Venture Capital Fund Bill

I move, That the Venture Capital Fund Bill be now read a second time.

Let me start by reiterating the underlying purpose of this bill, which puts in place a key element of the Wellbeing Budget’s economic package. I think we all in this House know that the world is in the midst of a technological revolution, which is borne of the confluence of affordable computing power, mobile positioning systems, sensors, robotics, big data and the internet of things, artificial intelligence, and genetics. We know that digitalisation of many parts of the economy creates challenges that we are dealing with under the banner of the future of work. The flip side of the size of that challenge is the enormous opportunity to improve the efficiency of existing methods of production and to commercialise new products and services that are borne of this revolution. In the opinion of this Government, it’s the duty of this Government to help New Zealand chase down as many of these commercial opportunities as we can in this highly competitive world so that we harness the jobs and the value that can be created for the benefit of our economy.

We know that many high-growth, early-stage New Zealand entities currently struggle to access capital they need when they’re in their expansion phase. This is caused by a shortage of available capital investment at the series A and B stages. New start-ups, earlier in their journey, are already well served by angel investors, with some seed capital support from the Government. And that improvement of that market was actually caused by Government intervention not dissimilar to the one that we’re now proposing.

But the mid-sized capital raising, between $2 million and $20 million in size, normally, is not as well supported in the New Zealand capital markets. So the $300 million Venture Capital Fund (VCF) which this bill creates helps fill this capital gap for these companies as they expand. It’ll help increase the amount of technology that gets commercialised, and this will lift the level of innovation and productivity, not just within those companies but across the country. I expect that the additional $300 million in the fund will be leveraged by investments from the private sector so that more than $300 million will flow into this part of our capital markets. The effect will be that more of our start-ups in New Zealand stay for longer, along with the benefits this brings.

I would add that I’m not arguing that these start-ups shouldn’t be sold overseas, and in a way we’re not even trying to discourage it. But we are keen that they have the access to capital they need to grow and are not forced to sell, or forced to sell too soon, by the current capital constraints. The initiative put in place by this bill will, in our view, keep more start-ups in New Zealand for longer and support the proportion of these firms that stays in local ownership.

The Venture Capital Fund will also help to establish extensive domestic and international networks and develop world-class capability and experience in working with start-ups. And that will, ultimately, give them the ability to raise domestic and international private capital without further Government intervention. Alongside the R & D tax credit, the ring-fencing of losses, and extending the brightline test, it’s all helping weight investment towards the productive sectors, which we think is key to lifting economic performance and productivity.

As we conduct the second reading of this bill, I want to highlight the process to undertake to develop this legislation. We had public submissions on the bill, and we had separate consultation with the venture capital (VC) market to support its implementation. In developing the VCF, we’ve worked hard to listen to the market, as well as to the Guardians of New Zealand Superannuation and the Venture Investment Fund. And I’m pleased to say that our engagement with the market shows widespread support for the initiative. We also received broad support from the select committee, and, as a result of their input, we’ve strengthened the purpose section of the bill to provide a clear signal that we’re doing this to improve New Zealand’s productivity.

As a result of consultation and feedback, a number of other amendments have been made to the bill. We’ve made it clear that one of the purposes of the VCF is to encourage the further development of private VC funds so that capital is increasingly raised from New Zealand investors in the private sector, and to ensure, also, that there is an appropriate focus on the New Zealand market. Progress has already been made in the private sector support for private seed markets, and we want to stimulate this for series A and B capital rounds.

Achieving an inclusive economy is, of course, an important part of the Government’s overall economic strategy, and the bill now better reflects this by including the ability for directions that the Guardians must have regard to in their oversight of the VCF. But, equally, by giving the Guardians the job of independently allocating capital, we’re harnessing the Guardian’s expertise, reputation, and proven track record. They really do have a history of making wise investment choices, and we think their involvement will help. They’ve also got a solid reputation for responsible investing and adhering to an environmental, social, and governance framework, and we’re confident this will carry over into their oversight of the VCF. Of course, the primary focus for the Guardians is to apply best practice to the VCF investments while employing that environmental social governance framework to deliver other objectives of the bill.

By establishing the capital fund, we’re not only supporting New Zealand’s most innovative firms; we’re also stimulating capital available to invest in high-growth firms in the future. By establishing this in the manner set out in the bill, we’re confident that the funds created will attract other investors. So, ultimately, we believe this is going to foster investment and innovation in high-growth, high-wage businesses. We’ll be nurturing a thriving capital market in New Zealand that is more comparable with the global counterparts.

Before I take my seat, I would note that I think New Zealand has made enormous progress in growing the sophistication of our economy since the Catching the Knowledge Wave conference that was held by the Rt Hon Helen Clark. And it was there that New Zealand industry and Government came together and identified that in order for us to increase the value of our offering to the world, in order to pay for the things that we like to import to sustain our standard of living, we needed to broaden our exports beyond our traditional core towards technology and higher-value exports. They identified three main technologies to be supported: ICT, creative industries, and biotechnology.

The subsequent National Government focused biotechnology, quite wisely, on food and beverage, and the related technologies, and as a country we have since made enormous progress, to the point where technology-related exports are now our third largest and fastest-growing source of exports—third, after services in tourism and agricultural exports—and our technology exports are growing in sophistication and value. We’re seeing this recorded in statistics. Not only is it part of the reason why exports are growing strongly but it’s also reflected in the number of offshore hires by New Zealand’s technology companies, who are expanding abroad as they broaden their export reach.

One of the indicators of success is the number of people that they are employing in offshore markets in order to increase their sales efforts. We have capability that is growing in this area. We wouldn’t have had it had it not been for the interventions of the Hon Pete Hodgson back in those days, when he brought the Israeli innovation model to New Zealand and started supporting early-stage capital markets. The earliest iteration of that was through the Venture Investment Fund. It’s had a slightly negative rate of return but has met its overall objective of stimulating the sector. That morphed down to the last Government into support for seed capital, which was appropriate, and this endeavour says, “Look, we’ve got those seed companies coming through. We need to better support their globalisation efforts as they take their goods and services to the world by filling this gap in our capital markets for series A and B capital rounds.”—which, as I said at the start, is generally in the realm of $2 million to $20 million.

I’m confident that we’ve got the mix right: administration, largely through the Venture Investment Fund; oversight by the super fund, who oversee who will be, effectively, chosen as the VC fund managers; and the private sector through those VC funds, bringing some matching money from the private sector and making the investments into the New Zealand economy, which will improve the productivity and growth of our country, which will flow through to better-paying jobs for New Zealanders and higher export earnings in the future. I commend the bill to the House.

National will continue to support the Venture Capital Fund Bill as we proceed through the second reading, with a couple of concerns that I wish to address during my contribution.

