KiwiSaver Budget Measures Bill

This is a clause that refers to the principal Act and to amending the principal Act. I have a very short story that I wish to share with the Committee, which illustrates the benefit of not amending this Act but, instead, of attaching the legislation to another Act. It is a story that some will know and that some will not know. It is the story of Nasrudin.

Nasrudin was caught in the act and sentenced to die. Hauled up before the king, he was asked by the royal presence: “Is there any reason at all why I shouldn’t have your head off right now?”. To which, he replied: “Oh, king, live for ever. I know that I, the mullah Nasrudin, am the greatest teacher in your kingdom, and it would surely be a waste to kill such a great teacher. So skilled am I that I could even teach your favourite horse to sing, given a year to work on it.” The king was amused and said: “Very well then, you move into the stable immediately, and if the horse isn’t singing a year from now, we’ll think of something interesting to do with you.” The story concludes that as he was returning to his cell to pick up his spare rags, his cellmate remonstrated: “Now that was a very stupid promise. You know that you can’t teach that horse to sing, no matter how long you try.” Nasrudin responded: “Not at all. I have a year now that I didn’t have before, and a lot of things can happen in a year. The king might die. The horse might die. I might die. And who knows, maybe the horse will sing.” That is a story—

The CHAIRPERSON (Lindsay Tisch): Order! [Interruption] Order! We have had 2 minutes of something that is completely unrelated to the bill. I will ask the member to focus on the clause before the Committee in future debates. This is clause 3. It is a very narrow debate, this part on clause 3, so I now ask the member to continue on clause 3.

Point of order, Mr Chairperson.

The CHAIRPERSON (Lindsay Tisch): No, I have ruled. I am waiting for you to continue.

I will continue to speak to the principal Act amendment by saying that the story that I have just told illustrates clearly the benefit of not amending this principal Act and of amending another Act.

For example, the estimates—what if we amended the estimates? That debate is still to be had. We have not had that debate yet. There are plenty of other debates that will be had this year in the House. If this legislation was amending those Acts, if the legislation was jiggered around so that it could fit into another Act, it would wait to be passed and we would not be passing it under urgency today without input from the public and without the opportunity to speak about why this deprives New Zealanders—half a million New Zealanders, the Government tells us—of the opportunity to get the $1,000 kick-start payment. That is why it is important to wait. Many things could happen if we amended this legislation in another way and allowed an opportunity for the public to comment. The Government might be persuaded. It might hear the logic that has been espoused in this House. No doubt there will be more that the public can add. That is why we have the select committee process. In the short time we have had, we have already heard from some stakeholders who have launched press releases to the public—for example, the Financial Services Council has said that this legislation is like robbing the kids’ piggy banks and heading down to the pub for one more beer.

Many members of the public will have their own wisdom to bring to the table. They may bring their own version of the story of Nasrudin. What we do know is that when we have measured processes through this House, we get valuable input from the public. So by changing the principal Act that is to be amended to a different Act that is to be debated in this parliamentary Chamber later, we provide more opportunity for people to engage with the debate and for this crazy change to be pushed out to another time. Who knows—the Prime Minister may step aside. We know that he is increasingly out of touch with New Zealanders, and there are movements within his own Cabinet. So many, many things can happen, and that is why if we do not amend this principal Act in this way but choose to attach it to another Act, additional time will benefit us all.

Firstly, let us examine what would happen if we did not amend this Act—if we actually left this entire clause out. What would happen if we left this entire clause out? That is an interesting question. What happens if you leave the entire clause out of the bill is that the legislation does not make sense any more. On this side of the Committee, we would argue that it never made sense anyway, but that is a debating point. We do not particularly like what is being rammed through here under urgency. But, actually, if you did not amend the principal Act, the KiwiSaver Act 2006—an Act that was designed to increase savings and an Act that we have been told in the debate has increased savings by an estimated 36 percent, according the Inland Revenue Department’s own research on the effect of the KiwiSaver Act 2006, which is referred to in this clause—we would continue, we imagine, to attract savers at a rate of additionality that is similar to the 36 percent reported by the Inland Revenue Department in its extensive review of the effects of this particular legislation.

