New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill

I move, That the New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill be now read a second time.

It is an absolute pleasure to be talking on this bill, but before doing so I just want to acknowledge my colleague who was just sitting behind me, the Hon Dr Nick Smith, who is here on his penultimate day of being a member of this House for, I think, just over 30 years. So I just want to acknowledge him.

It’s great to be speaking on this bill. It is an important bill that was originally introduced by Mark Patterson, who was a member of New Zealand First during the 52nd Parliament. As he lost his seat, he asked me to take over this bill, which I gladly agreed to do. I’m hopeful that both the Government and ACT are going to support this bill, and I think the biggest issue in getting here tonight is how the Finance and Expenditure Committee has had to address one of the crucial deficiencies in the original bill that was put in: namely, it didn’t really deal adequately with the issue of the transitional arrangements in terms of if we are to move to a longer period of required service or living in New Zealand, what would be those transitional arrangements? And I just want to particularly acknowledge the Hon Carmel Sepuloni, first for allowing the officials to support and work with the committee, and I think, hopefully, she will also be supporting this bill.

Before we just look at the specific requirements in this bill, I think it’s worthwhile just looking at the international context for what’s happening with superannuation around the world. The first thing I’d say: most countries are dealing and looking and reassessing their entitlement to superannuation, given, as populations are ageing, demographic changes are occurring. Virtually all OECD countries are on a pathway to increase the age of entitlement—broadly, most are aiming to increase it to age 66 or 67 years—and around half of the Governments have undertaken major pension reforms. Our closest neighbour, just as an example, has already increased the age of eligibility to 67 years, and has a further plan to increase it to 70 years. If New Zealand keeps at the current rate of 65 years, then the costs of New Zealand super will effectively double over the next 40 years to 2060, whereas in Australia, with those changes they’ve made, there will be quite a substantial reduction in the cost of super.

So I think we’ve got to see this bill in the light of what’s happening internationally, which is basically countries re-evaluating and changing the age of entitlement to make it more stringent. Just in terms of New Zealand super, the current value of New Zealand super is about $57 billion, and, under current projections, it will be start to be drawn down in the years 2034-35. Even when it starts to get drawn down—and by that stage, obviously, hopefully the New Zealand Superannuation Fund’s a much larger fund—it will only basically account for about 6 to maybe 10 percent of the annual pension cost. Everyone thinks New Zealand super is going to be the panacea, and it’s a very substantial amount of money and it’s a good thing we have it, but the reality is its contribution towards the annual payment that the Government will have to make is actually very modest—as I say, in the order of 6 to 10 percent over time.

So what that means right now: New Zealand super costs in 2018 were about $14 billion. It was about 17 percent of Crown expenses. So 17 percent of all the Government spending is going into New Zealand super, and what we will see over time is a rapid escalation. And it’s highly likely, if you start doing financial projections for the Crown accounts, that the costs of New Zealand super and health costs—health being the highest-value item at the moment; about $21 billion we spend on health—those two factors are likely to lead to a situation where they will probably account for about half of Government spending in the years to come, unless there is reform of New Zealand super. And I think the issue is, how do you realistically deal with those costs? And I’m not—and I don’t want anyone to anticipate that I am—proposing that we deal with super in any way other than what this bill talks about, what we’re going to talk about tonight. I’m not suggesting that those costs mean that we have to take other decisions. This bill is an important element in basically trying to level off that escalation in price or cost that the Government’s going to have to incur in years to come.

I think the other issue that we need to take into account is that the ageing demographics of New Zealand are changing quite rapidly: 15 percent of New Zealanders are 65 or older at the present, but that’s forecast to grow to about 25 percent by 2050. So that demographic change is one of the issues why the costs are going up so significantly. Of course, that’s what Treasury are projecting in terms of the costs for and the financial implications for the Crown. Therefore, there’s a strong rationale why we need to be looking at changes to New Zealand super.

The current arrangements are that you need to be a New Zealand citizen and you need to be aged 65 years or older, and that you also need to have lived here for a minimum of 10 years, five of which must be from the years that you turned 50. And so there’s that double test—10 years, but five over the years of 50. If you meet that threshold, under a single entitlement currently it’s worth about $403 a week, or about $21,000 per individual, or if you’re in a couple arrangement, $672—on an annual basis, about $35,000. One of the most revealing issues about this is how generous New Zealand super is in terms of entitlement. We’re one of the few countries in the world where you only need to have 10 years of entitlement. New Zealand and Australia are the two countries with the lowest entitlement. The average in the OECD is 26 years to be entitled to super. And I think this is one of the reasons why the previous Retirement Commissioner had a view that we should, and she did recommend that we should, be increasing the period of entitlement from 10 to 25 years—in this bill we only increase it to 20 years—but she also said that we should reduce the five-year test from age 50 onwards. So that was her recommendation, and New Zealand National actually proposed that we reduce the value of this quite some time ago.

So this bill, effectively, will affect fewer than 6,000 people, and what the bill proposes is that we raise the period of entitlement from 10 to 20 years. It excludes residents based in Realm countries, namely Cook Islands, Niue, and Tokelau—so they are, effectively, covered by New Zealand arrangements, which is only appropriate—and also anyone who qualifies under the veteran support arrangements. Also, one of the changes we made in select committee was the removal of any increased requirement for refugees. The arrangement set out in the bill that’s been reintroduced raises gradually, over a 10-year period, the entitlement. That means that for every two years that you are of age, you have to do one year of additional service in New Zealand before you’re entitled to superannuation. So what that means is if you’re age 64 at 30 June 2021, you will still have to only meet the 10-year rule. If you’re age 45 at 30 June 2021, you will have to do an additional 10 years to be entitled to this.

I think one of the remaining issues is that we will need to look at when this comes into force, and I think that’s an open debate. The Minister and I have been talking about that. Whilst we agree with the 10-year phase-in period, I think at the committee of the whole House stage we may look to make sure that the implementation date, the start date, for this bill is delayed so that those close to retirement have the ability to plan. But that’s looking forward to that process in the committee of the whole House. Thank you very much.

The question is that the motion be agreed to.

Thank you, Mr Speaker. I should start by congratulating the member opposite for picking up this bill and carrying on the sterling work done by the previous member who brought this bill to the House, Mark Patterson. Mark will be, no doubt, sitting down on his farm down there in the deep South at the moment, no doubt watching this, having just come in. He’s quite a laconic sort of character, Mr Patterson, but he put this together, brought it to this House, and argued it very well in his time here, I have to say, I was very lucky enough to spend some time in London with Mr Patterson, and he’s one of these characters that is the only person I know that took about half a day to get from Heathrow to central London, having taken a few options on the way—obviously, the wrong options—but eventually got there. So it was quite remarkable that he was able to get this bill together, well organised, and get it here, so I do congratulate Mark Patterson.

What he’s done—and when people come to this House there’s often a bill that comes here. Again, “Its time comes.” is something I often say when I stand here when a good bit of legislation comes through, and it’s really what we’re here for. Often legislation may in the past not have been a piece of legislation that would have really got the sympathy of the House, but coming at the right time as it does, you’ll end up getting the full support of the House as this one has.

So, it’s important to understand just what and why that timing for this bill is so important, because when superannuation—you might remember, this was something that was universal superannuation, brought by a Labour Government in the 1930s. It’s something that, in fact, was built on and, in fact, originally it was the 1880s that they suddenly realised that New Zealand had a lot of, mostly, men and others who really had worn themselves out, were destitute. There was no way for them to live. And so the State—and what was to continue in New Zealand was a country that really does look after its people. So in those days, most of those people wouldn’t have been born in New Zealand and most of them had come here via the goldfields of California, Eureka Stockade, and various other places. So they would have come here at the end of that trail, having left, usually, the UK and they really needed the State to look after them.

