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

Members, we now come to the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill. Members, we start with Part 1. This is the debate on clauses 4 to 9, “Amendments to principal Act”, and the Schedule. The question is that Part 1 stand part.

I seek leave that all parts are taken as one question.

Leave has been sought for that purpose. All those in favour say Aye; to the contrary No. The motion is agreed to. The question is that Parts 1 and 2, the Schedule, and clauses 1 to 3 stand part. If there are no calls to be sought, the debate will end. So if there are calls to be made—

So we’re asking questions on this bill to enable the New Zealand Superannuation Fund to invest a larger portion of the ownership of particular businesses, and we recognise that the New Zealand market is a small market and that the Superannuation Fund has grown substantively over a reasonable period of time and is now in a position where it is unable to take minority positions in sufficient numbers of companies to fully utilise all of its funds.

I just want to understand if the Minister has any idea on the number of companies that passing this amendment would enable the Superannuation Fund to expand its investment into as part of the Government’s focus on ensuring that we can grow a more productive and value-adding New Zealand.

Obviously, the Government is under some challenge to grow the size of the economy, and thus needs more productive and engaged businesses, and this amendment is working to support that objective of the Government and ensure that we can have the sort of investment that we need into companies to enable the growth in the economy. So the second part of my question is whether or not the Minister has any indication of the number of those businesses that would be able to be invested in by the Superannuation Fund, should this amendment bill be passed.

The second part of that question is whether or not the Ministers had any indication of the degree to which investing in those businesses would help to grow the New Zealand economy should this amendment bill be passed. I think it’s really important that we have clarity on both of those questions so that we can be assured that passing this amendment bill will support the Government’s legislative agenda, will support the growth in this economy that we need to see, will support an increase in productivity, and that the bill will achieve its aim by expanding the mandate of the Superannuation Fund to take a majority stake in businesses, that the bill will achieve its underlying objective of supporting that economic growth through enabling it to take these positions.

So I’m really interested in understanding if the Minister has been able to take advice and has those specific numbers on both the number of companies—now, that might be by value, that might be by number of employees, that might be by industry. All of those variations, I suppose, would give us insight into the impact that the Superannuation Fund being able to have a wider investment mandate, being able to take these majority positions, would have for the New Zealand economy. I think it’s important, when we’re asking questions about this bill at this stage, that we have that sort of clarity so that we can assure the public that the Government’s agenda of delivering on growth in this economy and growth in productivity will be achieved through increasing the Superannuation Fund’s mandate to take these majority stakes.

Coming from a background in supporting our boards of directors to appoint directors and run good boards, I think it’s really important that we understand the sort of companies that this bill will enable the fund to invest into, because if we don’t have good leadership, both of the fund and of those companies, then we’re going to have a real challenge in delivering on that mandate.

But I know the Minister will have clear answers. Just to clarify both of those questions, one was the number of companies that the Minister understands that passing this bill will expand the mandate for the Superannuation Fund to invest into, and secondly, whether there’s any indication of the growth in the New Zealand economy that that might achieve by enabling that investment to occur here onshore, rather than overseas. Thank you.

A very quick call Mr Chair, just to point out that this bill came back from the select committee unchanged and with unanimous support from the select committee. So there is very little to debate and the objective of the bill is not something where the Government should be telling companies what to do, but it just gives the New Zealand Superannuation Fund a little bit more scope to make more investment.

So it’s a very simple, straightforward bill, and a bill that this House already, via the select committee, you know, agreed to in its first formation.

Thank you, Mr Chair. The New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill is a great bill, and I think there’s wide acceptance across the committee that things need to change.

I have a question around the Guardians having independence in their investment decisions. I think it’s really important that the House and New Zealanders actually have confidence that the New Zealand Superannuation Fund will invest in companies based on the fundamentals of those companies and their business cases rather than trying to seek a political objective. We did hear in the second reading, from some of the speakers at least, about ESG goals—that is environmental, social, and governance goals—which, in my view, cloud investment decisions. In fact, what we’re seeing, as I’m sure the Minister will be aware, is entities such as BlackRock Investment, which are the champions and the global leaders in ESG investments, have been losing funds. Their returns are down, and they’ve been losing investment from the private sector putting money into that, because of those poorer returns that they’ve had. And it’s because they’ve been trying, of course, to focus on things that are not related to the fundamentals of the company concerned: what are their business cases, are they going to make money, do they have a clear objective?

