Brash Don: Questions for Oral Answer — Questions to Ministers 
Brash Don: Questions for Oral Answer — Questions to Ministers 
[Volume:610;Page:7984] 
3.  
Dr DON BRASH (NZ National) 
 to the  
Minister of Finance 
: In light of today’s announcement of the New Zealand Superannuation Fund’s investment strategy does he believe that Treasury’s original assumption of an overall long-term annual return of 9.4 percent on the fund is realistic; if not why not? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Yes. 
Dr Don Brash 
: Given that Treasury itself has acknowledged that there is no realistic way of judging the long-term outlook that the expected rate of return has recently been revised down from that first proposed and that the similarly structured Government Superannuation Fund has lost considerable sums on its investments over the last 2 years why does the Government not simply retire some of its $35 billion of Crown debt as any prudent homeowner with a mortgage would do? 
Hon Dr MICHAEL CULLEN 
: The statement on the Government Superannuation Fund is incorrect. The original question related to the Superannuation Fund’s investment strategy. The estimates by the guardians are extremely close to the original Treasury estimates despite the fact there is a somewhat different mix of investments within the portfolio. 
Peter Brown 
: What is the Minister’s attitude to investing some of this money in New Zealand’s infrastructure such as roading and transport areas? 
Hon Dr MICHAEL CULLEN 
: That is a matter for the guardians; they determine the asset allocation policy. This will never be a fund that is at the whim of any Minister of Finance to use as a slush fund for things like silly “think big” projects. 
Rod Donald 
: Can the Minister confirm that the guardians have established an ethical investment strategy that includes investing in anything that is legal which could include such enterprises as armaments manufacturers cigarette companies alcohol companies casinos and even brothels; if that is the case is he happy with such an investment strategy? 
Hon Dr MICHAEL CULLEN 
: I think the member’s summary of the approach taken by the board to ethical investment is in fact not a fair one. In any case at the end of the day it is up to the board of guardians to interpret their statutory responsibilities and to carry them out. I repeat that one of the main purposes of the way the fund is structured is to stop Ministers of Finance determining how the fund should be invested. 
Gordon Copeland 
: Does the Minister believe that the investment of a mere one-fifth of the New Zealand Superannuation Fund in New Zealand could be viewed as a vote of no confidence in the future of the New Zealand economy and therefore become a self-fulfilling prophecy by denying local companies access to capital; if not why not? 
Hon Dr MICHAEL CULLEN 
: The guardians are determined to invest 7.5 percent in New Zealand equities. The New Zealand equity market is 0.2 percent of the world total so they are weighting New Zealand at 40 times its world average. 
Dr Don Brash 
: If the Minister is so confident that the fund will over the long term generate a much higher rate of return than the cost of the Government’s debt why does he not borrow another $100 billion or so invest it in overseas sharemarkets and use the income generated to cut everybody’s tax burden? 
Hon Dr MICHAEL CULLEN 
: I think we have at last flushed out the member’s economic policy; it is to borrow for tax cuts which is what I have said the National Party’s policy always has been. 
Gordon Copeland 
: Does the Minister have concerns that having almost four-fifths of the fund allocated off shore carries an additional level of risk given that New Zealand is the highest-indebted country in the OECD with resultant large annual outflows in interest and dividends; if not why not? 
Hon Dr MICHAEL CULLEN 
: No. Strictly speaking in terms of when the fund comes to be realised I think it is fair to say that appreciation of the New Zealand dollar is more of a worry than depreciation of it.