So I refer to this bill, the New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill. That is, again, a bill that has come on the end of a long journey from that time. So, of course, in that time, also life expectancy, as you might imagine, was very low. I’ve just done some research to try and find out just how low it was. Records weren’t particularly well—but anyone who was a manual worker who lived into their 50s was regarded to be doing pretty well in those days. Of course, that has changed. In fact, I look now at the average life expectancy in New Zealand; 82.36 years is the age an average New Zealander can expect to live these days. We’re actually ahead of the UK at 81.26 and just slightly behind the Australians at 82.75.

So as you can imagine, many of the schemes that were devised—in New Zealand, we’re lucky; it is a universal superannuation scheme. But I know from my own experience with working with a lot of American city pension schemes that they, of course, very often were schemes that were traded off in lieu of pay rises. Those schemes were fine when the average life expectancy of the fire service firemen or police officers or even nurses was—rarely lived into their 70s. Well, of course, those schemes—the chickens came home to roost, if you like, because later on, many years later, when life expectancies started to climb, as they have in New Zealand, those figures that I’ve just given you, of course, now those individual cities and municipalities have carried the cost of those pensions and often, it’s a surprise to me, they carried them on the annual budget. Actually, most of them had made absolutely no provision for them at all. So, of course, you can imagine a lot of those cities over there are actually now coming to real financial problems.

So I bring this back to the bill and why it’s relevant, but I think it’s good to get context for any piece of legislation that comes to this House, that affects anyone listening at home—often a piece of legislation by itself without context. So I come back to the bill, Mr Speaker, because I can see that you’re requiring me to do that, and I’d hate to have to put you in the position to ask me to do so. So this fair residency bill, what it is is it will raise the minimum length of residence and presence in New Zealand after the age of 20 required to qualify for the New Zealand Superannuation. Well, of course, what actually happens now is that to qualify for superannuation, someone has to have spent 10 years before the age of 50, between 20 and 50, living in New Zealand, contributing, and, of course, coming back to New Zealand. And it’s been five years after 50 working in New Zealand to actually qualify for the full pension at 65. That won’t change. Of course, what will change is that now the requirement is that people need to have been here for 20 years to qualify for the pension, and a very important part of this bill.

One thing, and again the previous speaker did mention this and it is an important part of the work we did at select committee—many of the submissions we did hear talked about, really, the hardship this would bring on people who, essentially, set their retirement planning around the fact that they would get the pension at 65. So as a result of that and being a good select committee and being there to do the job we’re there to do—listen to the submitters—we’ve introduced a scheme, or a part, that there is actually now going to be a graduated scheme. Now, the main date to remember is 1955. And so, obviously, anyone who was born in 1955 will be now qualifying, being at this time—

💬 Hon Michael Woodhouse: Does the member?

No, I’m still well shy of that date, and if that man opposite had seen me playing rugby, or kept up with me, he would have seen just how lithe and quick I still am and belying my age.

But anyway, firstly, back to the bill itself, which, of course, is an important part of this presentation. So from 1955 being the main qualifying date, so through there—so that person would still now only have a 20-year qualification, and moving down, anyone who was 46 to 47 would go to 19 years. So you will see the fairness of this, to make sure we continue to be in the whole spirit of superannuation, as we have in New Zealand, we ensured that, in fact, this remains fair for the vast majority of people.

The other thing, too, is also addressing the issue of the Realm countries and there was some legislation came through here in the last Parliament to address this issue. I know I have a relation who left New Zealand before he was 50, now has a very successful business in Rarotonga, and was facing the prospect of having to come back here for five years in order to qualify for the New Zealand pension. That would have meant selling his business. He had many employees. He was unlikely to have anyone able to take over that business. As a result of those changes, now, if you are in the Realm countries, you actually still do qualify, a very important part—those Realm countries, of course, being Niue, Tokelau, and the Cook Islands.

I am running short of time, but I’m sure there’ll be other speakers who will be able to go into other details of this bill. But it is, as I said at the start, a bill whose time has come. We have been able to adapt this bill to ensure that it is fair, that those who are going to be affected by this in time to come have got time now to plan, as the country has to start planning for the fact we have an ageing population, and we want to make sure that we can continue to look after the aged in New Zealand, the increasing number of aged people. So I have no hesitation in commending this bill to the House.

Thank you, Mr Speaker. I’m delighted to talk in the second reading of the fair residency bill. But before I do, it would behove me, I think, just to provide some kind of commentary on Mr O’Connor’s rugby prowess, because as a sprightly—I think—20- or 21-year-old in the western suburbs second team some years ago, Greg O’Connor was the vice-captain or captain and very much the senior, some would say geriatric, member of that team. But I have to say, he did have many skills. He had many qualities. Yelling was one of them, and all I could say is if words had wings, Mr O’Connor would have flown along the rugby field.

I must commend both the member who introduced the bill, Mark Patterson, farmer of Lawrence, former MP, and my colleague Andrew Bayly who has passaged it through the select committee process. But Greg O’Connor describes the work as “sterling”. Well, of Mr Patterson’s work, I would suggest that it was more solid than sterling, because when the bill was introduced it was pretty much a one-pager. And the select committee had to do quite a bit of work to panel beat it into a shape that meant that the policy effect could be given, but that the unintended consequences—or at least by the members of the select committee by the time it was referred—

💬 Greg O’Connor: Speaking ill of the dead.

—the unintended consequences were not—well, I try not to speak ill. As one of my colleagues said in the first reading that it was a lazy piece of legislation from our friend in New Zealand First. I probably wouldn’t go that far, but there’s no doubt that no one on the Finance and Expenditure Committee through the process wanted to see people negatively affected, because the bill as introduced would have had a person on the day that the Act came into effect—say, at the age of 64 years and nine months—who would have had to have waited over 10 years in order to qualify for New Zealand superannuation. I’m sure that wasn’t what Mr Patterson intended, it certainly was what he introduced and which we agreed at first reading needed to have some serious panel-beating done to it. So I’d like to thank the officials who contributed, I think, very sensible suggestions. I note the Minister for Social Development may well be interested in the kudos that I think we all would give them, because they worked very hard to make sure that the bill was in good shape when it came out of the select committee.

The three main areas that formed the basis of the more than 350-odd submissions that we received and the 15 submissions that we heard were: the transition process, so that that wasn’t affected, and both Mr Bayly and Mr O’Connor have covered that off. But it was also to ensure that two other important groups were not even more negatively affected; that is, those people who reside in our Realm countries, Tokelau, Niue, and one other.

💬 Ingrid Leary: Cook Islands.

Cook Islands, thank you very much, Ms Leary. But also the issue around refugees. And this was going to be a particular problem for refugees. So I think the amendment that the committee is recommending to the House is to ensure that there are some carve-outs for refugees who, as the select committee report indicates, don’t really have a choice either to come to New Zealand, the timing of their arrival in New Zealand, or any choice, in most cases, to return to their country of origin. So I think those were perfectly sensible suggestions.

I just want to finish on another note that I think is relevant, and this is because the National Party actually had this policy in its manifesto in the 2017 election. So, of course, we were going to support it. But it also talked about having an honest conversation with New Zealanders about the affordability of New Zealand superannuation. And the officials—

💬 Simon Court: You can borrow that line.

—when providing—sorry?

💬 Simon Court: You can borrow that line.

All right, I got one for free. Well, an honest conversation it needs to be, and, indeed, I thought we would have had one with the Labour Party when Jacinda Ardern was their spokesperson on social development, but then as Leader of the Opposition and now as Prime Minister did a 180-degree turn on that. Apparently it isn’t such a compelling issue after all.

