New Zealand Superannuation and Retirement Income Amendment Bill

I move, That the New Zealand Superannuation and Retirement Income Amendment Bill be now read a second time. First of all, I would like to thank the chair, David Bennett, and the members of the Finance and Expenditure Committee for their report. It was good work on what is quite a technical piece of legislation. However, it is an important piece of legislation. The New Zealand Superannuation Fund is a large and growing part of the Crown’s total balance sheet, and it will continue to grow. At the end of March the New Zealand Superannuation Fund had over $29 billion in funds under management. In the last 10 years this has been a very significant addition of financial management and financial risk to the Crown balance sheet. Over time, along with the other funds, it will become a more and more significant part of the economy.

The fund was well set up originally by Dr Cullen in the previous Labour Government with a very clear governance structure, in the first place, to prevent politicians from being able to exert influence over this now substantial fund, which will grow to a much larger size than $29 billion, and, in the second place, to administer the fund in a way that encourages the good governance and management of the fund. Certainly, judging by its returns, it has functioned competently.

This bill is aimed at administrative improvements, not governance changes. It should lead to some cost reduction. For those who are familiar with the financial services sector, they will know that even small reductions in costs and fees have a big impact over time. Small reductions achieved through this bill will have a big impact in 2030, 2040, and 2050, when people who today are only 25 or 30 years old will be in a situation where the Government is drawing on that fund to support their retirement.

The bill implements changes in Part 2 of the New Zealand Superannuation and Retirement Income Act. The bill will allow the Guardians of New Zealand Superannuation, as the managers and administrators of the fund, to control entities formed for the purpose of holding or managing investments of the fund, described as fund investment vehicles. This has been important because there are restrictions in the current legislation that prevent this fund from being a majority owner of any particular investment. That has had the effect of preventing it from using some pretty well-tried and tested fund management instruments.

Enabling the guardians to structure and access investments more efficiently should result in better performance of the fund. The guardians will still be prevented from holding or taking substantial controlling interests in any underlying operating entity, whether directly or through the use of a fund investment vehicle. The bill will not change the investment universe available to the guardians, and that is a pretty critical point. It does not remove any restrictions that currently exist on their ability to have a substantial controlling interest; it simply enables them to use these particular types of investment vehicles. This is consistent with the guardians’ mandate. It is particularly pertinent to their fiduciary duty to maximise return without taking undue risk for the fund as a whole.

The bill will also make administrative changes aimed at increasing the efficiency with which the fund’s assets are managed. These include giving the guardians some delegation powers. Importantly, the board will still be responsible for the actions of any delegate acting under the delegation. I am informed that all of the submitters provided useful suggestions and comments. In particular, the Legislation Advisory Committee provided specific recommendations to clarify wording around the bill’s validation clause—that is, clause 5, the validation provisions—and to clarify whether fund investment vehicles would be subject to the Official Information Act.

The committee decided that fund investment vehicles should be excluded from the Official Information Act, given the investment risks this would pose. However, the committee was comfortable that there are sufficient safeguards around this, given that the Guardians of New Zealand Superannuation are subject to the Official Information Act. I must say that the transparency of its reporting has meant that at least in my role as the Minister responsible for the guardians, I have had very few Official Information Act requests, and that is as it should be. Every New Zealander needs to be able to see what is happening with a $29 billion fund that will exist for the next 40 or 50 years.

The select committee was also concerned to ensure that the ability to use fund investment vehicles did not undermine the principles of section 59 of the New Zealand Superannuation and Retirement Income Act. This is the section that prevents the guardians from controlling any entity. The committee was comfortable that the guardians’ approach to date has struck an appropriate balance between the need to maintain a balanced portfolio, by investing in 100 percent of some real assets such as farms and forests, and a requirement to not control entities. This is particularly relevant in the New Zealand situation, where a $29 billion fund can pretty quickly own a significant proportion of the assets available for it to invest in. As the fund grows from $29 billion to who knows what—$39 billion, $49, billion, or $59 billion—there is even more of a challenge in a small economy such as ours. The committee wanted to ensure that the guardians maintain this balance in the future, so it inserted new clauses to provide that the Minister of Finance could approve fund investment vehicle investments, or classes of investments, that go beyond a passive holding of financial products.

The way the fund is organised to manage the significant risk it is taking on is critical. In recent years the fund has made high returns. It can make such high returns only by taking fairly significant investment risks. This means, inevitably, it will also sometimes make negative returns. I think this is an important point. In the shorter term the fund has been a stellar performer, returning over 20 percent on its funds under management. But in the long run it is very difficult to beat the market average returns, which these days are much lower than 20 percent. At some time, no matter how competent and professional this fund is, it is likely to make negative returns.

So I am intending here to introduce a Supplementary Order Paper in the Committee of the whole House on the bill. As I said in the bill’s first reading, the biggest risk to the taxpayer around this fund is politicians getting involved and overriding the legislation and interfering with the management of the fund. I appreciate that there is a balance of views here, and it is a bit of a fine line. However, in my view it is not consistent with the guardians’ independence as originally set up by Dr Cullen in a very thorough manner, and supported, I think, by most of the Parliament at the time. That independence means that the Minister of Finance should not be approving investments or classes of investments. That is why I want to introduce a Supplementary Order Paper that will remove the clause—as recommended by the select committee—for ministerial approval over investment decisions. I agree with the select committee that the guardians have struck the right balance, and I believe it is the guardians’ ongoing role, not the role of Ministers, to ensure that that balance continues.

I want to acknowledge and thank the committee members and the submitters for the time and effort that they put into that particular issue, because it is a complex one. I am comfortable that the controls in the Act and the bill ensure the guardians will not use the fund investment vehicles to expand the scope of what they can and do invest in. These controls include that the bill limits the use of fund investment vehicles consistent with the fund’s existing mandate, and the requirements of the guardians’ statement of investment, policy standards, and procedures to include the governance framework for the implementation and operation of the fund investment vehicles.

If this fund were to show that it could not find that balance remaining independent, then I am sure the Government would want to see legislative action taken, but it is certainly my experience, as the current custodian of the Crown balance sheet of $250 billion, that it is best to have these assets managed by people who know what they are doing, with clear parameters framed by the Government, rather than have the Minister of Finance involved in complex investment decisions that, speaking only for myself—at least, this Minister of Finance would not know what he was doing. It is best to leave those decisions to the guardians of the fund. Thank you.

In 2 weeks’ time, when the Minister of Finance, who has just resumed his seat, comes to deliver the Budget, we on this side of the House will be looking expectantly forward to what we were told we would be getting in the Budget this year, which is a surplus, which, in turn, would have allowed the Minister of Finance to restart contributions to this fund. Sadly, from what we have heard in recent days, the finance Minister is set to break the promise to New Zealanders that there would be a surplus this year, and presumably, in turn, he is set to break another promise, which is that he would restart contributions to the Cullen fund—the Superannuation Fund—once we got into surplus.

It is, on this side of the House, regrettable that the fund does not have that. It is performing extremely well—that is true—but the bottom line is that in order to continue to provide New Zealanders with security in their retirement in the future, we would like to see contributions restart. I know that Chris Bishop wants to see contributions to the scheme restarted, but that will occur only when this Government sorts out its finances, finally follows through on what it promised New Zealanders, and actually gets us into surplus. Sadly, from what we heard today from the finance Minister in question time, I do not think we are going to see any new ideas. I think those members are out of ideas, they are out of touch, and they are not able to come up with things that will allow them, in this Budget, to restart contributions to the New Zealand Superannuation Fund.

The Labour Party will be supporting this legislation, although I do note that it will be good to see the Supplementary Order Paper that the Minister of Finance referred to. It did not come through the Finance and Expenditure Committee, and it will be interesting to see it arrive, I guess, on the floor of the House at some point. Obviously, we would want to read that before committing to supporting it. In general, this bill is largely of a technical nature. The Guardians of New Zealand Superannuation came to the committee and explained in some detail the way in which they wanted to use fund investment vehicles to continue to grow the fund in a sustainable way.

At the moment, as the Minister has articulated, section 59 of the principal Act, the New Zealand Superannuation and Retirement Income Act, prevents the guardians from controlling any other entity. When the legislation was created, the purpose of that was to ensure that this was genuinely an investment fund, a fund that took the resources of New Zealanders and turned that into superannuation payments for the future based on strategic and good investments. It was not based on the guardians of the fund being the controllers or the owners or the directors of entities, but rather they used those resources to invest—guardians of investment. Section 59 made that clear.

What has become clear to the guardians, and what they brought to the committee, was the notion that, actually, in order to be the most effective investors of New Zealanders’ funds, they needed to be able to make use of funding investment vehicles. They were challenged in the committee about what this really meant. Did this make them the controllers of these entities in some way or other? But they were able to make a case to the committee that, actually, what it will mean is that they will control the assets created by these entities, but they do not have control of the businesses themselves.

To put it in layperson’s terms, we are not expecting the guardians to go out and run farms or forests, or whatever it is that they invest in, but we are expecting that they have asset investment vehicles that will allow them to be more efficient and more effective in getting returns for taxpayers. On that basis, we on this side of the House consider that that approach is good. There are enough rules around ensuring that the investments are prudent. We feel that means that the overall balance of the Act is not unduly changed by this particular amendment, but, clearly, it does make a change to section 59, and we thought that that was justified in this case.

The Minister raised some questions about the role of the Minister of Finance and whether or not a particular funding decision should be made. I want to make clear that we on this side of the House support the independence of the guardians. We think that has served the fund well. Quite clearly, the guardians operate under whatever the parameters of the Act are, and today we are changing one of those parameters.

