Employment Relations (Protection for Kiwisaver Members) Amendment Bill

Thank you, Mr Speaker. When KiwiSaver—

ASSISTANT SPEAKER (Greg O’Connor): You are moving.

Oh, sorry, I haven’t got the motion. I move—

So just move the bill.

💬 Dr TRACEY McLELLAN: I move, That the Employment Relations (Protection for Kiwisaver Members) Amendment Bill be now read a second time.

Pardon me, Mr Speaker. Thank you. When KiwiSaver was first introduced, it was recognised as world leading. It’s fair to say, I think, over the years, it has suffered quite a few setbacks. The National Government’s 2011 Budget reduced the maximum available tax credit; an employer superannuation contribution tax was introduced the next year, which, effectively, reduced the contribution; and the minimum employee and compulsory employer contribution was then set at 3 percent, reducing it from the 4 percent that was always intended a year later; finally, the kick-start payment stopped a couple of years after that.

KiwiSaver has certainly been through a lot, and there have been several changes over the years, and there are several changes that we should probably make now if we are truly concerned about the state of the scheme and if we are truly concerned that the KiwiSaver scheme actually achieves the outcomes that it was intended to when it was first devised. But this member’s bill before the House today, by virtue of the fact that it’s a member’s bill, is offering a small but important measure to remove at least one of the barriers that exist towards saving for our retirement and to restore some of the glory to what was once a world-leading savings scheme.

Currently, the crux of the matter is that currently employers are not legally obliged to offer KiwiSaver workers the same terms and conditions as workers who are not enrolled in the scheme. They can, effectively, offset their compulsory employer contribution in a number of ways, most commonly by rolling the employer contribution into a total remuneration approach or even withholding other benefits or other terms and conditions such as pay increases.

These legislative loopholes that have been created on purpose, that have been created by design, have the potential now to significantly disadvantage New Zealanders who are saving for their retirement. Quite frankly, I think, as has been said by the Retirement Commissioner and several other experts, it is against the spirit of the KiwiSaver Act. It, effectively, removes an incentive, and as we know, when we think about incentives, incentives are there to prompt behaviour in a certain direction, to provide incentives so that people do the intended behaviour that effects a decent outcome. These moves, effectively, remove what is a simple and an explicit and a salient incentive—that is, the employer contribution made towards retirement savings that is on, over and above, salary and wages.

This bill, therefore, seeks to restore the protections afforded to KiwiSaver members by the Employment Relations Act 2000 before it was amended by the Employment Relations Amendment Act by the National Government in 2008. It aims to ensure that workers can’t be discriminated against because they’re members of KiwiSaver or a complying comparable scheme, and it does so via a mechanism, a simple mechanism of being able to raise a personal grievance, which is the way that employees can seek redress and rectify that grievance. I’d like to acknowledge the Finance and Expenditure Committee and all of the people who submitted to the Finance and Expenditure Committee and also acknowledge the officials who took that information and garnered the expertise of those people and made some valuable changes and improvements to the bill as introduced.

There were four main changes made to the bill as introduced. One was simply just changing the title so that it made it explicit that it was to include other complying superannuation funds as well as KiwiSaver. The second was to amend clause 18 of the KiwiSaver Act to clarify what is the interaction between the KiwiSaver Act and the Employment Relations Act when a total remuneration approach exists. And that is that parties can still agree to a total remuneration approach, but not one where the member of KiwiSaver is paid less than a comparable employee who is not a member if the difference is because the employer has taken into account the employer’s compulsory contribution. So that just clarifies the interaction between those two Acts.

Thirdly, the select committee recommended that we replace the transitional provision with a new clause 24 and also clarify that an employee who is a KiwiSaver member would be able to raise a personal grievance if their employment agreement was entered into by, or varied after, the effective date, regardless of the date a comparable employee entered or amended their agreement, assuming that that comparable employee is receiving better terms and conditions than the KiwiSaver member. So that just, again, clarifies that whilst there must be an effective date, sometimes things can change before and after the effective date, while after the effective date, that impact people beforehand.

Also, clause 24—it was recommended that we add that a KiwiSaver member can raise a personal grievance if an employer offers better terms and conditions to a non-member after the effective date because they are not a member. This would apply even if the KiwiSaver member’s employment agreement had not been varied after the effective date, which makes sense. I know that’s incredibly wordy, but these are really good amendments, and, effectively, they are tidying up what was always the intention of the bill but specifying it very clearly so that there’s no confusion. This provision is intended to mitigate the potential risk that discrimination could occur through employers giving salaries or wages to non-members after the effective date whilst not varying the KiwiSaver member’s salary or wages.

The Retirement Commission and the Retirement Commissioner have been quite vocal on various things that need to change with the KiwiSaver scheme. And, again, the intentionality behind this is always to look at ways in which we can improve it for the benefit not only of people but for the economy as well. I think that it’s fair to say that whilst the majority of employers act responsibly when it comes to employees’ KiwiSaver membership—and I know that that was an issue for the Government parties in so far as their differing view—it’s also fair to say that the Retirement Commission survey showed that 25 percent of employers do include employer contributions to KiwiSaver as part of total remuneration. So whilst the majority do act responsibly, 25 percent is a sizable proportion of employers who are rolling up the KiwiSaver contribution in that total remuneration package. And for employees who don’t know that or don’t know that that’s not how KiwiSaver was intended to be, there’s not a lot of wriggle room there in terms of negotiating individually to have that rectified. So I think that it certainly deserves a legislative fix and a return to the way it was intended.