But I note that the officials, in advising the committee on what happens in other OECD countries, both with the age of eligibility and with the qualifying period if one spends time out of their countries—nearly all of the countries we received advice about have retirement age and superannuation qualification age higher than ours and rising. So they look as though they are doing a graduated process from age 65 to age 67 at least. But if one reads policy documents or commentaries from around the world, that is being revisited, even as they have taken a step that we haven’t. I note with interest that there is a gender bias in Switzerland. Members might be interested to note that the age of eligibility, which does remain 65 for men, is actually 64 for women, which is fascinating. I would have thought that if there was to be a gender bias, it might have been the other way round, given that in most OECD countries men don’t last nearly as long as women do in terms of average life expectancy. So there’s something that I’ll go and research. But in the meantime, I think the bill comes back to this House in much better shape than it was referred to the committee. I commend colleagues, but certainly officials and the support of the clerks for enabling us to consider now a bill that’s in much better shape, and I commend it.

I rise in support of the New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill. I wasn’t here when this was drawn out of the biscuit tin under the name of Mark Patterson. I absolutely agree that it looks like it was more of a vibe than an Act, and people have worked hard to make it into something that will work well for our country. I am very grateful for the work that was done before I joined the Finance and Expenditure Committee, and I was very honoured to be part of that process.

This is a bill that originally didn’t protect current entitlements and there was no lead-in or transition, and that is something that the select committee has taken very seriously. Veterans would have been caught up in it, and it was inconsistent with the portability that we’ve arranged in the Realm countries. We have a very special relationship with the Realm. We’re part of it, and we have the Cook Islands, Niue, and Tokelau. They are part of our own citizenship, and so we have to really look and turn our minds to how we best work with that group of nations. We also hadn’t considered how this would impact on refugees.

The changes that have taken place are very sensible changes. The first change that’s taken place is that a mechanism has been devised to phase in on the basis of age. It depends on when you were born, and there are two-year little jumps, so if you were born in 1955, then you will need to have 11 years of entitlement. This happens in two-year jumps, so if you turn 65 in 2022, to 30 June 2024, it’ll be an 11-year entitlement. If you turn 65 on 1 July 2024, then it will be a 12-year entitlement, and so it will go on. So it actually is a very reasonable lead-in to this change.

Why the need for the change at all? Well, I think we’ve actually had a few speakers today talk about the history of New Zealand, and it’s probably a good idea just to contextualise this. New Zealand was one of the first countries to bring in an old-age pension, and it did that in 1898. It wasn’t the kind of pension that we have here. It was a pension that was means-tested. People were very grateful for it and it kept a lot of people going in their old age, but in 1932, we introduced a universal superannuation system. That’s a very special thing indeed, and it has been very much something that’s been precarious, because it’s an expensive system. But it means that New Zealanders can count on quite a generous entitlement when they retire, and we’ve heard today a slight baying for raising of the age of entitlement and that’s because of the expense of it. We’ve also seen a time when we stopped contributing—under the National Government—to the Superannuation Fund. Again, that puts that fund very much in jeopardy, so it’s our job and our duty to make sure that we’re actually making this a feasible scheme for people.

My understanding is that this was a scheme that was introduced when the life expectancy of people was about 65 to 67, and so it wasn’t a great deal of entitlement they were getting. What we’ve seen happen—very thankfully—is life expectancy raised by about 20 years, on average, which is a really great thing, and we hope that it will go higher. With good management of our health system and with the advancements we’re making, we’re going to be looking at long, healthy lives.

It’s during that time that people will need to retire, and they will rely on this money, so it’s an important thing that we make sure that we are actually recognising that most of the people who are in the system will need to contribute to it, and will contribute to it for quite some time. That is being secured in this bill, because what we’re doing is coming in line with other countries.

We’re coming into a 20-year time frame, and we’re excluding the groups that are truly vulnerable or that are necessary for us to protect. Hence the exclusion of the Realm countries, and hence the exclusion of refugees, because refugees—as Mr Bayly pointed out, and I think Mr Woodhouse just pointed out—are a very special category of New Zealander. They come in without very much choice and with a lot of devastation, and they come in with nothing, quite often. So it’s very, very important that we extend to them a different kind of security from that of somebody who comes into the country and who can plan how they do that and actually know what they’re in for when they come in. So that’s the difference in scheme. It’s very much a matter of choice and fairness, and it is a very important balancing act that we have here, because this is a system that is fragile and it is expensive and it is a really good scheme, and we should actually respect that.

There are people who at the current time are actually already affected by our scheme in a disparate way, and I’d just like to recognise them for a moment. One is that we’ve always had a problem with the fact that working-class people haven’t actually lived into the period of entitlement, so we actually haven’t had a system that’s been particularly beneficial to those groups. It’s also very important that the entitlement’s there for that very class of people, because manual labourers get worn out and they need to be able to come into those entitlements in a reasonable time. It’s also an area which has affected Māori. Many, many Māori don’t live to the age of entitlement. So these are the areas where we really need to make sure that we’re looking after people in a fair and reasonable way, and I’m very satisfied that we have struck a good balance here.

I just wanted to thank several people. One group is the officials, because during the submissions process it was the officials who suggested the mechanism we have here for gently raising the age of entitlement. It’s a good mechanism, and I can see it applying in many other situations where it would be a very useful and sound mechanism. They really contributed something to this which was absolutely taken up with open arms by the people in the select committee.

The other group I wanted to recognise are the submitters. The things that came out of the submissions weren’t what I expected. We had people who were not necessarily talking about their own self-interest. I remember one Indian migrant, a young man who came in and talked about how he saw this bill as important, and he was actually in a category where I would have thought he would have been perhaps more self-interested in being able to allow people to come in on a lesser term. But something that I’m constantly surprised at with the submitters in the select committee is how many people come along with a very genuine lack of self-interest and who put forward a submission that’s based much more on inviting the idea of participation in a democracy and putting their best efforts into contributing in an intelligent and logical way.

I am extremely proud of the commitment here that we’ve got to refugees. I think it’s a very important carve-out. It shows the motivation of people in putting up this bill and making the changes that they’ve made that we’ve managed to come to a very sensible, fair, reasonable kind of approach which guards entitlements which are not our safety net. Our safety net is actually there anyway—you know, it’s not the safety net. This is the layer on top—the wonderful thing that we have in universal superannuation. So I commend this bill to the House.

Thank you, Mr Speaker. I rise to speak on the second reading of the New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill. As the Green Party’s immigration and senior citizens portfolio holder, it comes with great shame that we cannot in good conscience support the bill, for several reasons. But I, firstly, want to start by acknowledging the contributions of previous speakers who talked at length about the history of our superannuation scheme and the important contributions it actually has made over the years to reduce poverty rates amongst our senior citizens. It is a scheme that, while many members have discussed the issue of sustainability, is critical to ensure that our low-income whānau who reach their twilight years have a safety net for them to subsist. And what has been really concerning over the past few years is the increasing rates of hardship amongst our senior citizens—in fact, more of our senior citizens are now requiring food grants from Work and Income to survive, and the rate of senior citizens requiring food grants from Work and Income has gone up by 50 percent between 2014 and 2019. That is something that is concerning and should be of concern to all of us. I don’t think we want to see our senior citizens in hardship growing.

What this bill aims to do is to increase the number of years that people need to live in Aotearoa New Zealand as new migrants before they can qualify for the New Zealand super, and the rhetoric behind the intent of this bill was to make our superannuation scheme fairer. But I want to point to a submission by the Ministry of Social Development (MSD) that I think points at some really key facts—particularly on the issue of restricting superannuation for new migrants contributing to the sustainability of the New Zealand Superannuation scheme. An assessment made by the Ministry of Social Development found that the fiscal savings would only be at around 0.3 percent of the cost of New Zealand super. This takes into account increased benefit numbers as a result of people not meeting the new residency requirements for New Zealand super and the veteran’s pension. So while the intent of this bill was around sustainability, the Ministry of Social Development was quite clear that, actually, this bill would not achieve that intent. But what the Ministry of Social Development submission also pointed out was that this bill would increase hardship, and it was clear that this bill will increase hardship amongst our senior citizens, at a time where we are already seeing increasing rates of hardship. I want to point out page 17 of the Ministry of Social Development’s submission, point 90, where it says that “Increasing the residence requirements for [New Zealand superannuation] will inevitably increase income poverty and material hardship amongst seniors.”