First of all, the good news and the reason we should support it is it will be a boost to the economy. In the so-called year of delivery, we know this economy needs a boost. The Prime Minister, I recall, at the beginning of the year, promised it to be a year of delivery. I see the Hon Phil Twyford sitting there, holding his head in shame. He hasn’t been part of delivery at all. In fact, I think he lost his portfolio because he failed to deliver KiwiBuild, and that’s only one of the examples of the promises made by Labour as they went into an election campaign in 2017 which they have failed to deliver on. The people—the voters of New Zealand—will not forget the extravagant promises made by the likes of the Hon Phil Twyford as we proceed to election 2020.

But, in saying the economy needs a boost, I do want to comment on the fact that the terms of trade are the best we’ve seen for decades. The economy should be doing substantially better than it is. Business confidence should be substantially better than it is. Therefore, when we look through Budget 2019, it is a surprise to find some initiative in amongst that Budget of misery and non-delivery that actually does give the Venture Capital Fund the chance of being successfully formed.

So two or three points I do want to address: first of all, in the Budget it’s announced as new money: $300 million. But, in actual fact—and the Hon David Parker, who’s just introduced the bill for its second reading, doesn’t mention this in his comments—there is no new money. Of the $300 million, $240 million had already been signalled and appropriated to the New Zealand Superannuation Fund. So what this Government is doing is actually telling the super fund how to invest its money, and that is one of the concerns I wish to raise very, very shortly.

The second contribution to make from $240 million to $300 million is a call, an instruction to the New Zealand Venture Investment Fund to direct $60 million of its money already available for venture capital to this newly created Venture Capital Fund. So let’s dispel any notion that this Government has found $300 million more that it wants to give to business. It is simply smoke and mirrors: reclassification, re-appropriation, and the direction of money that has previously been committed elsewhere.

Can I then move to the particular concern that worries me the most, and it is connected to the $240 million that is now going to be invested by the New Zealand Superannuation Fund. The New Zealand Superannuation Fund has been highly successful, and it is worth noting that the current Governor of the Reserve Bank, of course, is part of the reason for that success—

💬 Hon Phil Twyford: Why did he stop contributing to the fund if it was so successful?

Why did we stop contributing? Because we dealt with the global financial crisis and we dealt with the Christchurch earthquake. If the Minister wants to actually come occasionally to Christchurch, and if the Minister wants to actually bring the Prime Minister occasionally to Christchurch, Christchurch would be grateful to see you both in Christchurch to have a look at what that contribution has done.

But returning to the New Zealand Superannuation Fund and the way it has performed, why then does this bill give the ability for a Minister to start to direct the Guardians of New Zealand Superannuation to where those investments must be placed?

💬 Hon Phil Twyford: It doesn’t.

And Mr Twyford says it doesn’t. There is another case where this Minister sits around blindly around the Cabinet table, and discusses legislation that he either hasn’t read or doesn’t understand. No wonder Jacinda Ardern sacked him from KiwiBuild.

💬 Hon Phil Twyford: Read the bill.

Well, Mr Twyford interjects that I should read the bill. I spent time on the Finance and Expenditure Committee studying the bill, Mr Twyford—

💬 Hon Phil Twyford: Obviously didn’t read the bill.

And I have read the bill. But the Minister himself clearly doesn’t understand how it works, and that is why he’s no longer looking after the KiwiBuild programme. He mucked up that one completely—mucked up that one completely. And if he’d had any involvement in this, I suspect that’d be the very reason why National wouldn’t want to support it.

💬 Hon Phil Twyford: David, you’re hurting my feelings!

I’m not here to hurt the poor Minister’s feelings. I would have thought that he was hurt enough when Jacinda Ardern had to fire him because of his incapability. How he still manages to sit on the front bench, God only knows. But I know one thing: he was the tactician at the last election for Labour, and Jacinda Ardern doesn’t trust him with that position this time. That says it all.

Now, if I can return to the legislation. The second concern that I have is, of course, that there is already an institution—an organisation—that provides this service to the New Zealand economy, it is called the New Zealand Venture Investment Fund. It’s been operating now for in excess of 10 years.

💬 Hon Chris Hipkins: Yeah, who set that up?

It has a good track record. It was, I think, set up in the dying days of the Helen Clark Government, so back prior to 2008. So it was probably established around 2007, for the Hon Chris Hipkins, who should have actually known that and interjected to ask me.

💬 Hon Chris Hipkins: I did know that.

Now, he says he knew it! But he still had to ask me! But, anyway, my point is that it has operated successfully. Its funding was boosted by the National Government. It has the expertise. It has the expertise in this area, and, therefore, the question that I did ask at the select committee, which was not answered satisfactorily by the officials appearing before the select committee, was: why didn’t they just expand the New Zealand Venture Investment Fund instead of creating a new fund altogether?

I suspect the reason we’re debating this legislation and the reason the announcement is in the Budget is, of course, that investors don’t favour New Zealand and its economy at the moment, and that’s not surprising when you see a Government who moved immediately to do all it could to banish foreign direct investment from this economy.

💬 Hon Phil Twyford: Rubbish.

Well, Mr Twyford is part of the rubbish; that’s the problem. He moved straight away to reduce the opportunity for foreign investors into the apartment market in Auckland particularly, and then he argued that that would bring the price of housing down. So let anybody who wants to measure the success of the Hon Phil Twyford have a look at what’s happened to the price of housing since that legislation came into vogue in—what?—2018. It’s had absolutely zero effect on reducing the price of housing.

He moved also to remove foreign investment from agricultural sales—unless it was forestry. Now, Mr Twyford has suddenly gone very quiet. He can’t explain that. Well, I can. It’s because the Hon Shane Jones had a programme of planting a billion trees and they suddenly realised they’d never achieve it if they banned foreign direct investment from New Zealand. So we then passed—or this House passed; not supported by me, I hasten to add—special legislation to make it easier for overseas forestry interests to buy land in New Zealand. In fact, we had a case recently of the Hawke’s Bay - based company Pan Pac Forest Products, which has given early approval to land that it hasn’t even bothered to visit yet to make sure it can go through the Overseas Investment Office process to make it easier for that company, with its foreign investors, to buy land in New Zealand.

So schizophrenic-type Government policy exists all over the show. We will support, and continue to support, the establishment of the New Zealand Venture Investment Fund, but I do hope we do not see this being used by the Government, by a future Labour-led Government, if there is one—and there may not be one, but there could be one. So, accepting there could be one, I do hope we don’t see a Minister of the calibre of the Hon Phil Twyford getting a portfolio role when he can then start to interfere with the investments by the New Zealand Superannuation Fund, where he, as a Minister, thinks Government money should be going to assist in venture capital establishment. If that’s where this ends up, it will be a sad day for the venture capital industry of New Zealand and a very sad day for the economy of New Zealand.

What a nasty, toxic, and bitter and twisted contribution that was from David Carter, the member for the landed gentry. It was notable in his attacks on Government policy that he was very concerned to defend the role of speculative offshore housing investment, which actually shows how far we’ve come in the last two years in reallocating the economy towards a much more productive focus on firms that generate jobs and exports.