It said that its estimate was about 36 percent in 2010, and that that had not changed significantly in 2013. So what it is saying there is that this Act increases savings for New Zealanders. It actually changes the savings culture. If you did not put this clause in here—if this clause was not in here and this Act was not amended—then that 36 percent would not be lost, and New Zealanders would continue to save at a rate superior to the rate that they were saving before the KiwiSaver Act 2006 was introduced. That is why I think it is important that we just leave this clause out. I would be in favour of that. I would be interested to see what the Government members say—whether they think that this clause should be left out or not. I am sure that Dr Nick Smith, the Minister in the chair, will have a view on that—he has a view on most things—unless he is so ashamed of this legislation that he does not wish to speak to this particular clause.

💬 Hon Gerry Brownlee: Like the member. I’m confounded that the member hasn’t been on one of those quiz shows. He knows so much about everything.

That is very flattering, Mr Brownlee—very flattering, Mr Brownlee. I would enjoy being on a quiz show with Mr Brownlee, because I do find Mr Brownlee entertaining at least. Although Mr Brownlee may not bring much substance to this particular debate, he is an entertaining member of the House, and so I would welcome the opportunity to be on a quiz show with him. I do not know—perhaps he can suggest some shows. He is quick on his feet. We should have a debate about what show that might be.

I will return to the matter at hand, although I look forward to Mr Brownlee’s contribution shortly, because I expect he will want to defend this clause.

💬 Hon Gerry Brownlee: I have spoken, and you should consider it the last word.

Mr Brownlee says that his speech should be considered the last word. If that is not a sign of a Government that is out of touch and that has lost touch with the people of New Zealand, then I do not think anything is. That is the kind of wisdom that Mr Brownlee brings to this Chamber—his word is the last word, he is the Leader of the House. That is the reason that this legislation is going through under urgency, because he says his word is the last word, New Zealanders be damned. Anyone who objects to this should not have the opportunity to participate in the parliamentary debate. That is the kind of Government that we have opposite. That is the kind of Government we are staring down today as we protest against the changes that are proposed in this bill, which over the next 4 years will rob half a million New Zealanders of that $1,000 that every single National MP has taken advantage of. Not one of them will stand up and say that they have not taken advantage of it. That is what we are facing here in this Committee. I think that is very, very much a lesson to those at home.

Mr Smith is putting up his hand to speak. I look forward to his contribution after this, because he is a man who might set that record straight. He might say that many National MPs have not taken up that $1,000. He might say that he has not lined up his own family to take advantage of it. Who knows? We will see. We have certainly heard from one member of this House who has confessed that he and his family have taken it up, and now they are cutting it off for everyone else.

This is a Government that is out of ideas. It has failed to produce a surplus. And here we have—

The CHAIRPERSON (Lindsay Tisch): Order! Come back.

Yes, coming back to the point, Mr Chair, and you are quite rightly bringing me back to the point of the matter. I was feeling quite passionate.

If we left out clause 3, the bill would not amend the KiwiSaver Act and New Zealanders would continue to save at that additional rate that the Inland Revenue Department recommends of 36 percent and the savings of New Zealand would continue to be superior to what they were before the Act was introduced. That is why I think clause 3 should be left out of this bill. I do think that would make a difference for New Zealand in the longer term. It would encourage the savings culture that this Labour KiwiSaver Act brought into place. It would be a disappointment to the Government, of course, because it is more concerned with its sham surplus, which it cannot achieve anyway, and filling the billion-dollar black hole in its Budget, which its economic mismanagement has opened up over the last year.

To speak to clause 3 of this bill: it is a very narrow debate and it does focus around the Act that this bill amends, the KiwiSaver Act 2006. I think it would be useful to look at the purpose of that Act, if I can have some time from the Chair to read that out, because I think what we may have here as a situation is where what is being amended in this bill does not necessarily match with the purpose set out in the principal Act. If I can quote from the purpose section of the KiwiSaver Act 2006, which reads: “(1) The purpose of this Act is to encourage a long-term savings habit and asset accumulation by individuals who are not in a position to enjoy standards of living in retirement similar to those in pre-retirement. The Act aims to increase individuals’ well-being and financial independence, particularly in retirement, and to provide retirement benefits.” As I said, that is the purpose as set out in the KiwiSaver Act 2006. The main function of the bill in front of us now is to remove the $1,000 kick-start payment to anyone who wants to join KiwiSaver. One of the arguments on this side of the Chamber around the amendments to the KiwiSaver Act 2006 is that it will no longer allow youngsters to sign up to KiwiSaver and get that $1,000 kick-start—

💬 Hon Ruth Dyson: From when? From next week?

