4. R DOUG WOOLERTON (NZ First) Link to this
to the Minister of Finance
What, if anything, is he doing to address New Zealand’s declining level of household savings?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
I thank the member for his question. On 1 July this year the KiwiSaver scheme will begin. The scheme makes it easier for New Zealanders to save for their retirement. Earlier this month the UK’s Secretary of State for Work and Pensions, John Hutton, commented that the British National Pension Savings Scheme has been designed essentially around KiwiSaver. There has also been a range of tax reductions in relation to various forms of savings, including the tax reductions on the earnings of people earning below $38,000 a year and the abolition, obviously, of the specified superannuation contribution withholding tax on up to 4 percent of employer contributions to KiwiSaver and KiwiSaver-compliant schemes.
Has he read recent reports suggesting that public opinion towards compulsory savings may be changing and that 63 percent of respondents to a New Zealand Herald survey felt that saving for retirement should be compulsory; would he agree that one way of mitigating the effects of compulsion on those of modest means would be corresponding personal tax cuts to offset their initial loss of income?
Hon Dr MICHAEL CULLEN Link to this
I think one of the key issues here is that people tend to be in favour of compulsory savings until they are asked who will pay. The assumption of employees is that employers will pay, and the assumption of employers is that employees will pay. I had an interesting experience at a recent seminar in Wellington along those lines. I think the biggest problem about requiring compulsory superannuation savings of employees is the fact that then the Government effectively, in my view, takes on the risk in terms of the success or failure of those schemes. If people arrive close to retirement and their savings scheme falls over—and the Government has forced them to save—what recourse do those people have at that point?
Hon Bill EnglishCan the Minister confirm, or otherwise, that under KiwiSaver any person who earns any level of PAYE liable income—as little as $10 a week, for instance—will qualify for the full $1,000 Government payment on the day he or she enrols in KiwiSaver?
Hon Dr MICHAEL CULLEN Link to this
The issue of minima was looked at but it was considered not really worth worrying about that in terms of the likelihood of people actually signing up and the ongoing obligations that they may enter into in that respect. There is always a trade-off between compliance costs and efficiency in those respects.
Sue BradfordWhat steps is the Minister taking to ensure that KiwiSaver offers a socially responsible investment option for New Zealand workers, and, if he is not taking any such steps, then what guarantees can he give workers that their savings will not end up being invested in things like tobacco, gambling, and nuclear weapons, as happens with the New Zealand Superannuation Fund?
Hon Dr MICHAEL CULLEN Link to this
KiwiSaver schemes are required to meet a set of criteria. If they are not default schemes, then the criteria are those for registered superannuation schemes. It is a matter for the House to consider whether it wants to change the entire rules around registered superannuation schemes. I am advised, according to the co-leader of the Green Party, that at least one socially responsible investment scheme is considering applying for registration.
Has the Minister read any other recent reports that support the New Zealand First leader’s call for compulsory retirement savings, particularly Monday’s New Zealand Herald—a publication not usually amongst his closest allies—which stated: “He was right then, as we were among the few to acknowledge at the time, and he is right now.”; and is the current Government totally opposed to revisiting this issue in the future?
Hon Dr MICHAEL CULLEN Link to this
I am aware of some considerable support. I am also already old enough now to have lived through a period when there was considerable support for tolling roads in Auckland, until we started talking about actually tolling roads in Auckland, at which point support for that seemed to disappear. That does tend to lead one to a certain level of scepticism, perhaps, about public support for things that people have not quite thought through in terms of who is actually paying.
Would the Government consider introducing legislation that would provide a clear, ethical mandate for all Government investments, including those of KiwSaver, the New Zealand Superannuation Fund, and the Accident Compensation Corporation?
Hon Dr MICHAEL CULLEN Link to this
Maryan Street has a member’s bill in the ballot that raises some interesting issues around that. I think it will require quite considerable scrutiny and debate. This is not an easy issue at all—partly because, of course, it is easy to throw accusations at international corporations that prove to have little substance on further examination, and partly because some people, for example, think Boeing is inherently a bad company because some of what Boeing does involves defence equipment. Given that this country both buys Boeing aircraft and purchases defence equipment, it would seem extraordinarily hypocritical to say the New Zealand Superannuation Fund could not invest in Boeing.
I seek leave to table the excellent editorial from Monday’s New Zealand Herald.
Madam SPEAKER
Peter BrownI raise a point of order, Madam Speaker. A few moments ago I took a point of order and referred to a former Minister of Transport who did not know how to spend any extra money if it was granted to him. Apparently, I have upset some Labour colleagues. The Minister I was referring to, of course, was the honourable Minister Maurice Williamson.