It would be completely possible and conceivable and within the spirit of the law for a future Government to decide to change some of those parameters. An example of that would be in the consideration of how much investment happens in New Zealand. That would not be telling the fund what investment to make. It would not be directing the fund and saying: “You must invest in a particular company or in a particular class of asset.” But what it would be doing is recognising something that the fund itself has said, which is that it would like to increase the proportion of its investments into New Zealand.

From a Labour Party point of view, we do think that is something worthy of consideration. We do think that, for example, it would be possible to take a very small portion of the fund’s resources and see it invested in small and medium enterprises, or in funds that would in turn support small and medium enterprises. That is not the Minister of Finance directing how an investment would be made; it is merely creating the framework in which the guardians would operate. So I do not think the Minister should take any indication that we are interested in the fund having a kind of role that compromises the way that the guardians work or the way that their independence operates. We certainly, on the main provision in the bill, have been convinced by the argument advanced by the fund and by the controls that are around that.

There are a number of other matters that are dealt with that are largely of a technical nature. I want to refer to one of those now, and that is the question of the application of the Official Information Act and the Ombudsmen Act to these new fund investment vehicles that are going to be created, or the use of them that is going to be enabled, under this legislation. We did discuss this in some detail in the select committee. One of the things that the Minister and others have noted is that the transparency of the fund is a good thing. For instance, it enables parties in this House to raise concerns about some of the classes of assets and some of the investments that the fund makes, and that is exactly as it should be. However, what we discussed at the select committee was whether, actually, it is right that the actual fund investment vehicles themselves will be subject to the Official Information Act.

What was brought forward to us was, of course, the fact that the guardians themselves are subject to the Official Information Act. So in their actions all information that they hold about the fund investment vehicles is now subject to the Official Information Act. The fund investment vehicles themselves are at arm’s length and will now not be subject to the Official Information Act or the Ombudsmen Act. I have to say that on this side of the House there is a balance to be struck here, and I think we need to see how the vehicles operate over time to ensure that we are getting the level of transparency that we have got used to in the overall operation of the fund.

So we certainly can support that clause on the grounds that all of the information that the guardians themselves hold about an investment vehicle is subject to the Official Information Act, and, indeed, through that to the Ombudsmen Act, but that the fund investment vehicle itself is not directly under those Acts. We will watch to see how that works, but I am pretty clear that we should continue to get the same level of transparency that we have had up to now. So those are two of the main issues that arose in the consideration of this.

Just in the brief time remaining to me, I want to say two things that arose around the time that we were considering this bill that are relevant. The first of those is the excellent returns of the fund. We should be proud that the fund has now got itself up to nearly $30 billion worth of value. It has done a good job, and we should respect that. However, that does not mean that the fund is not open to scrutiny for particular types of investment, and at the time that this arose we learnt of the nearly $200 million that had been lost in the investment in the Portuguese bank, the Banco Espírito Santo of Portugal. We are still concerned on this side of the House about the cash fund that is used for those investments. Investments that go through several pairs of hands will be inherently more risky, and in this case they were trying to save a bank that was already known to be in trouble. So we do need our fund to be careful in that management. We do need to know that due diligence is done. The fund managers have assured us they did that due diligence, but that kind of investment is the one that, obviously, we want to know about. We are not saying that it cannot be made, but we do believe that that level of risk through that series of transactions is one we need to look out for.

I and other members of the Labour caucus have met with those administering the fund. We have discussed this. We are aware that they are following through on this. We want to make sure that they do follow through. They believe what has happened is illegal, and they should be able to have remedy through the courts, but it is an example of where transparency is important so that we can see that kind of investment and raise questions about its suitability. But on this side of the House we are very proud about the Labour Government’s association with this fund. We thank Michael Cullen for his involvement in creating it, and we do believe it continues to serve New Zealanders well.

It is a pleasure to take a call on the New Zealand Superannuation and Retirement Income Amendment Bill. This is a sensible and prudent bill that will allow the guardians of the Superannuation Fund to run it better—the Cullen fund, as it is affectionately known by Labour members. I do want to start my speech with a couple of points in rebuttal of Mr Robertson’s comments. The first is about the case that he has been prosecuting recently about the National Government’s apparent failure to achieve a surplus in the 2014-15 financial year. Of course, we will not actually know whether or not that has been achieved until some time in the next financial year. But it is, I have to say, a rather comical complaint from Mr Robertson and Labour members, after 7 years of complaining about the cuts that the National Government has made—or the fiscal restraint, as we would term it on this side of the House—and after 7 years of claiming that the only thing the Government is getting wrong is that it is not spending more money. I remember the days of David Cunliffe and other finance spokespeople—there have been a few of them in the Labour Party over the last 7 years—talking about Keynesian spending and deficit spending being required. After all that time, and after the fiscal legacy left to us by the Labour Government, it is rather amusing, I have to say, to—

💬 Dr David Clark: Nine surpluses in a row.

It was not nine surpluses in a row, actually, Mr Clark. It was not nine surpluses in a row. The 2008-09 financial accounts ended up with a deficit of $4 billion because of your woeful mismanagement of the Crown accounts. So it is comical to hear the Labour Party complain about the failure to achieve surplus.

The second point in rebuttal I want to say is to the claim by the Labour Party that the Government should have been, basically, putting money on the State credit card to invest in the sharemarket over the last 7 years through the Cullen fund. Because let us make no mistake about it: the equivalent of what the Labour Party has said is that over the last 7 years the Government should have been whipping out the Government credit card, going down to the ANZ cashpoint on Lambton Quay, whipping out as much money as possible, paying exorbitant interest rates on that money, and investing it in the sharemarket. Another equivalent would be borrowing more money on a mortgage in order to invest in the sharemarket. Well, the Government, I think, quite rightly and quite wisely took the view that that was not a prudent use of taxpayers’ money in a time of fiscal restraint, and declined to do that.

Let me come to the objective of this bill. The major change the bill makes is to amend Part 2 of the Act to allow the guardians to control what is known in the terminology as fund investment vehicles, or FIVs, as some have called the, and of course, the current section 59 of the Act stops the guardians from controlling any other entity. The submission by the Superannuation Fund’s guardians was that this is inconsistent with the obligation under the Act to invest consistently with best management practice. The change this bill makes allows the guardians to lower their cost to manage their risk better and to structure their investments more efficiently. I think there is widespread unanimity across the House that this is a sensible change to make. It was interrogated pretty clearly and diligently by the Finance and Expenditure Committee. I was not a member of that committee, having entered Parliament only in September 2014, but I have diligently gone and read the select committee report, as all diligent members of Parliament do. That is right, is it not, Mr Mitchell?

💬 Dr David Clark: Very hard-working committee it was.

It is a very hard-working committee indeed. I have got to say that since the new chair and deputy chair have stepped on to that committee, the workload has really increased. It really has. I also have to pay tribute to the ranking member from the Labour Party on that committee who has been a very conscientious member of Parliament on that committee.

Let me talk briefly about the Superannuation Fund because I think it is not wrong to acknowledge that it is one of the better things that Michael Cullen did. The member who spoke before me, Grant Robertson, described Michael Cullen in a newspaper article at the weekend as one of his political heroes. That is fair enough. Michael Cullen kept things pretty tight fiscally for the first 6 years of his administration, but I have got to say that in those last 3 years, from 2005 to 2008, spending went massively out of control—and, I might add, for actually no tangible outcome. It was the Salvation Army in 2008 that lamented the lack of social progress under the last Government, despite the very large increase in State spending.

It is fair enough that Michael Cullen set up this fund. It is also fair to acknowledge on this side of the House that the National Party in those days opposed the setting up of the fund. But I think we would acknowledge nowadays on the Government benches that the Superannuation Fund has proven to be a useful, effective, and, as the Minister of Finance rightly pointed out in his first reading speech on this bill, quite elegantly structured scheme in order to maximise returns for taxpayers. It is essentially a form of pre-funding New Zealand superannuation, essentially preserving tax rates at the rates they are now and, in effect, lowering real tax rates for taxpayers today to avoid increases in the future. Of course, Grant Robertson rightly pointed out that the fund has made pretty good returns in the time since it was set up in 2003.

I do want to briefly deal with the suggestion that we should change the independence of the Superannuation Fund. Every now and then you do get political parties or commentators or people involved in the financial industry who say that the fund should do something different from what it does now. The beauty of the fund as it is at the moment is that it is wholly independent from the Government. I believe, and members on this side of the House believe, that that is the right structure for the fund. When it comes to dealing with something like $30 billion worth of assets for the Crown, about 40 percent of the Crown’s balance sheet, that has to be managed prudently and effectively, and that means independence from Ministers. But you do hear groups every now and then say that the fund should do something with the money that is invested in it.

I was reading back through the first reading of this bill, and we had a suggestion from Russel Norman that the Superannuation Fund should perhaps consider investing in the forestry industry. Well, that is fair enough. It is Russel Norman’s prerogative to call for that. If he thinks it is a good investment, I invite Mr Norman to go and borrow some money and invest in the forestry industry if there is a good return. But, actually, the right thing to do is to make sure that it is not what individual politicians standing in Parliament think; it is actually people who know how business works and, actually, people who know how to maximise returns. I am certainly not in a position to do it. No disrespect to my colleague Mr Norman, but I do not think he is in a position to do it. You just heard a concession from Mr English, the Minister of Finance, that he is not either. So you have got to leave it to the experts. There is a real risk with interfering with the independence of the fund.