When they start clouding it with objectives other than what the company is set up to do—let’s say it’s an investment company in the energy sector—what are they trying to do there? Would they forego an investment in a company that might build a gas “peaker plant”, for example—that would keep the lights on but would not necessarily meet ESG requirements, because it would emit carbon dioxide as a result of it running to keep the lights on, but would be a very good business case—and instead say, “No, we won’t invest in that; we’ll invest in something else”? Now, those decisions should be made by the market. They shouldn’t be made, in my view, by trying to put overarching templates of some sort of social goal that goes along with it. We’re not talking about investment in landmines or something; we’re talking about other things.

An energy company is a really easy one to use for that as an example, but there would be others—forestry companies, for example. Are we investing in those, and if we are, what’s the investment goal from that? Is it about sequestering carbon? Is it about a business that’s actually going to return a good return on the capital investment? And, if the Superannuation Fund is able to take a controlling stake in that company, it could be a major impact on that business’s operations. Are we going to have the Super Fund then imposing its own view on how the company should be run, other than the investment drivers that the business was originally set up for? So I’d really like to have some clarity on that, in the Minister’s view—how that might play out—and that would be really helpful. Thank you.

Well, Mr Chair, thank you for the questions from the members, from Carl Bates, the comments from the Hon Deborah Russell and from Stuart Smith. One of the issues that did come through the select committee process, and that the members are all referring to, is this important question of the independence of the New Zealand Superannuation Fund. Because by allowing the fund to take controlling interests in entities, it becomes arguably even more important that the Government be distant from its investment decisions.

So I simply draw members’ attention to section 58 of the Act, which requires the Guardians to “invest on a prudent commercial basis” and requires them to apply “best-practice portfolio management;” and to “[maximise] return without undue risk to the Fund as a whole;”. So this section, in conjunction with the independence of the board and the governance frameworks in place, give me comfort that the legislative settings do allow for a high degree of investment independence; that that is there in the Act and will continue to be preserved even while we allow this controlling entity stake to be made.

I would note that the Minister is not able to give a direction that is inconsistent with the Guardians’ duty to invest the fund on a prudent commercial basis. I think that is a very important part of the law, and it would be inappropriate for the Minister—and, in fact, illegal for the Minister—to do that.

What that requires of the fund is that it assess what it thinks are good investments in the market. What can be observed as that direct investment is now a much more common feature of best-practice global portfolio management today than it was when the Super Fund was first created, and that we also can see that the proportion of the fund allocated to direct investments has increased and may continue to grow into the future. As the fund becomes larger, it actually has to look for a wider range of investments and there are more investments that are available to it.

Look, the member is correct to identify that there are other significant investors from around the world who the fund may want to jointly invest with, and certainly we have seen that that’s common practice with super funds in other parts of the world—that they invest with other technical experts into things.

So I share members’ hope that this will lead to investment in New Zealand infrastructure and significant New Zealand projects. But I would never direct the fund in that way, and it would not be appropriate for me to do so.

I just want to say that in this particular case, we have debated the independence of the New Zealand Superannuation Fund quite substantially during the second reading. And in terms of this particular thing, there has been no amendment—there has been no new amendment tabled. And I think in terms of the technicality of this particular bill, it’s pretty robust. So I just want to say that we should observe the same expediency as the previous bill in terms of getting it through the House. Thank you.

I move, That debate on this question now close.

Look, I just want to ask a couple of questions, particularly around the main provisions of the bill. What I’d quite like to understand is how this seeks to allow for the Guardians of New Zealand Superannuation to hold controlling interest in a business, particularly also with the New Zealand Superannuation Fund statutory requirements and the five-yearly statutory reviews—as well as that also how that applies to public sector organisations that aren’t intended to apply to entities that the Guardians have invested in. So sort of more administrative questions, but if there’s any way that we can have some answers to those questions. Obviously there are consequential amendments involved in this bill, but I’d quite like to really understand a bit more about the removal of the control restrictions specifically, because obviously there’s a wide group of investment opportunities that this will unlock, and just to understand some of those administrative outcomes that we can potentially seek to see as a result of the viability of investment partners.

I thank the member for her question. The New Zealand Superannuation Fund, via the Guardians, is currently required to maintain a statement of investment standards, policies, and procedures. And in making these changes, we will be requiring the Super Fund to update that to contain a governance framework for the implementation and operation of controlling interests.

I think this is important for a couple of reasons. One, because it will require the Super Fund to make transparent the approach it intends to take towards these sorts of investments ahead of making them, and that that approach will be able to be scrutinised and consistently applied.

The second reason that this is important is that it provides a separation between the Guardians’ functions as an investor or a shareholder and then the underlying operations of the investee, which is to say, just because the fund has a controlling interest doesn’t mean that it’s actually running the business in which it is invested. Because management of that underlying entity would run the business under the supervision of the entities board. So I hope that goes some way to addressing the member’s question.

