Taxation (Budget Measures) Bill (No 2)

Members, we now come to Part 2. This is the debate on clauses 17 to 30, the “Amendments to other enactments”. Part 2 contains changes to the KiwiSaver regime as well as changes to the Tax Administration Act 1994. The question is that Part 2 stand part.

Point of order. Thank you, Madam Chair. I refer to two matters. Before the closure motion and the vote on Part 1, the Chair seemed to indicate that, despite the end of Part 1, those elements of KiwiSaver from Part 1 could be debated in Part 2. I just want to confirm that that’s the case, mainly because it is a bit odd given that we’ve voted on amendments to KiwiSaver clauses—but that’s what she indicated. There were very few calls on KiwiSaver and I note that colleagues from the Green Party and Te Pāti Māori were seeking calls but were not given the opportunities to speak on that part of Part 1—

CHAIRPERSON (Maureen Pugh): I understand.

Rt Hon ADRIAN RURAWHE: So my question, just for clarity of the committee, is: have I heard that correctly?

CHAIRPERSON (Maureen Pugh): You have heard that correctly, sir. I was watching the debate and I heard the previous Chair make reference to being able to go back, where relevant, into clause 1 as it relates to KiwiSaver.

Speaking to the point of order. I just want to really, really clarify this because, with respect, the operative changes to the KiwiSaver regime actually occurred in Part 1. The Chair seemed to think that we could, in actual fact, discuss those operative changes in Part 2, but that’s going to be very hard because we can’t relate them to a clause in Part 2—they actually sit in Part 1. The amendments in Part 2 are very, very technical and just to do with a very small part of the changes. So may I suggest, provided we bring up new points, that we have a rather more thematic debate in Part 2 around KiwiSaver? We could confine it to KiwiSaver and always make sure we are bringing up a new idea rather than repeating ideas, rather than trying to relate specifically to clauses.

Tim van de Molen: Speaking to the point of order.

CHAIRPERSON (Maureen Pugh): I’ll just take some advice from the Clerk. Speaking to the point of order, Tim van de Molen.

Thank you, Madam Chair. There is, obviously, under Part 2, clause 17, which relates to KiwiSaver. My understanding of the comments from the Chair during the previous part were that KiwiSaver can, of course, be debated in Part 2 because there is a clause for that. But it would not be appropriate to give the committee the ability to rehash everything in the clause 1 aspects of KiwiSaver because, of course, that’s been dealt with and voted on and completed under that part. So it should indeed be constrained to this part.

We’re all in agreement. I think everyone understands as it—and I did listen to the previous Chair and she has provided me with confirmation of her ruling. So I think you’re correct, Dr Russell, that we can refer back to clause 1 as it relates to KiwiSaver. But I think we’ll just see how the substantive questions come through. To your point about the repetition, we will be very alert to that. Thank you.

Speaking to the amendments to KiwiSaver in general, there is some debate that we need to have around the substantive changes. Now, in actual fact, there are three substantive changes, and I think we’ll need to speak to the policy intent behind them. The three substantive changes are: one, the change to the member tax credit, which is being halved, so it’s going down to two hundred and forty-something-or-other dollars. The second substantial change, and it’s a change that this party, at least, supports, is the change to enable 16- and 17-year-olds to participate in KiwiSaver, to receive employer contributions, and to receive the member tax credit. Now, given that we agree to that, in this party, my party doesn’t feel the need, particularly, to discuss that particular change for 16- and 17-year-olds, other than to endorse it. But the third substantive change is the change that puts in a top threshold for KiwiSaver, and it says that people earning over $180,000 may not receive the member tax credit.

I have two points I want to make about that one. The two points are these—the first question is: why $180,000? What was the particular policy rationale around $180,000? Now, it’s clear that it links to the top tax threshold. The top tax threshold is also $180,000. It’s an interesting point, because people earning over $180,000—and that is a substantial income in New Zealand—first of all, their tax rate increases after $180,000, and now they don’t get the KiwiSaver tax credit, either. I’m hoping it wasn’t just a convenience thing at $180,000, that there was actually some substantial fiscal analysis that said that, in actual fact, we think people earning over or roundabout that amount of money are likely to be able to save without needing that extra credit from the Government, that they would be in a position to do that anyway. So I’d just like to know, from the Minister of Revenue, what advice they got around that substantive change, around $180,000. That’s the first question I have to ask around that threshold change.