You also hear a suggestion every now and then from the New Zealand First Party—which, I have got to say, is all over the shop on this issue—that there should be some tie-up between the New Zealand Superannuation Fund, KiwiSaver, and KiwiSaver guarantees. Indeed, just a few moments ago you heard from Grant Robertson a suggestion that the fund should consider redirecting some of its money into small and medium sized enterprises. Again, that is a thing that Mr Robertson wants. It is fair enough for him to call for that, but I think when you start to have politicians interfering in the direction of the fund, what you do is you potentially compromise the returns to the fund. The view on this side of the House is that you should have experts, independent from the Government, investing the funds on behalf of taxpayers and trying to maximise returns. Once you start fiddling with the independence of the fund, there will be no end to what areas you might get involved in.

The New Zealand Superannuation Fund is independent. It is regarded as one of the best sovereign wealth funds in the world. People often say that New Zealand should set up a sovereign wealth fund. Well, we actually already have one, and it is regarded as one of the best-practice sovereign wealth funds in the world. The changes promoted by this bill will allow the guardians of the Superannuation Fund to exercise their responsibilities to maximise returns for taxpayers. Mr Robertson rightly pointed out a bit of back and forth in the committee about allowing the use of funding investment vehicles. The Finance and Expenditure Committee came to the view that the changes would be OK, and I acknowledge the Supplementary Order Paper being moved at the Committee stage by the Minister to further preserve the independence of the fund. I commend this bill to the House.

Well, that was high praise from the National Party list member from the Hutt, Chris Bishop, for Michael Cullen’s good work in setting up the Cullen fund. The way it rolled off the tongue was most impressive. It was like reading Paul Goldsmith’s biography on John Banks. It was effusive, the praise was forthcoming—only in this case, it was well due.

💬 Hon David Parker: Bill English called it a dog.

Well, we know that Bill English called the Cullen fund a dog, of course. He has changed his tune, and there should be some credit there for having the wisdom to recognise good ideas eventually, even if the Government does not have any of its own and even if it is a Government that is getting a little tired, and even if Bill English, when challenged today in Parliament to come up with one new idea, could not. I credit that member Chris Bishop for acknowledging that this has been a very, very successful fund. The Cullen fund changes that are proposed are to the fund investment vehicles, as we have heard, and those changes are consistent with the mandate for the fund. So it is not a huge change; it is a change that is in tune with what was intended when the fund was set up in 2003, and it is a change that is welcomed by both sides of the House.

The member is quite right—we did have some extensive conversations in the Finance and Expenditure Committee about the New Zealand Superannuation and Retirement Income Amendment Bill. We sought plenty of information from officials, they were forthcoming, and we had some really quality interactions. We debated at length whether or not the Official Information Act provisions should apply and sought information on that. We were convinced in the end that it may dissuade private investors from investing in the fund if they were subject to the Official Information Act investment vehicles, for a variety of reasons that were then hammered out, because you need to dig beneath the surface to discover whether that is really true and what the reasons are. We were convinced in the end that the governance arrangements for the Guardians of New Zealand Superannuation themselves would provide enough transparency for the public. The guardians have to show that they are comfortable with the governance arrangements of the fund investment vehicles, they can appoint the people who are going to be in charge of them, and they are then responsible for those appointments. They are responsible for the general purpose of the fund investment vehicles, obviously, and all of that information can be made available to the public in so far as it is not commercially sensitive.

So, as a committee, we did spend quite a lot of time on this bill. The folks at home should know that often those select committees do an awful lot of work that makes the legislation better. It comes to the House and we end up agreeing. It does not make headlines when that happens, but it is actually probably some of the more important work that we do in this Parliament. I also want to acknowledge the constructive way in which the whole select committee worked together to ensure that this bill will be progressed and be a useful one. We are all concerned, of course, that New Zealanders can live with dignity in retirement and that they can have security in the longer term, knowing that this fund is there to help pay for our future retirements as a country.

We do, though, have to acknowledge the history here, however, because National itself opposed the introduction of the Cullen fund originally. It said that New Zealand could not afford it. That was its argument then—that New Zealand could not afford this fund. That was when Labour ran nine surpluses in a row when it was in Government. That contrasts, of course, with the zero surpluses this Government has delivered in 7 years. These are the facts. So this Government opposed the Cullen fund and said that we could not afford it, but then went on to make changes to the tax regime that saw over 40 percent of the tax cuts it gave go the top 10 percent of earners in New Zealand, while the bottom 20 percent got just 10 percent of the tax cuts by value, and that was swallowed up in a GST increase. John Key changed his tune. Having promised not to increase GST when he was campaigning, he then went about changing GST. And many New Zealanders will think back to that broken promise as we come up to the current Budget, where we are about to witness another broken promise in the form of a surplus that will not be delivered. Of course, contributions to the Superannuation Fund were to be resumed when the surplus was delivered. That promise was made too, and it looks like it is also about to be broken by this Government.

This Government used to be a Government that made many promises, looked forward, and said to New Zealanders: “We will give you hope.” “We are ambitious for New Zealand.” was the phrase. Unfortunately, it now looks tired and out of touch and, in fact, we hear more excuses than anything else. We have heard a lot of explaining from Bill English over recent weeks as to why he not only will not make surplus this year as promised and as campaigned on—the most important thing in the National Party’s campaign—but cannot promise that it will happen the year after either, any more. This is a Government that, unfortunately, is coming apart at the seams. It seems to have no new ideas as to how to get to surplus. It has a Business Growth Agenda that actually has a target of increasing exports as a proportion of our economy from 30 percent to 40 percent, but that percentage is going backwards. It is now below 30 percent and going backwards. This is a Government that is not only failing to deliver on its promises but failing to produce a vision for the future that is convincing and that is actually going to take the country forward and generate the wealth that we know is needed to top up the likes of the Cullen fund to ensure that we can live in secure retirement. If this Government does not do that, New Zealanders are going to be a lot worse off in the future.

So we on this side of the House are concerned that this bill gets through. We will approve the minor amendments, apart from a Supplementary Order Paper that we reserve judgment on, having just heard about it from Bill English. It is an interesting prospect that he is bringing to the House—that he will not have oversight of these fund investment vehicles. That was one of the checks and balances that the select committee thought could be put in place—having the Minister of Finance sign those off, probably in a largely perfunctory fashion, to say that he is comfortable with them, because he is in a position of oversight of the whole of the Superannuation Fund. If the Minister of Finance signs it off, that gives the public confidence that it has been done with due process and that there is a check in place. By moving a Supplementary Order Paper to rid himself of that public responsibility, the Minister is taking a serious step that we will need to examine a little more fully. We will need to see the logic and exactly what that will mean. That is the one part where we are reserving judgment. The Supplementary Order Paper has come as a surprise today to the House.

But, as I have said, we will be supporting the bill. We know that in the Western World the fund is a model of what can be achieved. It has had returns that have averaged over 10 percent per annum since it was set up in 2003, which is a fantastic return. In fact, in 2014 it returned 13.89 percent on its investments, and that is around $5.6 billion worth of value that it has added to New Zealand’s retirement savings. Even in 2013, the year of the last calculation that I have seen from the Superannuation Fund, it estimated that $10 billion had been forgone from the lack of contributions made by the Government because, again, it said that we could not afford it.

This is a Government that cannot see an opportunity when it is staring it in the face. These returns from this fund are well worth investing in. Unfortunately, this Government seems more concerned with funding tax cuts for the wealthiest New Zealanders while middle New Zealand is missing out, real wages are stagnant, and ordinary folks who go to work every day are struggling to make ends meet. We have seen that small business creation is well down on what it used to be. All of these things are hitting New Zealand hard, particularly when we are also facing a drop in commodity prices. The failure of the Government to diversify the economy is having a very real cost and one of the costs that we are seeing is its failure, again, to re-engage in investing in this fund to bring the returns that are intergenerational, that create an sustainable economy, and that we know we need in this country. The Government has failed to achieve its surplus target, which it campaigned on. Labour had nine surpluses.

This is a sensible policy—one of the few—and we will support the bill through to the next stage. Thank you very much.

I am pleased to be able to speak on this bill. It is a relatively small bill but one that does have quite a positive impact on New Zealanders, so that they can continue to see the New Zealand Superannuation Fund go from strength to strength. Credit must be paid where it is due, and this side of the House is pleased to say that the New Zealand Superannuation Fund has been performing well. It was set up in 2003 and has been doing well since. It started with $2.5 billion in cash and it has returned, I understand, over 10 percent per annum. At the end of March this fund stood at about $29 billion and the return over the past 12 months was 18.85 percent.

The Guardians of New Zealand Superannuation, however, have been discussing over some time with the Government some changes to the legislation that they operate under. These changes are contained in this bill that we discuss today. The changes would effectively enable the fund to use fund investment vehicles to enable them to invest more efficiently and effectively in some certain areas where they have otherwise been inhibited in the past.

Before I go on a bit further about what is in the bill, I have to comment and rebut some of the comments that have been made today by our friends on the other side, Mr Robertson and Dr Clark. They seem to think that we should have been going to the bank and borrowing even further to continue with our contributions to the Superannuation Fund. Yes, the contributions that the Government makes to the Superannuation Fund were suspended some years ago. It was done for a very good reason. They argue that we should have continued to provide contributions to that Superannuation Fund, but why on earth would the Government do that whilst at the same time it has had to borrow to maintain services for New Zealanders?

Labour members like to stand in the House now and say that we should be getting back to surplus faster than we are planning to and that we are not doing the Superannuation Fund favours by not going back to providing contributions because we have not been able to make surplus so far. But I remember, as many others on this side of the House remember, during the election campaign and in speeches from the Opposition members during the past year or two, when they continually came up with ideas for spending more money. Spending more money, of course, would have led to even more debt being accumulated by the Government—by the Crown—which would have made it even harder for Superannuation Fund contributions to have gone back to the way they were when the Government was making those contributions.