Not from next week but backdated to 2 p.m. on 21 May. I would like to ask the Minister in the chair how taking away that $1,000 kick-start matches with encouraging “a long-term savings habit and asset accumulation by individuals”. Because I do not think what the Government is doing in this bill, and the purpose of the principal Act being amended, match up. KiwiSaver was set up by Dr Cullen in the last Labour Government to do as the purpose says—to encourage long-term savings. Not by people of age but across the range, and, as has been said in this Chamber, many people have taken up that opportunity. The $1,000 kick-start was seen as one of those cherries for people to sign up. But as of 2 p.m. on Thursday, 21 May 2015, as is amended in this bill, Kiwis will no longer be able to do that. One of the Supplementary Order Papers that I have to clause 5 is to amend the bill in its current form—

The CHAIRPERSON (Lindsay Tisch): We are not on clause 5.

—but which will change, obviously, this KiwiSaver Act 2006 to continue to encourage that long-term savings habit that is set out in this piece of legislation. I would ask the Minister in the chair—and I do appreciate that he has taken some calls before—to try to explain to those at home, who might have young children, as to why, before 21 May at 2 p.m., it was a good incentive for them to sign their children up to KiwiSaver with a $1,000 kick-start, but now it is not. Or is this simply a measure to raise revenue to use for other things? Because that is what this seems like, because the principal Act, as it stands, is pretty clear about what the purpose is and what the Government of that day was trying to achieve. That is long-term savings habits. I would think that starting saving from birth until 65 is pretty long-term. But now this Government is taking away the ability for Kiwi families to do that.

On my Facebook site over the lunch break people have commented about how it was a really good thing that when we had a child the $1,000 incentive was there to make it an even better incentive to join up to KiwiSaver. But now, under the amendment of the KiwiSaver Act 2006, that is no longer there. I want to know, from this Government, why it does not think it is a good thing for Kiwi parents to start their kids saving from the very earliest of ages. Because that is essentially what this is doing. Many parents have taken up the opportunity to get their kids started, almost from birth, and this Government is taking that opportunity from them.

Thank you very much, Mr Chair.

💬 Hon Gerry Brownlee: I want to hear more from David Clark.

Look, I agree with Mr Brownlee. We all want to hear more from Dr David Clark. The really good news for Mr Brownlee is he is going to get numerous opportunities to hear from Dr David Clark over the coming hours in this Chamber. I am sure Gerry Brownlee will hang on every single word that comes from Dr David Clark. I want to speak to clause 3 of this bill.

💬 Hon Ruth Dyson: That’s good because that’s what we’re debating.

That is right. That is my first key performance indicator for the day ticked off: I am on the right clause. The reason I want to take a call on clause 3—

💬 Hon Gerry Brownlee: Come clean and tell us you know nothing about it.

Oh, I see; here we go. Mr Brownlee asked whether I know anything about clause 3. We will read it out slowly for the Leader of the House: “Principal Act amended—This Act amends the KiwiSaver Act 2006.” There are four numbers in a row. You will recognise the 2, then two 0s, and a 6. If you put them all together in one, that is 2006. That is in clause 3 of the bill. There will be many thousands of New Zealanders hanging off this debate, watching it on television, and listening to it on the radio, who will be asking why it is—

💬 Hon Gerry Brownlee: Wondering why you’re wasting time.

Ah! Mr Brownlee says he is wondering why we are wasting time. There is only one person in this Chamber who can explain—and that is Gerry Brownlee—why it is that he is overseeing a piece of legislation coming into this Chamber that retrospectively takes away people’s rights. It retrospectively takes away $1,000, rips it out of their pockets. Gerry Brownlee can explain that. He is the one wasting the time and money of New Zealanders by having us here in this Chamber. So clause 3—

💬 Hon Gerry Brownlee: Will Labour undo this?

Oh, yeah! Oh, yeah! We have been there; we have been there, Gerry, because we believe in savings. We believe that every New Zealander should actually have a right to savings. Every New Zealander should have the ability to put something away for the future—not just Gerry Brownlee’s rich mates but young people and people from low-income backgrounds. They should all have the opportunity, but Gerry Brownlee wants to take that away. He wants to make KiwiSaver only for the people who can walk in on the first day and say: “I can do KiwiSaver off the bat; I know I have got enough money.” It is the people who would not have saved before this incentive came in whom Gerry Brownlee does not want to have in KiwiSaver. [Interruption]

Responding to those interjections, I want to return to clause 3. There will be people out there watching and listening who are wondering why it is that in each bill—

💬 Ron Mark: Oh, they’re glued to the television!