The whole problem that we inherited when we became the Government was that the whole strategy for economic growth under the former National Government was based around immigration and housing speculation and cashing in the insurance cheque from the Christchurch rebuild. There was really nothing going on other than that, and if the former Minister had actually taken the trouble to read extensive commentary on the positive effect of our Government banning offshore foreign speculators from buying and selling houses in our residential housing market, it’s actually contributed to the quietening down of the Auckland housing market, which saw house prices double under the National Government.

There’s an enormous amount of work and reform going on across the economic development programme of this Government. My colleague Chris Hipkins is in the process of reinventing the entire vocational education system, that has been utterly broken. Chris Hipkins is fixing it, and that’s a good thing because we desperately need to grow the workforce that the new economy requires. Shane Jones is overseeing the Provincial Growth Fund, a $3 billion boost to infrastructure, workforce, and sustainable job growth in regions that have been neglected for far too long. Megan Woods is developing our whole strategy around research, science, and innovation, and work to develop affordable and sustainable energy for the future; and there’s David Parker’s Resource Management Act reform process, cleaning up fresh waterways. We are determined to see the best land use possible without depleting our natural capital for future generations.

There is a huge amount of work going on, and one of the critical pillars in our economic development plan is deeper pools of capital so that we can invest in a growing and productive economy. I want to acknowledge the leadership that David Parker has shown in developing this bill. It was his thinking, they were his ideas, and it was his analysis when he was Minister for Economic Development that saw the development of this bill, designed specifically to plug the gap in our venture capital system that currently sees the shortage of series A and B capital driving New Zealand firms offshore sooner than they otherwise would have because of the capital constraints in our system. David Parker gave quite a good history of the development of the Venture Investment Fund under the Clark Government. The SCIF, the Seed Co-investment Fund, I think has performed well. We’re seeing, actually, pretty good, pretty healthy investment in New Zealand by angel investors in the very early stage firms.

But the clear gap is in series A and B investment. International research shows that a market that’s performing properly should have a 25 percent conversion rate between seed capital and venture capital stages. So that would mean that for every 100 start-ups, 25 of those firms would successfully go on to raise a series A round investment. Now, in New Zealand, the current conversion rate is only 10 percent. Twenty five percent’s the benchmark for a healthy market; in New Zealand we’re only achieving 10 percent, and that’s largely because of the lack of venture capital investment funds in New Zealand for firms that are at this stage. Where around 30 to 40 firms should be expected to be closing their first venture capital funding round annually, there are less than half of them achieving that in New Zealand, and most of those go abroad to get that funding. So that’s the problem that this fund is trying to solve.

I want to acknowledge the work of the Finance and Expenditure Committee. Their report has only really three significant things that I think rate a mention in this debate. There are a number of small technical improvements that they’ve made, and I thank them for that. But the three things that they’ve recommended that we change are that we set out more explicitly in this bill what we mean by developing New Zealand’s venture capital markets. And in clause 24(b)(iii), they’ve recommended inserting reference to this in the purpose statement of the bill.

There has been some interesting debate as this bill has gone through the House about the extent to which the investment of $300 million will make a difference to New Zealand - based funds. And there’s no question—let’s be really clear about it; there’s no question—that’s what we’re trying to achieve. The fund will take a fund of funds approach by investing in New Zealand - based funds and some offshore funds who will be required to invest that money in New Zealand firms. We are trying to grow the venture capital ecosystem in New Zealand. That’s what we’re trying to achieve. Putting some of that money through Australian and other offshore funds in order for them to then invest in New Zealand firms is part of actually leveraging and stimulating a much bigger investment, much bigger than the $300 million that we’re talking about investing in the Venture Capital Fund.

Secondly, the select committee has helpfully invested clause 32, which would require the Guardians of New Zealand Superannuation to use best practice investment management when investing the fund’s capital. And some submitters expressed concern with the limited scope of directions that the policy statement could contain. And the committee has very helpfully recommended that we amend clause 35 so that the policy statement could include the Government’s commitment to an inclusive economy and the possible directions that that policy statement could contain.

And, lastly, again sort of, I think, mindful of the statutory independence of the Guardians, the committee has recommended that we should allow an amendment to clause 56 to give the Minister the power to direct the Guardians to report on additional matters in their annual report—for example, the work that they are doing in managing the Venture Capital Fund.

So those are all fairly small amendments, but I think they are well considered. I thank the select committee for them and I look forward to the further progress of this bill through the House. I commend this bill to the House.

It’s my pleasure to take a call on the second reading of the Venture Capital Fund Bill, and as other speakers have said, and as the Rt Hon David Carter said, National will be supporting it as it did at first reading. But I do want to correct some things that are being said both by the Associate Minister of Finance and the most recent contribution from the other side from Phil Twyford.

This sounds all very good: $300 million going to support businesses who probably need capital in the $10 million to $20 million range as they move from start-up to the next phase of their development. Well, we now know that $240 million roughly of that money is simply being reallocated from the New Zealand Superannuation Fund and it’s really instructing that fund on how to invest that money. It is important, and I do support this, that we work, where at all possible, for New Zealand start-ups to stay in New Zealand.

However, there are a number of factors that influence decisions made by start-ups as to where they operate from and how they operate. And I do think it’s important that we recognise in a global environment, where capital can be obtained in other countries, that we look at things like business confidence, the sentiment around how Government operates. And it is important to recognise that business investment has fallen from 5 percent to 0.6 percent since this Government has been in power. Job growth has dropped from 10,000 jobs a month to more than 3,000; 22,000 more people are on the dole. These are all contributing factors, and simply reallocating some money to venture capital will not resolve all those ills nor some of the sentiment, including the GDP growth, which has fallen to just 2.1 percent from 3.1 percent, when this Government took office.

So National understands that economic growth is really important for New Zealand, and the surest way to prosperity and to how you lift the living standards of New Zealanders. We, ultimately, support this bill largely because, as we assessed the 2019 Budget, it’s really the only pro-growth policy that was put in the entire list of opportunities and funds that were made available in that Budget. And we do support the need to grow future capital, venture capital.

We do like some of the changes that were made in the select committee process. We are, however, worried that the Minister has new intervention powers in terms of setting direction for the Guardians of New Zealand Superannuation. And if you look at how funds have traditionally worked in New Zealand, and the New Zealand Superannuation Fund is a classic example, then it makes a real difference that those Guardians are impartial. So it is a change to allow the Minister to give some directions to those Guardians. And I sit here and reflect on that. That really allows a lot more political interference than we’ve ever seen in these types of funds before. And in our view, some of that is risky.