The other one around the threshold change is a very precise one. It just seems to me, from the way it’s written, that a person who earns $179,999 will get the member tax credit, but a person who earns $180,001 will not get the member tax credit. There’s just a little flex point there, where, in actual fact, you’re going to end up worse off earning a tiny bit more money than if you earned a tiny bit less money. Now, in other places in the income tax system, we try really hard to make sure that people do not end up worse off because of a tax change that pushes them up or over a threshold—an example of that is the minimum family tax credit. I just want to know what happens to people who sit right on that cusp, who, if they just get a tiny wage increase or a tiny salary increase, end up earning just a little too much to get the member tax credit. What was the thinking around that? Was there, again, any analysis done around that? I get we have to draw a line somewhere.

So the two questions: why was the line drawn there, and what happens to people who just fall on either side of that threshold?

Thank you so much, Madam Chair. My question is similar to what the Hon Dr Deborah Russell has mentioned as well. Again, we’re really appreciative, Madam Chair, of your clarity around this. I think, when we’re looking at the operative elements of this—I know we have voted on this. My question is around, in Part 1, tying into Part 2—because Part 2, in terms of KiwiSaver, sometimes we’re looking at the contribution rate adjustment and also the reduction rate; so it’s mainly the operationalisation of what the KiwiSaver will look like, from the employer and employee perspective.

But, I guess, the fundamental question we’re looking at in Part 1—although I think there is this narrative that we’re looking at making sure that more people are putting into KiwiSaver, etc., fundamentally we’re seeing that we are asking, if I am correct, New Zealanders to pay more out of their wages, which would affect people on the minimum wage as it is, in order that the Government isn’t going to be able to contribute as much, which is what we’re seeing in clause 13 of Part 1. Hence, we’re looking at increasing the contribution rate adjustment from a baseline 3 percent to a baseline 4 percent. I wanted to check with the Minister of Revenue: if the Government is really looking at wanting to ensure that New Zealanders can save up enough for their KiwiSaver, why has the Government considered reducing the Government contribution from $521.43 to $260.72, by half, and also, as a result of that, adjusting the threshold from a half to a quarter. That’s kind of my first question regarding some of the broader policy questions on the Government contribution element.

I also wanted to check, in terms of—let’s say, with Part 2, when we’re looking at clause 18—when we’re looking at the idea of this transition, in terms of the reduction rate going from 3 percent to 3.5 percent to 4 percent. Why was the increase going up to 4 percent? Why was 1 April 2026, as a figure, picked? Again, we’re looking at this sort of arbitrary—unless it’s a specific policy requirement or rationale that the Minister could highlight, it seems like an arbitrary date that has been put across, in terms of some of this.

So those are my two questions for the time being. Again, we’re kind of dancing back and forth between Parts 1 and 2 a little bit, but, in the broader scope of things, when we’re looking at the Government contribution changes, why has the Government decided to contribute less towards people’s KiwiSaver? Then, also, in terms of the rate reduction, as a starting point, why were those particular dates chosen to transition from 3 percent to 3.5 percent to 4 percent?

Thank you very much, Madam Chair. In answer to the questions regarding income thresholds relating to clauses 20 and 22, the income thresholds were considered. The Government decided that $180,000 was the appropriate level in which earners do not need additional Government support. The benefit and value for money in providing Government contributions to low and medium income earners under $180,000 was seen as the most targeted mechanism in order to achieve that.

In addition to that, research suggests that low to medium income earners need more support than higher-income earners as they have other forms of savings. So that is the policy rationale in regard to clauses 20 and 22 in regards to the income threshold.

The question raised in regard to people that sit above and below $180,000—it is no different to any other brightline number used in regard to taxation; there is a threshold and those above will be subject to it and those below will not.

In regard to clause 20, in regard to the question on the threshold increasing from 3 to 3.5 percent and the timing of that, the Government considered to ensure that there was appropriate time for both employers and employees to be prepared to increase those contributions and, hence, why the date—just under a year out from today—was considered appropriate. That was then balanced with the further increase over the period of the next three years—providing certainty to business is a key objective of this Government.