—they are; they will be glued to this—that comes before the House, the principal Act is named in a clause on its own. It does seem a little unusual to have a clause that simply says: “This Act amends the KiwiSaver Act 2006.” The reason that clauses like that are put in legislation is that people will look at an amendment bill like this and ask: “What are they doing? Why on earth are they putting this measure up?”. It refers people back to the KiwiSaver Act 2006 to enable them to understand what it is that is being amended here.

You would look at this piece of legislation and you would wonder why on earth someone would introduce legislation to take the incentive away from being part of the scheme. That is what the KiwiSaver Act 2006 is about: “The purpose of this Act is to encourage a long-term savings habit and asset accumulation by individuals who are not”—here is the one for Mr Brownlee—“in a position to enjoy standards of living in retirement similar to those in pre-retirement.” It is very important to have clause 3 in the bill because it refers people back to the actual purpose of KiwiSaver. If they were looking at just this amendment bill, they would be confused. They would think: “Well, KiwiSaver is a scheme just for people who can afford to get into it. We do not need to have any incentives for people to get into KiwiSaver.”

When we were sitting in the Budget lock-up, in a sort of airless room downstairs, on Thursday, we read this and we thought: “This is ridiculous. This is taking away the incentives that are in the KiwiSaver Act 2006.” And then we saw the retrospectivity. Why would you make it retrospective? Why would you do that? You do it because you know that this is a good incentive. It has been made retrospective because if the Government waited before putting this legislation through, thousands of people would sign up to KiwiSaver. Is that not the point? Is that not the very point? The reason the Government is doing this retrospectively is that it knows that this is a good incentive, that it is actually a useful part of the scheme. The bill amends the KiwiSaver Act 2006 in a way that actually, in my opinion, undermines the purpose.

💬 Paul Foster-Bell: What’s in it for Gene Simmons?

Paul Foster-Bell, I have to say, would probably look better in Gene Simmons’ make up than he does at the moment. He is clearly a long-term fan of glam rock. We on this side of the Chamber can all see that. Actually, to be honest, I think Paul Foster-Bell is a bit more Gene Pitney than he is Gene Simmons. [Interruption] No, Mr Foster-Bell, if you want to be Richard Simmons, you need to get to the gym a bit more often, OK?

💬 Hon Member: Oh, that’s unnecessary.

That is what he just called me, by the way. Where were we before I was so rudely interrupted?

The CHAIRPERSON (Lindsay Tisch): Clause 3.

That is right—clause 3 of the bill. That is right. As you, Mr Chair, indicate by your hand movements, clause 3 is a very small clause that is about naming the Act that is being amended here.

I think it is very important for all members of the Committee to consider again what the purpose of the KiwiSaver Act 2006 is. When KiwiSaver was brought in, National Party members never liked it. They never liked it because it reminded them of an earlier Act that actually created a universal, comprehensive, compulsory superannuation scheme that their former leader Sir Robert Muldoon came along and pulled apart and that would have been worth $200 billion or maybe $500 billion - odd dollars today. That Act from the 1970s could have been what is being amended today, but, no, today it is the 2006 Act that is being amended.

This clause allows us to refer back to the purpose of the KiwiSaver Act. I got halfway through that before I was interrupted. The Act aims to increase individuals’ well-being and financial independence, particularly in retirement, and to provide retirement benefits. To that end, the Act provides for the KiwiSaver scheme to facilitate individuals’ savings, principally through the workplace. It is an excellent Act with an excellent purpose being thoroughly undermined by this amendment bill today. It is undermined by taking away the incentive that has made a huge difference to whether or not people sign up to the scheme. Just today—

💬 Hon Gerry Brownlee: Why means test it?

Why means test it? Gerry Brownlee wants to means test KiwiSaver, ladies and gentlemen. That is what he wants to do. There is only one political party that has tried means testing of superannuation, and that is the National Party. That was Gerry Brownlee’s party. What did you think of it, Mr Brownlee, when National went for asset testing? What did you think of that?

💬 Hon Gerry Brownlee: I am really interested in what Andrew Little wants to do.

What do you know? He does not want to answer—he does not want to answer—because it was his party that went down the path of asset testing. It was his party that wanted means testing for superannuation. I stand proudly for a party that has worked hard to give people security and dignity in retirement by introducing the KiwiSaver Act 2006, by starting the Cullen Superannuation Fund, and by keeping superannuation universal. It is members on that side of the Chamber who have got something to answer for when it comes to cutting back—eight cuts to KiwiSaver, asset testing on superannuation, and Sir Robert Muldoon taking away a fund that would have been compulsory superannuation. That is your legacy, Mr Brownlee. That is the legacy you should get up on your feet to try to defend.

