Venture Capital Fund Bill, New Zealand Superannuation and Retirement Income Amendment Bill

It’s my pleasure to speak on this Venture Capital Fund Bill. If you look back at the Budget this year, 2019, this is the only measure that could be arguably, possibly described as a pro-growth policy. Everything else was just extra spending, but you could argue this one. We intervene in the New Zealand economy to invest a lot in terms of the production of scientific ideas and innovation. We spend about $1.5 billion a year on science more broadly. We generate a lot of ideas through the university system. But, as a country, we’re relatively unsuccessful at translating ideas into successful large companies. There’s a few that go, and the private sector develops those very well. So the question is: is there a shortage or a limiting factor in the shortage of capital available for what’s called series A and B funding rounds for the development of new companies in the economy?

There is an argument that there is a difficulty in accessing that funding, and so this fund—which puts $300 million of taxpayers’ money into a fund to co-invest in such companies—we think is something that could make a difference if it’s done very well. So we’re prepared to support it.

I suppose the broader point that I’d make, however, is that it’s part of a wider Government economic policy which has been failing this country. If we look back at the situation we’ve got ourselves in today, we’ve got a Government that inherited a rapidly growing economy with surpluses as far as the eye could see and, within two short years, has turned that into a slowly growing economy in deficit. That transformation is remarkable. The absence of any clear economic growth strategy from this Government—we’re starting to reap the whirlwind of that in very short order. I don’t think anybody would have predicted that the turnaround could be as quick as what we’ve seen today: two broken promises in terms of the debt and also going into deficit.

When I look at Budget 2020, which follows on from the Budget that brought in this venture capital bill, when you look at the priorities—just transition, a future of work, Māori and Pasifika, child wellbeing, and mental wellbeing—they’re all very worthy, but there is nothing about growing the economy and nothing about economic growth. That’s what’s missing from so much of what this Government is about.

With the previous speaker, Chlöe Swarbrick, you’ve talked about saying that growth isn’t everything. Of course it’s not everything. People’s happiness in life is related to family relationships, the quality of our environment, and a whole host of things. The economy is not everything, but it’s important. If growth is slowing, that’s fewer opportunities for New Zealanders to look after themselves and their families, to spend on quality investment and healthcare and all those sorts of things that we like.

This Venture Capital Fund may, if it’s well organised and well operated and well run, make it easier for start-up New Zealand companies to get access to capital to grow in early stages. We hope that some of them will succeed. Many of them won’t—that’s the nature of venture capital. So we’ll be watching with great interest as to how this develops. But, if you are serious about growing the economy more broadly, this is by no means the most important thing. It’s about getting the basic settings right for the economy that can restore confidence so that people will invest generally.

Why investment generally has been drying up in this economy is particularly in relation to three things, really. The Government has driven up costs significantly right across the industrial relations space. Secondly, it’s created an enormous amount of policy uncertainty in every, every angle that you look at. And, thirdly, it’s demonstrated rank incompetence in the way that it carried out KiwiBuild and particularly infrastructure.

So we’ve heard big announcements today about infrastructure, but for two years this Government has done very, very little indeed. So the slow tram has still not started down Dominion Road, and it never will. So that’s what’s making people nervous about things. So National supports this bill but we do make the point that if you really want to grow the economy, there is a lot of other things that need to be done. Thank you very much.

Thank you, Mr Speaker. It’s an absolute pleasure to stand and speak to the Venture Capital Fund Bill. I think this bill is going to have a huge impact and significantly help grow the New Zealand economy, so I have no hesitation in commending this bill to the House.

It’s my pleasure to take a brief call on the third reading of the Venture Capital Fund Bill. I do reflect on what the previous speaker and our finance spokesperson have said. This was really the only positive growth item in the Budget, and National is supporting it. Three hundred million towards a venture capital growth fund is a good thing to do, but, as the Hon Paul Goldsmith said, the real question is how it’s spent and the efficiency of it.

I’d put that against some of the stats we’re seeing. Even today, some stats were revealed that show that the economy is not doing as well as it was. When this Government came into power, job growth was 10,000 a month. It’s now down to 3,000. GDP growth is now down to 2.1 percent—2.1 percent. But at the end of the day, there are some things that can be done for businesses as they transition in a growth phase, and as they go from a small company to a larger company. If we don’t want them to go offshore, then there is an ability to help. Three hundred million sounds like a lot of money, and it is; 220-odd million is coming from the super fund; 80 million is pretty much a new investment.