Thank you. Just a quick question on new Subpart 3B, “Rate reduction”, inserted by clause 23, which talks about “[may] be required be no less than 92 days and no more than 1 year.” I understand the philosophy around 92 days is probably around not having frivolous applications. Interesting number, 92, so keen to understand the rationale. Also, no more than a year—there seems to be an assumption that the circumstances will have changed or a pressure, if you like, to make it that the amount will change after that one year. I’m wondering what happens in the event that circumstances haven’t changed. Will they have to do a new application? Will they have to submit all the information that is required under new section 101L(2), or would they just be able to seek some kind of an extension? What is the policy reason for that? Thank you.

I just want to follow on from my colleague Ingrid Leary’s question. It’s not so much around the policy around that but I’m just thinking of the compliance costs that are associated with these rate reductions. Now, it’s interesting because a rate can be reduced from 4 percent to 3 percent—so a difference of 1 percent—in what a person contributes to KiwiSaver, and the implication is that that will help with the cost of living. It seems like a fairly small amount to be changing around there, but I get that some people may feel the need to do that. Particularly we’ve seen just reported in the news today that, in the last year or so, more people have been withdrawing KiwiSaver for hardship reasons than for housing reasons. But given that quite small economic benefit, what was the trade-off with compliance costs there? Part 2 has concerned itself very largely with that rate change, and it’s quite a complicated procedure. There’s quite a significant compliance cost for an individual to go through and get that rate reduction, so I wonder what thought was given to the trade-off there between compliance costs and the benefits to the individual.

But it’s not just the compliance costs either. It’s for the individual but also for the employer, so there’s a set of compliance costs there, but then there’s some work that must need to be done within Inland Revenue’s own systems to enable those changes to take place as well. So there’s a set of costs to the Government in terms of how it actually sets up the systems in order to accommodate this particular change in the rates. I’d just like to hear from the Minister of Revenue what consideration was given to those three sets of costs—compliance costs for the individual, compliance costs for the employer, compliance costs for Inland Revenue and Government systems—in that space.

Thank you, Madam Chair. I appreciate the call. I hope you can hear me from all the way back here. I’ve chosen to sit here because I have the theory that you’re more likely to get called when you’re in the Speaker’s line of sight.

But on to my questions. I have specific questions around the general, cumulative impact of the changes, some in Part 1, as the previous speakers have already articulated, and some in Part 2. My questions relate specifically to what the impacts of these changes might be on migrant communities. We know that migrants come here later on in their life, so won’t have had the opportunity to contribute to KiwiSaver as much as, for example, if someone was born in New Zealand, they were here all their lives, they would have been contributing to KiwiSaver from when they started working—I started working when I was 13 years old, I was a paper boy—so from 13 years old to, potentially, when they retire, to 65, some end up working longer than that. But we know that some migrants end up coming here later in their lives—for example, someone who comes here when they’re 30 or 35. So they would have had less opportunities to contribute to their KiwiSaver.

What are the impacts of having the contribution rate that the Government has set; will that have the potential to create disparities in terms of communities that are more likely to come from migrant backgrounds—for example, the Asian community? Acknowledging, of course, that just because you’re migrant doesn’t necessarily mean that you’re Asian, and vice versa. Some communities here are actually quite well-established from the Asian communities, and I’m thinking, for example, in Dunedin, some of the families there have been there since the era of Chinese goldmining, since the 1800s. We can’t necessarily equate the two, but we do know that there are likelihoods.

I also have questions about whether there’s been much engagement in terms of whether there was specific feedback from the Retirement Commission on the impact of these changes. I’m looking at a body of work that they did a few years ago, and it’s titled “Research highlights widespread disparities in the experiences Māori have in retirement.” This is a series of papers that they issued regarding the gaps in wealth between Māori and non-Māori, and how that might impact the potential for Māori in retirement. Paper one goes over the structural, historical, and political factors. Paper two is a literature review by Dr Margaret Kempton that acknowledges that, obviously, Māori are—

CHAIRPERSON (Maureen Pugh): Can you come to the question, please, Francisco?

FRANCISCO HERNANDEZ: This is part of the question. Was there engagement in terms of the Retirement Commission, and were the four papers that the Retirement Commission did—in terms of research that highlights widespread disparities and experience Māori have in retirement—factored into the sort of analysis and the work that the department did in terms of estimating the broad impact of these changes? I’ll leave my contribution there. I might want to take some follow-up calls depending on how the Minister of Revenue answers, but thank you for the opportunity.