On this side of the Chamber we are proud of the KiwiSaver Act 2006. We are proud of the fact that we have given New Zealanders the kind of dignity in retirement that you and your cronies would deny them. That is what this bill is about. This bill is about taking away from ordinary working New Zealanders a little bit of an incentive to get into saving—500,000 New Zealanders. That is what they are budgeting on—500,000 New Zealanders. It is taking away that $1,000 from them. That is the record of a party that does not support dignity in retirement for all New Zealanders, that never liked the KiwiSaver scheme, and that has undermined it from day one of getting into Government. This is just the latest step on that path—amending the KiwiSaver Act 2006 by pulling the rug out from underneath people, taking away the very thing that allows those people from low-income backgrounds to get in. Just today I got an email in my in-box when I got back from Auckland, to tell me—

💬 Paul Foster-Bell: Just the one.

I will explain to you later what emails are, Paul. I got this email from a constituent saying that they had wanted to join KiwiSaver, they were waiting to join KiwiSaver, and they had just got a full-time job that would allow them to do this, but now it has been ripped away by a Government that simply does not care enough.

I rise to take probably a fairly short call on clause 3 of the KiwiSaver Budget Measures Bill, the amendment to the principal Act, the KiwiSaver Act 2006.

💬 Hon Gerry Brownlee: Oh, you’ll spin it out.

I may not, Mr Brownlee. I may not spin it out. There is a valid point I would like to make in relation to this. This is just about amending the KiwiSaver Act 2006. As has been mentioned earlier, it relates to the purpose of that primary Act, which I also want to refer to. The purpose of the KiwiSaver Act is to encourage a long-term savings habit and asset accumulation by individuals who are not in a position to enjoy standards of living in retirement similar to those in pre-retirement. That is a key point I would like to address. By amending this Act, we need to consider the purpose of the original Act and the role that the $1,000 kick-start incentive plays in achieving that purpose.

The advice that I am looking at from the Inland Revenue Department from 2011, when it was considering the removal of that kick-start programme, was that “this could damage KiwiSaver’s attractiveness to new members. There is a strong psychological boost attached with such an early initial increase in a member’s funds and, on balance, the potential damage to public perception and to the initial attractiveness of KiwiSaver outweighs the diminishing value of fiscal savings made by reducing or removing the iconic kick-start payment.” So there we have, just a few years ago, advice directly from the Inland Revenue Department on evaluating the scheme and potential cost-benefit analyses of removing this exact provision of the kick-start contribution. The department is telling us pretty clearly that there is the potential to undermine the entire purpose of the Act. And here we are in Parliament, passing this bill under urgency with no ability for the Inland Revenue Department to inform members of Parliament around whether it has potentially changed its mind since then—give it some benefit, the Government—or not, and there is no ability for the public, either, to contribute to that point.

I feel compelled as well, to mention the point around ethics in this provision. This is focused on individuals who are not in a position to enjoy standards of living in retirement similar to those in pre-retirement. I do feel compelled to mention, because it has particular value in relation to the kick-start, the increasing number of New Zealanders now for whom superannuation represents a step up rather than a step down, in terms of their incomes. All too many people with disabilities, who are locked out of the employment market or who for reasons of sickness are on a benefit, are living below the poverty line. When they reach the age of retirement, to them, superannuation is just so much more generous than the conditions that they are living in on a daily basis. We have such low poverty in our older population, relative to our younger population—a rate of 3 percent compared with over 20 percent in our children—that we do need to be looking at that issue and we do need to be looking at levels of debt in this country, and savings is a key aspect of that.

The most recent research that we have available to us shows that the top 10 percent in New Zealand own over 51 percent of the wealth, and the bottom 20 percent of New Zealanders—and, you know, that is a fifth of our population, 20 percent, stating the obvious—have zero or little wealth and are often in negative. They are in debt. This $1,000, this whole purpose of KiwiSaver, is in some part to shift that round. It is actually just to say that as a society we are all better off the more equal we are. It is the role of Government when the market fails, and, actually, I would just say in terms of helping us look after each other, to recognise that we are all in this together. There is a role for Government and that relates to the purpose of this clause, the bill, and the purpose of the KiwiSaver Act 2006. Thank you.