The purpose of the KiwiSaver Act was to encourage long-term savings so as to increase individuals’ wellbeing and financial independence in retirement. We know that retirement can be really tough for a lot of people, and we know that most people—most people that swap their labour for wages, which is most of us—are not in a position to enjoy the same standard of living in retirement as in pre-retirement times. Ensuring we get the most out of KiwiSaver is not only good for people in their retirement; it’s actually really good for the economy. KiwiSaver is an asset of national significance, and we should be doing everything we can to remove any barriers that we come across—there are several of them, but this is a really obvious, salient one—any barriers to participation to keep the effective and simple incentive salient and simple.

For that reason, I would again like to reiterate my thanks to all of the members of the Finance and Expenditure Committee, who worked on this and provided really good feedback, and to all of the officials who very diligently offered suggestions on how this could be improved. I commend this bill to the House.

The question is that the motion be agreed.

Thank you, Mr Speaker. I rise in this second reading on behalf of the National Party. This is, of course, a member’s bill. I want to congratulate the member Dr Tracey McLellan for having a member’s bill come into the second reading, but I do have to say that National opposes this bill. It was, you know, somewhat interesting, because members’ days like this are always really interesting because there tends to be two different types of members’ bills: those where there is a bill in search of a problem—and some bills go a long, long, long way in terms of trying to find a problem to solve; it’s called a ballot-stuffer bill—and there are others that are real challenges that members bring on behalf of constituents, like my colleague Stuart Smith earlier today, a hard-working member of Parliament for Kaikōura, who represented businesses and people in this community, constituents, with a real kind of policy problem, and put the work in to get legislation through the House. Then, the previous one, which was nearly unanimously supported—nearly; so, pretty good for Dan Bidois and the bill on—

💬 Tom Rutherford: Gift cards.

—on gift cards and expiries. Again, it seems, on the surface of it—you know, really? But, actually, that is a serious problem. We’ve heard example after example after example of why it’s a real policy problem to solve, and a member’s bill is on the way to fixing it.

Unfortunately, this one, we have 3.25 million New Zealanders that are KiwiSaver members—$93.7 billion invested. So we actually have a very high proportion of New Zealanders from the working-age population in KiwiSaver. Unfortunately, this is more of an ideological bill, because what it says is that the relationship and the discussion and contract between employees and employers is broken. What it actually says is we can’t trust the two parties to negotiate and come up with an agreement that works between them. So the challenge with this—and if there was a problem, it was actually the National Government that fixed it in 2008, which I thought I would just touch on.

In 2008, the National Government amended the KiwiSaver Act 2006 to clarify that whilst compulsory employer contributions must be paid in addition to an employee’s gross salary or wages, employers and employees can contract out of the requirement through good-faith bargaining. This side of the House actually agrees that the two parties in an employment contract should have the ability to negotiate themselves. So that is the provision that remains today.

While I say this is a bill that is seeking a problem, in the previous Government, the then Minister of Commerce and Consumer Affairs, the Hon David Clark—there’d been this review by the Retirement Commissioner in 2019 which raised a whole bunch of issues, of which this was a tiny one, an absolutely tiny one. But it was two years later that the Minister then thought, “This is kind of interesting.”, but then actually still did nothing. And that’s why it backs up my statement that this is one of those members’ bills, unfortunately, that is a bill searching for a problem. It’s like a problem-searching missile that’s just kind of cruising around, trying to land, and hasn’t quite landed it.

The select committee process—unfortunately, ACT and National and New Zealand First in the Finance and Expenditure Committee report back had quite significant concerns with it. It’s actually quite unusual to have a report back from a select committee where the members don’t want it to proceed. It comes back into the House, so we’re debating it. But, again, it’s not a bill that has significant merit, unfortunately. So National won’t be supporting the Employment Relations (Protection for Kiwisaver Members) Amendment Bill in this second reading. We don’t think it’s a problem. We don’t think there needs to be a new ground for a personal grievance—actually, what it does is just creates another whole area of grievance for the Employment Tribunal. Actually, it has the real risk, if it was to pass, that cases that do need the attention of the Employment Tribunal would be blocked up with something, like this, that actually has no place to be there, because we believe it is important that an employer and an employee have the ability to bargain in good faith.

That’s why we clearly voted against—we repealed legislation like the fair pay agreements that forced mandatory conditions on large numbers of New Zealanders irrespective of their conditions and their circumstances. We believe that New Zealanders should be able to have that negotiation to provide what is best for them—because what this bill actually does is limits employees’ ability to choose the saving option that suits them best. It also limits the ability of employers to opt for a remuneration approach that is best suited for this business. So, you know, whilst the argument is that employer contributions are an incentive to opt into a scheme, the employer is contributing regardless of the remuneration approach they take. The difference is that there is a perception that the employer is not when a total remuneration package is utilised.

💬 Carl Bates: It’s just madness.

So it is—it is absolutely crazy. Ultimately, it is important that both employees and employers understand, or employers will understand, the package that’s being offered and understand whether or not their salary or wages includes or excludes KiwiSaver contributions—that’s part of the negotiation, part of the discussion that an employee and an employer will have. So we don’t believe that removing flexibility through this negotiation process is a good idea. Actually, it’s a bit concerning, because if at the start of an employment relationship an employer and a potential employee can’t have an open conversation about how the salary package is made up—what are the components and why—then it is quite concerning that that would be the start of an employment relationship.

While we’ve had bills earlier today in this members’ day that have had wide support, unfortunately this isn’t one of them. This isn’t a bill that has a widespread problem that the Parliament needs to solve through the member’s bill vehicle. So that is why the National Party will be casting our votes against this piece of legislation. We do think it is important—of course KiwiSaver is a significant part of New Zealand’s savings record, and we want to ensure that when employers and employees are agreeing their terms of their new relationship that they are able to discuss and agree what suits them best. We will be voting against this bill.

This debate is interrupted and will resume the next sitting day. The House is adjourned.

Debate interrupted.

The House adjourned at 9.57 p.m.