Thank you very much, members. In regards to answers to questions relating to the temporary rate reduction in regards to individuals being able to select, for a period of time, a reduction back to 3 percent—these are clauses 18,19, 23, 24, and 25; all of those clauses relate to the temporary rate reduction point—this is providing choice for employees, depending on their financial circumstances. They have a 92-day period, which is, in effect, three months, to be able to apply for that rate reduction; that would be based on their personal circumstances. They can reapply as many times as they wish in regards to that rate reduction. The process that will be involved is considered appropriate and is not overwhelming in the context of administration.

In regards to the questions around compliance and burden, IRD did consider the costs in the context of compliance. They also will be managing the administration costs of this through baselines. We did take on board feedback from the Retirement Commissioner, who also noted and has made statements in the context of the benefits of increased savings which will result as a result of this policy.

Lastly, to the question in regards to working parents, if I use a working-parent family with children as an example, under the status quo versus under this policy, a working parent, at the time at which they purchased a first home or used the KiwiSaver for a first-home deposit, would have 9 percent more savings, from $15,800 to $17,281. At retirement age, a working-parent family will have 26 percent more savings, from $397,000 for the household to $500,000. These changes will drive a significant uplift in benefits for New Zealanders in the context of retirement and also in regards to their KiwiSaver balances, which they can use to buy their first home.

Thank you. Mōrena, Madam Chair; thank you. I think I heard a comment earlier around tax and this whole debate this morning and how it can—it does leave me a bit cold in reality, but, in fact, unfortunately, in this context, it’ll probably leave too many Māori families out in the cold. So I want to start my discussion in that way.

Minister, if you can—and it’s a little bit, I think, in the previous part, but I’ll land with this section now, regarding Adrian Rurawhe’s discussion earlier. Has the Government considered the cumulative impact of the changes alongside rising living costs, housing pressures, and other benefit changes affecting low-income and Māori whānau?

I live in the community up in Te Tai Tokerau—that is, Northland—and, like many of my colleagues, rural Māori communities, and urban communities, actually, are of a particular interest to me—all families are, actually. So this is the context of my questions. What assessment was made of how this policy affects equity outcomes? Will the Minister of Revenue release the full cost-benefit analysis or distributional impact modelling used to inform this policy change? And how does the Minister justify a faster reduction in support for struggling families?

There’s a phrase up in the Far North—we talk about “Living in poverty in paradise”; sadly, too many are forced and struggling in this thing called a “poverty reality”, Minister. I don’t see them in these ideas which are now policy and now will be made law, sadly. What protections of transitional measures are in place to ensure families don’t suddenly lose crucial financial support? How will the Government monitor and evaluate the impact?

Now, I’m going to come to clause 18—if I may—which amends section 4, by inserting the definition of “rate reduction”. This allows for a formal process where individuals can temporarily lower their contribution rate due to financial need in clause 19, which amends section 22 to insert section (22)(1)(c)(ia) on the evidence of rate reduction needed for new employees. How will these amendments ensure that Māori participation and retention in KiwiSaver are not adversely affected? Has an impact assessment—an actual impact assessment—been done specifically on and with whānau Māori regarding these amendments? What measures are in place to monitor if these legislative changes disproportionately disadvantage—and they will—Māori whānau? What mechanisms, Minister, if you can answer, does the Government have in place to remove barriers to applying for rate reductions? Minister, it is difficult for Māori to engage with these processes in plain language, whether the language is—well, more often than not, it’s English, and it’s not Māori enough, sadly. And how is Government going to mitigate these issues for Māori communities?

These are real and actual issues for whānau Māori in rural communities and urban communities. Many of the processes, the clinical, technical processes that you’re forced down into a lane, Minister, are already alienating and they are difficult to navigate. When processes like this are that difficult, the end result will always be either frustration, anger, or just basically giving up and doing-what-you-need-to-do - type of processes, Minister. So I am really interested and keen. I hope that you can give some genuine thought to these questions, these places that I’m talking about, particularly our Māori places and people, and that they are understood in some of your responses. Thank you, Madam Chair.