Clause 3 is relating this back to the principal Act, which, of course, is the KiwiSaver Act 2006. In this short call I want to go back to why the KiwiSaver Act was put in place in the first place. These remarks are foreshadowed by the earlier call that I took on clause 2.

There were always three separate and mutually reinforcing objectives around KiwiSaver. The Government seems to be ignoring two of them. The first one, which is common ground, is that KiwiSaver helps New Zealanders save. In particular it helps those who otherwise would have low savings rates. One of things that Labour abhors is that the removal of the kick-start contribution weakens the incentives, which are particularly important for those who have the least, and, therefore, actually thwarts that objective.

The Inland Revenue Department study upon which this piece of legislation has been based is in our view a very narrow and very flawed piece of work, for several reasons. Firstly, it ignores the broader goals, which I will discuss in a second. Secondly, because it talks about leakage from a target group, which is low-income, low-saving New Zealanders, it does not address the fact that there is a broader benefit for all New Zealanders saving. We would say the Government releasing that Inland Revenue Department study on the same day that it put the legislation into the House is really just political cover. We do not think that it has a high level of analytical weight that can be attached to it.

What are the other two objectives, beyond helping individual New Zealand families save? The first is actually touched upon briefly in the Government’s Fiscal Strategy Report released this week. On page B.29 it is a goal of the Government to reduce “… government debt through higher public savings [plus put] New Zealand in a better position to cope with the next economic shock or natural disaster. It helps to raise national savings, maintain credibility with international lenders, reduce finance costs and allow the internationally competitive sectors of the economy to grow.” It goes on to talk about the advantages of the New Zealand Superannuation Fund, but, interestingly enough, does not mention KiwiSaver per se.

So it is common ground between the two sides of the Chamber that we need to grow New Zealand’s savings. Members opposite are putting all of their eggs in the basket of public saving, reducing the Crown’s debt. The problem with that argument is that it misses the fact that actually only 15 percent of New Zealand’s total debt is public and 85 percent of it—

💬 Brett Hudson: Borrow and spend. Nothing changes.

These are facts. Listen to the facts. Eighty-five percent of it is private debt. If we are going to turn New Zealand round, if we are going to become more financially self-sufficient, this is the reason that the KiwiSaver Act 2006 was set up. Clause 3 hooks this amendment to that Act so it is entirely within scope, I think, to reprise the objectives of that Act.

The key thing is to recognise that growing New Zealand’s total savings position must be driven off private savings, and we must, therefore, have an effective KiwiSaver scheme as well as an effective New Zealand Superannuation Fund. If we do that, we move to the third argument, which is that we affect a whole lot of macroeconomic variables in a really positive way. What are they and why do they matter?

Our savings deficit, our gap between what we earn and what we spend, by mathematical certainty is going to be the same as the difference in our current account between what we import and what we export in terms of capital. So our savings deficit will in the long run equal our current account deficit. New Zealand’s problem is that we do not pay our way in the world. That is just a fact, and that is something that both sides of the House have been grappling with. In order to do that, the purpose for which the 2006 Act was set up was to grow our savings position. KiwiSaver is one of the most important tools in the public tool box to do that. Without it we would be sunk. We must keep it strong.

At the last election there was a competition between the policies of the two major parties in terms of how to grow New Zealand’s savings rate. I think it was the New Zealand Institute of Economic Research, Business and Economic Research Ltd, or both that did some comparative analysis between the two. What they showed was that Labour’s plan was going to grow national savings by about three times or four times the rate of change of National’s. That was before National took the kick-start component out of KiwiSaver. I come back to the point that my colleague Grant Robertson made earlier: this is not the first time—

It is great to be able to take a call on this part of the bill. It is pretty rich for Labour members to come in here today and spout on about KiwiSaver and the $1,000, when, at the same time, they are telling those exact workers that they are not going to be able to retire at 65, and if they do retire at 65, they are going to lose more than $1,000 in being income tested. It is all right for them to say that it makes people feel good to have $1,000 in their hands when they are 21, but when they are 65, they will still have to be working in the freezing works, on the farms, and doing that hard labour because the Labour Party will not let them retire. That is the reality of what Labour is saying here today. As for that $1,000, Labour is going to borrow that $1,000 to put into the hands of people today.

