New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill

I’m delighted to rise to this third reading of the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill. It’s been a very disruptive sort of debate, but, finally, we’ve got to this point, and we will actually get this through and into law.

This is really about the Guardians of the New Zealand Superannuation Fund being able to take controlling interests in entities other than things like real estate, which they’ve always been able to do. Currently, that is prohibited by section 59 of this Act. Really, what this bill is about is reflecting the growing size and maturity of the New Zealand Superannuation Fund. It’s something that’s supported around the House, which is great, it’s non-controversial publicly—I think we only had six submissions on it—and the bill, frankly, is common sense.

It’s interesting that when we started this reading, the fund scale was about $72 billion to $74 billion. The last I looked this evening, it’s getting closer to $75 billion, so if we keep going on, it’ll be even bigger. Removing section 59—at the moment, that section constrains the Superannuation Fund’s ability to invest in some New Zealand entities, including in major infrastructure projects, and, really, what this is about is it’s allowing our Superannuation Fund to invest more in our present while it’s also investing in our future. It’s spreading its wings.

Just in passing, I’d like to mention the other major Government-aligned investment vehicle, which is the ACC, which currently has about $47 billion under management. So that’s quite a lot between the two of them. Both of them are dealing with future liabilities on behalf of New Zealanders, but both are investments in our collective future but also in our collective present if we manage them well.

But we’ve heard some discussion, during this debate, suggesting investing in particular projects within New Zealand, and while that might be great to do that, what we cannot do is we cannot direct the fund to do that. The Superannuation Fund must never be subject to instructions by politicians for whatever reasons. Section 64 of the Act is very clear on that. The Minister can give advice, can give directions, but only having consulted the Guardians, and the Guardians don’t have to take any notice, effectively, only just say what they’ve done in response, or not done in response.

But, during the second reading, our Green colleague across the way there Dr Lawrence Xu-Nan leaned into this issue, and I’ve got to say that I wasn’t particularly comfortable with that, because he said “we really would encourage the … fund to be guided in their activities … to divest from fossil fuels and the requirement for a portion of the fund to be targeted towards social impact investments, including emission reduction, as well as aligning with the Government’s goal of net-zero carbon by 2050.” They’re all very good things—all very good things—but no, no, no to any interference in the Superannuation Fund Guardians’ ability to do their job.

But I was pleased to see the same member in this third reading express some confidence in the fund’s environmental, social, and governance (ESG) credentials, and I’m going to come back to that later on. So I hope the Green Party does realise, through this debate, that, actually, it can trust the Guardians of the Superannuation Fund to do a really good job, not only in terms of giving us a good return but also in terms of responsible investment.

Minister Willis, when introducing this reading, talked about nation-building infrastructure, and, yes, there is an opportunity there. The Guardians, at the moment, invest about 14 percent of the fund in New Zealand assets and only about 1 percent of it in New Zealand infrastructure. However, that’s actually overweighted, because the fund’s own annual report says that a benchmark portfolio would only be about 5 percent weighted in New Zealand. So it’s actually already doing that, and diversification is a fundamental principle of good investment. In fact, the fund’s most recent annual report is titled The Wisdom of Diversity, and they were talking not only about people but diversification of investment. The fund is always going to have the substantial majority of its investments in other parts of the world. But let’s not forget that even if they’re investing in other parts of the world, that is drawing income into New Zealand, it’s helping our balance of payments, and that is contributing positively to our standard of living.

I also wanted to note that the fund makes money, in considerable part, through this thing called capital gain. That’s gain in the value of stocks, shares, real estate companies, etc., and that’s the same as KiwiSaver. They gain a lot of their return, or our return, through capital gain. It’s the same as many Kiwis do in investing for our collective future.

Capital gains are not evil. They occur over time and through inflation. They’re nominal. They are about protecting and enhancing the real value of assets over time, and achieving capital gains is not without risk and cost. Capital gains incentivise saving and investment, and that is, without doubt, a good thing, certainly if you want to grow the economy and help address housing-supply shortages. Indeed, without capital gains, many investments simply would not happen. Incentivising investment rather than consumption is also a good thing for our balance of payments, which is one of our greatest financial weaknesses, especially because we keep borrowing from the rest of the world, day after day, to pay for our living standards.

But the fund is already doing some excellent nation-building. It invests in productive farming, and since 2019, under the Labour - New Zealand First coalition, the Guardians have been responsible for the $300 million Elevate New Zealand venture fund, which is about growing emerging businesses, which I think is a fantastic thing. But, fundamentally, the fund is about delivering the best possible risk-adjusted return. Now, that may or may not allow investing in nation-building infrastructure, but the judgment must be made by the Guardians—not by politicians trying to put weight on the Guardians, but by the Guardians.