Thank you very much, Madam Chair. Just in regard to the last two questions, as we know, a large proportion of youth in New Zealand are Māori and Pasifika, and, as a direct result of this Government’s changes in the context of KiwiSaver changes related this clause, allowing 16- and 17-year-olds to be eligible for KiwiSaver, a large proportion of youth who are Māori and Pasifika will now be more better off in the context of KiwiSaver than they were under the status quo, and that should be celebrated.

The IRD provides its services in multiple languages, including in print and by phone, and including, obviously, Māori and other languages. If any individual in New Zealand is not fluent in English, then they can call the IRD on 0800 700 342.

Thank you, Madam Chair. In the spirit of back and forth with the Minister of Revenue, I’d just like to acknowledge that he has put on the record, in Hansard, the ability for people to apply as many times as they would like for what is, essentially, a kind of hardship allowance to be able to go to the 3 percent. I guess my points would be picking up on the previous speaker: the ability for those who need that 3 percent—because of cost of living pressures—is likely to be less than for those who are in higher income brackets. So I wonder if the Minister would consider, perhaps, whether a reapplication process could be put in place or whether he would be prepared to put in the Hansard that there would be no jeopardy for those people, that every application would be considered either as a starting point so that the commissioner would not look back and go, “Well, you’ve already applied 10 times, and, therefore, we’re going to get hard on you.” If the circumstances have not changed, then they have not changed, and, perhaps, there could be a process that just enables that access, because, currently, as has been pointed out, there is a difficulty with access.

The other point I would like to go into is just around the refund if the person cannot apply—in new Subpart 3B, new section 101T. It’s really interesting language here where it says, “The employer … may refund the amount” to the person, and then, again, in new subsection (6), it says, “The Commissioner may refund the amount determined under subsection (2) … if the money is held by the Commissioner.” To some extent, I understand the new subsection (6) more because it would seem that a discretion like that for a commissioner is probably appropriate. But I would like to understand, still, in that subsection, why the commissioner “must not”. For subsection (2), I think very different principles apply, because here the legislation is giving the employer a kind of discretion around refunding moneys to people who cannot comply, and there is a clear set-out formula in the legislation about “contributions deducted - rate reduction amount.” I don’t understand why this legislation would create this kind of discretion, which just makes it even more difficult for the employee to be able to get moneys if they cannot comply. It also puts a bit of an unfair pressure on the employer, who now becomes judge and juror of the situation. To my mind, it would be better, really, if the moneys either had to go back to the employee or had to go to the commissioner, who would then apply that discretion. The employer is not an agent of the State, and it is putting an unfair burden, in my view, on the employee but also on the employer to have to make those decisions.

So, really, the wording, Minister—I haven’t got a formal amendment to this, as far as I’m aware, but would the Minister consider making it that the employer must give that refund, or would the Minister consider striking that out and replacing it with something that requires those moneys to go to the commissioner, who would then apply that appropriate discretion? Although, even then, the way the legislation is meant to be operating, if I understand it, really the commissioner should be giving that money back to the person who cannot comply.

Thank you, Madam Chair. Look, I’ve just got a question regarding new section 15B, “Rate reduction”, inserted by clause 26. It’s good that, obviously, Kiwis will have a choice to opt back or down. That’s quite good for us on this side of the House; we’re all about personal responsibility. I just wonder if the Minister of Revenue is satisfied with the way it’s worded in new section 101L(3), inserted by clause 23, “For the purposes of subsection (2)(c), the period for which the rate reduction is required must be no less than 92 days [before] and no more than 1 year.” I just want to check that the Minister’s happy with the way that’s landed in legislation.

As we’re just about at the end of Part 2—just at the very end—I’ve just got a question for clarification from the Minister. This is replacement section 80KB, “Section 80KB amended (Contents of application)”, inserted by clause 29. For reference, it’s on page 16 of the bill. Again, I’m just seeking clarification from the Minister on clause 29(1): “In section 80KB(1)(c), in the words before the subparagraphs, replace ‘on the last day of the tax year’ with ‘on the last day of the tax year and that tax year is before the 2026-27 tax year’.” Also, clause 29(3)—just at the bottom of page 16, just for your reference, Madam Chair, and Minister—“In section 80KB(1)(g), replace ‘on the last day of the tax year’ with ‘on the last day of the tax year and that tax year is before the 2026-27 tax year’.” Similarly, it goes on in replacement section 80KV, inserted by clause 30, which actually brings us right to the end of the whole bill and part. Just before we go to deliberation, I just really was after some clarification from the Minister, and we’d really appreciate his response on that. Thank you.

