Savings questions

10. GORDON COPELAND (United Future) to the Minister of Finance: Is he concerned that the findings of the recent survey by Research Solutions show no more New Zealanders are saving for retirement now, than was the case five years ago?

Hon Dr MICHAEL CULLEN (Minister of Finance): Yes, I do have some concerns. That is why I intend to begin to address the matter of the over-taxation of retirement savings in this year’s Budget.

Gordon Copeland: Is the Minister also concerned that the establishment of the New Zealand Superannuation Fund has led to retirement savings complacency, since the survey also shows that the proportion of those who are leaving it to the Government to look after them in retirement has doubled over the last 5 years?

Hon Dr MICHAEL CULLEN: I thought the figure had actually trebled from 6% to 18% of those who believed that the Government pension was adequate. The purpose of New Zealand superannuation is to provide an adequate basic level of income in retirement. I regard that as the basic duty of a Government in a civilised society. Attempts to scare people into saving have simply not worked over the last 12 to 13 years.

Lynne Pillay: What other steps has the Government taken to boost retirement savings?

Hon Dr MICHAEL CULLEN: The periodic review group has been tasked with reporting on ways to improve employment-based retirement savings, in particular. It is chaired by the chief executive of the Investment Savings and Insurance Association. Other members include the Retirement Commissioner and employer and union representatives.

Dr Don Brash: What is the Minister’s response to comments made by Vance Arkinstall of the Investment Savings and Insurance Association that: "We’ve been concerned for some time that all the publicity about the ‘Cullen fund’ has caused quite a large number of people to believe that they don’t have to worry about saving for themselves."?

Hon Dr MICHAEL CULLEN: Considering that the weekly income for a married couple on New Zealand superannuation is slightly less than the increase per week in pay that that member used to seek as Governor of the Reserve Bank, clearly it should not be relied upon too much—[Interruption]

Mr SPEAKER: I would like the Minister to have another go at that answer.

Hon Dr MICHAEL CULLEN: The point I was making—

Gerry Brownlee: I raise a point of order, Mr Speaker. There was a high level of personal reflection in that answer. The Minister should withdraw and apologise.

Mr SPEAKER: No, I have determined that the Minister should give another answer.

Hon Dr MICHAEL CULLEN: The other answer is that people who are on high incomes are not going to regard the present level in New Zealand superannuation as an adequate income in retirement. But, certainly, the present level is a darn sight better than that member would offer anybody in retirement who has not saved for himself or herself.

Dr Don Brash: I raise a point of order, Mr Speaker. I do not know how the Minister could have any idea at all what I would offer, if I were running the New Zealand Superannuation scheme. It seems to me a totally unwarranted comment.

Hon Dr MICHAEL CULLEN: I know the member favours both increasing the age at which New Zealand Superannuation is obtained and the level of payment. It has been his stated position on many occasions.

Gerry Brownlee: I raise a point of order, Mr Speaker. How is it acceptable for a Minister to answer a question by saying he knows what someone else’s policy is? He is being asked about his own policy.

Mr SPEAKER: The member is, strictly speaking, correct, but I will be watching this very closely.

Rod Donald: Would the Minister agree that New Zealanders should be furiously saving for their own retirement, given that he wants the New Zealand Superannuation Fund to adopt the same investment strategy that has caused the Government Superannuation Fund to lose $380 million in less than 14 months; if not, why not?

Hon Dr MICHAEL CULLEN: I think every balanced managed fund in the world has probably lost money over the last year, whichever country it happened to have been in. Not many people are able to use a parliamentary income to invest in a property-based superannuation scheme to benefit their political party.

Gordon Copeland: Is the Minister prepared to consider further the introduction of tax incentives for retirement savings, in view of the finding by the survey that 79% of people believe that such incentives would lead them to increase their retirement savings, and that a whopping 92% would support the introduction of such incentives?

Hon Dr MICHAEL CULLEN: I have never known anybody to turn down a tax incentive gift-horse, whichever mouth he or she is looking into at the time. But whether it will actually achieve anything in practice, is a totally different matter.