We have raised some issues about how, in fact, the Minister can direct the governors of the super fund as to how they manage things. We think that’s dangerous, but, on balance, our side is supporting it. I support it. I think it is a useful addition to the New Zealand economy, and I’m happy to commend it to the House.

I call David Seymour—five minutes.

Well, thank you very much, Mr Speaker. I rise on behalf of the ACT Party in sole opposition, it would seem, to this abomination of a bill—a house of cards built on a series of fallacies. One thing all New Zealanders want is to be richer, to have a higher level of productivity so that they can work less, earn more, and enjoy their life to a greater extent. That is what’s agreed upon. But in a pathetic series of contributions in this debate over the last few minutes and hours, we have heard absolutely no justification, logic, or explanation for why taking $300 million of taxpayers’ money and putting it into a venture investment fund is going to help us achieve that goal.

So we understand what the goal is and we understand that rhetorically, at least, taking some taxpayer money and putting it into some businesses sounds like something that might make us more productive, more sophisticated in terms of our economy, wealthier, and achieve our goals. But there is no explanation of why the policy should work. Nobody that is supporting this bill in this House has gotten up and actually given us the explanation.

The first fallacy they might want to address is the old French economist Bastiat: “Ce qu’on voit et ce qu’on ne voit pas.” There is what is seen and what is not seen. Everybody stands up and talks about how all the money, the $300 million, will be used, the companies that will take it, and what they will do with the money. They all want to talk about what is seen. Not one of them talks about the fact that in order to do as much, the same money—$300 million—has to be taken off taxpayers who could have used it to achieve their own goals.

As soon as one confronts that fallacy, suddenly the benefits evaporate, unless somehow the Government has greater knowledge about how to invest taxpayers’ money and what to invest in than those taxpayers do. I say to the people clamouring to get their hands on this money: if you find it hard to get taxpayers to invest in the business, well, I don’t mean to be rude, but maybe they are trying to tell you something. Because the fact is the only reason that this money will get invested is not because it’s a good investment; it’s simply because it is politically fashionable to do so.

And here comes the third fallacy. The second one was that politicians or the guardians of this fund have a better idea how to spend taxpayers’ money than the people who earned it, but the third fallacy is simply the idea that somehow we’re going to get better incentives for people spending other people’s money. So the first problem is they’ve got to take the money off somebody else. The second problem is that they have no knowledge of how to better invest it, and the third problem is they have worse incentives.

The incentives that people have when they’re spending other people’s money is ultimately to do what is politically fashionable. We’ve already heard it in this debate. The Green Party thinks you shouldn’t invest in certain companies because they think those companies should be deemed politically unfashionable. The incentives for people investing this money are not to put it where it’s going to best satisfy the customers of the companies getting invested in, the incentives are not to get the best return for the taxpayer; the incentives are to do what is best politically.

For all those reasons, you have got other people’s money being spent by people who have no greater knowledge about how to spend it, by people whose incentives are actually more political than economic. It’s a disaster, and what’s really incredible is that ACT is alone in opposing it, because it’s one thing to criticise the Government for doing it. In a way, they don’t know any better. The truth is if they knew what to invest money in, they wouldn’t be doing this job. But what is truly shameful is to have the leader of the National Party on the black and white tiles complaining about Government waste, while his colleagues are in here trying to justify—and badly—voting for this bill. ACT proudly opposes this public policy abomination.

Thank you, Mr Speaker. I am really proud to rise and talk about the Venture Capital Fund Bill. So everything the previous speaker said, I totally disagree with, and I think exactly the opposite, basically. This is a business-friendly bill. I commend this to the House.

I rise in the slightly strange position this afternoon of agreeing with Chlöe Swarbrick and disagreeing with David Seymour, which is a slightly foreign position for me to be in, but I’ll do what I can to disagree with Chlöe Swarbrick’s contribution, because there were a couple of elements in it that I did disagree with.

I do just want to cover off, of course, that we are supporting this bill, as Mr David Seymour has pointed out, because we do see it as one of the few pro-growth measures that was in the Budget, and we do see a role for Government in being involved in venture capital, involved in a venture capital ecosystem.