CHAIRPERSON (Maureen Pugh): Cunning plan, Mr Hamilton, but we’re not there yet.

Thank you, Madam Chair, and I am—

Dr Lawrence Xu-Nan: Good try!

Hon WILLOW-JEAN PRIME: Yeah, good try—trying to jump right ahead to the end. I am wanting to ask follow-up questions to the Minister of Revenue’s response to the questions from Mariameno Kapa-Kingi, and, in particular, around the impact that these changes will have on Māori. The point that the Minister made was the inclusion of 16- and 17-year-olds and the number of Māori who make up that group.

But what I want to ask the Minister is: what does he say to the Retirement Commissioner, Jane Wrightson, who said that low-income earners, Māori, women, and self-employed people would be the hardest hit by the reduction of the member tax credit? What impact can the Minister tell us that these changes will have, in particular, for Māori?

I’ve already provided an answer in regards to that question, so I won’t repeat myself.

In regards to the question on the rate reduction, I want to confirm that the process will be an automatic approval and there is no hardship criteria in regard to taxpayers that are seeking a rate reduction. The protocol in regards to the timeline for a rate reduction is also consistent with existing savings suspension protocol under KiwiSaver, and that therefore ensures that compliance costs are saved.

I want to answer the question by the member Ryan Hamilton in regards to section 29. Just to clarify, this provides for different dates of birth for individuals and the drafting of the rates reduction. They all follow standard processes for saving suspension, so I hope that clarifies the questions asked in regards to all of clause 29.

Thank you, Madam Chair. I want to pick up on something the Minister of Revenue said before, and, again, it comes back to 16- and 17-year-olds being eligible for KiwiSaver. I think, from what we’re hearing and what the Minister has said, it is a good idea. But one of the things that one of the previous speakers picked up on, and this is a different perspective of that—he was talking about KiwiSaver in the context of the Government’s attendance package. However, one of the things we have found, particularly during the pandemic and due to the cost of living crisis post-pandemic—and this, again, follows on from Mariameno Kapa-Kingi’s question around Māori and Pasifika and also rural families’ perspective—is that we do see 16- and 17-year-olds, or potentially younger, having to leave school, or who are no longer able to attend school, because of the fact that they have to work to support their families.

Although 16- and 17-year-olds being eligible for KiwiSaver is a good idea, I wondered if the Minister had any advice around the fact of whether this will have, I guess, an adverse response in the sense that we’re then going to be seeing more and more people who will leave school early, or more and more people who are not even leaving school but are simply not attending school because then they would need to go and work, because now they have this new incentive, which is that their salary will be contributing towards their KiwiSaver. So that’s one of my first questions to the Minister.

But picking up on what the member opposite was talking about in terms of people being able to opt out of the rate reduction, I wanted to check with the Minister on what the rationale was behind allowing people to only do it for one year and having to reapply for it every single year. Now, yes, I agree that having people being able to opt out is a good idea, but people who are probably doing that are already working two, three, or sometimes four jobs. They’re working 60 to 80 hours a week, and yet now we’re adding on this additional administrative burden for them that they have to now do it every single year, or opt in every single year and reapply and go through all of the process. As we have seen with the saga that is FamilyBoost, people don’t necessarily have the time to do that, and IRD is not the most user-friendly department in terms of application process. So when they do something like this—and you’re asking people to do it once every year—would that then put, unfortunately, undue burden on people having to do that?

I wonder if the Minister would consider my amendment, which is that people then do this to opt out, and they are opted out for as long as they want to until they are happy to opt back into the system again—and it would increase their rate reduction to go back up to 4 percent as opposed to 3 percent—as opposed to having to do it on an annual basis.

I know there are some other questions that other people have asked in terms of 90 days, but I’ll leave that to the Minister. But those are my two questions on whether there’s been any advice the Minister has received around the adverse effect of 16- and 17-year-olds no longer attending school because they’ve now got this additional incentive of being opted into KiwiSaver, and also whether the Minister will consider my amendments in terms of the rate reduction opt-out to be longer than one year.