So I say to Mr Robertson and Dr Clark, please do not stand in this House and argue that we are not doing the right thing by ceasing Superannuation Fund contributions. Do not say that we should be getting back to making Superannuation Fund contributions faster than we are planning to, because under Labour members’ prescription, which they outlined to the public and which was rejected by the public, there was a whole lot more debt, there was a whole lot more spending, and it would not have been good for New Zealanders. We do have a Minister of Finance who is working hard and has seen our economy continue to improve and continue to get back on its feet. I think that New Zealanders are pleased with that and are happy with the economic prescription that we have.

The Superannuation Fund, though, is there effectively for the protection of New Zealanders and their retirement opportunity through the superannuation they are paid by the Government. This Superannuation Fund is there to protect the funds available to continue to make those Superannuation Fund contributions. The guardians of the Superannuation Fund do a very good job. They are providing very good returns for New Zealand taxpayers. I believe—and the Minister of Finance has outlined this earlier today—that their independence is fundamental to their ability to continue to provide those high returns.

We are politicians in this Parliament. We are very good at arguing points of view. We are very good at going out and selling to the public what we believe is fundamentally important for this country. Some of us are better at it than others when it comes to elections, as it turns out, but I have to say that we—

💬 Iain Lees-Galloway: Oh, don’t be so smug. Your time will come, my friend.

Just talking about the election results, Mr Lees-Galloway. We are politicians, though. We are not experts on investing funds through the Superannuation Fund. We are good at arguing in Parliament, but when there is $30 billion of assets sitting there that we want to continue to see increasing in size every year, the guardians, through their independence and through their structure, are best placed to be making the investment decisions.

The Minister of Finance has quite rightly outlined that he plans to bring in a Supplementary Order Paper during the Committee stage. When we were considering this matter in the Finance and Expenditure Committee, we did feel as though some extra checks and balances were warranted, but those are worth exploring even further during the Committee stage, and I look forward to Dr Clark—as he was saying—and the Opposition examining those as well.

It is worthwhile just going to the Guardians of New Zealand Superannuation submission, which they made to the select committee. They outline quite well in their submission some of the reasons why they wanted to have these changes around fund investment vehicles implemented and some new legislation through this amendment bill. They believe that some of the costs that they have incurred by having to go through a relatively complex way of achieving the goals they want to achieve have led to about $30 million of cost to the fund. They believe that they could have effectively saved that $30 million if they were able to have the ability to invest through the fund investment vehicles that they are proposing.

I just want to read out some of the comments that they made in their submission. They spoke about the fact that having the ability to establish and control fund investment vehicles “formed for the purpose of holding, facilitating or managing investments” would allow the guardians “to negotiate a [more] specific mandate with an Investment Manager as opposed to being one of a number of investors in a pooled fund.” Again, we talked about independence earlier in this Chamber, and there is greater independence there, should they be able to use fund investment vehicles. They would “have more say over the jurisdiction where the Investment Vehicle is located.”, and that is important for the Superannuation Fund to be able to make the best decisions for New Zealanders through the fund. They will be able “to increase and reduce the level of investment over time.”—more flexibility, which will enable the Superannuation Fund guardians to do better for taxpayers. Having this ability to use fund investment vehicles would “protect the fund from disproportionate liability”, such as liability being limited to the value of the specific investments.

What we have here is a group of people who are experts in their field, who want to see the New Zealand Superannuation Fund increase at the high rates that it has. It has a $30 billion fund, which, in a relatively small country like New Zealand, makes them some of the most significant fund managers in the country. For them to have more flexibility through fund investment vehicles and to look elsewhere for more opportunities is a very good thing, and good on them for coming to us to ask for this.

So, the Superannuation Fund—yes, set up by the Hon Dr Michael Cullen—has done well. Dr Cullen should be congratulated on the foresight that he had with the fund. However, it does need to look wider as to where it invests in the future, it does need to look for future opportunities, and it is doing that.

The Official Information Act provisions were seriously looked at by the committee, too. We know that transparency and accountability is important for the public. We on the committee felt strongly that the current Official Information Act provisions around the Superannuation Fund are working well and that there was no need to progress those further and include fund investment vehicles. One of the very reasons why you would not do that is so there is greater flexibility available through those fund investment vehicles.

I am pleased to see this bill go further through the House. I am looking forward, hopefully, to some good support from the Opposition on this change as well. It is sensible, it is practical, and it will enable the New Zealand Superannuation Fund to continue to improve and increase over time for the benefit of New Zealanders.

I rise to speak to this amendment to the New Zealand Superannuation Fund and the legislation that governs it. The New Zealand Superannuation Fund was established by an Act in 2001. That Act was put up by the Labour Government and got the numbers in the House by the Green Party voting for it. So Labour and the Greens provided the numbers; the National Party opposed it. It was far too sensible for the National Party to support. The reason the Greens supported it and allowed the Superannuation Fund to come into existence—because without our votes, it would not have come into existence—was that we thought it was important to put money aside at a time when we were running large surpluses in order to pre-fund some of the costs of baby boomers’ superannuation further down the track. It does not pay for all of it—it does not even pay for most of it—but it does deal with some of the costs that are going to come down the track in the 2030s, and possibly before then, as we deal with some of the retirement costs.

It is important to understand that the fund is not here for ever. It is not a permanent sovereign wealth fund, nor is it designed like that—although it may end up becoming one. Who knows what future parliaments will decide? But it was meant to prepay some of the cost. That is why Michael Cullen put it up, and that is why the Greens gave the necessary votes for it to come into existence. We were very supportive of the arm’s-length operation of the fund. We negotiated, at the time, for a clause within the bill, whereby the Superannuation Fund—it was a kind of a responsible investment clause, basically—could not operate in a way that would damage New Zealand’s international reputation. That was the compromise that was reached at the time between us in the Green Party and Michael Cullen. We wanted a stronger responsible investment clause in the Superannuation Fund. If you look at the Norwegian fund, for example—the world’s biggest sovereign wealth fund at US$1 trillion—it has a much stronger responsible investment clause in it. But Michael Cullen would not accept as strong a responsible investment clause as we wanted, so that is how we came up with a compromise. For us, that was the kind of parliamentary direction under which the fund should operate.

I think that the fund has tried to work within a responsible investment framework. There have been a number of times when we have raised issues about the fund’s investments. Over time, the fund has pulled out of a series of investments—for example, cluster munitions, which are small bomblets designed to target children. We got the fund to pull out of those. We are very pleased about that. Of course, the next battle is going to be about fossil fuels. That will be the next thing that the fund pulls out of, as leading financial institutions all around the world move away from fossil fuels.

In terms of interference in the fund, the main interference in the fund has been by this National Government, by its giving a direction to the fund that a certain percentage of the fund should be invested in New Zealand. Prior to that, we had all operated a hands-off approach, but, unfortunately, the National Government interfered with the fund and gave it a direction that a certain percentage of the fund should be invested in New Zealand. Our view was that you should leave that decision up to the fund. But the National Government thinks that it knows better about where to invest money than the fund managers, and it was certain that this approach would get a better result. Of course, the National Government was quite wrong about that. There is, of course, an argument for investing a certain percentage of the fund in New Zealand. It is a reasonable argument. But prior to that, those of us who supported it—which was Labour and the Greens—had taken a hands-off, arm’s-length kind of approach to the fund. So that was important.

The next interference in the fund by the National Government came in the form of stopping the contributions. We supported the argument that during times when the Government is running a deficit you should not make ongoing contributions to the fund—and we differed from Labour on this. We supported that argument. The problem was that the Government’s deficit is largely one of its own making. As a result of the big tax cuts to upper-income earners, there was a big cut in Government revenue, and the result was that Bill English and National drove the books into the red. There were obviously a number of other factors, but we would now definitely be in surplus had it not been for the big tax cuts to upper-income earners in New Zealand, and we would be in a position to start reinvesting in the fund. Contrary to what Chris Bishop said, we have not directed or encouraged the fund to invest in forestry. He is obviously unaware that the New Zealand Superannuation Fund has already invested heavily in forestry.

In terms of the fund investment vehicles, we discussed this at some length, and after a debate, we decided not to support this bill because we do not support the fund going to use fund investment vehicles. This is largely because, essentially, it will facilitate the greater use of tax havens for tax efficiency purposes. The New Zealand Government and the OECD are trying to run a global campaign to protect tax bases for sovereign countries, for countries all around the world, and so we have been concerned that the fund has been using a bunch of investment vehicles based in the Caribbean that are notorious for tax avoidance—last time we looked, it had about $1.6 billion going through there. So, although I acknowledge the assurances from the fund that it does not use aggressive tax avoidance measures, none the less these kinds of investment vehicles based out of the Caribbean and elsewhere—the Isle of Man, and so forth—are notorious for tax avoidance, and so we have not supported them for that reason.

Of course, the broader issue is really about what the investment policy of the fund should be. Really, the kind of live debate in that space is now about fossil fuels. This year we released a report showing that the New Zealand Superannuation Fund has investments of about $676 million in companies involved in the production and mining of fossil fuels—currently, about 2 percent of the funds under management. It seems to me that a fund that we all voted for in order to protect a secure future for New Zealanders should not be investing in the production of greenhouse gas emissions, which is all about insecurity for the future of New Zealanders. If we continue to release greenhouse gas emissions in New Zealand—and globally as well—at the rate that we are currently doing, we will produce tremendous insecurity for our children and for those who are going to come after us. The whole purpose of the fund was to provide security. In fact, by investing in coalmining, in particular, the fund is, unfortunately, contributing to insecurity. I think that part of the investment strategy is a mistaken investment strategy because that is not what the fund was set up for.