In the New Zealand investment environment, if the returns in New Zealand are poor, if we could collectively create an environment that the Guardians don’t think is worth investing in, guess what! They and a whole lot of other people will invest somewhere else, and that is not good for the future of New Zealand, because capital is very, very mobile. So the better our governance, the better our stability, the better our integrity, the better our protection of property rights, the better our productivity, our infrastructure, our education system, and our tax and our regulatory systems are, the more attractive we are not only to the super fund but to all investors, whether they are New Zealanders or overseas people.

But, back to the fund. The independence of the Superannuation Fund and its Guardians is essential, and section 58 on that is absolutely clear. It says that “The Guardians must invest the Fund on a prudent, commercial basis and, in doing so, must manage and administer the Fund in a manner consistent with—(a) best-practice portfolio management;”. They need to “[maximise the] return without undue risk to the Fund as a whole;”, and they must “[avoid] prejudice to New Zealand’s reputation as a responsible member of the world community.”

I’d like to say that we are in very, very good hands, and a little history might demonstrate this very, very well. The fund’s clear objective is to offset the growing cost of superannuation on the taxpayer. But there are a lot of assumptions built into this. The fund is projected to pay, on average, about 16 percent of the total cost of superannuation—get this—between 2040 and 2090. So I know Tom Rutherford spoke earlier about saying this is future stuff, but, Tom, I can assure you that you’ll be benefiting from this a long, long time before that.

Tom Rutherford: I can’t wait—after my 40 years here!

ANDY FOSTER: I think you can wait for a little bit.

The Government made an initial investment of $2.4 billion in 2003, and the fund has performed exceptionally well. The average annual return since then has been 9.9 percent before tax but after costs. The Government has invested just $26 billion since 2003, and it’s now worth, as I said, approaching $75 billion. That’s a pretty darn good return. It’s $40 billion more than the cost of the debt borrowed to invest it. So I would say to the folks, particularly on this side of the House, don’t take another holiday from investing in that fund, because it’s been a good investment. The return is $16 billion to $17 billion above the passive benchmark fund, and we need to keep on with it.

In short, the Superannuation Fund has delivered an outstanding performance, and, wait, it gets better. The fund has received a large number of awards, and this goes to the ESG side of things. They fall into three areas, and together they tell you that our Superannuation Fund is right at the top of the game. In each of the last three financial years—2022, 2023, and 2024—it is ranked the world’s top-performing sovereign wealth fund—top-performing sovereign wealth fund—based on a 10-year return. So over 10 years, it has been the best in the world. That is something to be very, very proud of. It’s also an exemplar recognised for quality of communication—again, over a whole decade of performance. Also the fund is very highly regarded as a responsible ESG investor with a suite of related awards.

So I think the fund is performing exceptionally well. Really, what I’m saying is we should keep on relying on the legislation we’ve got there, which is to let the Guardians of the fund get on and do the job that they are doing so well.

Look, I’d like to make two final points. First, it was really interesting to look at a list of sovereign wealth funds. Of the 88 funds I looked at, 37—including our Superannuation Fund—are described as “non-commodity”, 14 were based on minerals, and 36 were based on oil and gas, and the biggest of those, of course, were the Norwegians, who have a very, very high standard of living. They have the highest use of electric vehicles, but where do they get a lot of their wealth from? Selling oil and gas to other people.

The last thing I wanted to say is that during this third reading—again going back to Dr Lawrence Xu-Nan, he touched on superannuation eligibility, and he said that it would be good if recent migrants were eligible for superannuation more quickly than the 10-year residency requirement we’ve currently got. Actually, he’s slightly wrong on that, because this bill actually says that it’s between 10 and 20, depending on the age of the person that’s come in. But I completely disagree with him, because if we start doing that kind of thing, then the health and superannuation costs will really count against migrants of, should we say, more mature age being attracted to New Zealand.

So I commend this bill to the House, and I’m looking forward to it being passed into law tonight. Thank you.

Thank you, Mr Speaker. It’s a pleasure to support the third reading of this bill and, in broad terms, to agree with my colleague across the House. Superannuation is the only benefit that’s not means-tested. Its near universality is admirable, but it’s not perfect. But we’re talking about widening the power of the Guardians of New Zealand Superannuation, not about eligibility, today. It’s strange—almost an anomaly—to do a better job within the existing economic system without a capital gains tax, a wealth tax, nor an inheritance tax. None of those are changes we’re going to see on Thursday, so I don’t have to worry about how many sleeps it is till Budget day.