Thank you very much, Mr Chair. I was privileged to take part in the debate last week as the final speaker for the Government side. I pointed out the irony, at that time, of being the youngest member of the Government talking about superannuation.

Arena Williams: Yes, you said it then. It’s repetitive.

TOM RUTHERFORD: It’s repetitive but it was from last week, so I was just reminding the committee just in case they didn’t remember. Good to see members on the opposite side being so engaged and involved with the debate. I’m looking forward to seeing them making some meaningful contributions—

Hon Member: I’d like to know what you want to know about it.

TOM RUTHERFORD: —meaningful contributions. You want to know what I want to know about this bill? Oh that’s a good question.

Having looked through the department disclosure statement, I’m keen for the Minister to flesh out a little bit further for us around how the bill distinguishes between the Guardians of New Zealand Superannuation as a Crown entity and the Guardians as a manager and administrator of the New Zealand Superannuation Fund. The reason that I’m keen to know about that is because the laws that apply to public sector organisations are not intended to apply to entities that the Guardians control as managers and administrators of the fund. I’m keen to understand from the Minister the intention behind that direction but also around why the bill is clearly distinguishing needing the Guardians as a Crown entity but also the Guardians as managers and administrators of the New Zealand Superannuation Fund. So if the Minister wouldn’t mind just providing some clarity for me on that, I’d really appreciate it.

The member does raise quite an important point, because there could be the scenario in which controlled entities, if they were treated as having the same requirements as typical Crown entities, would therefore become subject to all of the usual expectations that the law places on those Crown entities. That is what has given rise to some of the technical and consequential amendments in the bill, which include amending sections of the Income Tax Act and the Ombudsmen Act to make it very clear that any controlled entities are not subject to the same requirements as Crown entities. I think this is actually quite an important limitation, because that could actually both prevent the Super Fund from making some investments if it thought that, in making that investment, it would be subject to the same expectations as a Crown entity. It could also complicate the nature of those investments and create obligations, in fact, for the Crown.

It’s also relevant, though, that we distinguish here what would be the legal duties from this other question, which is: could there be a greater expectation, because of the nature of a controlling interest investment, that the public, that stakeholders would look back to the Crown to, say, in the event of a failure of an entity, that the Crown would be expected to bail it out? I think it’s really important that the way that the Act is set up, that the policies are set up, that the independence is set up, we don’t create that expectation. The Super Fund, if it is to be free to make investments, also has to be free to make investments that fail, without the expectation that the Crown would be bailing it out. That is very much the way that this Act has been written, with that very clear, so that the Super Fund, in entering those investments, it can be clear that there is absolutely no expectation that the Crown would become the funder of last resort.

Thank you, Mr Chair. It’s great to stand up here and look at this bill, and we really enjoyed the second reading, where we did see cross-party support for this very, very important issue of the Superannuation Fund in New Zealand. You know, we’ll all agree that there’s been some great success with this fund, and with the ageing population that we are seeing in New Zealand at the moment, it’s critical that we have some good investment and we can grow this fund so that we can sustain this ageing population.

But I was particularly interested, because, obviously, this opens up more opportunity for investment not only internationally but also in New Zealand, whether that be in infrastructure or even looking at—particularly agriculture at the moment have seen some wonderful, successful investments from the Guardians of New Zealand Superannuation, whether that be in our orchards, in horticulture, or whether that be in dairy, and I’ve seen some viticulture investment as well. So that’s really positive, and, obviously, this amendment is going to open up more of that opportunity.

But I was particularly interested in amended section 49A(b), inserted by clause 5, “an entity that is formed or controlled by the Guardians for the purpose of holding, facilitating, or managing the investments of the Fund”, and just around, I suppose, the implications of that moving forward when we are looking at investment around New Zealand. Obviously, one of the members did point out before that it is very important that the Guardians do act independently and make sure that there is that independence when they are making those decisions around those investments. But if the Minister in the chair, Nicola Willis, could perhaps just make a few comments around that, that would be much appreciated.

Well, the question relates to the sorts of investments that the fund may wish to have a controlling interest in and the circumstances in which it would make that choice. The member in particular highlights a sector which I too have great confidence in and optimism for, which is the New Zealand primary industries, which certainly have a very bright future in a world that is looking for sustainable protein and nutrition—and we produce the very best.