I also draw to the attention of the House, and particularly to the member Mark Patterson, who sits just across from me, that while venture capital is important, there are also a lot of other things that are influencing investment decisions made in New Zealand. And the previous speaker, Phil Twyford, has spoken about changes to the foreign ownership and investment rules, and he particularly focused on housing. What he didn’t focus on was the fundamental changes that are occurring in other forms of investment from foreign investment. Traditionally, we have welcomed foreign investment into companies that support agriculture, to some vertically integrated processes of farm ownership, right through to the market, to other foreign investment opportunities around viticulture and horticulture—largely all of which have now stopped dead in their tracks, with the exclusion of planting trees.

Yesterday, it was sobering for me to be told at the Finance and Expenditure Committee, when the Reserve Bank came in, that about 200 large-scale and significant dairy properties in New Zealand were going to be unable to meet their commitments to their banks and were in serious trouble. Now, we’re waiting to get further information about the scale of those commitments, but, see, what happens is when that happens and there are no alternative buyers, and the contraction of the credit industry in New Zealand by things like today’s announcement and Government policies—

💬 Mark Patterson: So you’d flog them off to foreigners?

What happens is the value of land drops. All those farmers, they lose value right across New Zealand because of that. And now they do not have foreign-owned investment or companies available to help buy some of those distressed assets.

Now, Mr Patterson might say that’s a good thing.

💬 Mark Patterson: It is.

You go and tell—sorry, members should go and talk to, and that member should go and talk to, thousands of farmers in New Zealand, particularly in the dairy industry: if that proceeds on that basis, with 200 seriously indebted farmers, there will be a loss of value to New Zealand companies. So we support the Venture Capital Fund Bill as it’s proposed, but let’s not kid ourselves: it is not the panacea. There are many other things wrong with the economy at the moment, largely because of this Labour-led Government.

Thank you, Mr Speaker. It is a pleasure to rise on behalf of New Zealand First to speak to this Venture Capital Fund Bill. Of course, this bill looks to amend the New Zealand Superannuation and Retirement Income Act 2001 and enable the Guardians of New Zealand Superannuation to take on this new role, managing the Venture Capital Fund. I welcome the opportunity to speak after the previous member, Lawrence Yule, and address some of those issues; I’ll get to that shortly.

But in terms of this Venture Capital Fund, it has two roles, really: to increase venture capital available to new entities, and particularly, as we’ve heard, those entities that have got to about $2 million to $20 million. That’s the gap that has been identified. We will now have some capacity—or the super fund will have some capacity to use their track record, which is world-leading, to identify those opportunities. It’s all to develop New Zealand’s venture capital markets, and this is a catalyst for more funding coming in from other private sector funding opportunities. So it’s a catalyst.

The reason we need to do this is because if we are to grow our economy to its maximum, it is about productivity, and this country has not fared well in productivity for decades. We’ve had a volume over value mentality, which we’ve got to the end of to some extent, particularly in our agricultural sector where we’ve come up against some of the ecological limits for our environment. So we must do things smarter, and that starts out with investing in R & D. Of course, we know that our R & D is about—well, it’s less than 1.5 percent of GDP, our investment. So that is quite an indicator, actually, across the OECD—the level of investment in R & D spending as a percentage of GDP is almost a direct correlation with the wealth of the countries that are on that OECD ladder. So it is incredibly important. This Government has a goal of getting our R & D to GDP ratio up to 2 percent, and we have started out on this road. I’ve heard from the Opposition some plaintive cries over there about “What are we doing for the economy?” It reminds me of that old Monty Python skit about “What have the Romans ever done for us?” I mean, this $300 million Venture Capital Fund is actually one of the more modest steps we’ve taken—if you look at the $1.25 billion R & D tax credits—of course, to get us up to that 2 percent.

Of course, being New Zealand First, it would be remiss of me not to mention the $3 billion Provincial Growth Fund (PGF). Let’s just put some context on that: under the last Government, the Ministry of Business, Innovation and Employment had a regional development fund of $11 million. It is now $1 billion a year—under the previous Government, it was $11 million. So there has been a hundredfold increase in the Government’s investment in our provinces. And, in fact, this Venture Capital Fund will do—the PGF is actually making very similar sorts of investments, and we saw it, actually, down in my neck of the woods, down in Otago and Southland, recently. Minister Jones was down there in the heavy industry, the manufacturing industries; those old legacy industries that are a bit disparate and ad hoc, but with some investment and tooling them up and joining them together with a sort of overarching strategy and an entity that can help them pull together to win bigger contracts and give them some funds to, as I say, to tool up and fill their order books and revive some of those great industries that we have down there—and there’s some really smart people and some really, really clever thinking going on. And, of course, if we’ve got some of the other stuff around the $100 million Green Investment Fund that the Greens will be unveiling, some of that—they’ve been squirrelling it away a wee bit. We’re hoping to see some action there, but they’ll certainly have some exciting projects to come there.

But this is an important thing. Last night, some of us went to the Speaker’s Science Forum and we had two presentations, actually: one from the Cawthron Institute around aquaculture and one from Plant & Food Research around some of the developments in horticulture. It struck me there that the opportunities are so exciting—and using what we grow in different ways that we would never ever have thought of. It’s how do we get those technologies from being developed in those science labs and those experiments and get them up to being companies that are producing millions and, hopefully, billions of dollars for New Zealand. Of course, one of those has been referenced a little bit, the seaweed—the red seaweed, which has some enormous potential in terms of its methane inhibiting potential. It is being developed—actually, the PGF invested $500,000 down there in Southland last week and Cawthron are also doing some work on this. So it’s that sort of thing: how do we get that sort of initiative from a $2 million company or a $20 million company, up to a billion dollar company.

I fundamentally disagree with the last speech by Lawrence Yule. It is important that we own these assets. It is important we own those value chains. We don’t want to be, in the words of our previous Prime Minister, Sir John Key, “[peasants] in our own land”. We need to own these assets. We need to reach into the international marketplace and bring that money back to New Zealand, not have it just disappear away to foreign jurisdictions. We are not, on this side of the House, in favour of that, and we have taken many measures to do that. Mr Yule, in terms of the dairy farm prices, I see Fonterra have just lifted their payout today, and that’s what should drive the price of land. It’s the productive value of that land, and there’s plenty of money in New Zealand to buy those farms should the return on that investment be where it is at the moment; of course, we’ve got record exports.

So there’s a 15-year timeline on this bill, and we note the Finance and Expenditure Committee worked through a number of small changes, but it’s good to see, actually, cross-party support for this bill because it is important that we get our innovation going in this economy, and getting ourselves away from being—those companies that start and then they just sell off overseas, and those ideas disappear off elsewhere. We can innovate and take some of those great ideas that have been developed in our institutes and universities, and in small companies up and down the country, and turn them into taxpaying entities and powerhouses for our economy, here in New Zealand.