There is a report that came out from the Inland Revenue Department today and it showed that 38 percent of people who have gone into KiwiSaver have never made a contribution—38 percent of the people going into KiwiSaver do not put in anything into that programme. What does that show? That shows that the Labour Party is looking after its rich mates—it is looking after its rich mates who can afford to put their kids into KiwiSaver. Labour is looking after those people who actually do not do the work, who are not in KiwiSaver, who are not the people out there doing the hard yards in our country. It is looking after the people who use and abuse the system. Those are Labour people and that is what Labour supports. They are the 38 percent of people who are in KiwiSaver who have only put their money—

💬 Hon David Cunliffe: What a bunch of drivel.

It is not dribble; that is the report.

💬 Hon David Cunliffe: Absolute drivel.

It is not. Read the report. Go on to the New Zealand Herald website and read the report and you will see, Mr Cunliffe, that 38 percent of the people you are talking about are not the people whom we need to be involved in savings and getting ahead in this country.

It is really rich for Labour members to come here and attack this bill, when Labour does not even look after the people they are talking about. We are looking after those people. For the first time in 43 years, we went out there and did something for those people. We did not do what the Labour Party is doing now—looking after its rich mates just to buy votes for the next election.

Having listened to that contribution I felt compelled to get to my feet and talk about the KiwiSaver bill. That 38 percent that he was talking about is more than likely to be under-5-year olds—parents who opened up a KiwiSaver account so that they could have a prospect of their child having a nest egg when they get older. [Interruption] Oh, my gosh! Where is he from? And the $1,000 that he is taking away from them is from the future generation and those parents who had a hope that they might have a nest egg.

In speaking to clause 3 of the bill, it is really important to go back to the principal Act. It is important that we create a generation of savers. In fact, if you go to a number of schools—and many of us will remember the days, or some of us will remember the days when you had the old PostBank deposit book and you took a gold coin—

💬 Ron Mark: My squirrel account.

Yes, your squirrel account. You took your gold coin and you were able to save, and by the time you left primary school you had a few savings.

Well, those days are gone. In fact, what we knew when KiwiSaver was initiated was that there was a generation that had not known what saving was all about until KiwiSaver came along. The $1,000 kick-start helped those families who are in the middle and working hard, earning two incomes, and want the prospect of having something for their kids when they turn 18 and can earn and have a little bit of a savings history to be able to continue to save. I think that is a good idea. Do you not? If you were listening to the Government you would have people think that this $1,000 is being taken away from the most vulnerable. The reality is the most vulnerable cannot save. But those hard-working families who do have two incomes and want the prospect of their children having a nest egg when they get older will suffer.

Mr Bennett knows, like I know, having visited St Vincent de Paul, that the working poor is becoming more of a prospect in Hamilton than ever before. These are the people who go to St Vincent de Paul and who do have an income. They are working. They still have to go to these services to get a food parcel. He is taking $1,000 away from them.

That is a shame because what we know is that it is more important now than ever before to ensure that people can save for their future, because they cannot rely on universal superannuation. In fact, people do not know from one minute to the next whether or not the Government will actually continue to put money into the superannuation fund. But here is the thing for good New Zealanders who are listening to this debate on a Saturday morning when the Government is putting through under urgency this policy to take away $1,000. What is it saying to working New Zealanders? It is saying that it is going to pull the rug out from under them. The first bit of legislation that it put into the House under urgency was about the child hardship grant, raising the abatement—

The CHAIRPERSON (Lindsay Tisch): Order! [Interruption] Order! Clause 3.

—actually takes away from working families, and that is the point of the kick-start payment. Removing the kick-start actually takes away from those families who are working and do want the prospect of being able to save for their children. When Mr Bennett talked about the 38 percent who were not putting anything into KiwiSaver, I thought to myself, what planet is he on? He is certainly not in touch with the real world.

In fact, I have met a number of parents who are delighted with the kick-start payment, who have said that for the first time they can open up an account for their child and then just put a little bit away over time—a little bit at a time. Then by the time their children reach 5, by the time they reach 10, the parents can talk to their child about this little nest egg that is growing. By the time they reach 18 they can say to their child that it is their time. In fact, many parents have said that they are hoping that their child will get a job at 14, just doing little things like selling feijoas on the side of the road, or something like that. But whatever it is, it is about parents trying to teach the next generation that saving for the future is really important. The National Government is taking away the $1,000 contribution from working families who want the hope and the prospect of a nest egg for their children. It is a shame, and it is a shame that the Government is doing it under urgency.