I’d start by saying that because the Super Fund is by its nature a long-term investor, that does distinguish it from some other investors in that it has the ability to ride out short-term market volatility and can instead wait to sell assets until the market has improved, and it is right to do that. By its nature, it has a long-term horizon and so isn’t investing for short-term gain or short-term return, and that lends itself very well to the concept of having a controlling interest. If an investor is investing in something seeing long-term potential, sometimes what that will require is changes to the way that a business is operating—recapitalisation in different ways, new personnel, new approaches—which necessarily require a controlling interest in order to exercise those changes. These two things come together when you think about an industry like the primary industries, where, potentially, there are areas that, if there was significant new investment or new innovation, could, over the medium- to long-term, offer significant additional return.

So all of this is a complicated way of me saying that I will never and should not tell the Super Fund who it should invest in or what it should invest in, but it does seem to me that agricultural industries would be a category of investment that the fund would consider and that having a controlling interest in would enable them to consider a broader range of investments.

More generally, beyond agriculture, it is obvious that when we look at New Zealand, we’ve actually seen a reducing proportion of the Super Fund’s investments being in New Zealand over time. Well, we can envisage that happening if we don’t allow it to broaden out to investments which require a controlling stake, which is to say I think there’s a risk, if we weren’t passing this legislation, that the Super Fund would feel increasingly constrained by what investments it could make in New Zealand because it wouldn’t be able to have a controlling stake and therefore would look increasingly offshore for those sorts of growth opportunities and innovation opportunities.

So I would put to members that by allowing this change, this controlling stake, we’re opening up a whole new range of investments for the Super Fund, medium and long term assets, and there could be some significant economic benefit from having another investor at scale investing in growth industries and businesses in our own country.

Certainly, when you look around the world at pension funds and similar funds in other jurisdictions, as they have grown larger, as they have accumulated scale, they have made increasingly sophisticated investments where they do hold those controlling interests and, in some cases, have built up expertise in particular industries or particular ways of investing. It is not impossible, Catherine, for me to envisage a world in which the Super Fund would develop expertise in a particular sector or a particular area and would have its controlling interests aligned with that. So I do thank the member for the question—I think it’s a good one.

Thank you, Mr Chair. I feel like I’ve come late to the party in relation to this particular piece of legislation. I’m not a member of the esteemed Finance and Expenditure Committee. However, I am a chartered accountant and have a particular interest in the management and oversight of companies. So I have several questions I’d like to ask in relation to this bill that I haven’t already had the opportunity to ask, and I have a few more I’ll ask, hopefully later in the evening.

My first concern sits around this context that has been touched on already, but I really want to get certainty, particularly for my constituents. Because in the wonderful Whanganui electorate we have a large South African population. In fact, yesterday I was in Stratford buying some droëwors from a great butcher there, and it reminds me of the concern that particularly South Africans have when you start thinking and talking about political influence, which is important to this bill when it comes to the Guardians fund not having political influence over the companies that they make—

Arena Williams: Point of order, Mr Chair. Thank you, Mr Chair. Members on this side of the Chamber gave the member a minute and a half to ask the Minister a question which was relevant to this bill, and the question is, in fact, repetitive. If you look to Standing Order 112(2), this is something which has been asked now by three members on the other side of the Chamber and would be something which would warrant you terminating the member’s speech now that it has been raised a third time.

Stuart Smith: Speaking to the point of order. Well, thank you, Mr Chair, but as the Chair well knows, that is a decision and a judgment for the Chair alone. It’s not for members on either side of the Chamber to make that judgment call. So I put it that that point of order is completely out of order.

David MacLeod: Mr Chair, speaking to the point of order. I also think it is upon us to think that there are many other questions that we wish to ask. So whether it was repetitive in that particular case, there are other unanswered questions as well.

CHAIRPERSON (Teanau Tuiono): OK, OK. OK, what I will ask members to do is to relate it specifically to the bill. I think the contribution just before this contribution did relate specifically to—and I was listening to it—59(1)(b), I think, and that was quite helpful. So if members do have questions, if you could relate it specifically to the bill, that would be very helpful. I’ll allow Carl Bates to continue. So relating it directly to the bill.

CARL BATES: Thank you, Mr Chair, and I take the point about questions being related to the bill. I’m speaking to section 64(2) of the Act.

Arena Williams: We know! A few of your colleagues have raised it already. We know.