So New Zealand First absolutely supports this bill, as we do all those other measures that I indicated earlier as part of a wider suite of packages that we are bringing in for the long-term good of this economy. This is not a Government that looks at immigration and housing speculation as the elixir of an economy. That is not a sustainable position, so we do have to do some of these hard yards. We have to build up those fundamentals in our economy. This bill does go some way to addressing that, and we hope that it builds some momentum and helps assist some of those private entities, as well, come on board, which, of course, has been the experience of the Provincial Growth Fund. That’s often co-funding, or almost always co-funding, these. It is the catalyst, the enabler, for greater things to happen, and we’re seeing that up and down the country.

So without further ado, New Zealand First will enthusiastically support this bill through to the next reading. Thank you.

Thank you, Mr Speaker. I rise to speak on behalf of the National Party in support of the Venture Capital Fund Bill in its second reading. Look, you know, we’ve got some reservations, but we’re going to support this because, after all, it was pretty much the only pro-growth announcement in the Government’s Budget this year. They’re not doing much, but, you know, we’re going to have to support them doing something, at least.

Let’s say that it’s suboptimal at best, but the country needs some sort of stimulus, because here we are in the heart of the best terms of trade that we’ve seen in a while and the exporters should be doing well and the country should be doing well, but we’re going backwards. Growth has halved. Jobs are down by 70 percent. We had 10,000 new jobs each month under National. It’s a 70 percent discount from this Government. They’re giving stuff away—mainly people’s prosperity.

So at least they did something in the Budget that was targeted at pro-growth, and we will support it for that. But the reservations are real and they should be reservations that New Zealanders hold, as well. First of all, there is no legislative objective for the New Zealand Superannuation Fund, who will administer this, to provide a return to taxpayers—no objective to provide a financial return. As members on this side of the House in the Finance and Expenditure Committee said, name one—name one—investment fund around the world that operates, particularly at arm’s length, or supposedly at arm’s length, from a Government that isn’t modelled on a certain level of return, at least as an objective, and this one doesn’t. So its success will be inordinately difficult to measure, because even if it loses most or all of the money that’s invested in it, there’s still not an objective goal that it can be measured against.

The second part, which is really quite worrying, is we don’t believe that the Superannuation Fund should be subject to any sort of Government influence in what it invests in. While the Government will have said and those members will try to say “Oh, this money’s new money.”, the reality, we fear, as this thing continues to roll on, is the Superannuation Fund will be influenced, if not strong-armed, into using some of its invested funds to put into this fund, and that does risk real returns to New Zealanders.

We have faith in the fund managers under the New Zealand Superannuation Fund. They do a good job. There’s probably a bit of rivalry between them and ACC as to who does the better job. They do a good job, including that the investments they make are rationally based ones that are designed to give good returns to New Zealanders. To force them—which we think is where this will end up going—to put that at risk in what are very high-risk and not necessarily high-reward sorts of venture fund investments such as this thing is targeted at actually risks compromising some of those returns to New Zealand taxpayers for a fund which is there to help offset our future superannuation costs.

So we will support the bill. As I’ve said, it does at least do something to try to stimulate some growth, but it’s not without reservation. So I will say the words: I will commend this bill to the House.

Tēnā koe, Mr Speaker. Tēnā koutou e Te Whare. I’m very pleased to take a call on this bill and to be the first woman in the debate, at No. 7. It’s interesting how gender-segregated some of our legislative topics can be.

The Green Party of course will be supporting the bill. For a very, very long time, our economics and finance spokespeople have been—a succession of them—speaking about the need in New Zealand to deal with the challenge of our small start-up companies scaling up without having to go overseas for investment and then New Zealand losing the benefits of those companies and their innovations.

First, let me just talk about why this is important and why the economy is important. It’s important that people have what they need to live good lives, and it’s important, in order for us to live good lives and in order for our children and their children to live good lives, that we respond to climate change and that we radically reduce greenhouse pollution in the next decade—that’s what the United Nations panel of scientists are telling us. So we need investment in our economy in the things that make it possible for us to live good lives, like food production, the building of houses, transport networks that enable people and goods to move around, and investment in education. It’s really important that all of that is done in a way that benefits the environment, that reduces pollution, and that is inclusive, because the more people are able to benefit from our activities, the more sustainable that will be.

We know we’ve had growing inequality across the world. That’s not good for democracy. That’s not the kind of country I think we want to be. We don’t want to be a country where the rich get richer and the poor get stuck. We want to continue to be a country of opportunity, and as a small nation, it is particularly important—although it’s probably true in large nations, as well—that Government takes a really active role in looking after our education, infrastructure, housing, and all of those things that make it possible for people to thrive and develop, and that includes looking after our economy and ensuring that the Government and the people of New Zealand are actively involved in investing in our own businesses and in our own organisations and are able to retain the benefits of that investment over time.

So, in 2013, the OECD specifically urged New Zealand to provide more support for expansion of early-stage firms to help address our productivity problem. We know we have a productivity problem. We’ve had an issue with wages staying low, and the top 1 percent of the top 10 percent of New Zealanders in terms of wealth and income have tended to benefit much, much more from growth of the economy than the rest of the country. That’s not fair, it’s not right, and it’s one of the many things that this Government wants to address.

So, despite the OECD recommending something like this in 2013, the previous National Government, of course, did nothing because they have a very ideological approach to the economy, which isn’t supported by evidence. Generally, National tends to be quite hands-off. It tends to try to ensure that the rich are able to get richer and that companies aren’t required to pay their employees living wages, but, generally, that stagnates the economy. There’s no evidence that that’s good for the economy, and there’s certainly no evidence that that’s good for society, but this Government takes a much more enlightened view. It looks at the evidence. It responds to recommendations from the OECD, and that’s why we’ve had wages growing much faster than inflation since this Government has been in office.

Of course, we have more work to do to ensure that there is secure, affordable housing for people. We have more work to do to ensure that the signals and incentives are right so that we can start to really reduce carbon pollution and greenhouse pollution so that we can do our bit in the global fight against climate change, and what we need for that to happen is for there to be support for innovation and innovative companies here in New Zealand.

So in the Budget, we announced the creation of a $300 million pool of capital available to be invested through a new fund of funds model to support New Zealand’s venture capital markets, and I think that will dovetail nicely with some of the other initiatives we’ve announced, like the $100 million Green Investment Fund and many of the other steps that we’ve been taking to ensure that we have the right signals so that investment is going into the productive part of our economy, not the speculative part of our economy.

Speculation on housing may make some people richer, but it doesn’t make us better off as a country; it makes us worse off as a country. Investment in really innovative companies that are able to, you know, take things like seaweed and reduce greenhouse emissions from agriculture; investments in new approaches to transport like e-scooters—all of that has the potential to be pretty transformational to reduce emissions, to make life better for New Zealanders, and we want to make sure that those small companies that start out in New Zealand with a great idea don’t have to go overseas to grow. This is just a first step that will help us achieve our goals as a society. The Greens are happy to support this bill.

Thank you, Mr Speaker. I shall only take a short call on this one, as I actually haven’t sat through the Finance and Expenditure Committee—I’m not part of it. I took great care in listening to all of the speeches, right from the Minister, when he opened up the session, trying to learn a little bit about this particular bill in its second reading. I have actually read my notes and listened very carefully to the debates, on both sides.