Well, thank you very much, Mr Chair. Well, firstly, I’m disappointed that members of the Opposition, particularly the Greens, are voting against this legislation, voting against 16- and 17-year-old New Zealanders to be eligible for KiwiSaver. I don’t think that that sends a very positive signal, but I do acknowledge Government for taking a step—about 85,000 young people will now benefit from KiwiSaver, something that you are opposing.

In the context of the points around section 102 of the KiwiSaver Act 2006, the ability to take a savings reduction—in the context that this provides members with choice, and the context around the 12-month element ensures that we want to be able to boost members’ ability to save in KiwiSaver and, therefore, the need to have to reapply does provide an opportunity to reconsider one’s position and whether they want to continue to invest or not.

Thank you, Mr Chairman. I have a question for the Minister of Revenue around clause 23, which is also on the rate reduction section, where this is specified. My colleague from the Green Party has asked about whether there was any consideration of not having to reapply every year. But my question for the Minister is about whether any modelling has been done around the need to reapply every year to qualify for a lower rate of, say, 3 percent, and whether or not this is going to disincentivise people being involved in KiwiSaver at all—whether it will mean they stop their contributions and they aren’t participating in the scheme, and whether the Minister received any advice around withdrawal from KiwiSaver because of the administrative burden, and what the distributional impacts of that would be.

You can see that the Opposition parties have an issue with the compliance burden and, also, just the restrictive nature of new Subpart 3B, inserted by clause 23. I’m wondering, if we look at new section 101M, “Grant of rate reduction”, where the commissioner must give the rate reduction for the period specified, if it has been applied in that way.

If we look separately at new section 101N, the “Commissioner must give notice of grant of rate reduction”—under (a)(ii)—“of the date on which the rate reduction will end”. As it is written, and without clarification, it does appear that there could be a discretion for the commissioner to actually give that reduction for a period longer. It is only the previous section that requires it to be for the period which was applied for. I’m wondering if the Minister could clarify whether, in his view, that might be a way that the commissioner, with his or her discretion, would be able to actually overcome these issues of equity that are going to impact Māori, women, and so on, or would he amend new section 101N to clarify the restrictive nature of that section, if he believes that it must be pegged to new section 101M, the previous section before it?

Possibly I missed the answer—or maybe I didn’t put the question, so here it goes again. Can the Minister of Revenue explain, please—no, let me just go back to clause 17 and KiwiSaver and how it seems that the Minister thinks we don’t get that. We get that. I’m interested, therefore, to know the actual numbers of young Māori 16- and 17-year-olds in KiwiSaver. What are those numbers? I’d be interested to know if the Minister knows those. That would be helpful for me to be able to get a better picture on that. Has an impact assessment been done specifically on Māori whānau regarding these particular amendments?

All measures have a direct impact on whānau Māori when systems often alienate. So, with that in mind, what measures are in place to monitor these changes disproportionately disadvantaging Māori? I might have said something similar in a previous question, Minister, but I didn’t hear the answer clearly enough, possibly. Also, what mechanisms does the Government have in place to remove the barriers to applying these rate reductions?

You might have heard me mention the other day this thing called “DWB”—driving while brown. It’s very much in the 16- to 20-year-old Māori young people band. So when you’re driving while brown and you get stopped, when you’re profiled and lots of photos are taken—sorry, I don’t mean to cause the Minister’s face to change quite like that, but that is the context, and unless you understand it, the ideas that come out of the mind that produces this are simply going to fail. So I am doing my best to assist the Minister by asking these really useful questions, and I’m looking forward to reciprocal responses.

It is difficult to engage with these systems—I’ve said that, and I hope that’s understood. How, Minister, will you mitigate these issues for Māori communities in a Māori way? I appreciate the responses.

Thank you, Mr Chair. I’m just looking at clause 25 of the bill. That clause deals with non-compliance of financial institutions with the Financial Markets Conduct Act and financial markets legislation and the Fair Trading Act. As I understand it, and the Minister can correct me if I’m wrong, this is to allow for the fact that there is this raft of changes to KiwiSaver contribution rates, what have you, and Government contributions, and there will be material out there—disclosure statements, advertisements, fliers, what have you—and it will say things like if you contribute a thousand and something dollars, you will get the Government contribution of $500, and that’s no longer accurate.