CARL BATES: If you give me an opportunity to ask my question, I might be able to get around to actually asking my question. It surprises me—and, Mr Chair, hopefully you’ll indulge me as I speak about the bill—that my colleagues on the other side of the Chamber when I’m speaking about an immigration matter related to the bill and the concerns of our fellow New Zealanders who have come here from around the world, and the mental wellbeing they bring to this country, and my colleagues across the Chamber aren’t allowing me the opportunity to ask a question that would be of significant concern to all South Africans living in electorates should they be MPs for an electorate. But if they’re not, Mr Chair, I’d like to come back—

Hon Dr Deborah Russell: Mr Chair, we’ve just been through this just a few moments ago. Whether or not—yeah.

CARL BATES: Well, if you don’t interrupt me, I’ll get to my question.

CHAIRPERSON (Teanau Tuiono): Just for my clarification, you were talking about 6 and—

CARL BATES: So I’m referring to the provisions as provided in section 64(2) of the Act related to political influence, which the bill is related to. In ensuring that we don’t allow the Guardians fund to get into a position where we have entities invested in that become majority-owned and ultimately have through—whether it be directly through the Act or through the influence of politicians, and we have strong politicians, as we’re seeing here in the House this evening, who have opinions that that come across.

I want to have certainty for my constituents that the Minister assures this committee that there won’t be political influence in any form enabled through this bill being enacted through this House. That’s the first question, Mr Chair. I said I had two questions and I’m coming to the second part of my question now, in relation to the different ways. So I’m now speaking about section 59(1).

Arena Williams: Yep! No, we’ve had that one too.

CARL BATES: I think it’s important to point out the section because while my colleagues on this side of the Chamber are following me clearly, my colleagues on the other side of the Chamber are finding it difficult to follow.

So section 59(1), which speaks to the different types of ways the Guardians fund can take interests in companies. I wanted—and I’m probably not going to get to be able to ask my question given the interruptions I’ve had so far this evening, but what I wanted to understand is, from the Minister, the different types of ownerships. Now, whether we’re speaking about majority control just in the form of shares; whether we’re speaking about majority ownership in the form of other types of instruments that could be converted into shares; debenture bond allocation; as well as bringing in different classes of shares to sort of get around—Mr Chair, can I finish that—

The member’s time has expired.

Mr Chair, the member is asking about how the bill relates to section 64 of the Act, which it amends. And there is actually an important point here around ministerial directions, which I haven’t covered as yet, because there is a clear legal separation from the core Crown to that of autonomous Crown entities in respect of the fund. And while I’ve at length commented on the fact that the Minister can’t specifically direct the New Zealand Superannuation Fund, the Minister can give non-binding directions to the Guardians regarding the Government’s expectations as to the fund’s performance, including as to risk and return.

And the member asks about where the line lies in terms of politicisation and what that looks like. And I think it is important to look at where that section has been operable. I think back to the Rt Hon Bill English, who as finance Minister directed the Super Fund to conduct a higher level of investment in New Zealand markets. And in that case, he directed the Super Fund to have regard to increased funding within New Zealand, but he didn’t—because he lawfully couldn’t—direct the entity to give effect to the policy. And there is a subtle difference there that is quite important. And so, in that case, the Guardians’ obligations under section 58 remain unchanged.

So to the question on the ministerial directions; those same requirements remain in the Act unchanged by the bill before us. What the bill focuses on, importantly, in terms of amending obligations as set out in section 59, is about the status of those entities in which the fund invests. Because, as I commented on earlier, it is important that no one be under the impression that an entity, simply because the Super Fund has a controlling entity in it, in some way becomes a Crown entity subsidiary, or a Crown entity, and therefore would be treated with the obligations, rights, and responsibilities of a Crown entity. And you see at section 59 that outlined clearly that the Official Information Act, the Ombudsman Act do not apply, and that “The Guardians’ interests in an entity that is formed or controlled by the Guardians for the purpose of holding, facilitating, or managing the investments of the Fund are Fund investments and part of the Fund.” And so that distinction is important.

And I would simply also note in relation to those ministerial directions that while the Minister cannot direct in a way that requires the fund to do one thing or another, it would be interesting, of course, to observe that I would find it hard to imagine there isn’t a member in this House who would like to see the Super Fund investing more in New Zealand infrastructure. That currently forms a very small portion of the fund’s overall investment portfolio. And I’m sure others would join me in being hopeful that the changes we are making tonight would enable the Super Fund to make more investments in New Zealand infrastructure, to grow and build this great country.

Tēnā koe, Mr Chair. Tēnā tātou e te Whare. A real short call from us here at Te Pāti Māori. We are in support of this bill. But just to make a statement and to remind the committee that superannuation—when I think about our kaumātua and kuia, they are the pou of our society. They’ve worked hard and long and contributed to building the economy of Aotearoa. The problem we have and the issue we have for Māori is we don’t get access to the Superannuation Fund. We die seven to 10 years earlier than non-Māori. If you follow the science and the data, it tells us that. So what we need is legislation and policy that aligns to be able to adjust the inequalities of superannuation so that we can get access to it sooner, earlier, so that Māori get access to their right and to what they’ve contributed to in their years of life. Kia ora.