We have now a series of reports about what kind of investment strategy makes sense both for sovereign wealth funds like the New Zealand Superannuation Fund and also for private wealth funds, as to how you should treat fossil fuels. We have seen reports from the World Bank, the OECD, the International Energy Agency, the United Nations, and many others that are now saying that the majority of discovered fossil fuel reserves needs to stay in the ground if we are to avoid 2 degrees Celsius of warming. We cannot burn the existing fossil fuels that have been discovered, and so those companies whose major assets are fossil fuel reserves are part of a carbon bubble—they are tremendously overvalued. So for the fund to be investing in those companies, it is not only bad because, of course, it is supporting fossil fuel production and out-of-control climate change but it is also a bad investment because it means that the value of those investments in fossil fuel companies will collapse at some point. This is part of what is also known as the unburnable carbon thesis.

Recently, the Governor of the Bank of England said that the vast majority of fossil fuel reserves that we have now are unburnable if we are to avoid out-of-control climate change. If we are to keep greenhouse gas emissions below a level that would cause 2 degrees Celsius or more of warming, then the vast majority of fossil fuel reserves simply cannot be burnt. That is why the Governor of the Reserve Bank is worried about those companies and those investment vehicles that have high exposure to fossil fuel companies. It is because when the carbon bubble pops as we realise that you cannot burn all of those fossil fuel reserves, the value of those companies that the funds are invested in drops dramatically. So we will continue to advocate to the New Zealand Superannuation Fund, as we have been, that it is a bad idea for it to continue to invest in these fossil fuel companies. It is a bad idea in terms of the climate and our kids but it is also a bad idea in terms of a robust financial investment because of what is going to happen in terms of the value of those companies once we get on top of climate change.

We continue to support the New Zealand Superannuation Fund, as we did at the very beginning, when we provided the necessary votes for the fund to come into existence. We continue to support its engagement in a responsible investment framework, which it has done extensively. Over the years since the fund was set up, we have had many discussions about issues around responsible investment, and it has always been pretty respectful about that and has listened to our arguments and has pulled out of a number of companies as a result of the arguments put forward by the Greens and many others about certain companies. So even though we are not supporting this particular piece of legislation today, we do retain our support for the concept and we retain our support for the guardians themselves, who, in general terms, have a done a very good job. Thank you.

New Zealand First stands in support of this piece of legislation but I will just touch on a few issues raised by previous speakers. Perhaps borrowing at 3 percent, or even zero percent, to grow your investment at what was acknowledged as 18 percent last year makes more sense in terms of Government spending than selling off capital assets that were returning such strong dividend returns to this Government and the people of New Zealand, although I think, actually, the argument was that a surplus would be needed in order for the Government contributions to begin once again. Look, this is a large $29 billion fund. It is a successfully managed fund and New Zealand First has supported it since its inception. It is still disappointing to note that the Minister of Finance has previously stated, even knowing how well it has performed over recent history, that he would still not have contributed to the Government’s contributions, perhaps even with a surplus.

If you will forgive me, I will just go through some of the detail here. I was not part of the Finance and Expenditure Committee, so it is important that we go through for New Zealand First some of the detail and acknowledge the work of the select committee members. The bill seeks to amend Part 2 of the New Zealand Superannuation and Retirement Income Act 2001 to facilitate the efficient and effective investment of the New Zealand Superannuation Fund by the guardians of said fund, and to help protect the guardians from liability. The principal change would be to allow the guardians to control fund investment vehicles, which we have discussed in quite some detail here.

The committee received and considered only three submissions, heard oral evidence from one submitter, and received advice from Treasury. No submissions opposed the bill or identified any real problems, although two matters were raised by submitters where amendments to the bill could be considered—namely, the Legislation Advisory Committee’s recommendation around validation provisions and the applicability of the Official Information Act.

The Guardians of New Zealand Superannuation is an autonomous Crown entity, with the sole purpose of managing and administering the fund. Consultation with the guardians was undertaken on the original policy decisions prior to the submissions by Cabinet and during the drafting process, which New Zealand First acknowledges. The Inland Revenue Department, the State Services Commission, the Ministry of Business, Innovation and Employment, and the Office of the Auditor-General were also consulted on the relevant issues.

Questions raised related to taxation—I note that the previous speaker, Russel Norman, spoke to that issue, which I will come back to—and to responsible investment. At present, section 59 of the Act prevents the guardians from controlling any other entity. This restriction is considered inconsistent with the guardians’ obligations under the Act to invest the fund in a way that is consistent with best-practice portfolio management and to maximise the returns, without undue risk to the fund as a whole. Allowing the use of the fund investment vehicles is expected to enable the Government to structure fund investments more efficiently, resulting in cost savings, and to manage risk more effectively—clauses 6 and 7. These clauses amend section 59 and insert new section 59A to permit the guardians to use fund investment vehicles for the purpose of the investment fund.

The current legislation has had the effect of preventing the guardians from using some very effective tools. Now the guardians can own assets, without the presumption or inference that they will be running the business themselves. The guardians have estimated in their information to the Government that the historical cost of not being able to control these passive holding companies, for example, is around $50 million. This is quantified as net opportunity costs, additional risks, and agency costs, although they acknowledge the difficulty of doing that. Treasury’s view is that the cost savings calculated by the guardians are not the primary driver for the legislative change. Treasury notes that the $50 million itself and the $25 million cost of large short-term movements in particular investments are not, in total, a significant amount of money, given the actual size of the fund itself.

I turn to my next point. New Zealand First—and it has been spoken of as a negative by the other side of the House—has always said and always suggested that investment in New Zealand by the fund itself is a critical investment in this country and the people of this country. I note that the guardians themselves are actually working to increase the proportion of the fund invested in New Zealand assets. The limited size of the New Zealand market means it must purchase real assets as well as shares. It is my understanding that it is these fund investment vehicles that will enable the guardians to do this very thing.

Prohibition on control does not preclude the fund from 100 percent ownership of assets. The select committee considered it desirable to reinforce the intention that the fund investment vehicles themselves be related to the passive holdings of entities, and that the Act provides a mechanism for scrutiny and control of the Government’s arrangements. The select committee suggested two new sections. We have talked about this as a positive, but there is some debate on that. But I think in this context, and I think my caucus would approve, this would mean that the Minister of Finance would specify the class of investment or entity for which a fund investment vehicle could be used and would stipulate governance arrangements for the entity. I think that is reasonable control. I think it is not interference by the Minister. At least initially, at this stage of this piece of legislation, we will support those additions.

The other proposed amendments make three relatively minor changes. Clause 5 aims to strengthen confidence in commercial transactions entered into by the guardians and protects the guardians from any potential challenges that their investment decisions lack statutory authority. The select committee recommended replacing clause 5 in the bill as introduced with different formulations that would achieve the intended purpose in a much more straightforward way. The second recommendation would be to allow the board of the guardians to delegate operational functions. The third recommendation would be to make it explicit that the fund is not an entity separate from the Crown. We note that the current wording does leave some uncertainty about the fund’s sovereign nature.

It is important to note that the bill also makes consequential amendments to the Income Tax Act. We were assured by the statement of the select committee, but the previous speaker did note that some of these fund investment vehicles have allowed what we would consider to be classed as perhaps minor tax evasion and standard tax evasion tools. But the last thing New Zealand First would support would be introducing fund investment vehicles in order to allow large-scale tax evasion.

The reason for the support for this bill from New Zealand First is that fund investment vehicles are a simple and commonly used tool that will allow the guardians to make more effective investment decisions. I note that this would allow more investment in New Zealand, and would efficiently and effectively provide a suitable balance when allowing the guardians access to new vehicles in terms of the investment funds. We also note that the Act makes sure that the fund investment vehicles themselves are not subject to the Official Information Act but that the guardians are. With all that detail in mind, New Zealand First will support this bill. Thank you.

I call Andrew Bayly. You must go for the call.

Thank you.

The ASSISTANT SPEAKER (Lindsay Tisch): You call out “Mr Speaker”.

Yes, I thought the way you were looking at me, Mr Assistant Speaker.

It is a pleasure to be talking on the New Zealand Superannuation and Retirement Income Amendment Bill. It is great to hear members of the Opposition supporting this bill, because it is actually a good piece of legislation. Just to put it in context, nearly all New Zealanders will have worked and paid taxes over their working lifetime, with the prospect of having a prosperous and healthy retirement. Retirement plans are often individual, but in terms of the role of Government, there is a principal concern to ensure that every citizen has the comfort of knowing that they will have some income provided to them by the Government in the form of the New Zealand Superannuation Fund. That is why we as a Government have an obligation to our superannuitants to ensure that the funds are managed efficiently, effectively, and in a way that is prudent over the long term.

We are focused on ensuring that the Government’s own finances are appropriate across all the sectors that we manage because not only does that help in terms of building a robust economy but also it means that there is going to be further money in the future to be able to meet our future commitments to superannuitants. Of course, the end result of all of that is that we have got a determination that will see more jobs, better incomes, improved standards of living, and a continuation of the excellent public services that we all need and require.

The purpose of this bill is that it addresses the financial security of the older members of our community. The Superannuation Fund invests money effectively on behalf of all New Zealanders to meet the future requirements of superannuation. By doing so in a good manner it obviously creates wealth for the Crown’s own accounts, it improves the ability of the Government to fund New Zealand superannuation, and, thirdly, it reduces the tax burden on future New Zealanders when we get to the stage where high superannuation payments are going to be required. New Zealand superannuation is, in effect, a form of savings for today’s taxpayers, who, ultimately, will become the future’s superannuitants.