I am saddened that this House is passing a bill that will increase inequality amongst groups, some of which are already facing discrimination in many, many levels of our society. While I acknowledge that the Finance and Expenditure Committee made attempts at creating a transition period so that people wouldn’t be so harshly affected as the bill came into effect, I think that the end result of this bill will be, as the Ministry of Social Development submission highlights, an increase in hardship.

Our migrant communities come from several backgrounds when it comes to the level of welfare they come into the country with. We can’t ignore that many migrants of the global south have come under types of visas and types of unemployment that don’t yield a lot of income. Our senior citizens may not be in Aotearoa with already a safety net, and MSD’s submission talks about how many people will have to tap into their own savings and to the goodwill of their communities in order to survive. What this will end up doing is putting more pressure on the people who won’t be able to qualify for the New Zealand super and will then need to go on a main benefit or require emergency assistance from Work and Income. What it will do is put more pressure on our welfare system, at a time where we are seeing a record number of hardship grants.

So this almost feels like, for the people who will be put in hardship as a result of this bill, we are going to be putting them into a situation with added bureaucracy, at a time where, I think, all of us want to relieve that pressure off front-line Work and Income staff. So the Green Party cannot support this bill in good conscience for the effects that it will have in our communities. It is a step towards dismantling a scheme that actually has been really critical in reducing poverty rates. I would challenge people who say that the superannuation scheme is really generous at this time to look at the facts and the figures of the fact that quite a few senior citizens are now struggling financially. Not all of our people from the baby-boomer generation are wealthy individuals, as sometimes the media likes to portray—

💬 Andrew Bayly: So what’s your solution?

RICARDO MENÉNDEZ MARCH: —in fact, many people are really struggling right now. And I hear the contribution from the member in charge of the bill about what the solution is. Well, the solution is to continue investing in our safety net to tax the rich and ensure that we have a tax system that allows us to raise enough revenue so that we have a sustainable safety net. I don’t think that calling for taxing the rich in order to have a safety net that works for all of us is a radical thing. I think the fact that it is really making the members to my right annoyed speaks to the fact that, in fact, those are the sorts of solutions that the other side of the House should be, hopefully, looking at.

The New Zealand Superannuation scheme, I think, is a treasure to this country. Many countries around the world do not have a safety net that allows for senior citizens to be supported. I hope that, despite this bill likely passing—seeing as it seems to have the support of both sides of the House—we look to ensuring that our migrant communities are well supported, because what I also don’t want to see is negative health outcomes as a result of loss of income, seeing as we know that income is one of the most important determinants of health. For those migrant communities who will miss out on the superannuation and who may not have a lot of income support from the goodwill of their community or being able to access hardship grants, I would hate for their health to deteriorate faster, therefore needing to go to the doctor or to hospitals as a result of not having critical income, and that actually putting further costs on a system that is already under a lot of stress.

Taking steps to discriminate our migrant community, under the pretence of making our superannuation scheme fairer, is pure rhetoric, dog-whistle politics and, as per the Ministry of Social Development submission, not backed by facts and figures. We don’t stand by dog-whistle politics that discriminate against our communities, and so we cannot commend this bill to the House.

I rise in support of the fair residency bill, which is otherwise known as the New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill.

What this bill does is it amends section 8 of the New Zealand Superannuation and Retirement Income Act 2001. That Act is supervised by the Ministry of Social Development and Treasury. Section 8, in particular, that this bill proposes to amend is supervised by the Ministry of Social Development. When this bill goes through, the proposed start is for July 2022, in order to allow the ministry to be able to get the systems in place to administer it properly.

I’d like to talk about the history of this member’s bill and a bit of a discussion about fairness—because I note that Andrew Bayly spoke a lot about the figures but, actually, this is a bill about fairness, as are so many of the bills that come from this side of the House. I’d also like to talk about the select committee process, how we looked at fairness and also the impact on the ethnic communities—and, in particular, the refugee community—because in my Taieri electorate we have many refugees whom this bill could have impacted on, and so I’m really pleased with the process that happened in order to safeguard their interests.

Finally, I’d just like to make a comment about the select committee process with the Finance and Expenditure Committee, because I think, as has been alluded to by Mr Woodhouse, the bill did need a little bit of reworking and this is an example of a select committee process that has worked really well.

So just commending Mr Bayly for taking on the bill—but, actually, it was originally in the name of Mark Patterson and came into the House in 2018. Of course, as has been said this evening, Mark Patterson was a New Zealand First MP—in fact, a very good MP based in Lawrence, in my electorate. It wasn’t previously in my electorate; it is now. We got to know Mr Patterson really well when we were out campaigning, and what I saw was that he did a great job, even though he was a list MP, as being something of an electorate MP. So I would like to wish him well in his new role as the president of Federated Farmers in Otago. The reason I bring this up is because, when I first joined the select committee, I phoned Mark Patterson to find out the history of the bill to get a bit of context, and he was extremely helpful. So I know that in his role with Federated Farmers, that relationship will continue—even though, of course, our politics are very, very different.

As Mr Woodhouse alluded to, the bill did come into the House as a bit of a blunt tool, and it needed quite a few changes. I think the starting point is, really, to look at the name of the bill. It talks about “fair” and it talks about “residency”. If we look at what that means, we really need to look at what is fair for those people who have worked all their life here in New Zealand and contributed to the superannuation scheme, what is fair for them; also what is fair for those who come in a later stage or who may contribute in other ways, such as looking after grandchildren; and what is fair for people who, perhaps, have worked for a while in New Zealand, have left New Zealand and contributed to overseas economies, and then come back later in life.

These are all real questions and real situations and scenarios thrown up by the way that the legislation currently stands, because, currently, to qualify for New Zealand super you need to be a citizen or a resident, you need to be 65 or over, and you need to be over the age of 20, and then you can qualify after 10 years of residency—or after five years, if you are over the age of 50.

The problem that throws up is, for example, a migrant who is in New Zealand for 10 years and is able to get full superannuation—even though they may not really have contributed to this economy—or a New Zealand citizen who has left New Zealand at the age of 25 and has returned at the age of 60 and has worked for 35 years somewhere else overseas and contributed to another economy. What is fair in that situation?

As has been pointed out, we have an ageing population as well, so that’s put pressure on the system. It’s really called into question the integrity of the superannuation system. So we do need to do something in order to make it sustainable.

What we don’t want to do is to raise the level of eligibility, because that, simply, would not be fair. It has been done in Australia, up to the age of 67. Todd Muller—several National Party leaders ago—suggested he was going to do that. But if you look at the statistics about life expectancy for New Zealanders, the overall life expectancy for men in New Zealand is 80 and for women is 83.5. When you break that down though, Māori men can be expected to live to 73; Pasifika men, 75.5; Asian men, 85; and so on. So if you look at the differential, 85 years for an Asian man compared to 73 years average for a Māori man, how could it be fair to then raise the levels when already there is a benchmark that cuts across that has them on different playing fields to start with?

Just referring to those average ages—I think Greg O’Connor, my colleague, mentioned the ageing population—I was down in Kaitangata over the weekend celebrating a dedication to the Kaitangata cemetery, where, actually, New Zealand’s worst mining disaster happened many years ago. They’ve put up these incredible billboards that tell the history of Kai and include the name of many of the victims there. Not only were there young men killed in that mining accident but also people who just died from ordinary life circumstances, and it really struck me how young many of those people were when they passed away. So, really, it is a real issue for us that we have an ageing population. It’s a good issue to have, but we need to get our superannuation correct to deal with that.

When we look at the amount of money that we will be able to save, it’s about $162 million per year by the year 2041-2042. But, really, as I said before, this bill is about fairness. It allows people to phase in their planning, and it avoids the so-called cliff edges, which is when somebody reaches an age and they suddenly face a very different future in terms of their superannuation. As has been alluded to by my colleagues, the phasing in will make that be easier to plan for.