Thank you very much, Mr Chair. I want to focus on clause 6. I think the Minister of Finance made some very good points about ownership and what constitutes the entity, or what the entity that it’s invested in is considered as, and whether it’s a Crown entity or otherwise. I think it’s really important—the Minister had made points earlier about investment, much-needed investment, coming in from overseas. I do understand that and I think it’s really important; we do lack depth and breadth of capital in New Zealand to invest into businesses, and that does create a problem.

But I want to turn to clause 6 of the bill: sections 59 to 59B of the principal legislation are being replaced with section 59, “Status of certain entities”, which the Minister covered. Subsection (2) of section 59 states, “To avoid doubt, the Official Information Act 1982 and the Ombudsman Act 1975 do not apply to any entity by virtue of a Fund investment or any related [arrangements]”, and in brackets it says, “(but the Official Information Act 1982 applies to the Guardians in respect of information held by the Guardians about the entity).”

Now, I have some concerns about that, Minister. If I was a company that was looking for an investment, large capital raised in some way, and a New Zealand Superannuation Fund was one of the options, if I knew that any information that I had about my company could be accessible via the Official Information Act (OIA), I’d be reticent. If I’ve got two offers on the table, one from the New Zealand Super Fund and one, say, from an overseas investment firm, and one of them I know will not be subject to the OIA and the other will be, I’d be quite concerned. So if that information included commercially sensitive information such as pricing, such as suppliers and supplier agreements, which would normally be part of a transaction—any investor would want to know some of those things and they’d have a non-disclosure agreement, I’d imagine, for commercially sensitive information. That wouldn’t be worth anything if the New Zealand Super Fund was the potential investor, as I read the bill. There may be some other caveats that go with that.

We do know from long experience in the Opposition that getting OIA requests—sometimes there’s a lot of redaction. Sometimes there’s more black ink covering everything than there is in the rest of the request and you can’t read anything. But as this bill reads, it would seem that everything that the entity supplied to the Super Fund could be viewed by Official Information Act request. So my question is: am I understanding this correctly? If I am, what would be acceptable as a redaction on the grounds of commercial sensitivity, and where does that go for those businesses? Because it could well gazump the whole intent of the bill, which is to enable the Super Fund to bring much-needed depth to the capital markets to ensure that New Zealand businesses survive and thrive.

The whole point of an investment might be to invest in new technology to increase productivity, it might be to invest in ensuring that they can grow their markets. It may well be better to accept an investor or only to cast your net as wide as the international markets where you might get extra benefits other than money coming from offshore, like access to markets, which the New Zealand Super Fund would not actually bring to the table. So I’d be very interested in hearing that, Minister, because I think it’s a very important thing for New Zealand and for the Super Fund as well.

The member raises a very good question, because what the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill recognises in new section 59(2) is that if the Official Information Act 1982 were to be automatically applied to any entity which had a controlling fund investment in it, that would be significantly problematic, because it could actually prevent the fund from wanting to make that investment in the first place. It would make it a less beneficial investor than others, due to the additional disclosure obligations that would sit upon it. So that is specifically carved out in this bill.

However, what the member is now focusing on is the fact that the Official Information Act still applies to the Guardians in respect of the information that the Guardians hold. That is the case. However, the Official Information Act—by way of, I understand, sections 9(2)(b), 9(2)(i)—does allow entities to withhold the release of information on a number of grounds relating to commercial sensitivity. That is, entities can choose to withhold information if they believe that supplying that information would damage the public interest in a number of ways. Looking at the Ombudsman guidance on that, this goes to whether or not it would prejudice a commercial position, and, in particular, the information the release of which could prejudice a commercial position includes information that could disadvantage an entity vis-à-vis their direct competitor, that could increase their costs, that could decrease their income or profits, damage their negotiating position, damage their reputation leading to a loss of business or trade, or damage shareholder, customer, or supplier confidence.

Now, I don’t pretend, members, that I came to the committee tonight with expertise on the particular commercial grounds for withholding under the Official Information Act, but what I can assure the member is that the operation of the Official Information Act as it has related to the Super Fund has included grounds for withholding information that I am not aware of there being any concerns about. As the member points out, it would be another step for the entity itself to be subject to the Official Information Act (OIA) simply because the Super Fund was its investor, and that would raise a new range of concerns. So I think that is an important point that the member raises.