So I get that, but I guess one of the questions I have—or the real question—is that new section 244(b) says that “the non-compliance relates to a product disclosure statement or other disclosure document, … and does not continue on or after 1 January 2026.” So we’re here in May, and it appears that these documents are, by definition, misleading. These are critical documents to the financial decision-making of New Zealanders. This provision says, in essence, up until 1 January next year, you can give people misleading information about investment decisions.

Now, I can understand a short period of grace, because of the way this is done, but the fact is that they’re $66,000 worse off over their careers as a result of this reduction in the Government contribution, and that’s not being put to them. In fact, the opposite is being put to them: that they’re being presented with a disclosure document or going online and clicking on the disclosure document and going, “Oh, goody! The Government will give me $500 a year.”, and it hasn’t been changed.

Now, I guess the question is this: have I got that right, and why is it not that best endeavours must be used, and why is the period so long? If it’s a website—an electronic document—it could be edited within days or weeks, and yet there’s over six months when this information can be in the public domain, and that’s how most disclosure happens nowadays, electronically. The days of having boxes of prospectuses and disclosure statements are well past us, and I accept that there are going to be some fliers and some leaflets, and, in fact, they should be shredded. The short answer is that they should be shredded because they’re no longer accurate; they’re, in fact, misleading. I wouldn’t want to hold the financial institutions liable if in some office, in the back corner, someone forgets to shred them and one accidentally gets out, but what this does is it says, “You don’t need to do anything for over six months.” So it’s really quite problematic.

Now, I’m hoping that good financial institutions, to comply with their Financial Markets (Conduct of Institutions) Act obligations, will immediately inform their investors and potential clients that these changes are being made and that the long-term contributions of the Government will fall and that there’s a different contribution framework for employer and employee contributions going forward. But the suggestion that there’s no need to amend those disclosures—whether those new provisions come into force immediately or not, the fact is that KiwiSaver is a long-term investment strategy and the rules appertaining to their entire investment—the Government contributions across the life of it, the employer contributions across the life of it, and so on—are needed. So I’d be very interested indeed if the Minister could elucidate that. Thank you, Minister.

Thank you very much to the member the Hon Dr Duncan Webb for the question in regard to clause 25. I can assure the member that the time period provided is consistent with the usual period for KiwiSaver changes. The Financial Markets Authority was consulted in the context of this change and confirmed that it was a suitable period. And it is acknowledged in clause 25 that we are looking to provide a limited protection for non-compliance with financial markets legislation, acknowledging that some of these changes relate to changes in product disclosure statements under the Financial Markets Conduct Act 2013 and that they will have until the date noted. It is sufficient time in order to make those changes.

In regards to the questions regarding clause 23, new Subpart 3B, new section 101M and 101N, the Inland Revenue has no discretion on changing those; those statements are consistent with other aspects of legislation.

In regards to the questions from Te Pāti Māori, I will not repeat answers that I’ve already given to questions, and I didn’t have any clause numbers to be able to give any specifics.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 18, section 4(1), to replace “1 April 2026” with “1 April 2028”, be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 19, section 22(1)(c)(ia), to delete “give or”, be agreed to.

Dr Lawrence Xu-Nan’s tabled amendment to clause 20 to insert subclause (5) is out of order as being outside the scope of the bill.

The question is that Arena Williams’ tabled amendment to clause 23, to delete new section 101L, be agreed to.

The question is that Arena Williams’ tabled amendment to clause 23, to delete new section 101M, be agreed to.

The question is that Arena Williams’ tabled amendment to clause 23, to delete new section 101N, be agreed to.

The question is that Arena Williams’ tabled amendment to clause 23, to delete new section 101O, be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 23, new section 101P, be agreed to.

The question is that Arena Williams’ tabled amendment to clause 23, to delete new section 101P, be agreed to.

The question is that Arena Williams’ tabled amendment to clause 23, to delete new section 101Q, be agreed to.

The question is that Arena Williams’ tabled amendment to clause 23, to delete new section 101R, be agreed to.

The question is that Arena Williams’ tabled amendment to clause 23, to delete new section 101S, be agreed to.

The question is that Arena Williams’ tabled amendment to clause 23, to delete new section 101T, be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 25, new section 244(a), to replace “1 November 2025” with “1 October 2025”, be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 25, new section 244(b), to replace “1 January 2026” with “1 December 2025”, be agreed to.

The question is that Arena Williams’ tabled amendment to clause 26, Schedule 1, to delete new clause 15B, be agreed to.