I would just like to speak very briefly about clause 3 as well, which amends the KiwiSaver Act 2006. Specifically, we are arguing the purpose of the original Act. I also want to respond to David Bennett’s wilful misinterpretation of the data. He referred to the 38 percent of people who have not made a contribution since they opened their KiwiSaver account. National calls itself the party of aspiration. The 38 percent of people who have set up an account have done so because they aspire to one day earn enough to put money into the KiwiSaver account. The only reason they have not done so is that they do not earn enough money right now. The $1,000 incentive has got them to open up that account and leave it open until the day that they aspire to earn enough money to put in it. So by taking away the incentive, you are taking away any reason for them to open those accounts at all. So I would expect that you will see the number of accounts go down as a result of this policy.

I have been asking this question over and over again during the course of this debate and I have not received a single response yet: what do you expect to happen to the rate of take-up of KiwiSaver once you have removed the incentive that 92 percent of people understand is there and available to them? Do you expect it to go up, do you expect it to go down, or do you expect it to stay the same? You have not responded to that question. When you take away the incentives, you are going to be lowering the rate of take-up of the KiwiSaver programme, thereby undermining the purpose of the original Act.

Can I say to the member who has just resumed his seat, James Shaw, before I talk specifically to clause 3, that I think what he asked is a really important question because it does go to the heart of why this legislation is being introduced, what the Government is hoping to achieve, and, obviously, why we are doing it under urgency. I want to address my contribution in relation to clause 3, “Principal Act amended—This Act amends the KiwiSaver Act 2006”, to three points. The first point is: what was the purpose of the principal Act? What was the point of the legislation as passed in 2006? The second point is: what is the purpose of the amendment that we are debating? The third point, which again gets to the question that was just raised by my colleague from the Green Party, is: why are we doing this under urgency?

Unlike others who have referred to the legislation itself, I referred back to the Hansard of the KiwiSaver Bill debate in 2006, and I found two really interesting points that I would like to draw to the attention of the Committee. The first point refers to some comments that Michael Cullen made when he introduced the legislation. He said: “The KiwiSaver Bill represents a landmark in social and economic legislation. Saving and investing is the foundation of the future wealth of our country and of us as individuals. KiwiSaver adds a new, important element in the savings landscape, providing a vehicle to encourage all working New Zealanders to set aside a portion of their earnings to fund their long-term income security.” That sounds pretty good to me.

Mr Cullen went on to describe how it was the third in a set of measures that the Government of the time had introduced to restore integrity and security for older New Zealanders. The first measure was to restore the level of superannuation. I heard the Minister Gerry Brownlee crowing this morning about how National had put the level of superannuation up every year for the last 7 years. Well, that is good. It is the law, so I would hope that that is what the Government did, actually. When we were in Government we made it the law because the previous National Government had cut the level of superannuation to a point where older New Zealanders just could not exist on what their level of superannuation was.

The second tenet in the principal Act was, obviously, establishing the New Zealand Superannuation Fund, a fund that I know has not received any contribution for years under the National Government. It is another key point in our social and economic security for the future, and there have been no contributions under the National Government. There have been tax cuts for the wealthiest New Zealanders—

The CHAIRPERSON (Lindsay Tisch): Order! Clause 3.

—but nothing for the New Zealand Superannuation Fund. And, obviously, the KiwiSaver scheme as set up by the principal legislation was the third tenet.

If I go to the votes on the primary legislation, the parties that voted for it were the New Zealand Labour Party, New Zealand First, the Green Party, United Future, and Progressive. They all voted for the introduction of KiwiSaver in the principal legislation, which we are discussing under clause 3. The parties that voted against the establishment of a savings scheme that was so vital to our social and economic future were the New Zealand National Party—shock; is everyone shocked to hear that—the Māori Party, and ACT. Well, that was in 2006. Not a lot has changed since that time except the numbers, unfortunately. So those were the parties that voted for and against it. This legislation, in my view, goes absolutely against the point of the principal Act.

Other contributions earlier in this debate have asked that very question: what is the status of an amendment to an Act that actually undermines the primary purpose of the principal Act? In my view, what the KiwiSaver Budget Measures Bill does is to undermine the fundamental purpose of the principal Act. We call it an amendment in this debate—that is how it is described in clause 3 of the bill—but it takes away the very incentive that was at the heart of changing the savings culture in New Zealand and making it more possible for people to see the value of savings, particularly people for whom saving is very hard. I am not—

I move, That the question be now put.

I am going to accept the closure motion. We have canvassed the very narrow provisions of this clause.