Shaw James: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeShaw James: Oral Questions — Questions to Ministers[Sitting date: 26 February 2015. Volume:703;Page:1985. Text is incorporated into the Bound Volume.]4.JAMES SHAW (Green) to the Minister of Finance: Does he have confidence that the New Zealand Superannuation Fund is living up to its commitments to ethical investment as outlined in its Responsible Investment Framework?Hon STEVEN JOYCE (Associate Minister of Finance)on behalf of theMinister of Finance: The answer is yes. It is important to note that the New Zealand Superannuation Fund operates independently of the Government and is overseen by an independent board but it does have a Responsible Investment Framework which is closely aligned with the United Nations Principles for Responsible Investment. It is benchmarked and assessed by the UN on a regular basis. The last report concluded that the Superannuation Fund was managing responsible investment issues and risks to a best-practice standard and was one of the best-performing signatories of the principles globally.James Shaw: So does he believe that loaning $200 million through a tax shelter country like Luxembourg; using a shell company like Oak Finance which was created by a US investment bank like Goldman Sachs; to a Portuguese bank like Banco Espirito Santo which collapsed amid accusations of fraud and tax evasion; to help a Chinese company now under investigation for bribery working for the Venezuelan State Oil Company is a good example of the Superannuation Fund living up to its Responsible Investment Framework commitments?Hon STEVEN JOYCE: I think there are distinctions between the framework generally and particular investments. I think the member raises fair questions about that investment and I know that those questions were addressed at the select committee this morning. I think it is important that the Superannuation Fund be very careful to operate carefully as well as investing responsibly. The House has noted and I have seen public reports that most people in the House think that on the whole it has performed well but I think we would all hope and consider that it should learn any lessons that need to be learnt from this particular investment.James Shaw: When he told the House on 18 February that he expects “the Superannuation Fund to take into account the risks to future profits for the companies in which it invests.” is he concerned that the New Zealand Superannuation Fund is investing hundreds of millions of dollars in financial products like the Oak Finance - Goldman Sachs loan which Moody’s described as speculative and high risk?Hon STEVEN JOYCE: I think I said in the previous answer that there were issues of concern there and that I believe that the Superannuation Fund should be very careful to learn the lessons from that. This is an interesting situation where the Superannuation Fund rightly I think operates independently of politicians but as a result of that it has a heightened level of responsibility in terms of the way it makes investments. Again I think on the whole Parliament would probably be supportive of the returns that the fund has been making. That obviously comes with some risk—all investment does—and we would expect that the Superannuation Fund would learn any lessons that should be learnt from this particular investment outcome.James Shaw: Does he also believe that investing in fossil fuel companies which are directly contributing to the disappearance of small island States and the displacement of millions of people as a result of catastrophic climate change is a good example of the Superannuation Fund living up to its Responsible Investment Framework commitments?Hon STEVEN JOYCE: I do actually think that it is OK for the Superannuation Fund to invest in fossil fuel companies in the same way that I think it is OK that the Green Party continues to fly around the country in planes fuelled with fossil fuel. The simple fact of the matter is that fossil fuels are a part of our daily life and actually a part of the investment scene internationally and I think we have to be very careful about the suggestion that we should start telling the Superannuation Fund not to invest in a whole range of things because of the political views of certain parties in Parliament.David Seymour: What seems to be coming out of the answers is that there are—Mr SPEAKER: Order! Can we just have the question please.David Seymour: What would happen if the Superannuation Fund was to have another objective added which was to be a supplier of capital to small businesses at sub-market rates?Hon STEVEN JOYCE: I think the member illustrates some of the risks when various politicians decide what a fund such as the Superannuation Fund should or should not invest in according to their political beliefs rather than to the likely investment returns of the funds. Actually it is good that the fund invests in small and medium sized businesses provided the return is good. The purpose of this fund is to help meet New Zealand’s future superannuation entitlements and we do have to be careful not to take political views on all the different types of investment that we think the fund should or should not invest in and take the risk that it actually ends up losing money because Parliament gives it such confused objectives.James Shaw: Given that answer when he told the House on 18 February that it is ethical to invest in oil and coal companies because there is a profit to be made does he also think that the Superannuation Fund should invest in tobacco companies and arms manufacturers because there are profits to be made there too?Hon STEVEN JOYCE: What I believe is that the Superannuation Fund should operate its Responsible Investment Framework which it does and that it should come up with that framework itself. We have an independent benchmarking of that framework from the United Nations Principles for Responsible Investment. That is benchmarked on a regular basis and the conclusion drawn by that body is that the New Zealand Superannuation Fund is managing responsible investment issues and risks to a best-practice standard. I think that on that basis we can assume that it is balancing those investment opportunities—all the investment opportunities—appropriately for the fund.James Shaw: Why is he so reluctant to use his power to direct the Guardians of New Zealand Superannuation to stop putting New Zealanders’ hard-won superannuation savings into polluting industries stranded fossil fuel assets and dodgy deals?Hon STEVEN JOYCE: Again I think the member is fixing on two issues one of which I think there is a legitimate concern about which is the outcome of an investment. The other frankly is a little hypocritical coming from the Green Party—Mr SPEAKER: Order!Hon STEVEN JOYCE: —which uses fossil fuels. The challenge with that is that we actually have a fund that I think again by all agreement is actually performing reasonably well because we do not fetter it on a regular basis with politicians’ decisions. So I think that Parliament and the Minister would have to be very very careful before making those sorts of directions and generally that has been the case on all sides of this House.