. That was back in 2012. The last one today that has happened under this Budget is the KiwiSaver kick-start—cut. One thousand dollars has been removed from future generations—and it was given to those guys over there, for sure, and their families. They made sure that their families got their $1,000 before they stepped in and chopped it.

They were making a big play over on that side of the House that, somehow, this is not going to affect the take-up of people in KiwiSaver. Let us face it; KiwiSaver is fantastically successful—fantastically successful. Two and a half million people in New Zealand have signed up for KiwiSaver. Two and a half million people have gone into that system so that they can start saving for their retirement. What does the Inland Revenue Department say about that? In its analysis, from people it has asked and the various surveys it has done, what does it say? Well, here is a fact. The Inland Revenue Department—a Government department—says that 67 percent of members joined KiwiSaver because of the kick-start. Two-thirds of those people joining KiwiSaver voluntarily did so because of the kick-start. This Government—the vandal that it is, the “short-termism” that it is—has gone out and removed that and removed that incentive. It is like you have got a successful policy and what you do is you keep cutting and cutting it and cutting it and cutting it until it falls over. Then the Government will blame it on somebody else or it will not be in Government. It will leave it to us to actually have to fix up. This is a travesty. This is a Budget about “short-termism”, broken promises, and not looking out for future generations.

But look, do not take our word on how stupid this policy is. Let us take the Financial Services Council’s word. The Financial Services Council chair is Jenny Shipley, a former National Prime Minister, and what does it say? What does it say about this policy of cutting the KiwiSaver kick-start? Listen to this: “This is like a parent raiding their own child’s piggy bank to pay for a round of drinks already promised down at the pub.” Let me read that again, just in case you did not get it clear. This is not coming from the Labour Party; this is coming from the Financial Services Council. “This is like a parent raiding their own child’s piggy bank to pay for a round of drinks already promised down at the pub.” Does that not say it all? It is about “short-termism”, looking at what is in front of you, smart alec, gimmicky little promises, and forgetting about what is actually happening further down the road for the future generations.

“Raiding the piggy banks”—the council goes on to say—“of the next generation is not the smartest move when the population is ageing. It is a pity, that the Government’s failure to manage its own finances, will hold back some younger New Zealanders from better managing their own future finances.” In other words, not only is this stupid but also it sets an extraordinarily unfortunate example to everybody else out there who says: “Look out for yourself now because who knows what is going to happen in the future.”

The issue about retirement policies is that they are about certainty. You invest in them now, hoping that everything will be fixed and right in 20, 30, or 40 years’ time. When with every single Budget, this Government comes in and cuts, cuts, cuts what people have come to believe is their right—and when they are putting in their money every week on the understanding that there is going to be some sort of nest egg at the end, and this Government comes in and cuts it and changes it every single time—then they have no confidence in it. Suddenly, we kill what has been a fabulous means of being able to save and being able to invest in New Zealand’s future. This Government is about “short-termism”, it is about broken promises, and it does not deserve to be sitting on that side of the House.

It has been a perverse couple of days, I have got to say. We announced a policy of providing $790 million to families in need—and it is a great thing to do for New Zealand families—and, yet, we have got an Opposition saying: “No, we do not want to support that.” Then we have got an Opposition that says: “We should not be removing this $1,000 subsidy for the KiwiSaver.” and that it wants to support other people. Then, at the same time, we have got an Opposition saying that we need to be in surplus. The reality is I just cannot see how the Opposition can make those numbers work. What we are doing is actually focusing on the people who really need it. That is why we are putting $790 million into a scheme that is going to support the people whom, normally, the Opposition wants to support. We are the ones who want to care for them. We are the ones who want to respect them. It is not only a financial package; it goes with all the other things that we are doing, such as the free doctors visits for children under 13. It is also about providing better housing for those families in need. It is about getting better outcomes for the children from those families in need, and that is why this Government is so focused on it. I just cannot understand why this Opposition wants to stop all of these good measures that support these families in need. It is disappointing; it is actually illogical.

I just actually want to now turn to the KiwiSaver issue itself. As our colleague before just spoke of, the original target was to get 700,000 people into KiwiSaver. Luckily, and with good management and with setting the right parameters, we have got 2.5 million people in this KiwiSaver scheme—2.5 million New Zealanders who have invested in it. That is a fantastic thing and I think that we should be celebrating that. But what people do not understand is that there are still very strong incentives to continue to invest in KiwiSaver and to want to join that scheme. I point to the $521 per annum that will be paid automatically by this Government into everyone’s KiwiSaver account when they turn 18 or when they get a job—$521 per annum every year until they retire. The second thing is that there is now another strong incentive for people to want to join this scheme, and that is because we have introduced this package of housing measures—the KiwiSaver HomeStart grant package—which means that people should invest in KiwiSaver because they can access more money to get the first deposit to buy their first home. That is why there are still incredibly strong incentives to be involved in this KiwiSaver scheme.

I now just want to turn to some advice we received from the other side of the House. I heard these strange figures. If you invested $1,000—and I presume that is from when you are born—due to compounding interest, I think the figure was that you would get to $140,000. I sat down before and did just a couple of little calculations, and I am just struggling to make it work. Let us assume that from year zero to 65 years old, we are averaging, say, a 5 percent per annum return. I realise that because of the wonderful management of the New Zealand Superannuation Fund, we are achieving 10 percent, but I have used the figure for the long-term run average of 5 percent. Actually if you used discount rates and things, you are normally work about 6 percent, but anyway, at 5 percent, do you know what the figure is? It is certainly not $140,000. If you invested the $1,000 at day one, it would actually be worth about $23,600 over 65 years. That is just a far cry from what I heard from over on the other side.

Look, the reality is what we are doing with that $1,000 is diverting it to the people who we believe need it most. I just cannot understand why anyone in this House would want to sit there and shout out and decry what this Government is doing. This is about a Government that cares about families and that has done concrete things to make it achieve those things that will improve the lifestyle of these people, create jobs, and give them the dignity and the respect that they deserve. I commend this bill.