Obviously, as previous National members have stood up and said, I stand with them in support of this bill. Having said that, I’d like to, perhaps, bring some perspective to some of the comments that have been made in this House. One of the things that I always found very interesting, as a speaker of English as a second language, was the saying, “rob Peter to pay Paul”. I couldn’t quite understand what that literally meant, but it’s actually about the going around of things, like, you know, borrowing or robbing someone to pay someone else—it’s the same pocket of money.

I think that’s what some of the earlier speakers were actually talking about, in terms of the supposed $300 million Venture Capital Fund, where $260 million is actually coming from what was already in the Superannuation Fund, and $60 million from the New Zealand Venture Investment Fund’s existing assets. So, literally, when the Government made an announcement that they were going to create a completely new $300 million Venture Capital Fund, it wasn’t actually creating a new fund, but they were literally robbing Peter to pay Paul. So I guess I’m using the terminology correctly—I hope I got that right.

I guess that is, sort of, the state of affairs or the standard of this Government. For example, the super fund—I think it was earlier that Brett Hudson was commenting—doesn’t have to return a dividend. I mean, to me, it just seems ridiculous. When you create a Venture Capital Fund, you would want some markers for success. You create any business, any venture; anyone would want to know that this is successful. Where are the markers? I guess when you put a Minister in charge of a portfolio, you want markers to suggest that the Minister is doing well. Perhaps that’s where the Hon Phil Twyford failed, because he had no markers for him. Well, there was, actually—there were 1,000 KiwiBuild homes to be built in the first year; 5,000 KiwiBuild homes to be built in the second year; and 10,000 KiwiBuild homes to be built in the third year, but he literally only built 258 homes, and he got dumped—the whole idea got dumped.

So I guess that is the standard of this Government—in the year of delivery—that there are no markers for this Venture Capital Fund that the Government is creating. They don’t have to deliver a dividend. For example, half of all State homes that were supposedly built by this Government were started under the National Government. Seven out of nine child poverty indicators, which basically suggest that perhaps they might be doing well—but seven out of nine child poverty indicators are worse under Labour. These are some of the markers that people can use to see if this Government, or anything that this Government creates, is actually doing better or not. Like everything else that this Government is doing, this Venture Capital Fund has no markers to show whether it is performing well or not.

One of the things that I’m a little bit confused about—I think one of the things that the select committee have actually, sort of, disagreed on, that members of the National Party have disagreed on, is this whole idea that the Government or the Minister can decide what the Venture Capital Fund can actually invest in. I would have thought that you really don’t want politicians involved in deciding what the fund can invest in. You would want to leave it up to the experts to decide what to invest in, so they can gain something out of the fund, but obviously not. The politicians—the Ministers in charge—are apparently going to be making the decision.

The other thing is that the decision to tax the Venture Capital Fund was not removed from the bill at the select committee stage. I guess this is contrary to what they have actually done in terms of the treatment for the Provincial Growth Fund, or the Green Investment Fund, in that there wasn’t going to be—I guess the policy’s intention behind the fund should be treated the same way, but apparently this is quite different to the other. I don’t understand why they are treating this fund differently to the Provincial Growth Fund or the Green Investment Fund when it actually comes to the tax area.

I guess we have some reservations, as earlier members have commented, and I stand with my colleagues in our reservations. I think, all in all, anything that grows the economy has to be a good thing, or any attempt to grow the economy is a good thing, because, at the moment, the 10,000 a month job creation that the National Government delivered for New Zealand is actually providing only about 3,000 jobs a month, and so this Government is actually not doing as well as it should, especially under great economic conditions.

You know, how people can tell whether the country is actually doing well is if businesses are confident enough to invest. Business confidence and business investment—both have failed. Business investment has actually fallen from 5 percent to 0.6 percent. That means that businesses are not confident in this Government.

So I say, as I said earlier, anything that can boost a little bit of confidence in our economy, to grow our economy, has to be a good thing. So I commend this bill.

Tēnā koe e Te Māngai o Te Whare. Thank you, Mr Speaker, for this opportunity to take a brief call in the debate this afternoon. I just want to start by actually rejecting the comments that have been made by the previous speaker, Melissa Lee. Our economy is in good shape. We know that unemployment is down—its lowest in a decade—and we have the highest annual wage growth in a decade. Our minimum wage is up. Our economy is actually growing faster in spite of what is happening internationally in terms of in the United States, between the United States and China, what’s been happening with Brexit, and other global uncertainty and destabilisation around the world.

So we are actually, here in New Zealand, doing really well in spite of what’s happening in the global markets. But we do acknowledge and we do recognise that lifting New Zealand’s productivity is absolutely crucial. I find it interesting, some of the points that have been made today, because actually it was identified in 2013: the OECD specifically urged New Zealand to provide more support for the expansion of early firms to help them address our productivity problem. It wasn’t until now, in 2019, when we are in Government, that we are actually taking steps to do that.

We used this year’s Budget to create a fund of $300 million for capital to be invested, to be available to be invested, to support the type of growth and scaling up that we want to see in Aotearoa New Zealand. So I want to commend particularly the Minister who is sponsoring this bill, whose name this bill is in, because it was the Hon David Parker’s idea, as acknowledged by our Minister of Finance in the speeches in the first reading of this bill.

So what we’re really talking about here is the opportunity to have a pool of funds available to support our start-up companies beyond the initial, sort of, seed funding or angel investment that they are able to get, where they are able to scale up their businesses without having to go overseas.

Last night, I had the absolute honour and privilege of attending the national award dinner for the Youth Enterprise scheme. We saw our taitamariki, the regional winners, all converge in Wellington to put their pitches for their business ideas to what is, essentially, a taniwha’s den or dragon’s den and the—

💬 Dr Duncan Webb: Ha! Red taniwha.

Yeah, that’s right—taniwhas. We saw them receive national awards and overall awards. I want to mention two in particular that stuck out for me which having this type of fund may give them some hope that their businesses could potentially scale up with the support of New Zealand funding, and not necessarily having to go overseas.

The first one I want to talk about is particularly interesting because it is in the area of technology and it’s in the area of sustainability, which is an area that we as a Government are particularly interested in. Now, that is Mud Tech—they are from Kaitaia College, Kaitaia Abundant Life School, and Te Kura Taumata o Panguru, Papa Taiao, and they have developed a remote underwater camera drone designed and built for inspecting the bottom of boats for pest species. Now, they are currently working with our regional council in the Far North, but they are looking to work with other councils throughout Aotearoa if there is interest there. This is something that could potentially be used throughout the world. We have a serious threat in terms of marine pests. They received one of their national awards from our Minister for Primary Industries, the Hon Damien O’Connor. So I’m so proud of them—and watch this space, I reckon.