In terms of the performance of the New Zealand Superannuation Fund, it has been exceptional. It started in 2003 with a cash injection of $2.5 billion. It has now grown to just on $29 billion and has achieved a staggering return over that period of, on average, just over 10 percent—10.2 percent annually. When you compare this with the fund’s long-term objective, which was to beat Treasury’s bill rate by 2.5 percent over a rolling 20-year period, this has been an outstanding return.

At $29 billion, the New Zealand Superannuation Fund actually represents close on 40 percent of all the funds under management held by the Government. It is a huge part of that industry, a huge part of the Government holding, at 40 percent. ACC is obviously the next-largest component of all that. There are two other funds that contribute to that. But it is a huge part of the total assets that the Government has. And, of course, although we are continuing to invest in infrastructure such as schools and roading, and projects like that, the value of those assets is not significantly increasing. The importance of the funds management industry, and particularly the part that New Zealand superannuation plays in that, is that it is always going to be a growing asset class for this Government in terms of the future net assets for the Crown accounts.

This robust result that the New Zealand Superannuation Fund has achieved is due principally to the Guardians of New Zealand Superannuation, currently chaired by Gavin Walker, and, of course, the management and leadership team led by Adrian Orr at the New Zealand Superannuation Fund. They have achieved a sterling result. Given the size of the fund—just on $29 billion, as I said—it has been absolutely necessary to have a diversification in terms of not only asset class but also the geographical mix of investments.

It is interesting to note that at 31 March 2015, in terms of the asset class breakdown, just on 60 percent was invested in global equities—i.e., a range of international equity markets around the world—12 percent was in fixed interest - type investments, which are things such as bonds, Treasury stocks, and all those sorts of things, often with a geographical separation as well; 5 percent was in property; and 4 percent was in forestry.

It is interesting. One of the things that has been fascinating to watch with the evolution of the New Zealand Superannuation Fund is the different types of investments it is prepared to undertake. In terms of forestry and the investment that the New Zealand Superannuation Fund made alongside other partners in the Central North Island Forestry Partnership, here we see it taking strategic roles. In terms of geographical diversification, nearly 40 percent is actually invested in North America. The next highest is 25 percent in Europe. Interesting is that third on the list is actually New Zealand, at 15 percent, followed by 9 percent in Australia.

You might ask yourself why only 15 percent is invested in New Zealand. The reality is that with a fund size of $29 billion, it would swamp the New Zealand equity market and the bond markets. That is why the fund is almost absolutely obligated to diversify both in asset class but also, which is probably more important, in geographical terms.

It is interesting the types of investments that the fund has made in New Zealand. They are in many of the top companies and primarily in the listed market area. Not only is this fund recognised as one of the best-structured sovereign wealth funds in the world but also it was named the most innovative sovereign wealth fund by CIO magazine in 2012.

Just turning to the purposes of this bill, the primary purpose is to facilitate the efficient and effective investment of the New Zealand Superannuation Fund by allowing the guardians, who are the managers and administrators of the fund, to control entities formed for the purpose of holding, facilitating, and managing its investments—commonly referred to as fund investment vehicles. Another way of describing those, effectively, is holding companies for a range of investments that funds take in. The New Zealand Superannuation Fund is not unusual in terms of using these vehicles. These fund investment vehicles can be used as investing entities—i.e., such as a holding company for taking equity stakes in a range of investments, as well as other investment funds. They can be used for investing in internally or externally managed funds, again with the view around equity stakes or debt, and investing equities for real estate.

When you look at New Zealand’s investments that the fund has made, as I said before, a lot of them have been in the major stocks, but the biggest holding we have got is, actually, 20 percent in Z Energy. This is where the New Zealand Superannuation Fund took a very strategic view and invested alongside other partners in that venture as a private company, listed that entity, and made a substantial amount of money on that investment. But in terms of controlling interest, that is the highest one that we have, at 20 percent. Typically, the fund invests less than 20 percent in a range of investee companies around the world.

Allowing the guardians to control funding investment vehicles will permit them to structure and access investments more efficiently and will also protect them from liability. It should be recognised that the guardians are actually a Crown entity. At the moment, the legislation prevents the guardians from having control of an entity, which at the time of the establishment of the New Zealand Superannuation Fund was a good idea, but with migration and the scale of New Zealand superannuation as it now is, it is appropriate that the guardians be given this flexibility concerning official investment strategies, structures, and access.

The key parts that are going to make changes around this bill will enable the guardians to have the ability to grant a power to appoint a power of attorney, to appoint an investment manager, and to appoint a custodian. Those are very, very relevant and appropriate vehicles that all fund managers use. Thank you very much.

The next call is a split call. Iain Lees-Galloway—5 minutes.

That was a very eloquent contribution from the member Andrew Bayly. It was lovely to hear him extolling the virtues of the New Zealand Superannuation Fund—the Cullen fund, as it is affectionately known. It is good that Mr Bayly is a new member of the House and was not here back in 2001, because otherwise the National Party would have deployed him to tell us all the reasons why the Cullen fund was an appalling idea and something that was a waste of money and something that New Zealand could not afford. It is good to see that the National Party has finally come around to the idea that, actually, the New Zealand Superannuation Fund squirreling away some money now and investing it very wisely—and Mr Bayly did discuss at length the success of the New Zealand Superannuation Fund—in order to fund our superannuation needs in the future from 2030 onwards was actually a very wise and forward-thinking idea from the then Labour Government, introduced by the finance Minister, Michael Cullen.

Of course, National said: “No, no, no, no, we can’t do this.” In fact, National bemoaned the fact that Labour ran surpluses. It said we should provide tax cuts and, of course, that would have made it impossible to save that money. National is always thinking about its mates first and always thinking about the here and now. It has no vision for the future—no foresight whatsoever. It opposed KiwiSaver and it opposed interest-free student loans and it opposed a whole host of things that it now, actually, supports. That is the nature of conservative Governments—no ideas of their own. They have all sorts of reasons why you should not do things, but then when those things actually bed in and turn out to be good ideas, oh, actually, they supported them all along.

It is interesting to hear Chris Bishop, actually, because he is the master of spin, we all know that—perhaps not after the Northland by-election, but he was one of the National Party’s spin doctors before he came into Parliament. He said that Labour likes to call this the Cullen fund. Actually, people may not remember this, but the “Cullen fund” as a term was an invention of the National Party members, because they thought that by associating Dr Cullen with this awful superannuation fund, it might actually damage Labour.

💬 Chris Hipkins: Communism!

Communism, yes—not by stealth at that stage; I do not think they had coined that term at that point. Of course, this was in 2001 and we all know what happened to the National Party in the 2002 election, with its 20 percent result. Maybe National members have realised that actually the “Cullen fund” is now a term of endearment and they want to try to say that the term was something that Labour invented, but, actually, it was the National Party in an appalling effort to try to spin against the New Zealand Superannuation Fund.

I was also quite pleased to hear from Mr Bayly that he was impressed by both the success of the superannuation fund and ACC with its investments, and they are actually two of the best investment vehicles in New Zealand. I think, actually, as a private citizen I would quite like to be able to invest my money in either of those, because they do a very, very good job. It is a really good demonstration of how the State actually can run things extremely well. The State can be prudent managers of finance. The State can be prudent investors. Actually, the decisions that the State agencies, essentially—ACC and the New Zealand Superannuation Fund—are making around investment are actually doing wonderful things for the country. It flies in the face of what the National Party believes in—that you have got to privatise everything and that the private sector will always be better than the State at absolutely everything, particularly around matters of finance. Andrew Bayly actually used the word “innovative”, and it again proves that the State can be a source of great innovation, much in opposition to what the National Party believes.

This is a good piece of legislation that Labour is happy to support. It will improve the efficiency and effectiveness of the way the Guardians of the Superannuation Fund are able to administer the fund in order to carry on the absolutely superb results that the superannuation fund has achieved since it was created and established back in 2003. That is important because this is a long-term investment. This was something set up by a Labour Government that was interested in ensuring that the security of future generations was supported by the actions that we take now. So we do support this bill because this is a good fund and a good way to secure New Zealand’s future.

I call James Shaw—5 minutes.

I would like to start by echoing the words of Iain Lees-Galloway, warmly commending the words of Andrew Bayly about the New Zealand Superannuation Fund. Of course, Andrew Bayly is very credible in this area. He is one of the few people in the National caucus who knows a few things about finance, having come from a long background in it. So we should accept his word as it comes. I just want to start by pulling out something that Bill English said when he was introducing the New Zealand Superannuation and Retirement Income Amendment Bill earlier, referring to the fact that most parties in the House supported the introduction of the Cullen fund back in 2001, implying somehow that National was actually one of the parties that had supported it, which, of course, it did not. National’s preferred solution, as to what to do with these vast Government surpluses, was to cut the top tax rate and not to save for the future and not to worry about the demographic bubble that is approaching as the baby boomers retire. That is entirely consistent with the National Government’s policy of sticking its head in the sand when it comes to the demographic tsunami that is approaching us.

It is interesting to note, of course, that National’s preferred way of dealing with the fund since getting into Government has actually been to replicate its policy back in 2001, which is to cut taxes so that there is not enough money to run surpluses, so that it does not have to put anything into the Superannuation Fund. I will just say it again. Back in 2001, when it was opposing the creation of the New Zealand Superannuation Fund, the preferred approach of the National Party was to cut taxes and reduce Government revenue rather than to put it into savings. What it has done since getting into power is cut taxes to the point that Government revenue is running below its ability to run surpluses, and so has not put money into the New Zealand Superannuation Fund. So although Government members wax lyrical, extolling the virtues of the fund, they are actually acting completely consistently with their earlier policy of not supporting the fund.