But I did want to point out some of the points that Chlöe Swarbrick made in relation to clause 35 of the bill, where she talked about the fact that Guardians of New Zealand Superannuation must have regard to the Government’s commitment to a low-emissions economy, the Government’s commitment to an inclusive economy, and the Government’s wider economic policy, as specified in the direction.

I have concerns about all three of those aspects of the bill, actually, because what it essentially means is that the Guardians will be required to look at other things other than just growth. They’ll be required to look at things that will yield lower returns than if they went for higher returns. My view is that, certainly when it comes to our superannuation and in the money that we are going to rely on in our retirement, the Guardians should be looking for, ideally, the biggest returns they can get, rather than other considerations.

But the two concerns I have in particular with that are that she actually didn’t fully explain what that clause means. It’s because it’s not just in relation to the guardians having regard to those things. It’s that the guardians have to have regard to the directions from Ministers. So what it means is that a Minister of the Crown would be able to direct the Guardians to have regard to a low-emissions economy, an inclusive economy, and to the Government’s wider economic policy. I have concerns about that, because what it would mean is that a future Green Minister could say, “Right. Well, from now on, growth is no longer our consideration. We’re not worried about how much the Superannuation Fund or this fund actually yield. We’re only concerned about climate change mitigation, or only concerned about ensuring that the wealth disparity in New Zealand reduces. We’re not actually worried at all about getting higher returns for our superannuation.” So I do have concerns about those aspects.

Earlier in the debate Mr Mark Patterson said this bill would “plug a hole in the New Zealand economy”. I thought about that afterwards, because I think to myself, “Well, what an awfully large hole this Government’s dug themselves in when it comes to the economy.”, because what we’ve had this afternoon or earlier today was the HYEFU, which is the Half Year Economic and Fiscal Update, come out. What that showed is that we’ve now got a projected deficit for the first time in quite a few years after having this Government come in just a couple of years ago, two years ago. And at the time Treasury were projecting, I think, from memory, surpluses out to 2032, which is about as far as they can project.

So it’s quite staggering now that we have this situation just two years in that we have such low growth that the Treasury are now projecting that we’re going to have a deficit for the first time. So for Mark Patterson to jump up and say that in some way this $300 million fund is going to plug that hole, I find quite staggering, because, as my colleagues on this side of the House have pointed out, it’s not actually $300 million of new money at all; $240 million of it comes from the Superannuation Fund, which, as I pointed out, should be trying to get high yields and higher returns for our superannuation, and $60 million of it comes from the Venture Investment Fund.

So we’re standing up in this House, debating this legislation about $300 million and a brand new fund, when actually it’s not $300 million of new money at all. All it is is $300 million dollars of reallocated money that, as my colleague Mr Seymour has pointed out, has come from taxpayers. So it’s not as if this is a brand new wonderful fund which is going to—

💬 David Seymour: What does the member think of that?

Mr Seymour has actually almost talked me into voting against this bill. I won’t, though, because we are trying to encourage the Government to come up with pro-growth policies. We do see this as one of the very few pro-growth things that the Government has proposed. So we will vote for it. But I do have concerns about those things, and I do, in particular, have a concern with Ms Chlöe Swarbrick, who wants to go even further than those ministerial directions. Thank you.

Mr Speaker, just a short call to say that the double-talk coming from the opposite side is astounding—you know, they double-talk all the time about the bill not being on target but they’re 100 percent behind it—because they created the hole that our New Zealand First member was talking about earlier. A hole in the New Zealand economy? Absolutely, no doubt about that. A hole created because of the nil investment in terms of the New Zealand economy over nine years. And that’s why we’ve got a great investment from Minister Robertson.

💬 David Seymour: What does the purpose statement in the bill say?

We’re talking about a $12 billion investment, Mr Seymour, in terms of infrastructure—a fantastic investment from the Minister of Finance—and Mr Seymour should know, as the Opposition should know, that it’s not just about numbers, numbers, numbers. It’s about people, people, people—something that the National Party forgot about a long, long time ago. Basically, the National Party are a disgrace, and the reality is that they support us because they’re double-talkers. The public know that, and that’s why they’re going to lose next year’s election.

I’m very happy to support this bill. Kia ora.