We had 362 submissions and 15 oral submissions, and most were around hardship, most were around the cliff edges, and, actually, the tone of those submissions would suggest that most people would have been satisfied if there was a more graduated approach to the changes to super.

I will note, contrary to what people may believe around migrants accessing superannuation, the vast majority of those accessing superannuation in New Zealand actually come from the UK—so that’s about 86,000 people. If you look at the next largest group, that’s China at 12,000.

I’m really pleased that we have made exceptions for the refugee community, as I mentioned, but also we have looked at the graduation and the unfair impact on some ethnic minorities, even though they are the smaller group, and that is because they tend to arrive in New Zealand when they’re older and they often don’t have social security treaties, like the UK people do. So even though they are the smaller group of people affected by our superannuation and by the changes, should we have those cliff edges, actually, the impact on them would be very unfair. In fact, the words used by many of those submitters were “unfair”, “unreasonable”, and “inhumane”.

I’d just like to commend them, actually, for the submissions they made, because some of them came from much older people for whom English was clearly a second language, and it was great to see that they had made the effort to put forward their views and also to remind us of the really important work that some of them do as grandparents, looking after grandchildren so that their children can contribute very ably to this economy. I’m reminded of Marilyn Waring’s work around Counting for Nothing and the fact that we need to be counting unpaid work when we look at issues of fairness and equity.

In my final comments, I’d just like to really say this was a fantastic select committee process to be on. I learnt firsthand what happens when there’s good advice from the officials and when there’s collegiality. We were able to consider fairness and come up with a changed regime but one that still reached a consensus when it came to agreeing on what was fairness, what was residency, and a system that is going to work into the future. I commend it to the House.

Sitting suspended from 5.59 p.m. to 7 p.m.

Before the dinner break we were discussing New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill.

Madam Speaker, thank you very much. I stand on behalf of the ACT Party to support Mr Bayly’s bill and pay respect to Mr Patterson’s legacy–also, to my colleagues across the House in terms of their commitment to the bill, and also to the officials, who I think have done an excellent job on this bill.

The whole idea of the bill was to improve fairness of superannuation of people who have been resident and present in New Zealand, and who will benefit from having a substantive connection with New Zealand. The bill is also intended to contribute to the sustainability of superannuation. New Zealand’s superannuation system is one of the world’s most generous schemes. It’s one of the few pension schemes internationally that is given to everyone who fits the residency criteria. If you’re legally resident and you’ve lived here for 20 years after the age of 20, as we are proposing, it’s not means-tested or income tested. Other countries take a very different approach. Many rely on schemes that are based on compulsory contribution from wages and from employers. The State only ever steps in when those are left without enough.

Our system is fair and cost-effective, and New Zealand super payments are taxed where those in other schemes are not. At current rates it virtually singlehandedly pulls over-65-year-olds out of poverty and enables a basic standard of living and helps to offset residential care for older pensioners. To that effect, I don’t really understand the Green Party of New Zealand’s argument around why we shouldn’t have this.

The Ministry of Social Development showed that there were 774,651 people receiving super in March 2019. By 2060 the numbers are projected to be closer to 1.838 million. And by that stage, people over the current pension age will be 28.2 percent of the population, compared with 15.4 percent in 2018, which is a massive jump. In 1996, New Zealand spent $5 billion on New Zealand super, which has grown to $10 billion in 2021. And if you take a 2059 to 2060 view, it is a hundreds of billions of dollars issue. Superannuation currently costs an amount equal to 5 percent of GDP. At the ACT Party we believe any change to the law must be equitable for all, and its core must not provide uncertainty for retirement planning or reduce vulnerability, and it should not affect equity. The bill must contribute to the sustainability of super in New Zealand, which we believe it does.

There will be a big shift in the proportion of Government spending that goes to retirees as demographics dictate. Within the bill the transitional provisions are very important. We’ve had fellow speakers talk about the phased benefits by age matrix, which was a great piece of work by the officials, and, we believe, very fair.

One of the issues we do feel strongly about, and we agree with both sides of the House, is that the implementation period must not affect people’s planning. It should be equitable. For people who are in the 60-plus age group, it shouldn’t create any uncertainty. Therefore, we believe that a two- to five-year period is worthy of consideration. There’s a worry that too many New Zealanders who are approaching retirement years are in poor financial shape, and we tend to agree with that.

At a macro level, New Zealand super is sustainable over a 30-year period, but we believe now we’ve got some serious thinking to do. Unlike the Green Party we believe this is a start. We believe that it doesn’t limit any growth in income, and it does protect against poverty amongst older people. We’re particularly proud in this bill of the treatment of the Islands, of refugees, of people who have had uncertainty with regards to the COVID implications overseas, and also looking at the ability for veterans to be treated fairly.

One of the things that we do believe at the ACT Party is that in terms of super generally, as a standalone means of saving and superannuation as a second form of net, it is one of the most complex areas of confusion in the financial sector. We believe we should start thinking now over the 30-year period, because we believe it’s sustainable for the next 30 years but needs to have some radical change to meet future requirements. So, to that extent, we’re very proud to support the bill tonight, and we look forward to the next stage. Thank you.

Thank you, Madam Speaker. I must say that was a thoughtful speech by Mr Smith of the ACT Party. It’s not often a Labour member can stand up and express pretty much wholehearted agreement with an ACT member’s speech, but I was heartened. I was heartened in many respects to hear the affirmation of taking into account of refugees and our Pacific neighbours as well, of course, as the intent of the bill itself. And I suppose it’s also worth noting that we don’t often divide starkly with the Greens on matters of social policy, but on this matter, we do.

I do think that in this respect, the Green Party have essentially mistaken the intent and purport of this bill because, you know, in my view and in the view of most members, I think, this is not a bill which is about to create some hardship. In fact, at select committee we were at pains to make sure that really there was no hardship. And I do want to recognise that given that a goodly number of our immigrants come from countries with either good pension arrangements, transportable pension arrangements generally, or with reciprocal arrangements with New Zealand in respect of pensions, the immigrants who are most significantly affected come from a narrow group of less-developed countries.

So, for example, we had some submissions from people from the Indian subcontinent and also from China. I did want to point out that we had a really good submission from a group of organisations, eight Chinese organisations—Albany Chinese Association, Blockhouse Bay Community Centre, Browns Bay Chinese Society, and several others representing the Chinese community. In fact, they were pretty supportive of the overall thrust of the bill. Now, they vigorously opposed the original drafting which would have seen it come in pretty much overnight, and quite rightly so.

I mean, I think at select committee we were all agreed that you couldn’t invite people into New Zealand on an expectation of having certain benefits conferred by the State, such as superannuation, and then all of a sudden kind of pull the rug out from under them and say, “Hang on, we’re changing it overnight.” That’s why we looked at the long, ultimately 20-year transition period. I think that is very fair.

The other submission that I put a lot of store on for a number of reasons was that by the Retirement Policy and Research Centre from the University of Auckland, not least because Susan St John was the submitter, and we know that Ms St John is well known for her advocacy in respect of poverty and hardship. Now, I don’t want to misrepresent that submission, because she very much tied the residency requirements with the transferability requirements of pensions, but in that submission, some really, really good points were made.

I think it is worth noting that the universality of New Zealand’s pension, superannuation, is really quite extraordinary. It’s not means-tested and it is universally available. Look, it is actually a treasure that we want to look after. Ms St John in her submission noted its comparative generosity. Now, it may not be up there with—and I don’t know the exact numbers—a Government employee’s pension in Germany or England, but they are not universal pensions. They are pensions which are made over a number of years of working for an agency or a Government department or whatever. But in terms of a universal pension, tagged to the average wage and increased accordingly, this is comparatively generous.