For members’ interest, the Super Fund does already have a number of direct investments in New Zealand in which it doesn’t have a controlling interest but which it does have a direct investment. This includes: Kaingaroa Timberlands, which obviously owns a large forest; Longroad; Datacom; Awanui; Kaha Ake; Fidelity Life; and NZ Gourmet—alongside significant property investments in hotels and land development. The point that I am simply making is that the Super Fund has been able to make investments of this nature while being subject to the OIA previously, and that gives me confidence that when it later takes controlling interests in entities that could be similar to those it already holds, this will not be prejudicial to its commercial performance in the way that the member raises.

Thank you, Mr Chair. Just very quickly, as I read through this piece of legislation, and going on from what my colleague has just mentioned around Māori accessing the New Zealand Superannuation Fund, and due to our mortality rates—dying seven to 10 years earlier than everybody else—it seems to me that this particular fund has built up its funds due to those who maybe don’t have access to it, including Māori. My question to the Minister is: will this legislation allow for the Superannuation Fund to invest in closing the mortality gaps for Māori? Is there a priority for this National Government to then start to put pressure on the New Zealand Superannuation and Retirement Income Act and the Guardians of New Zealand Superannuation to start to look at closing the mortality rates, investing in those who probably have contributed more to the superannuation because they haven’t accessed it—those being Māori.

And my colleague also talked about the ability to lower the superannuation rates so we are able to access superannuation due to many of our people working in precarious labour-type jobs for many, many years. Many of them don’t own homes—we’re renters—and so the investment into housing, the investment into better health outcomes, I think, would be a better spend for the New Zealand Superannuation and Retirement Income Act. And whether the Minister would guide the Guardians or have this piece of legislation ensure that those who are not accessing superannuation because they’re dying earlier are able to access that through investment funds where we’re able to start closing those particular gaps—that’s the question I ask of the Minister.

I thank the member for his question. I think he appreciates that some of his question relates to aspects of the superannuation scheme in New Zealand which are outside of this bill that we are debating tonight in terms of the age of eligibility for superannuation.

However, the second part of the member’s question, which relates to the nature of the kinds of investments the Super Fund can make and may make in future is, I think, relevant to the bill because what the bill says is that the fund in future can take a controlling interest in a broad range of entities. What the Guardians are required to consider when they make those investments is whether they are making those investments in a prudent and commercial way that is consistent with their statement of investment standards, policies, and procedures, and that is consistent with their governance framework.

And it is not hard for me, Mr Waititi, to imagine that there will be investments which have two benefits, which provide commercial return but also provide enhanced wellbeing to Māori people. There is an example in that list of organisations I just discussed: Awanui. They are the leading provider of laboratory and pathology services in New Zealand. The provision of health services that are effective and efficient can be life enhancing. But I have an aspiration which is that I would like to see more New Zealanders feeling that their superannuation assets are being invested in New Zealand assets. And I think that the Super Fund is a vehicle which in some senses is highly democratic, because even if you yourself don’t have a KiwiSaver fund, by virtue of being a New Zealander, you can claim a stake in the New Zealand Superannuation Fund. So when the New Zealand Superannuation Fund goes out and invests, it is quite literally investing on behalf of every single taxpayer and New Zealander, and therefore, in making those investments, has the capacity, I think, to make positive social and commercial impact for New Zealand.

Here’s a number for the member and others to reflect on: New Zealand investment represents only around 14 percent of the Super Fund’s current total portfolio. Less than 1 percent of that is in infrastructure. So the point that I would simply make is if we want the Super Fund to be more invested in activities that create prosperity for New Zealanders and that create commercial return for New Zealanders, then we should be broadening out the scope. And a bill like that, that we are doing tonight, will actually broaden out the scope of activities, I hope, that the Super Fund will consider. And I look around the world and I see the positive effect that social bonds and social venture investment has had, and the willingness of pension funds in other parts of the world to invest in those vehicles because, again, they have that patient investor mind-set, that long-term return mind-set.

So to come back to the beginning, of course the Super Fund still has to be looking for commercial return and prudent return, but as any good investor will tell you, often commercial return and prudent investment comes hand in hand with offering positive social or environment impact to the benefit of Māori and to the benefit of all New Zealanders.

Mr Chair, thank you for the opportunity. I think one thing that hasn’t really been covered off which I think is quite important is the title and commencement of this bill. I think that’s just one thing I want to point out particularly, and there’s another couple of points I want to make. Actually, first, before I do that, I just wanted to say, to my colleague Stuart Smith’s point about what I call the perverse outcome, I suppose, with potentially not wanting to take on investment from the Superannuation Fund—if that was going to be disclosed—which I think is really important.