I just wanted to say, as my colleague Dr Russel Norman said earlier, that the Greens have consistently supported the fund since its creation. In fact, it was only Green Party votes that actually got the fund created and got it over the line in the first place. However, in relation to this bill, we do have a deep concern that the types of vehicles that are being authorised by this bill will enable the use of tax havens. The risk is that New Zealand’s Government-owned, State-owned, sovereign wealth fund is actually exploiting loopholes in other countries’ taxation systems, and we do not think that that should be enabled. Of course, a lot of people will say that countries choose to be tax havens; they choose to have the kinds of laws that they do. The United Kingdom, which is verging on being a tax haven, is simply tied up in knots in terms of its own legislation—something like 70,000 pages of tax law. We should not actually be exploiting other countries in terms of their ability to gather revenue to pay for education or health care or anything like that. We would not want other countries to be doing that to us, and so we consider that to be a risk of these fund investment vehicles here.

In conclusion, we should be setting an example, not selling out. We should be upholding the ability of other countries to gather the revenue that they need, rather than exploiting loopholes for our own benefit. And New Zealand’s own sovereign wealth fund, our own savings fund, should really embody Kiwi values of fair play. So, although we do and always have supported the New Zealand Superannuation Fund, we will not be supporting this bill.

Thank you for this opportunity to speak on this bill. I rise in support of this bill. Just to clarify a couple of things that were mentioned by Mr Lees-Galloway, for his benefit, the State does not manage the New Zealand Superannuation Fund. It never has and, I hope, it never will. The independence of this fund is paramount to the success of the fund. Twenty-nine billion dollars is a significant fund. It is well set up, and we do not want even the slightest thought that Mr Lees-Galloway or Mr Robertson would participate in the decision making on the investments of that fund.

We already heard that Mr Robertson wanted to invest more into the New Zealand Exchange, or the New Zealand market. He even specified that he wanted to invest in small businesses. This is not doing a service to the New Zealand taxpayer. This is not doing a service even to those small businesses that he would like to support. We know that many small businesses fail, and all he is asking is for the taxpayer to invest in a lot of failed businesses. It is just a statistic. We also know that overweighting an investment in any particular index increases the risk of the fund overall. We heard from Mr Bayly that 15 percent of the fund is invested in New Zealand, and, obviously, that is significantly higher than the weighting of the New Zealand sharemarket across the global equity markets. So already we are supporting the New Zealand market by providing liquidity in that market.

Getting to the point of the bill, it is very important that we do manage the administrative side of this fund efficiently. A small percentage difference will make a significant difference to the return of the fund. My colleague Mr Ross suggested that there had been $30 million of opportunity lost because of the lack of this flexibility, which the guardians are requesting. So this flexibility will allow the guardians to do some actions that they, to date, have not been able to participate in. For example, they will be able to negotiate fee structures. They will be able to accumulate their investments, approach an investment manager, and negotiate hard for reduced fees.

The location of the entity, the fund investment vehicle, is relevant, because, again, they will potentially be setting it up in a different location to reduce costs. Of course, if you have got an entity, a fund investment vehicle, you are able to limit the liability of that entity to the assets of that entity without recourse to the Superannuation Fund, which would potentially be the case in some instances.

This is restricted to passive investment opportunities—for example, farms, forests, or a financial instrument that is not a business. And, again, the opportunity to save $30 million is there for the taxpayer to take advantage of, because we know $30 million after 10 years will be $60 million—in fact, it will take less than 10 years at the current rates of return on the fund.

I would also like to turn to New Zealand First’s support of this bill, which I appreciate. But I wonder whether that member, Fletcher Tabuteau, can see the irony in this support, when the fund is mostly invested offshore. In other words, this fund is a foreign investor in other people’s lands, and of course that is exactly the policy that that party opposes for this country. It does not wish to see foreign investment in New Zealand, yet it supports the Superannuation Fund, which does exactly just that. It invests in other countries’ jurisdictions, in other countries’ equity markets, and in other countries’ financial markets.

💬 Hon Paul Goldsmith: You’re not saying they’re confused, are you?

I think, Minister, they are confused and perhaps they may revise—I would be interested to hear from their next speaker whether they really do support this fund, which does invest in foreign shores.

Of course, the fund investment vehicles are not going to change the restrictions that are already on the fund, which restrict the investment to less than a controlling interest. That is a good thing because that forces the fund to diversify, to not interfere—because it is a big fund—and diversification is important. Without the diversification we do not get the spread of risk, and again I come back to the point made by Mr Robertson where he wants to overweight this fund in the New Zealand market, overweight its investment into small businesses. The risk is, of course, that any index that one overweights their investment into loses money. I mean, even the New Zealand market—over the last 20 years we have seen the likes of Telecom and Brierley’s completely disappear off the share market.

So imagine if that was the case, if Mr Robertson had been in charge of that fund, invested in those companies because of his interest in that particular sector, for whatever reason, political or otherwise. It would be a disaster. Of course, I have respect for Mr Robertson’s political ability, but I would not want him to manage my money.

💬 Grant Robertson: Why?

I am giving him some credit, but, for investing my money—the taxpayers’ money—I would give him no credit whatsoever. Why would you want to give a penny to a politician of any sort?

Of course, coming to the Greens’ argument—Mr Norman’s suggestion again—trying to pick winners or trying to restrict the fund is a dangerous thing, because we would have Mr Norman investing only in forestry, I would assume, and certainly not in any oil exploration, or anything that involved anything to do with carbon fuel, or anything that might make a dollar for and on behalf of the New Zealand taxpayer. So it is really important that we do not restrict the guardians of this Superannuation Fund. It is important that we give them the flexibility to independently invest, given their level of expertise.

We know that diversification across currencies, across indexes, across financial instruments is important, because that manages the risk. We have seen the Portuguese bank—or is it a Spanish bank—that the fund is having trouble with. That is exactly why you need to diversify, because although that is potentially an ugly end to an investment, we know that it is only a very, very, very small portion of the fund. If we allow Mr Norman and Mr Robertson to get together and invest in the things that they like, they will over-invest in things that would create an unbalanced, dangerous, highly risky investment for the taxpayer and on behalf of the taxpayer.

So just to sum up—just to clarify for Mr Lees-Galloway’s benefit—the State is not managing the Superannuation Fund; the guardians are managing this $29 billion fund. It is significant. It is important that we keep politicians of every colour away from the fund. It is important that we leave the independence to those who are capable and experienced in managing the fund. This legislation allows an increased flexibility to the fund investment vehicles to decrease costs, to save the taxpayer some dollars, so that future generations are able to benefit from investments made today. Thank you.

Yes, I am standing up to support the New Zealand Superannuation and Retirement Income Amendment Bill. But the last member who spoke was a little disingenuous, I think, in the way that he represented the Labour Party. No, we understand that the State does not manage this fund. What we do understand is that the State set this fund up, and there is a fundamental difference there. In terms of Labour not being in favour of foreign investment, Labour absolutely welcomes foreign investment. However, what we do say about foreign investment is that it has to add value over and above that which can be added by New Zealanders.

💬 Grant Robertson: Productive, not speculative.

Absolutely. In the last 3 years there has not been one—not been one—application to the Overseas Investment Office under the Overseas Investment Act that has been turned down. We would put stricter controls on this because we believe that if foreigners are going to come into our country and buy our land, buy our strategic assets, and buy our fishing quota, which they are able to do, they must prove by law that they are adding value. The interesting thing is that one of the major conditions around overseas investors buying our land is that they create jobs. However, the Overseas Investment Office has absolutely no idea how many jobs foreign investment has created in this country. That is one of the reasons why we need to better control who is investing in our country—where, what, how, and why.

What Labour would look to do, I believe, is just sort of put a little bit more structure around foreign investment in this country, which we absolutely need. The last speaker, Alastair Scott, talked about investing in forestry. Bring it on. Forestry is one of the lifebloods of our regions. It has the potential to create so many jobs. Unfortunately, under this Government, over 60 percent of all logs harvested in this country head offshore without a cent of value being added.

Let me give you an example of a fantastic Minister for Economic Development and what he did as a spokesperson. When Jim Anderton was Minister for Economic Development, he paved the way for Juken Nissho to set up a mill in Gisborne that employs 400 people. That was because of Jim Anderton’s intervention. This Government believes that you take a hands-off approach. That is the difference between Labour and National. This Government believes that if you leave it to the market, the market has all the solutions; whereas Labour believes that the Government has a very important role to play in driving economic growth. Nothing epitomises this more than the work that Jim Anderton did. In fact, the interesting thing is that Jim Anderton is one of only two people who have been given the keys to the region of Northland. The other one was Sid Going. He was an All Black in the day.

💬 Grant Robertson: Oh, is that right?

Absolutely—absolutely. There is an interesting fact. Sorry; he was created an honorary citizen because of the work he did in that region—an honorary citizen. That is what a good, proactive Minister for Economic Development does under a Government that believes in the regions.

Let me quote to you, if I may, from the Minister of Finance in his first reading speech on this bill. He said that the bill “was set up under the previous Government by Dr Michael Cullen with an elegant legislative scheme and funding formula designed to allow New Zealand to pre-fund some of the costs of national superannuation—in fact, pre-funded to the extent that tax rates would hold steady while the population aged. In that sense it is a form of savings for today’s taxpayers, where they will avoid tax increases in the future.” That pretty much epitomises the difference between Labour and National. What Dr Cullen said was: “I have a vision for the future. What I want to be able to do is to make sure that New Zealanders, as they age, are going to be looked after in their retirement.” What he said was: “I’m going to put this money aside, and I’m going to grow this fund.” This was a vision, whereas what National came in and said was: “No. No money for the super fund. We’re going to cut taxes.” It was a very short-term, really opportunistic policy, and it blew the long-term policy out of the water.

