Parker David: New Zealand Superannuation and Retirement Income Amendment Bill — First ReadingText is incorporated into the Bound VolumeParker David: New Zealand Superannuation and Retirement Income Amendment Bill — First Reading[Sitting date: 19 March 2014. Volume:697;Page:16811. Text is incorporated into the Bound Volume.]Hon DAVID PARKER (Deputy Leader—Labour):I am pleased that the Minister of Finance has finally come around to supporting what is colloquially known as the Cullen fund because at the time it was implemented he called it a “dog”. That is a quote. The New Zealand Superannuation and Retirement Income Amendment Bill is supported going to the Finance and Expenditure Committee by the Labour Party. It will further the good management of the Superannuation Fund.But I would like to remind New Zealanders that it is good if occasionally when it comes to some of these big decisions the National Government could get things right with foresight rather than with hindsight. We heard the Minister of Finance say that with hindsight maybe it should have invested over the—Hon Bill English: No no I didn’t say that. I said even with hindsight I wouldn’t have.Hon DAVID PARKER: Even with hindsight he would not have. With hindsight he would not have taken the gains either. That is even more stupid. My goodness! I did not think I heard him right when he said that the first time. The reason the New Zealand Superannuation Fund has done very well recently is that actually sovereign funds can take a very long-term perspective and they can invest in a countercyclical manner in a way that a lot of other funds cannot. A lot of other funds when things are going down in sharemarkets have rules that say they have actually got to reduce their weighting to a particular sharemarket because they have to run their fund in a way that is proportionate to different size asset classes. A sovereign wealth fund like this Superannuation Fund can take a countercyclical view and say that actually this is the time when some of this lemming-like behaviour where everyone follows each other off a cliff is wrong and they can take a long-term view and go in the opposite direction.Sometimes I would like the Minister of Finance to manage these Crown assets with foresight a bit better. Solid Energy—there are lots of those movies Honey I Shrunk the Kids. The next sequel was probably going to be “Honey I Shrunk Another Government SOE—I Ruined It”. What happened with Solid Energy was that the Minister of Finance the Minister for State Owned Enterprises and the Minister of Energy and Resources collaborated to ruin it—to ruin it. They turned Solid Energy from an award-winning profitable company into a dog. They ruined it. They told Solid Energy in the face of rising concern about the importance of environmental emissions like carbon in the face of everyone except Don Elder and the National Party and Gerry Brownlee knowing that there was not any near-term future in lignite to liquids that it should develop its lignite plans. The Minister of Finance Bill English—because it was in his own electorate—proudly stood on the end of a spade turning the first sod from a lignite briquette plant. That was also a dog.This is the same Minister of Finance who wrote to Solid Energy when Gerry Brownlee was saying “Expand please. We love coal.” “Sexy Coal” was the self-titled video that Gerry Brownlee had the audacity to put up on his own website prior to the 2008 election. They encouraged Solid Energy to expand. They then wrote to Solid Energy and said “Please take on more debt on your balance sheet.” Mr John Palmer the chair of the company at the time came back and said “It is not prudent to carry these high levels of debt.” The Government said “Do it anyway.” and then it said “Please pay us higher dividends.” So there was more expansion into risky coal more debt and higher dividends. Then what happened? It has got a dog now.The Government’s silliness does not end there. The Minister of Finance said that the Government is very proud of the way ACC is going. ACC is an institution we should be proud of. It is now just about fully funded in terms of its tail because successive Governments—Hon Bill English: Got rid of by a Labour Government.Hon DAVID PARKER: No actually that is not correct. No that is not correct Mr English. The prior Labour Government invested to fully fund the tail a measure that was proposed by the prior National Government—it might have been Bill English was it or Bill Birch his predecessor—carried through by the Labour Government and now carried on by the National Government. We all agree that we should fully fund the tail of ACC. But then what else has National done? Well actually National got a report from ACC last year—it was last year—saying it should drop levies because it was over-collecting in respect of current costs and over-providing more than a fair amount in respect—Maggie Barry: What’s this got to do