One thing also to mention: Australia has great investment in transport and infrastructure businesses through this very protocol, and so I’m really excited to see what this will do for our superannuation scheme, for investment, for people getting involved in KiwiSaver as well, obviously resulting in the outcome of better investment and what that contributes to New Zealand. But I think just the question about, obviously, the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill; I just want to be sure that, obviously, “controlling interests”, in parentheses, that that is the best and clearest way that we can put that bill amendment forward.

Then in the terms of commencement, obviously, with it being in its immediacy of being the day after the date on which it receives its Royal assent, if that gives enough time for those that are in the investment departments within the Superannuation Fund, the Guardians of New Zealand Superannuation sort of aspect of that, that they’ve got that time to be able to prepare themselves for what this means for their investment programme and how this might work, from an administrative point of view.

So, really, quite administrative questions, but I think they are quite important. Something that we tend to get quite involved in in all of the clauses—particularly, obviously, with replacement section 59, inserted by clause 6, and the wording, which is obviously vital, but as we’re talking about this in one full part, I think it’s important that we cover those off. Often, those are the things we don’t give enough thought to, so if the Minister could answer this question.

Well, thank you. Look, the question is about the date of commencement, which is obviously quick in this instance. It’s the day after the Act receives Royal assent. I’d assure the member that I met with the board of the New Zealand Superannuation Fund earlier this year—well, members of the board—and mentioned to them the passage of this bill through the House and how pleased I was that it was being agreed to in a bipartisan way. The Superannuation Fund made clear to me that they are both looking forward to and prepared for its passage. As we have been discussing in the committee tonight, they did think that it would open up the range of investments that they could make, and they have obviously been thinking about this for some time.

I think one of the issues that we haven’t canvassed as much, that they are prepared for and have been thinking about, is that in the past, even when they haven’t entered an investment intentionally with a controlling stake, they have had to be careful about some investments that they make on the basis that if one shareholder was to exit that investment or the nature of that entity was to change, that they could inadvertently or accidentally become a controlling shareholder. So that has meant both some avoidance but also that they have had to have particular investment requirements and technicalities in a range of investments that they’ve made.

I think that they would anticipate that there would be less of that kind of concern in the future. Of course, they would continue to have to be prudent about the nature of any investment in any stake that they took, but it is safe to say that they are very ready for this bill. They have waited patiently for it to become law and would welcome it becoming so. As to the title, look, it’s not a very creative one, but it says exactly what it does.

Just for members’ awareness, I am listening for new material, particularly for material that relates directly to the bill. I do note that that has been happening, but we’re down to the title and commencement, so listening very, very carefully.

Thank you very much, Mr Chair. When we are taking this all as one part, I’m really keen to actually talk about the title of the bill, particularly. The Minister of Finance did talk about it briefly in her response to my colleague Katie Nimon’s proposal and question to her. I’d ask the Minister: the title currently is New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill; had she considered a potential title for the bill to be “New Zealand Superannuation and Retirement Income (Ideally Invest in New Zealand) Amendment Bill”, where we’re looking for the New Zealand Superannuation Fund to invest ideally—

Camilla Belich: Point of order, Mr Chair. Thank you, Mr Chair. Just a point of order. That is repetitive. The Minister has already spent a great deal of time responding to questions around the title and commencement, which she did describe, herself, as quite simple and straightforward, describing the nature of the bill.

TOM RUTHERFORD: Speaking to the point of order. Thank you very much, Mr Chair. I would just note in the Standing Orders, under the committee of the whole House, each member is entitled to make multiple speeches of up to five minutes.

Camilla Belich: If relevant.

TOM RUTHERFORD: Well, I was relevant, because I hadn’t proposed this to the Minister for her consideration yet, on the specific title that I was putting forward.

CHAIRPERSON (Teanau Tuiono): Yeah, that question is repetitive, but I will allow the Hon Nicola Willis to respond, if she has a response to that question.

Look, I thank the member for his question. The member is bright, he is bright-eyed, he is bushy-tailed, he’s enthusiastic, and he’s full of ideas. I will admit that I didn’t get to name this one, and, actually, it was my predecessor who got to name it. Perhaps, in future, when I have the exciting opportunity to name a bill, I will consider, first, a visit to Tom Rutherford, he the designer of creative bill titles.

I move, That debate on this question now close.

Motion agreed to.

Parts 1 and 2, the Schedule, and clauses 1 to 3 agreed to.

Bill to be reported without amendment.

House resumed.