But I would like to disagree with the points made about leaving it totally up to the Guardians. At the moment, there are a number of existing excellent exclusions. Despite the connections with the tobacco industry, I have not seen any member of the coalition arguing that we should get rid of the exclusion that stops the New Zealand Superannuation Fund Guardians investing in the tobacco industry. I have not even seen Ministers from parties that are not particularly keen on frogs trying to get rid of the exclusion on companies processing whale meat.

Tom Rutherford: All right, come back to the bill.

CELIA WADE-BROWN: These are exclusions that exist now, and we would have liked to have added more exclusions. That is absolutely the topic of the bill, and it could have been the topic of improved amendments. I haven’t even noticed people bringing forward the idea that it’s radical that the Guardians do not invest in developing settlements in Israeli occupied territory. I just think it’s completely inconsistent to say we want them to do the total judgment, we don’t want any thought about investment in fossil fuels or more renewable energy when we’ve already got some really strong exclusions. My suggestion is that certain members on the other side of the House have not read the existing bill.

I do think it’s important that we get the best return and, like reinsurance councils, I’m sure that these long-term investment funds will not wish to invest in stranded assets and will almost certainly continue their very good returns by not investing in coal or gas or oil. We also understand that the New Zealand Super, like most benefits, although super is not being cut, superannuitants are not being asked to prove that they’re still over 65 every year, as people receiving disability benefits are. We think it is useful that increasing the effectiveness of the Super Fund may go a little way towards, in the long term, improving the options for increasing superannuation.

It is a pleasure for once to speak to a bill that is going to have unanimous agreement, if not unanimous comprehension, in this House. Thank you.

Well, thank you very much, Mr Speaker. It is a pleasure to speak on the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill. I’ll come back to the “controlling interests” in brackets a little later.

We have a great Super Fund. It’s actually got $60 billion to $70 billion worth of assets now—

Andy Foster: $75 billion.

STUART SMITH: $65 billion?

Andy Foster: $75 billion.

STUART SMITH: $75 billon—OK, it’s gone up. That’s inflation for you. I knew it was bad, but I didn’t think it was that bad. Crikey! Well, there you go. I just looked at my speech notes from the previous time, so clearly either that was a long time ago or inflation really is bad. The Super Fund is a huge asset for New Zealand. Regardless of whether there’s $4 billion or $5 billion in it somewhere else, it is actually a great asset for New Zealand.

What this bill seeks to do is to allow the Super Fund to be able to take a controlling interest in a company. Now, what does that mean? What is a controlling interest? Well, I went to the Companies Act 1993 to find out what that is, and “control” is defined in section 7. I won’t bother you with all of the words, but, basically, it really means that a company has the ability to make the appointments on the board of the company without anyone else’s support.

But I think it’s a little bit more complicated and nuanced than that, in that having up to 20 percent of the shares in a company may well be, in some cases, defined as a controlling interest because all of the other shareholders had very small parcels and aren’t able to conglomerate together in a unified way, whereas a large entity like the Super Fund holding 20 percent could be a controlling interest. So they never got in that situation because they never sought to do that, and that was because they were set up originally to make investments for a return on those investments and not to own companies.

While you could understand why they would be required to do that, time has moved on. Not only has time moved on for the Super Fund but in New Zealand, in our case, we actually now have very shallow equity markets and we lack capital and, actually, we have one of the poorest foreign direct investment levels in the OECD.

So what that means is that companies in New Zealand that want to grow and need capital to do so have got limited choices. Yes, they can borrow money, absolutely, but capital and taking equity stakes in companies—often what comes with the equity is the expertise and it enables those companies to grow.

As you know, I came from the wine industry, so I’m going to give you a bit of a wine industry example. The wine industry would not be what it is today if it were not for foreign direct investment. Those companies that bought investments and bought their capital and invested in New Zealand wineries also bought a route to market, a route to market that would be very difficult to build out quickly. In fact, it takes years to do that, and it particularly does if you’re going to sell at the top end of the market.

While New Zealand wines are not at the very top of the market as such, on the pyramid, they are right up near the top as relatively small volumes and at quite high values. To actually build a market in that sector—it doesn’t matter what the product is; that is a really difficult thing to do. I think that’s why foreign direct investment is really important.