It was noted there that really there’s some big questions in there, and I think, in terms of the amount of the Government budget spent on superannuation that Mr Smith referred to, there is a question of intergenerational equity. Certainly, there’s a question about the degree to which it is appropriate, if ever, to borrow to pay superannuitants and then foist that burden on young people today who will be earning tomorrow. So we’ve got to be very cautious about that.

And, of course, our super fund is aimed at making sure that that doesn’t happen, that we don’t simply—

💬 Angie Warren-Clark: Switched back on.

Switched back on by the Labour Government in 2017 when the Rt Hon Jacinda Ardern hit the big button and put $500 million into it in the first few weeks of the first Labour Government here recently. So there is that intergenerational equity question.

But it’s also a question of fairness as well, and, as has been pointed out, the idea that someone might emigrate to New Zealand at, say, aged 63, which is the example used, never having paid any tax in New Zealand—I mean, quite possibly never would at the age of 63—and then after 10 years’ residency be entitled to national superannuation payment for the rest of their lives, and the numbers in this submission—I suggest people read it if they are interested—that is a huge benefit. So the average total amount paid to a superannuitant is $356,720 for a male or $458,640 for a female. That’s a very significant sum of money.

Now, whilst Mr Menéndez March can talk about the need to alleviate poverty, and we agree with that, the suggestion that a person can come to New Zealand and live here for a relatively short period of time and have a legitimate claim, a legitimate expectation, of being supported by the wider people of New Zealand—none of the submitters thought that was the case. They actually were pretty universal in saying, “Look we get it, but look we’ve got to plan. We’ve got to plan much better. It’s unfair to change the financial framework overnight.” So that’s in fact what the bill back before the House does. It has a very long additional 10-year transitional period, a stepped transitional period, that was in fact very well-thought-through.

I think it’s been a really good process, and I know there’s further discussion to be had. I know the Retirement Commissioner has additional views about when this bill should commence, and that’s probably a discussion for a little later on. I just would note as well that given, (a) the transitional period and, (b) the unusual circumstances we found ourselves in with COVID, the acuity of the problem is probably ameliorated somewhat because the amount of people coming to New Zealand in the kind of age bracket where they might expect superannuation in the next decade or two has fallen off considerably. But it’s worth noting that between 2015 and 2019 there were between 6,000 and almost 9,000 people in the over-60 age bracket coming to live in New Zealand. So that’s a lot of people that one way or another would have been—and that’s as residents, migrant arrivals. So that’s a lot of people who would have been looking at that.

Look, I think this is a really good piece of legislation, but coming back to the excellent speech by Mr Smith, really good to point out that not only have we got that still—

💬 Damien Smith: Come across!

It won’t happen again, don’t worry—ha, ha! But not only do we have this stepped transition but absolutely we took care. Anna Lorck was very good in committee—I think it was Anna Lorck, wasn’t it—who looked at the veterans, who really wanted us to look at the veterans and make sure that the interface with veterans pensions was right. We had a good examination of how it interfaced with COVID generally, but also our Pasifika neighbours, recognising that we’ve got a special duty and responsibility to Realm countries, and, of course, all of those other things in there as well. So a good piece of legislation. I absolutely commend this one to the House.

The next call is a split call—I call Ian McKelvie.

Thank you, Madam Speaker. Just before I get into a couple of issues that I want to talk about with respect to the bill, I wanted to congratulate the Finance and Expenditure Committee and the member concerned, because this bill came into this House, in my view, in no fit state to be sent forward, and I think the select committee have done a really good job of it. They’ve got it to a point where I think it’s fair and equitable and, given that we’ve heavily relied on immigration in New Zealand for hundreds of years almost, I think it’s essential that we don’t put those people who have come to New Zealand in good faith under a set of rules at a disadvantage to what they expected to get when they came here. I think the select committee and the member concerned have done a pretty good job of that and got it in the right space.

I just want to stick up for superannuitants for a moment, though, as I go through this. The last speaker, Duncan Webb, made a couple of mentions of the way the—the intergenerational stuff. I’ll point out to him that those of us who are, and there are a couple of us in the House that probably qualify, we’ve paid tax all our lives to get this blimmin superannuation, and I don’t care what the younger people think—ha, ha!—because, frankly, we paid that tax and they will pay their own tax for their own superannuation. So I don’t get this intergenerational stuff at all, I don’t accept it, and I think we should dismiss that from our mind.

The universality of it, I think it’s exceptional in New Zealand, and while it’s not means-tested—it is means-tested to some extent by the tax department, or the Inland Revenue, and so I’d make that point. But I just want to stick up for the superannuitants and what’s going on in New Zealand with the largesse of this current Government at the moment. If you look at superannuitants, I think some of us got a $15 a fortnight pay rise a little while ago, but we’ve seen much larger pay rises—and I’ve got no issue with the minimum wage, but we’ve seen much larger pay rises with respect to the minimum wage, the benefits, and those sort of things. Effectively, it’s left superannuitants, of whom almost 50 percent rely entirely on the superannuation to keep them alive at a time when we’ve got fixed costs dramatically rising for those people on fixed incomes—I think they are challenged by that.

I just want to put a word in for our superannuitants because I do think that, whilst this bill deals with one very small spectrum of the superannuation scheme, there are some real big challenges ahead of us for our superannuitants and the way that we ensure they have a life ahead of them.

I just want to add one point, with respect to superannuitants: most of us were too late for KiwiSaver, and I think KiwiSaver’s the best thing that’s ever happened to us. I’m, of course, old enough to remember a particular Prime Minister getting rid of the superannuation schemes that were started by a previous Government, and I was actually a member of that—I wish I’d kept my superannuation, I probably would have been quite well off now. So it is a bit of a challenge, and I think that we need to be very careful how we manage that, going forward.

You see the country, as I said, has relied entirely on our immigrants—or to a large extent on our immigrants—to grow our economy in the last, probably, large number of years really, right back, probably, to the Second World War. So it’s essential that we don’t discourage those sorts of people from coming to New Zealand, and people who want to come here, build a life in New Zealand, and certainly help improve our economy.

So I think this bill has got to a state that’s pretty good from our perspective—well, from a New Zealand perspective, it’s pretty good as well. I’ve got no further thing to say on it other than to support it as it goes through the House.

Thank you, Madam Speaker. It’s a real delight to stand tonight. First, before I commence my speech in regards to this second reading, I want to just have a bit of a shout-out to my favourite superannuitant at the moment, Harry Hudson, a wonderful man: built his own yacht, sailed around the world, fabulous builder, taught me how to fish, and is having his second night in respite care, and I know that he’s watching from home. So hello, Harry. Good to see you, and I hope you’re not telling those nurses too many tales of your past.

It’s a real pleasure to take this split call on the New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill. I understand that there were 362 submissions but 15 oral submissions. Even though I’m not a member of that select committee—the Finance and Expenditure Committee, ably chaired by my colleague Dr Duncan Webb—I do know that the sheer number of submissions, and the number of people speaking to this, have been quite significant. I understand, as well, that this second reading finds the bill with some really significant changes from the originating draft. I do have to just acknowledge my previous colleague from the 52nd Parliament, Mark Patterson. He brought the bill to the House. It did need a lot of work, I understand, but I do want to acknowledge Andrew Bayly for picking this bill up and for carrying it through, and the select committee, who have worked really hard to come to a solution that is just, a solution that’s fair for all.

This outcome of this bill, though, is quite relevant for the select committee that I chair, which is the Social Services and Community Committee, which superannuation and veterans fall under. So I was very interested to participate in this debate tonight. As noted by the other speeches, the residential change from 10 to 20 years without any kind of process, or transitional arrangements, was going to be extremely harsh, and it was likely to affect some people for up to 10 years. As we know, and people have said this tonight, people make plans. They know what their entitlement might be and they make their plans regarding that, and so they would find themselves in quite a lot of hardship. So I think that it has been a really interesting process to come to the step change process around payments. So it’s phased, and I thought that that was quite interesting. It’s phased through a period based on your birth date. So currently, as I understand it, as of 30 June 2021, people over 64 must have residential requirement of 10 years. So those who turn 65 on or after 1 July 2040 would need to meet the full 20 years. So it’s a step, it’s a transition and it’s a step and it is very fair.