The second one I want to talk about in the time that I’ve got left was Sharndre from Crimson Education—they received a Young Enterprise Emerging Alumni Award—25 years old, 24 offices around the world, more than 200 employees, and worth over $400 million. Now, if our youth can see that there is a fund available where they could scale up their businesses without having to go overseas to look for that capital to scale up their businesses, then I think there is a lot of hope for them.

So I want to thank the Finance and Expenditure Committee for the work that they did on this.

💬 Dr Duncan Webb: You did it.

I also want to acknowledge—I am on that committee—the submitters for their feedback. One of the points that we did take into consideration was the inclusion of an inclusive economy in the list of things to be considered.

Thank you, Mr Speaker. National does support this Venture Capital Fund Bill at its second reading, but, as a number of members have pointed out before, we do have some comments to make about the bill, and I do have some comments to make about one particular change that was brought in at the select committee process. I’m not a member of the Finance and Expenditure Committee; I do, however, take a close interest in small business in New Zealand, as, no doubt, many of us have.

I speak to a number of small businesses throughout New Zealand, and in the term of this business, access to capital, particularly for early stage ventures, has been raised as an issue for me, which is why I do support this Venture Capital Bill. But I would also say that the Labour-led Government are ignoring what is, effectively, the elephant in the room, with regards to the changes that they have made to labour laws, to the sudden rise in the minimum wage, and other uncertainties that they have engineered into the small business environment, which has led to a sustained loss of confidence across the small business sector. And that loss of confidence is based mainly on Government policy. So I speak to small businesses from Northland to the South Island and all points in between, and there are some very common threads coming through.

Yes, there is an access to capital that is being addressed in a number of ways. There are a number of sources of capital now, ranging from banks, other lenders, private institutions, and now we have this Venture Capital Fund proposed—and that is a positive thing for small business and start-ups. But on the negative side of the ledger, there is a real impact of the sudden rise of the minimum wage, particularly, I have observed, in the services industries, including hospitality but also retail, which is also experiencing a number of other pressures and competitions, particularly with regards to online trading. And, of course, in the hospitality business, Uber Eats is making a fundamental and disruptive change to that industry. That is what business is all about; it is about change. But it behoves a Government not to add to those uncertainties in the way that this Government is.

So I speak to people in hospitality who have extremely busy cafes and restaurants but they’re no longer taking a drawing or a wage themselves because that portion of their net profit has now been eaten up in other costs which have been brought in by this Government. So we’re now finding business owners not even taking drawings for themselves and covering shifts, which means it is having a negative impact on their private and personal and family lives, and I and my colleagues see this around New Zealand. There has been no recognition by the Government of these factors.

However, the availability of venture capital funding is a positive. When I say “However”, I want to draw the House’s attention to the change that was made in the select committee process, whereby the Minister can now direct the Guardians of New Zealand Superannuation to give regard to the Government’s commitment to an inclusive economy.

💬 Dr Duncan Webb: That’s a great idea.

Now, it seems to me that contrary to members on the other side of the House not as well connected into the business community who think this is a wonderful idea, I differ in that view. I think that there is something a little dangerous, there is something a little concerning, around ministerial intervention in a capital fund, particularly when it is a capital fund for people’s superannuation. So I think anything that impinges on this fund’s independence is something that should not happen. I would urge, in the committee stage, the Minister in the chair to listen—listen—to members’ views as we go through the committee of the whole House stage.

Yes, sure, a venture fund is a good thing to have, but what New Zealand really needs is certainty. It needs labour laws which make sense, labour laws which don’t impose restrictions on the employment relationship between the worker and the employer and which has taken us back 40 or 50 years in terms of labour relations. A regime in small business—

Order! The member’s time has expired.

There has never been a better time to launch your own tech start-up company here in New Zealand. Why? Well, just as of last week, we heard that the Reserve Bank was keeping the official cash rate at a very super low 1 percent, which means that if you’re going to borrow money, now is a really good time to do it. Why else? Actually, the Government wants to be part of that ecosystem too, which is the premise for this. The Venture Capital Fund is going to help to assist in that ecosystem. At the moment, we’ve got a whole lot of help down one end, if you’re a start-up business and you want some seed funding; we’ve got lots of agencies spread far and wide around New Zealand that can help you out. But there comes a time, when, actually, you cross an invisible boundary, when you actually need to spread, you need to grow, and you need to expand your business, but that capital isn’t quite there.

So that’s what this fund does. It ensures that our start-up companies have got somewhere to go, that they don’t need to head off overseas and sell all their intellectual property to the highest bidder over there. In fact, this is a great thing for our tech sector in New Zealand—and isn’t it brilliant, because we’re developing a great reputation in the tech sector. In fact, I’ve also heard that it’s taken over as New Zealand’s third- largest export sector, earning us more than $12 billion in revenue in the last financial year.

We can, here in New Zealand, boast a series of privately owned New Zealand start-up companies that are worth more than $1 billion—the likes of Rocket Lab, the likes of Xero, the likes of Pushpay. These are businesses that started here in New Zealand with an idea, and what they needed was somebody to back them. So that’s exactly what we’re doing through this bill, as the Government; we’re stumping up $300 million so that we can send a really clear message to those start-ups, the techs, the innovators, to say, “We’re here for you, we support you.” Yeah, it’s risky—because new ideas are risky. If it’s a safe business, you’ll no doubt find some nice, safe investors that like a good, safe investment, but, actually, there is absolutely an argument for looking after start-up businesses, tech businesses, that are on the frontier of new stuff. We know that disruptive technology is taking over our country. It’s taking over the world. We need to be part of that, and, actually, if we just keep doing what we’ve always done, then we’re never going to get a slice of that pie.

At the moment, we’ve got some real innovative businesses here in New Zealand that are doing just that. But what do they need? They need that investment. They need a Government that stands next to them and says, “You know what? Yeah, it’s risky. We’re not sure if this venture is going to work over here—if this business plan, this idea, is going to work. But, actually, we’re going to take a gamble, and, hopefully, we can get our settings right.”

Just today, we were talking to Callaghan Innovation in our select committee, and what a brilliant job that they do. But, actually, they are going to be very excited that they’ll be able to make sure that they can hand over some of these start-up businesses so that they can access that kind of capital. Callaghan Innovation do a brilliant job around the country. They’re partnering with all of these organisations who are at the cutting edge of development—tech start-ups, software, and all of that kind of stuff. New Zealand Trade and Enterprise also do a brilliant job in that space, making sure that we connect all of our New Zealand businesses with overseas, whether it be investors or other businesses, to help them to develop their idea.

But what we’ve heard time and time again from people within these organisations, these Government departments, is, actually, we need to make sure that we’ve got the money to be able to pathway people into opportunity, and that’s exactly what this fund is doing.

It is a really exciting time for New Zealand: a great opportunity for any young person who has ever, ever dreamed about creating a start-up and also taking on the world. So that’s why I wholeheartedly support this bill and commend it to the House.