But we still have this resource here in the Super Fund that has a lot of capital. I can give you an example of one of the potential capital investments that the New Zealand Superannuation Fund could invest in, which, if we hadn’t made this change, I think would be unlikely, and that is in the offshore wind project that they have been associated with, with Copenhagen Infrastructure Partners.

So if they’re partners and they’re 50:50 partners, is that a controlling interest? I’d argue it is. Anyway, I think that’s a huge project and it would be very difficult to see how anyone else in New Zealand could grow that. Copenhagen Infrastructure Partners don’t have to come to New Zealand. They have $300 billion dollars’ worth of investments and so they can invest their money anywhere; offshore wind is a big industry. But what makes it attractive for them to invest is being close to where the machinery would be built, and that’s in Europe predominantly or in the United States, and all the equipment to put these things in place. You don’t just go out there with a boat with a part of a tower and drop it over the side; it’s quite a complicated business. There’s a lot of associated machinery and skills that go with that, and having an offshore partner like that would be really helpful. But for them to come here, the hook for them was having someone like the New Zealand Superannuation Fund to be a joint partner with them and also having the ability to engage with the Government of New Zealand, because we don’t have any regulations around offshore wind, so I think all those things fit together.

The New Zealand Superannuation Fund doesn’t confine itself to—oh, by the way, I’ll give you some stats for that particular wind farm. Initially, it’s going to be 1 gigawatt—that’s what they think they would like to do. A gigawatt, for scale, is about the size of the Huntly power station. I imagine, though, that that 1 gigawatt they’re talking about is the actual installed capacity. If you have a capacity factor of something like 60 percent to 70 percent, you’re talking about 600 or 700 megawatts. So that’s quite a lot of energy, but it could potentially go to 2 gigawatts. So there’s plenty of area out there that they think suitable where they’re looking to put that in place, so that’s quite a significant investment if they come that way. Actually, I’d better correct myself. I did say $300 billion; they’ve got $25 billion, Copenhagen Infrastructure Partners, invested in offshore wind projects.

The Super Fund actually also invests in vineyards. They’ve bought some significant vineyard assets in Marlborough. They’re not making wine; they’re owning land and either growing the grapes themselves and managing that or getting someone to do that on contract. They’ve put some investments in that area. I’m pretty sure they’ve invested in Hawke’s Bay in apples, and I know they’ve invested in kiwifruit and I know they’re looking at investments in apples further afield.

So they are significant players in the New Zealand scene and it’s something that I think we should be very proud of, actually. We do have large companies like Cooperative, as it happens, like Fonterra and other entities like that—Air New Zealand as well—but they are busy in their own businesses, not looking to broaden out their investments into other fields and, therefore, to allow our economy to grow. Particularly now where we are, we have to move—we don’t want to do away with our agricultural roots, by any means, but we do need to take a tech focus now and build off those good agricultural-producing entities in New Zealand and industries that have really built our economy. We need to take the next step, and that next step is going to require money and lots of it and a really significant player that has the ability to attract the people with the relevant skills to manage and develop those industries that they invest into.

So I’m really very pleased to support this bill. I’d like to finish briefly—the former speaker, Celia Wade-Brown, I don’t quite agree with everything she says in terms of investments. I think investments should be made based on the return on those investments, not on what they’re doing. She made a reference to oil and gas, which I don’t agree with. It doesn’t matter whether I did agree with it or not; it should be for the investment company to decide what they want to invest in based on the fundamentals that they see in that entity. If they don’t like oil and gas, that’s fine; they don’t have to invest in it. But they shouldn’t be beholden to anyone else for their decisions as long as they’re within the law and they’re investing for the betterment of New Zealand. With that, I commend the bill to the House. Thank you.

The House is in somewhat—well, not even furious, but just solid agreement on this bill, that it is a good bill and that it should be passed into law.

I do want to remind the House of just some of the features of the New Zealand Superannuation Fund. I want to remind the House that for a long time it had and still continues to have a nickname. It’s known as the Cullen fund, and that is because it was set up originally by Michael Cullen, when he was the Minister of Finance, in order to ensure that we had sufficient funds, not to pay all of New Zealand’s superannuation costs in the future, but, really, to smooth out the cost of New Zealand superannuation and, in particular, to deal with what we think will be the peak years of demand on New Zealand superannuation when it has the largest impost on our Budget each year.