There was some conversation around Realm countries: Cook Islands, Niue, and Tokelau, as well as refugees and protected persons. Both groups being treated differently is really important, I believe, because of their different circumstances.

Finally, I would just like to make a special mention of the officials and drafters in this bill. Something unusual has happened in this little piece of legislation, and that is that there are diagrams included in the bill. So I just wanted to acknowledge that it’s actually a very sensible way of explaining the circumstances of this legislation for clarity’s sake. I just wanted to make mention of it, and with that I commend this bill to the House.

It’s good to be able to take a call on the New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill, a bill that came before the Finance and Expenditure Committee, which I was a member of. I’d like to thank the member who is sponsoring this bill, Andrew Bayly—who picked up this bill from the previous member Mark Patterson of New Zealand First—both for his constructiveness during the select committee and his flexibility with some of the changes that we’ve made. I’d like to take the time to acknowledge the Minister, the Hon Carmel Sepuloni, and her Ministry of Social Development (MSD) officials for their advice. I believe this bill would not be in its workable form had we not had their input. For any members who have actually picked the bill up off the Table today, it evidences how much input the officials had, because there was only the title and the commencement clause that have survived the select committee phase. That’s how much this bill has changed during the Finance and Expenditure Committee.

The bill as introduced seeks to change the residence requirements from 10 to 20 years. As introduced, the new requirement would also apply from the date of Royal assent, which has not changed. In the first reading, Mark Patterson spoke of the history of the current 10-year threshold. He noted that the current 10-year threshold came into law in 1938, when life expectancy for men was 65 and for women was 68. He also spoke of his intentions for this bill. His belief was—and I quote—“… New Zealanders, those that have been out of the country for extended periods, contributing to other economies, and recent immigrants to be able to receive the same benefits upon turning 65 as those of us that have been here doing the hard yards at home, paying our taxes, and contributing to our economy.” The member currently sponsoring the bill has also spoken tonight of the generosity of our current scheme.

To me and for many members who have spoken before me, this all points to fairness. Therefore the policy mischief that the Finance and Expenditure Committee sought to respond to, for me, was covered in three key questions: one, whether having been resident and present in New Zealand for 10 years is too short a period for entitlement to New Zealand superannuation; the second question is whether an increase in residency requirements would contribute to the sustainability of New Zealand’s superannuation; and, three, whether an increase in residence requirements would contribute to the fairness of New Zealand’s super for people who have contributed to New Zealand for longer. I’ll come back to these three policy questions.

Our belief, on this side of the House, has guided us through that whole select committee process. Around 832,000 people receive New Zealand super or the veterans pension. We want to secure the future of New Zealand’s super on this side of the House. That’s why we resumed the contributions to the super fund when we came back into Government in 2017. The failure to invest under previous Governments, we believed, put the retirement plans of Kiwis at risk. We’re also keeping the age of superannuation eligibility at 65 years. Lifting the age of eligibility, we believe on this side of the House, would have unfairly disadvantaged some groups in society more than others—for example, life expectancy varies for people of different ethnicities. New Zealand Māori and Pacific people have lower life expectancy versus non-Pacific and non-Māori. Also, life expectancy also varies depending on what you do and where you work; so, for blue collar workers—the plumbers, the builders—versus white collar, which is people that work in businesses or in offices.

So, going to the changes to the bill at select committee, any changes to entitlement rules for superannuation—and, in fact, benefits or entitlements in general—have to be considered very carefully. And, again, the work that MSD officials put into this bill has meant that the changes that the Finance and Expenditure Committee is recommending removes the very sharp cliff face that the bill as introduced would have had—which leads me to one of the main changes in the bill that has been spoken about tonight, which is the phased increase by birth date.

Now, we heard it from many submitters who were concerned about the lack of transitional arrangements in the bill. I wanted to actually refer to a particular group of submitters which my colleague and member Dr Duncan Webb also referred to, which was the Browns Bay Chinese society. Now, their submission stood out for me. They were incorporated in 2007 and they have around 170 active members. I quote from parts of their submission: “The bill is totally lack of considerations about its possible negative impacts on the wellbeing of a portion of the older population. … Although it looks rather simple, the change this bill proposes is far from trivial. In fact the propose[d] changes would affect many New Zealanders in both short term and long term, and there are many open questions and concerns about the scope of the change and measures the bill should take to make the change fair and balanced.”

They go to, on page 4 of their submission, some recommendations as to how to fix that cliff face. In particular, I quote recommendation three, in clause 4, that you amend proposed section 8. They provide a really great table, which has year of birth, the year of age or residency granted, and the minimum residency qualification. They finish their submission with “We hope the Select Committee could give serious consideration to our comments and recommendations.” Well, I’d like to be able to say tonight to the Browns Bay Chinese Society that that’s exactly what we’ve done. What we’ve realised is that, almost overnight, with the bill as introduced, people could be faced with substantial delays of up to 10 years before they were eligible for superannuation.

To mitigate this risk, we introduced the longer residence requirement through a phased increase by birth date, as set out in new clause 4 of the bill, which, funnily enough, looks very similar to the table that was provided to us by the Browns Bay Chinese Society! There was just a slight change, because they proposed that the bill should commence in four years’ time, not at the date of Royal assent. But that, to me, proves how good the select committee process can be, when (1) you have members across the particular tables in that select committee work together, and (2) you have really considered, well-advanced submissions. So, again, thank you to the Browns Bay Chinese Society, because your submission was very convincing, and it is shown in the bill that’s on the Table tonight.

The last particular part of the bill that I do want to talk to speaks to me as a member of our Labour Pasifika caucus, our 10-member strong Labour Pasifika caucus, and that’s in relation to the Realm countries. The other key changes in the bill are the modifications for our Realm countries of the Cook Islands, of Niue, and of Tokelau. Now, we know, as Pacific members, that there were recent changes to the superannuation and veterans pension schemes to allow people to migrate to New Zealand’s Realm countries—the Cook Islands, Niue, and Tokelau—before they turn 65 and still receive superannuation. For someone to be eligible, migrating to a Realm country, then they still have to have been resident and present in New Zealand for at least 10 years since the age of 20.

The policy intention behind those super and veterans pension changes was to help the Realm countries’ efforts against depopulation. For a lot of our Realm countries, the people were coming to New Zealand and staying here. This was one way for the Government to be able to recognise that, actually, going back to your homeland is a good thing, and I know many of our retirees from the Cook Islands, Niue, and Tokelau have been able to enjoy that superannuation that comes with going back home. So the committee was concerned that this amendment would incentivise people to not return to their homelands, and we believed that it was contrary to the policy intention to help prevent depopulation within the Realm countries. So, therefore, we have put in some exemptions, or some rule changes, around that as part of the bill, in section 8 of the Act. The select committee also recommended modifications for refugees and protected persons, which is why, again, I thank the members of the select committee for coming to that point, and it is disappointing that the Greens were not accepting of this particular change.

So, going back to those three key policy questions that I believe the Finance and Expenditure Committee had to address: (1) whether having been resident and present in New Zealand for 10 years is too short a period for entitlement to New Zealand super—we believe that the bill as proposed, the revised tracked version, yes, 10 years is too short; (2) whether an increase in residency requirements would contribute to the sustainability of New Zealand super—although not a primary consideration, yes, we do believe the changes that we’ve put in the revised tracked version of the bill do contribute to the sustainability of New Zealand’s super, but also, again, the contributions that we’ve restarted, under the previous Government, to the super fund are extremely important there too; and (3) whether an increase in residence requirements contributes to the fairness of New Zealand super for people who have contributed in New Zealand for longer—that’s pretty much a no-brainer, based on the revised version of the bill.

