Smith StuartSTUART SMITH (National—Kaikōura): 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."