Now, at the moment, New Zealand superannuation costs about $19 billion a year. That amount is predicted to go up, and it will go up not just in absolute terms but as a proportion of the Budget each year. If we are to stick with universal superannuation, which has a huge number of benefits, and if we are to retain it at age 65—which is possibly not so important for people here in this House, where we do a job sitting at a desk and giving speeches and engaging in meetings, but it’s very, very important for people whose bodies are exhausted by physical labour—we need to find some way to fund superannuation out into the future, and that is what the Cullen fund helps to do. It was set up by Sir Michael Cullen and it has earned a substantial return, a return that was, alas, forgone in the years when the previous National Government decided not to keep on putting funds into the New Zealand Superannuation Fund.

However, the fund started again after the election of the Labour Government in 2017, and it now does control about $70 billion worth of assets. But the Guardians of New Zealand Superannuation are looking for higher returns. They are looking for ways to ensure that we continue to earn good returns on the funds that are invested and that is why it is now appropriate to enable them to take controlling interest in some entities, and this is precisely what this bill does.

The interesting thing is that the former Minister of Finance Grant Robertson, who got this particular piece of legislation going—when he was getting it under way, he consulted Sir Michael, sometime before Sir Michael died, about whether or not this was something that Sir Michael had had in his vision for the fund. Sir Michael did say that, actually, it was probably about time that the range of investments that the Guardians could make was actually expanded, and the reason for expanding it is primarily to ensure that the Guardians can earn a better return on the fund. It’s not to make particular investments because they happen to suit someone else here in New Zealand because they might build a bit of infrastructure or they might create a route to market, or whatever. It’s to ensure that the Superannuation Fund itself earns a decent return. That’s the objective of the Superannuation Fund.

So this bill simply enables all that. It enables the Guardians to earn a greater return. It is a good bill. It was started by the Labour Government before the previous election. It has been picked up and continued by the National - ACT - New Zealand First Government. It is a bill with which we all agree, and I don’t think there’s any further need to debate it. I commend this bill to the House.

I rise to support this New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill because it aligns with this Government’s plans to strengthen our economy and provide for our ageing population. The fund adds to Crown wealth, improves the ability of future Governments to pay for superannuation, and reduces the tax burden of the cost of superannuation on future generations of New Zealanders. Passing this bill will promote operational efficiencies. It will help ensure the New Zealand Superannuation Fund’s assets are being managed in the best way possible and provide benefit to all New Zealanders.

The New Zealand Superannuation Fund has been very successful, as we’ve already heard tonight. It’s grown and matured, and it’s at a stage where we need to take that next step to grow that fund further so we can sustain our ageing population. I was very, very impressed during the select committee annual reviews with the success of this fund and the huge potential that it has. We’ve already heard tonight that the fund sits at over $70 billion and is projected to reach $110 billion by the end of the decade. It really has a healthy return of 11.9 percent—so huge opportunity for investment. Removing the control restriction provides the Guardians with added flexibility around the implementation of the investment strategy. This approach is consistent with the Guardians’ mandate to invest the fund on a prudent commercial basis and, in doing so, managing the fund in a manner that is consistent with best-practice portfolio management.

I think there are big opportunities to invest here in New Zealand. We’ve heard many times that we’ve got a huge infrastructure deficit, so to open this fund up for more investment here will be great. It’s timely to take this opportunity to look at some of the investments we’ve already seen from the Superannuation Fund, and that’s opportunities in agriculture, where the fund has already been investing, as we’ve already heard a little bit tonight, from dairy investments to a diverse portfolio including horticulture, viticulture, and hops, with the portfolio exceeding about $1 billion—so, really positive for agriculture investments. And, of course, our primary industries have been struggling recently with a lot of red tape and regulation, so opening up more capital could be very beneficial. As we have already heard, and as my colleague here spoke about the wine industry, we actually heard from New Zealand Winegrowers just the other day. We see huge opportunity for investment in the wine industry. They see it as a $2.29 billion industry at the moment. It has grown by 13 percent, and the industry has actually grown from 35,000 hectares to 41,000 hectares. Hawke’s Bay, where I’m from, is a huge winegrowing region.

I would actually just like to commend also the chair of the Finance and Expenditure Committee, Stuart Smith, for his cellar door tasting amendment bill, enabling cellar doors to charge for tastings. It’s this type of legislation which supports our wine industry. During these discussions with the winegrowers, we also heard how supportive they were of some of our Government’s direction, which is about reducing red tape and regulation. It’s supporting water storage and, of course, infrastructure because getting bottles of wine to the port as fast as possible and out to the markets is very, very important. Coming from Hawke’s Bay, it’s heartening to see that we’ve got this Government investing in our roads of national significance and the four-lane expressway in Hawke’s Bay, which will get that wine to port faster. This is beneficial when we are investing in our infrastructure.