Increasing the residence requirements for New Zealand super is about improving fairness, because of longer- and shorter-term New Zealand residents, and it safeguards the future of superannuation. The current residence requirements ensures that almost all New Zealanders are protected in our older age, and so I commend this bill to the House.

This is one of those bills that actually does this Parliament proud, because it does something that I think members around the House will agree we’re often asked to do by our constituents, and that is, “Why don’t you all work together to do a good job from time to time? Why don’t you collaborate? Why don’t you come together and pass good law?” And this is a really good example of that.

It’s a bill that has many fathers and a few mothers, and is all the better for it. Of course, it was borne of a policy position, a principled policy position, that has been held across a number of parties, including the National Party, that would ensure fairness in terms of eligibility to New Zealand superannuation and would ensure the sustainability of that scheme. It was originally introduced to the Parliament by former New Zealand First MP Mark Patterson, who I enjoyed many hours on the Education and Workforce Committee with, and then it was kindly adopted by Andrew Bayly, a National Party member, as his bill on the commencement of this Parliament and in Mark Patterson’s absence.

It was then dealt with through a very constructive and robust select committee process where submitters raised their concerns and were given a very good hearing. What we heard from many submitters was that they were concerned that this was a very abrupt policy change and that it was introducing a 20-year residency requirement for eligibility for New Zealand superannuation that would create massive dislocation and impact on large groups of New Zealanders and was viewed as very unfair. The Finance and Expenditure Committee all could see that that was a genuine issue and strove to address it through the transition provisions that are in this bill. As other members have discussed, coming up with that transition regime was not straightforward. I believe even Dr Duncan Webb, a former legal professor, asked for a few explanations of exactly how and why it was worded the way it was. So to those who are later negotiating with this piece of legislation, we were pleased to be able to add some diagrams and tables to make it a little more interesting. Even the English language has limits when it comes to complex matters such as this. The select committee was able, I think, to amend the bill in a way that means it keeps to its core principles but that also ensures fair transition arrangements.

So, together, parties across the House have worked effectively on this legislation. There are two things about it that are important to me. The first is that superannuation is actually a New Zealand taonga that is very important, and it is something that we must ensure remains affordable and remains sustainable. We, as lawmakers, have a particular responsibility to look at the policy settings around superannuation to ensure that remains the case. This bill progresses that ideal.

The second thing that I think it’s important that we put on the record here, and that I think is reflected in the way this bill has been dealt with, is that actually New Zealand must value those who come to our country from overseas. We must value our immigrant population. We must remain open to the world, connected to the world, and we must recognise that those who choose to take permanent residency in this country or to take up citizenship deserve rights and also duly take on responsibilities. So part of that is ensuring that they are able to access superannuation after 20 years of residency, but we also must recognise—that concept of fairness—that those who work hard in New Zealand throughout their lives do have an expectation that others fulfil residency before accessing New Zealand superannuation. This bill furthers both of those principles. It is a good bill that deals with some technical issues and does so well. I would like to commend it to the House and commend all of those who have helped make it a better piece of legislation.

Thank you, Madam Speaker. I rise tonight to take the last call on the second reading of the New Zealand Superannuation and Retirement Income (Fair Residency) Amendment Bill. I’d like to begin by acknowledging the former member Mark Patterson, who drafted this bill, and Andrew Bayly for picking this bill up and bringing it through the House. I’d also like to acknowledge the work that the Finance and Expenditure Committee has done on this bill, because, although I don’t sit on that committee, I understand that when this bill was introduced, it was more of a vibe as opposed to something concrete and understandable. So I think the bill that we are now debating tonight before us has come a long way, and it strikes a balance that ensures that we’re looking after people in a fair and reasonable way.

I also want to acknowledge Minister Carmel Sepuloni and her officials because, again, their input speaks volumes in the bill that we have before us tonight. My final thankyou is to the more than 300 people who took the time to submit on this bill, to share their stories, to provide advice and information to the committee. As we heard from my colleague Barbara Edmonds, this bill is an example of how individuals and groups and communities can have input into this process and see meaningful results come from that.

So this bill proposes to raise the minimum residency qualification for New Zealand superannuation from 10 years to 20 years. It would ensure that a resident has lived in New Zealand for a substantial part of their adult life, which means that they will have also contributed through taxes to our economy for a substantial part of their adult lives here. Here in Aotearoa, we have, by international standards, a fairly generous pension scheme. It’s not means-tested and it’s universal. However, when you look across the globe at other comparable schemes, residing in a country for 10 years is an unusually short period of time to then become eligible for a full entitlement to a universal superannuation scheme at the age of 65. On average, we are seeing life expectancies lengthen, so it is possible that there are instances where an individual will be receiving their pension entitlement for longer than the period that they contributed to it for, and this creates an anomaly. It raises legitimate questions about the fairness of the current settings in the superannuation Act. This proposed bill would contribute to the sustainability of New Zealand’s superannuation and it would address some of those fairness issues that I have raised.

I’d also like to note at this point that there are a significant number of New Zealanders who work in highly stressful or highly physical jobs who have lower than average life expectancies. I’ve seen that firsthand in the prison service, where a number of corrections officers who my dad worked with, who I knew growing up through my childhood, passed away before they reached the age of retirement, before they were old enough to collect their first pension payment, yet most, if not all of them, had contributed to the superannuation scheme for the vast majority of their working lives. My dad was 54 when he died after working in the prison service for over 30 years and prior to that he worked in the forestry service. So for close to 40 years, he paid his taxes; he contributed to our economy, to our communities, and to the superannuation scheme; yet he did not receive any benefits from it.

Like I said, he and a number of his colleagues didn’t get to reap the benefits of this system that they spent years contributing to. So the suggestion from across the House that we heard earlier tonight that the solution to the affordability of our superannuation system is to raise the age of eligibility does not sit well with me. That is why I say that there is a fairness issue here and I am glad that we have the opportunity to debate this in the House tonight. How is it fair when someone has spent their full entire working lives contributing to a system that they don’t get to reap the benefits from, yet someone living here for 10 years could receive the full entitlement for longer than they spent contributing to that system?

It’s also been noted by my colleagues, and I want to remind those listening at home too, that the reason we’re having discussions about the affordability of our superannuation scheme is because the previous National Government chose to stop contributions to the super scheme. That means that the cost of that decision again falls to my generation to wear the burden of it. I want to commend several of the recommendations that have come from the select committee. The first is for suggesting a change which acknowledges the special relationship that New Zealand has with the Realm countries: the Cook Islands, Tokelau, and Niue. I think it’s really important that we acknowledge that relationship. The second change I want to acknowledge is the changes that were proposed around refugees and protected persons. I support this recommendation because it recognises that refugees have no say in where they go or when they go. I can’t begin to imagine what it would be like to be forced from your home, from your job, from your life as you knew it, to flee in fear of your life, so I commend this change. The third change I want to acknowledge tonight is the change to implement this in a graduated way over a number of years. I think this is an important change when you consider the original version of this bill pre - select committee didn’t protect the current or existing entitlements and it didn’t have any lead-in time proposed whatsoever. So the fact that this will now be transitioned in over a number of years is excellent. It gives people transparency and the ability to plan ahead.

Finally, I want to finish by acknowledging the contributions that our migrant communities make to Aotearoa every day. We have many wonderful and diverse cultures, including in my own electorate. They’ve come to New Zealand and they’ve shared their culture with us, their customs, their food, their dress, their music, and even their language. I would like put on record that I am grateful for their contributions. I am grateful to the vibrancy that they bring our communities. But this bill is about fairness, it’s about securing the future of New Zealand superannuation, and as somebody who is still more than 30 years away from reaching the current age of eligibility I commend this bill to the House.

The question is, That the amendments recommended by the Finance and Expenditure Committee by majority be agreed to.