In fact, if we look at the Superannuation Fund’s past history, National has a way of sort of scuttling these things. In fact, I was talking to Emeritus Professor WE Wilson—you may know WE Wilson, actually. I was talking to him about the Kirk superannuation fund. It is estimated that if the Kirk superannuation fund was still around today, it would be worth about $240 billion. It would be an absolute game-changer. In fact, there would be no debates about the sale of State assets. There would be no debates about how we are going to raise money for this or that form of infrastructure, because we would own them. We would absolutely own these assets. We would have a superannuation fund worth $249 billion. Just imagine that. I suppose that the approach to superannuation epitomises, as mentioned, the difference between our two parties: visionary in the sense of Dr Cullen, visionary in the sense of Norman Kirk; short-term and opportunistic in terms of Robert Muldoon, and short-term and opportunistic in terms of John Key and Bill English.

You can hypothesise about this, but it is believed that the amount of money that has been forgone because Mr English cut contributions to the Superannuation Fund is around $10 billion. The Superannuation Fund has made, on average, about 10.3 percent over its whole life. That includes during the global financial crisis. In fact, last year it made 14 percent on its investments.

Again, when I talk about the difference between National and Labour, National believes that you give the money back to the people, and they know what to do with it. Well, we do not believe in high tax rates. Of course we do not. In fact, we would love to run a Government where we gave tax cuts to all. In fact, if I look at the last Government that gave massive tax cuts, it was a Labour Government that cut tax rates from 66 percent to 33 percent. A Labour Government was responsible for the last major overhaul of the tax system, whereas National has always tinkered. In fact, it is quite interesting, when you look over the history of Governments, Labour Governments have always been ones of social evolution, whereas National Governments have been ones of tinkering. It is actually quite interesting.

But anyway, what I would like to say is that we support this bill because we understand that, in fact, you need a diversified portfolio. That is vital. We know that if you invest too much money in the New Zealand Exchange and capital markets, it will create distortions that are just, you know, not right for the market. So we have to invest overseas. We understand that, and it is why we support this bill.

However, what we also support is ethical investment. This is where the Greens—Russel Norman and James Shaw—and the Labour Party agree. We cannot just be going out investing in absolutely anything. It plays into our brand. You know, we have a global brand that is around clean, green, and 100 percent pure. It does not relate just to our environment; it relates to how people perceive our country. We must work incredibly hard to protect this brand. I truly believe that one of the really damaging things this Government has done is to devalue our brand to such an extent that the leverage that a lot of our companies that go offshore get from our brand is diminishing. I reckon that we have about 3 to 5 years to sort this out. If we do not, then we are in real trouble. We are going to go to Paris, and for me, I think we are going to get absolutely caned. We used to be leaders in this, and because we were leaders, we sort of held the global moral imperative. Now we do not. This started with David Lange and his denying nuclear ships entry into our harbours. The unintended consequence was that people saw a little country that stood up for its principles, but under this Government we have slipped. We really have, and it is an absolute shame.

That is why our sovereign New Zealand Superannuation Fund must be seen to invest in an ethical way. It plays into who we are as a country and how people perceive New Zealanders as business people and as a country. One thing I would urge this Government to do is to make sure that it protects our brand over absolutely anything, because they reckon that in about 2005 it was worth $20 billion per year. Devalue that, and we become just another small economy selling commodities into an ever-shrinking global market place. We support this bill, we understand that the New Zealand Superannuation Fund must practise a balanced and diverse portfolio, but we also believe that it must invest in an ethical manner. Thank you very much.

The next call is a split call—Jono Naylor, 5 minutes.

Well, it has been a funny old afternoon here, as we have been debating the New Zealand Superannuation and Retirement Income Amendment Bill. I have got to say that I was listening very attentively throughout the afternoon. Actually, as I was listening to the co-leader of the Green Party and I heard greenhouse gases being talked about, I had to wonder what sort of vehicle this fund investment vehicle was, and whether or not it had, in fact, a combustion engine inside it.

We have seen all sorts of weird and wonderful things occur. We saw Chris Bishop and Dr David Clark almost fawning over each other, offering praise and saying what a fantastic contribution the other had made. It made me wonder, actually, whether the Finance and Expenditure Committee holds hands and sings “Kumbaya” at the end of its committee meetings, such was the sort of warmth that was oozing across the Chamber. We heard the previous speaker, Stuart Nash, who was drawing analogies between a former All Black halfback and a Minister for regional development who was not actually even a member of the Labour Party, and we got some contributions there. What I thought was—

💬 Dr Megan Woods: He was the president of the Labour Party.

He was the president of the Labour Party, and then he saw the light and left. We also heard the previous speaker full of praise for the founder of the ACT Party, and then I thought that it really had been a funny old afternoon. I was pleased to hear praise from the other side of the House for Mr Andrew Bayly, who spoke earlier, and to hear all that members had to say about his expertise in this field. Although I cannot claim to have the same financial expertise as Mr Bayly, in terms of speaking to this bill, I am a New Zealander, and I feel that since this is a bill that speaks to the ongoing superannuation requirements of all speakers, I am, I think, in that light, quite qualified to speak about it.

It has been a great debate this afternoon, as I said. We have heard from almost all speakers about how well the fund has been performing over this time, so I do not need to fill you in on the details of how much was invested, how much is there, and what sort of a return it has been getting. In this regard, I do just want to acknowledge the great work that has been done by the guardians. If there was ever an appropriate name for someone who is managing this fund on behalf of New Zealanders, it is “guardians”, because they are, in fact, guardians of the future for many of us who are probably going to rely on the dividends of this fund to pay for our superannuation in the future. I think the way that they have approached this and the way that they have been working to develop and grow this fund for future generations needs to be acknowledged and deserves some level of praise. When such a group that is doing so well comes to Parliament and says to us that it would like to see some changes, I think it is appropriate that we take notice of what it is that it is asking for and that we take notice of what it thinks it needs in order to be able to do an even better job for us, moving forward.

I had a look back through the submissions to the select committee—I was not on the committee, as I said—to see just what it was that they were saying, in terms of their submission, about why it was that they made this request of Parliament to bring these changes into place. One key thing that they said was that they talked about the bill enabling them to discharge their duties more cost effectively and with less risk. I think, at the end of the day, that we would all agree that that is a very good thing for them to be doing—to be able to deliver things with less risk and more cost-effectiveness. They have sought to establish these fund investment vehicles, which I think will ensure, going forward, that we are going to get an even better result. It will enable them to negotiate a specific mandate with an investment manager as opposed to being one of a number of investors in a pool fund. It will protect the fund from disproportionate liability, and it will increase and reduce the level of investment over time. So there are all sorts of things that these actions are going to help us with. I commend the bill to the House, and I think that it will be a better thing for New Zealand.

Thank you for the opportunity to speak on the New Zealand Superannuation and Retirement Income Amendment Bill in its second reading. It is a pleasure to take a call to support this bill. The purpose of this bill is to facilitate the effective and efficient investment of the New Zealand Superannuation Fund. For that, this bill proposes to allow administrators of the fund to control entities managing various investments of the fund.

The New Zealand Superannuation Fund invests on behalf of the Government in order to help pay for increased superannuation entitlements in the future. It also helps with creating balance in respect of the burden that we want to put on taxpayers, and not just current taxpayers but future taxpayers as well. So this will help to avoid increasing taxes in the future.

We know that our economy is doing really well, and it is doing well because this National Government knows how to manage it. There are numerous indicators of our great economy under this National Government—for example, the number of jobs that have been created. We know that household disposable incomes are rising faster than inflation and that businesses and households are happy because interest rates are lower and inflation is low. This National Government is focused on sustainable growth to support higher incomes and to support people in retirement. So our focus is to provide a better life for our families, from our youngest to the oldest. The National Government is working hard to make our country a better place to live, work, raise a family, and also enjoy retirement. This bill is about increasing efficiency in terms of how the Superannuation Fund is managed, with the potential for material increase in the Crown’s balance sheet.

We have an ageing population in our country, and those people are an important part of our community. A few weeks ago I was in a meeting with the police and I learnt that it is seniors over the age of 65 years who are an easy target of crime. We want a society where people get a positive ageing experience. Our seniors are a highly valued part of our communities and our families, and that is why we want them to have security, especially financial security.

This bill is a great example of how the National Government’s policies are futuristic, because the National Government does not want to increase the superannuation age. We want keep our superannuation age at 65, and while keeping it at age 65 since 2008 under this National Government, the superannuation weekly rate after tax has gone up by 31 percent. Also, we have been able to maintain the superannuation married rate at 65 percent of the average wage. This has been possible because we know how to manage our economy, and as a result we are able to invest in other sectors. For example, in the health sector we are able to provide more hip, knee, and other elective surgeries to help our seniors so that they become independent as soon as possible.

This bill is about getting better returns from our investment. The New Zealand Superannuation Fund needs more efficient investment so that it adds to the Crown’s wealth, so that it improves this Government’s ability as well as future Governments’ ability to give increases to superannuation entitlements, and also to keep this balance—as I said before—regarding the burden that we want to put on our taxpayers. We want to put a minimal burden on our taxpayers. This is about the successful management of our economy and, as I said, this bill is a great example of that.

Just recently, we released the 2014 Report on the Positive Ageing Strategy, which shows that we are making great progress in most areas. This National Government is committed to our seniors having security, especially the financial security that they deserve. This fund is set up in a very sensible way that allows that reasonable level of independence, which is important for their investment policies. This bill is about strengthening the investment fund and strengthening its ability. I support this bill and commend the bill to the House. Thank you.