They were also very happy to see us out in the world, looking at more market access and investment opportunities, because, as we’ve already heard, capital investment in New Zealand, in our agriculture sector particularly, which creates a lot of our exports and wealth in this country, is really, really important. We need to be an attractive option for investors, and that is why this bill is really important. I talk about these industries because this bill will enable the Guardians to diversify investment. That’s not just offshore but it’s focusing investment at home here. We need to get on top of our infrastructure deficit, and opening up more capital opportunities will be positive. This is why I’m very, very supportive of this bill, and I would like to commend this bill to the House.

The next call is a split call—Helen White

Thank you, Mr Speaker. I am really pleased to take a call on this bill because I was on the Finance and Expenditure Committee as it was going through, and it was something that I learnt a lot about and I really enjoyed learning about, because it was really a story of great success and security for the country, and it started with Sir Michael Cullen setting up this fund. I want to end where my friend and colleague the Hon Deborah Russell ended, which is with the people who this will impact on, the people who work really hard and get worn out.

But I want to start at the beginning, because it is important that the fund wasn’t set up with this particular mechanism in it, because there was a cautiousness about the situation. Those Guardians have done a good job of being independent to making prudent choices, and they’ve built up a fund. They’ve, basically, frankly, run out of things to invest in, in lots of ways, without being able to move to a controlling interest. Now, there’s some really good things that happen when you have a controlling interest with regard to other investors. That’s one thing I learnt in the process of looking at this bill, was that other investors will come alongside if the Guardians throw their weight behind and invest in something. That makes sense. The Guardians do due diligence, they come in, they’re a very stable investor, and so other investors will be attracted to things that we need in this country—infrastructure, etc. So I do think there’s an element of double duty going on here, when other investors can come along and invest behind the Super Fund, investing in something, and we can have investment in our own needs in this country while growing the wealth of the country.

Now, that kind of long-term view of the Super Fund is something that I do need to set in a context, because it’s not always been like that. This particular fund has not been treated as valuable as it should have been at certain times. After the global financial crisis, there was a freezing up of investment by the Government in the Super Fund. Now, if we had kept investing, there would have been $20 billion more in this fund today. We would have been so much better off as a country as a result—$20 billion. The fund is about $70 billion now. So $20 billion is a fair whack if we had kept investing at that time. I hope that the lessons have been learnt. It’s not a case of blame, really; it’s a case of really understanding that this is a very important fund, and we need to treat it with respect. We never need to do that again, because we’ve got an ageing population and we have a fund here that is a taonga, and we need to protect it and look after it.

So I’m comfortable, having been on the committee, with the changes that are being made and the cautiousness. I take the comments that were made about how we should not be standing in this House and deciding what the fund invests in. But I’m also confident that the Guardians have taken a really long-term view of those investments, and a responsible one, and that the approach that they’ve taken—I’m heartened by the comments of Matt Whineray in 2017. I’d just like to remind the House of those. He said at that point when they were divesting out of fossil fuels, when they stopped doing that, he said we think climate change represents a material risk that is not being properly priced into the market

That means that the people and the Guardians in the fund have priced in that risk. They have thought about it, they are thinking in the future, and I wonder whether from that we could do well as a Government, as a Parliament, to learn the lesson here. These investments that we make in fossil fuels—when we restart things like oil and gas—we are taking a dreadful toll on our communities because these are risky investments. They’re not sound. I doubt very much that the independent guardians will be investing in any such investments; they will be making sound judgments. I’d love to see them do things like a dry dock, which would help the Auckland Harbour get cleaner and it would help the Whangārei community. I’d love to see them get behind. But it will be their decision, and they will make a prudent decision. I’m very happy to commend this bill to the House.

Thank you, Mr Speaker. It’s a real pleasure to speak on this. I’m actually really excited to speak on it tonight. I must give credit where credit is due and also acknowledge Sir Michael Cullen on his work on this and also, of course, KiwiSaver, which is truly a blessing to the future of this country. So I do acknowledge that, and some of the kōrero of the previous speakers.

One thing that I’m really excited about with this bill is the fact that it removes existing control restrictions and—the keyword here—opens the New Zealand Superannuation Fund to a broader array of investment partners and opportunities, particularly in strategic infrastructure, deepening the capital markets for local transactions. I’m very keen on infrastructure, as is this party, and anything that we can do to promote better infrastructure investment. We know we’ve campaigned on infrastructure funding and financing, special purpose vehicles, tolling, foreign investment, value capture—all that stuff—but if we can get it right within our own country, with our own investment portfolio, I think that’s really exciting. And, of course, as we know, the fund is increasing and so is the life expectancy of New Zealanders. So it’s important that we have a commensurate investment strategy and regime that meets that.