Thank you very much, Mr Speaker. We’ve heard this afternoon that this Venture Capital Fund Bill will establish a new $300 million fund, and, of course, it will. But sitting here, as I have for the debate this afternoon, you’d almost think that it’s $300 million of new money, such are the self-congratulations that are going on opposite in the House. Of course, it’s not $300 million of new money—$240 million of it is coming from the New Zealand Superannuation Fund, and a further $60 million is coming from the Venture Investment Fund.

I do just want to touch on a couple of points about that $240 million that’s coming from the super fund, because what it’s doing, by bringing it into this new fund, is actually putting some additional obligations or additional requirements on it with the oversight of Government, and, certainly, with the oversight of the Minister.

In one of the amendments that the Finance and Expenditure Committee has made, which is an amendment to clause 35, it says in there that the Minister can now direct the Guardians of New Zealand Superannuation to give consideration to the Government’s commitment to an inclusive economy in its investment decisions.

I don’t know about other members, but I actually find that quite chilling. What they’re doing is they’re taking $240 million from the Superannuation Fund, which is set up to try and gain as much money as it can to fund future super obligations, and instead they’re diverting it off into another fund, which is going to have ministerial oversight, ministerial direction, which will allow for a Minister to give guidance or direction to the Guardians to then put it into things that fit with the Government’s economic policy.

In fact, that’s spelt out quite specifically in the bill as well. Not only is it in relation to a commitment to an inclusive economy; it also refers to the Government’s commitment to a low-emissions economy and also the Government’s wider economic policy.

I have concerns about that, because what it means is that you can have a future Minister—and I’m not suggesting that Ministers opposite might do this, but you can have a future, I don’t know, Green Party Minister—who might determine that, actually, the Government’s economic policy now is for no economic growth, because we want to hear this, I don’t know, great leap backward—and that’s something that they used to advocate in the past. If they were to do that, and they were to say “Right, we now want to have zero or low economic growth in this country because we want to pursue other economic outcomes.”, that means that, actually, this fund will not be making an economic return. It will be set up with the explicit purpose of diverting money off into other things, other projects that the Government of the day might favour, without actually funding things that will get a return.

I now want to cover off some of the submissions that were made on the bill, and one of those came from—where is it?—the Guardians themselves, who have said that the Provincial Growth Fund (PGF) and the Green Investment Fund are exempt from paying income tax and that this bill should be as well. I unfortunately didn’t sit on the Finance and Expenditure Committee, that considered this bill, but that is one question I’d like to raise with the Minister during the committee of the whole House, which is: if funds like the PGF and the Green Investment Fund are not going to be subject to income tax, then why would this fund be subject to a tax as well?

During his contribution, Mark Patterson referred to this as being just part of a wider economic strategy, and that made me laugh a little bit, actually, because what it seems to be—what we seem to have from this Government, actually—is when there’s anything to do with the economy, it’s either a negative or it’s throwing money at the problem. Their proxy for good policy seems to be simply establishing funds or to set up new funds to throw money at the problem. But it’s unfortunately not a proxy. They can’t simply bring in $3 billion funds, in the way that it is with the PGF, or $300 million funds, as it is with this, as a proxy for good policy. We see that, actually, when we look at economic confidence and when we look at farmer confidence. That’s now flowing through to economic growth. That’s flowing through to job growth, which is now flat-lining. In fact, in some parts of the country it’s going backwards. Unemployment in the Ashburton District, for example, has now tracked up for the first time in several years—1.7 to 1.8 percent. That’s seeing a real impact, actually. Instead of doing the real work—instead of doing things that will actually move the dial and grow the economy—they’re setting up small $300 million funds of existing money—not even new money; existing money—and that seems to be their proxy for economic growth.

However, as has been heard on the side of the House this afternoon, we will be voting for the bill because we do see it as a very small tweak, a slightly positive change. As my friend and colleague Brett Hudson pointed out, it was the one positive economic announcement that was made in the Budget. We on this side of the House actually think that we should be trying to encourage the Government to take on really good economic policy and really, really good ideas. So, in the spirit of encouraging them to do that, we’ll be voting for this bill, and we hope that encouragement leads to some better economic policy in the future.

Thank you. Look, I love Thursday afternoons, with the Opposition getting tired and grumpy. They really need their afternoon tea. The funny thing is I don’t think they’ve read the select committee report, because it says that the Finance and Expenditure Committee examined the Venture Capital Fund Bill and recommends that it be passed with the amendments shown—unanimously, it was. Here we have them chipping away at these suggested improvements—fantastic improvements, they were, from a fantastic committee—that they agreed to. So perhaps they should chat amongst themselves before they come to the House.

This is a great piece of legislation—yet another building block in this country building a strong, sustainable long-term economy, not one that’s built on the back of overseas speculation and immigration but one that is built on genuine investment in a productive, forward-looking economy. We know that New Zealand has low productivity levels. That’s what the OECD report that Willow-Jean Prime was referring to said. They said, “You know what you want to do? You want to invest in innovation.” We also know—we heard very good evidence in select committee—that there was a gap: a real gap, not in the initial start-up, not in the few hundreds of thousands of dollars it takes to start a business, but in the $2 million to $10 million or $20 million that it takes to really take off.

You know, I was at the Westpac Champion Business Awards in Canterbury not long ago—best attended business awards in the country in the best area in the country as well. There were some really good businesses there. Ethique is a great business that creates sustainable cosmetics without using any plastics. Fantastic company—won the small business area. But it’s one of those companies that is poised to go worldwide, and it can’t hesitate. It’s exactly the kind of company that would benefit from this, and benefit because we would expect the Guardians of New Zealand Superannuation to enter into a funding arrangement or an equity arrangement, which is fair and reasonable, not rapacious. That’s the problem a lot of these businesses are having. They are having to go out to market and, essentially, sell their soul to get into the next stage of their business. But doing it—having a market leader that’s filling the gap and then creating a fair and reasonable venture capital market is what we absolutely need.

I find it extraordinary, the suggestion that the members of the other side have suggested: that it’s inappropriate that the Minister indicate that the Government’s commitment to an inclusive economy is not a reasonable thing to direct. The fact is—let’s face it—that we have an exclusive economy, an economy that excludes huge parts of our population, whether that be in wealth, race, or gender. The fact that we want to say that, for example, we have Treaty partners and that when we’re investing money, we want to recognise that ongoing relationship, that obligation to walk side by side with Treaty partners—if that’s not a reasonable suggestion, what is? That’s an absolutely reasonable suggestion—and our Pasifika cousins as well, and women in business as well. They’re all great ideas, and that’s why the committee unanimously adopted that recommendation.

I’ll tell you what I’d commend: I’d commend that the Opposition read this legislation before they say one thing and then commend it to the House. This is a great step forward to a sustainable, long-term, growing and productive New Zealand economy. I commend it to the House.

Bill read a second time.