with superannuation?Hon DAVID PARKER: It is actually the ACC pool that the Minister was referring to but Maggie Barry does not understand that. So what did it do? Did it take that advice? No it did not. National ripped off New Zealanders by overcharging them for ACC fees in their registration and petrol so that it could construct a surplus—by taking money off people for ACC levies—when it had given tax cuts 40 percent of which went to the top 10 percent of income tax earners and could not be afforded.What else has National done wrong? I will tell you something else it has done wrong. It has allowed the New Zealand Superannuation Fund to invest in infrastructure. This is something that Michael Cullen prevented but the current Government allows. It allows the New Zealand Superannuation Fund to invest in infrastructure assets some of which used to be funded off the Crown balance sheet. These are things like public-private partnerships which this Government is keen on in schools or in respect of some roading projects. What is the effect of that in the future? In the old days that would have been funded off the Crown balance sheet. Now some of that is off the Crown balance sheet—well it is actually on the Crown balance sheet but it is funded through public-private partnerships that involve private participants. In this context the New Zealand Superannuation Fund is a private participant.So what happens when you roll forward 30 years and you start drawing down the New Zealand Superannuation Fund to pay for that bulge in superannuation costs? You have actually got to take the money back off the Government or out of the New Zealand economy rather than actually having it set in a pool that does not suck it out. It is sort of taking one pot of money that should be available for New Zealand and saying that we can spend it for two purposes. I think we have to be very very careful that we do not allow the Superannuation Fund to be used for the wrong investments.Let us take what is happening in respect of the State-owned enterprises—the sales of the power companies. You know until a year ago these were 100 percent New Zealand - owned and any profit that was being taken from this incredibly cheaply produced hydro power was being—Hon Bill English: No it isn’t. It’s not cheap.Hon DAVID PARKER: He still does not understand that our hydro power is amongst the cheapest power to produce in the world. It is cheaper than nuclear.Hon Bill English: You’re wrong.Hon DAVID PARKER: It is cheaper. The operating costs of hydro are very close to zero. You should read the First NZ Capital report on the Meridian Energy sale to understand it if you have not already. What has happened over time is that because the cost of alternatives to hydro has risen and because the pricing model pays everyone the highest price that is bid prior to dispatch for that period the price that is paid for hydro power has risen as the cost of alternatives like gas has gone up—when Māui gas ran out—and the cost of new alternatives to gas like geothermal is more expensive. Because of the pricing model that is applied to those more expensive sources of generation it flows through to the price that is paid for hydro power—not to the cost of producing hydro power but the price that is paid to the generators for it—and there has been an enormous lift in the amount of profit taken out of our public rivers. The dams have not changed; all that has changed is the amount of money that is being made out of public rivers.We went along with that when it was being recycled by the Government into hip operations educational services the police and the other things that Governments fund. But now the Government is privatising it so the effect of that is it is privatising the value of our rivers for the benefit of the 2 or 3 percent in New Zealand who bought shares. This is another example of how this Government so plainly governs for the interests of the richest 2 or 3 percent in New Zealand while everyone else relatively languishes. That is going to be the election issue is it not?Denis O’Rourke: Yes.Hon DAVID PARKER: Yes that is going to be the election issue—more of the same from National where it lines the pockets of Rio Tinto it favours the big end of town and it serves the interests of the people who are almost wealthy or vote Labour and get your fair share. That is the difference.Hon Bill English: Ha ha!Hon DAVID PARKER: That is right. That is the difference—40 percent of the income tax to the top 10 percent National will not tax capital gains $600 million of subsidies to the irrigation schemes while it does not even pay for the public water that it uses to irrigate and lift its capital values.This legislation is good legislation. It is good to see that the Minister finally realises that he was wrong to oppose the New Zealand Superannuation Fund in the first place. It is an institution that was created by Labour and we remain proud of it.