The Finance and Expenditure Committee (FEC), which I’m now pleased to be a part of, has recommended that we pass this bill without amendment—and, obviously, this has clear cross-party support. It’s a pragmatic solution and something which I’m really keen to support also. I also just note that the FEC report said that this draft legislation goes a step further in freeing up the fund to exert control over active operating companies, and would therefore “represent a meaningful change to what the Guardians could do.” I’m all about meaningful change, as is this party.

But what I really want to speak on tonight is, I guess, an analogous correlation to what this bill represents. I can’t help but think of it compared to a hot bubble bath. Bear with me, Mr Speaker, while I give you an example. You can imagine on a cold night, you’ve got a bit of a chill, and you come home and you think, “Gosh, I’d love to hop in a big, deep bubble bath.” There’s a few things that make a bubble bath quite good, and I’ll just share a few of them. One is the temperature of the water. The temperature of the water, it’s very important—and the depth of the water too, because if you want a bath, you can imagine, you don’t want a shallow, stink bath; you want a deep bath with good hot water.

The other things which make a bath good [Interruption]—if I could; there’s a bit of noise on this side of the House—is a good bubble mixture, Mr Speaker, because you’ve got hot water, deep temperature. Bubbles, you know, contribute to it, and, ideally, if they’re perfumed—that helps too, the aroma of the bath. And also the lighting: if the lighting is dimmed a little bit, or even no light, or candlelight is actually quite good too. Also, perhaps, a little bit of music, Mr Speaker. So you’ve got a deep bubble bath, the right temperature, good perfumed bubbles—

Is there any of that wine investment along there, as well?

RYAN HAMILTON: —no light or low light with the candles. Yeah, no, this is coming to a real good comparison, Mr Speaker. And so—

Scott Willis: Glass of wine.

RYAN HAMILTON: Yeah, so a glass of wine, or potentially—

Hon Member: Yeah, 35 millilitres from the cellar door!

RYAN HAMILTON: Yeah, 35 millilitres, or a green mojito, or something like that, that you just top it off.

Now, that’s what this bill will do: it’s like the “Hot Bath Bill”. And if you think: not having a controlling interest is like having that expectation to hop into that bath, and then getting into a bath when it’s like—you were excited to hop in the bath, and the plug’s been leaking. You hop in and the water doesn’t even cover your thighs, and the temperature is, like, tepid. The light’s bright, like sterile, and it doesn’t provide that atmosphere. The bubble bath is non-existent because there’s no bubbles, and that would be a terrible thing, to hop into a bath.

So, I guess, just to recap, you’ve got a deep bath, hot temperature—I’m thinking 45-50 degrees—

Hon Member: You call that a hot bath?

RYAN HAMILTON: Well, it could be hotter, but, you know, each to their own—we’re a party of free choice. Good bubbles, a good thick density of bubbles, good background music, the lighting dim, potentially flickering candlelight, soft background music, and then, possibly, a drink as well. This is as compared to a shallow, stink bath that’s got leaking water. It’s quite shallow. It’s lukewarm, it’s a bit chilly. And you’re really looking forward to the bath, and it’s a bit chilly. The water’s leaking. The light’s bright. There’s no music. There’s no bubble bath. Your spouse is yelling at you, potentially, and the kids are fighting in the background. But, Mr Speaker, this bath—the controlling interest is like hopping into a bath that you have control of. It’s like hot water. The bubbles—

The member’s time has expired. I don’t know if that was in the bill, but maybe it should be. Thank you.

Meitaki maata, Mr Speaker. Look, I thank the member for putting the House into a state of relaxation at this point in the evening. But, for the benefit of those who may be watching, we are now debating the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill. It’s a pleasure to rise in support of this bill, a bill that enjoys cross-party support in Parliament, because this is a bill that will change the law and that will allow the New Zealand Superannuation Fund, colloquially known as the Cullen fund, to take an interest in an entity—but not just any old interest, a controlling interest at that. That’s because the time has come—it marks the next step in the growth and development of the Cullen fund. But it also allows for the fund to play its part in doing its bit towards the future in terms of preparing the country in meeting the costs of superannuation.

I note that we on this side of the House want to always give Kiwis certainty around their retirement, and so that’s why we have, in terms of addressing this legislation, maintained the super age at 65. It is unfortunate that some members of parties in this House have not, perhaps, done the same, because it does assist in the sustainability of the fund and in the many years ahead.

The Act as it currently stands does direct the Guardians of New Zealand Superannuation to do what they can to actually avoid funding—in the sense of a controlling stake in an entity. The reason as to why that is in place is because the original purpose of the fund was to get exposure at the time, rather than to own businesses or have a controlling aspect in businesses or entities. So removing this limitation, which is exactly what this bill does this evening, will allow the Cullen fund to access a broader group of investment opportunities, including here in New Zealand.

Earlier, Mr Foster talked about the independence from political influence. The good thing about this bill is it doesn’t make any changes in that regard, so Mr Foster is quite right.

But this is a bill that will provide flexibility moving forward, and it will allow investment decisions taken by the Guardians to be a little bit more flexible, which is what we are wanting to achieve. It’s wonderful that this does enjoy cross-party support. It is a bill that was introduced by the Labour Government. It’s wonderful to see it through third reading. I commend this bill to the House.

Mr Speaker, I stand before you to support the third reading of the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill. At its core, the amendment seeks to empower the New Zealand Superannuation Fund by removing the limitations, thereby granting the Guardian’s ability to take controlling stakes in the variety of entities.

Now, the changes proposed to this bill are not merely admin, as it sounds, but are actually quite transformative. That aligns our Superannuation Fund in New Zealand with the global best practices, and positions our fund to capitalise on significant investment opportunities right here in New Zealand. In the modern investment environment, flexibility and strategic foresight are paramount. The current limitations for our fund in New Zealand have actually hindered the ability for the fund to fully capitalise on the dynamic and adaptable and flexible investment opportunities both domestically in New Zealand but also globally over the shore.

Now, the world of investment has evolved drastically over the last 10 and 20 years, and as a mature investment fund, the New Zealand Superannuation Fund must also evolve and catch up. It needs to be equipped with the ability to adapt to a modern economy and also to explore a wider range of investment opportunities, especially with those available in New Zealand. So by allowing the Guardians to take a controlling interest, we are actually allowing ourselves to align with the progressive trend, ensuring that our fund is not a passive speculator, but, actually, a very proactive participant in shaping the future and shaping the investments that it invests into.

Now, part of the bill actually talked about the champions of integrating ESG—which is environmental, social, and governance—criteria in the fund’s investment decisions. So by enabling the Guardians to have that controlling interest, we are actually allowing the fund to have the ability to influence and shift investment decisions. Now, this approach aligns with global standards, but it also resonates with values of Kiwis in our country, in our community, by ensuring that our investment reflects our commitment to the environment, to social responsibility, and to ethical governance.

Now, during the select committee stages, we deliberated on the potential impacts of this bill and this is how I feel after we finished the select committee stage: which is the amendments that we are doing are enhancing the economic sovereignty of New Zealand. The Guardians will now, after passing this bill tonight, have access to a broader array of partnership opportunities that promises not only financial returns with but also a strategic benefit to our economy.

During the submission stage, we’ve also considered, heard, and debated the merit, and also arrived at a consensus across the House that respects the need to both grow our own investment and grow with safety and insurance. So I do want to take the opportunity to thank all the members on the Finance and Expenditure Committee who share similar thoughts and insights looking into the future.

Now, as I debated and researched about the fund and I looked into the fund’s performance—if I can quickly allude to, at the end of the 2023 financial year, the fund had returned 11.87 percent for the preceding 12 months, almost 8 percent for the previous five years, almost 11 percent per annum over the previous 10 years, and about 10 percent per annum since inception. These returns are actually in excess of the return of New Zealand Treasury bills. And guess what! The New Zealand Superannuation Fund is one of the few sovereign wealth funds in the world that actually pay taxes in their home country. So imagine this: by allowing the fund to do better, by allowing them to have more opportunity to invest, they bring more return for New Zealanders and they also pay more taxes in New Zealand.

So, with all of the above, I’m actually very proud that I’m part of the team and part of the committee to be seeing and supporting this bill through. So, in conclusion, this bill reflects that we now have a forward-thinking approach to our national investment. It also recognises the role that the fund has in providing long-term security to our superannuitants and improving the opportunities to enhance returns for all of New Zealand. So, in the step of developments to similar funds to the other parts of the world, I join all members across the House tonight and commend this bill to the House.

Motion agreed to.

Bill read a third time.