Foster AndyNEW ZEALAND SUPERANNUATION AND RETIREMENT INCOME (CONTROLLING INTERESTS) AMENDMENT BILLThird ReadingDebate resumed from 9 May.ANDY FOSTER (NZ First): I'm delighted to rise to this third reading of the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Bill. It's been a very disruptive sort of debate but finally we've got to this point and we will actually get this through and into law. This is really about the Guardians of the New Zealand Superannuation Fund being able to take controlling interests in entities other than things like real estate which they've always been able to do. Currently that is prohibited by section 59 of this Act. Really what this bill is about is reflecting the growing size and maturity of the New Zealand Superannuation Fund. It's something that's supported around the House which is great it's non-controversial publicly—I think we only had six submissions on it—and the bill frankly is common sense.It's interesting that when we started this reading the fund scale was about $72 billion to $74 billion. The last I looked this evening it's getting closer to $75 billion so if we keep going on it'll be even bigger. Removing section 59—at the moment that section constrains the Superannuation Fund's ability to invest in some New Zealand entities including in major infrastructure projects and really what this is about is it's allowing our Superannuation Fund to invest more in our present while it's also investing in our future. It's spreading its wings.Just in passing I'd like to mention the other major Government-aligned investment vehicle which is the ACC which currently has about $47 billion under management. So that's quite a lot between the two of them. Both of them are dealing with future liabilities on behalf of New Zealanders but both are investments in our collective future but also in our collective present if we manage them well.But we've heard some discussion during this debate suggesting investing in particular projects within New Zealand and while that might be great to do that what we cannot do is we cannot direct the fund to do that. The Superannuation Fund must never be subject to instructions by politicians for whatever reasons. Section 64 of the Act is very clear on that. The Minister can give advice can give directions but only having consulted the Guardians and the Guardians don't have to take any notice effectively only just say what they've done in response or not done in response.But during the second reading our Green colleague across the way there Dr Lawrence Xu-Nan leaned into this issue and I've got to say that I wasn't particularly comfortable with that because he said we really would encourage the … fund to be guided in their activities … to divest from fossil fuels and the requirement for a portion of the fund to be targeted towards social impact investments including emission reduction as well as aligning with the Government's goal of net-zero carbon by 2050." They're all very good things—all very good things—but no no no to any interference in the Superannuation Fund Guardians' ability to do their job.But I was pleased to see the same member in this third reading express some confidence in the fund's environmental social and governance (ESG) credentials and I'm going to come back to that later on. So I hope the Green Party does realise through this debate that actually it can trust the Guardians of the Superannuation Fund to do a really good job not only in terms of giving us a good return but also in terms of responsible investment.Minister Willis when introducing this reading talked about nation-building infrastructure and yes there is an opportunity there. The Guardians at the moment invest about 14 percent of the fund in New Zealand assets and only about 1 percent of it in New Zealand infrastructure. However that's actually overweighted because the fund's own annual report says that a benchmark portfolio would only be about 5 percent weighted in New Zealand. So it's actually already doing that and diversification is a fundamental principle of good investment. In fact the fund's most recent annual report is titled The Wisdom of Diversity and they were talking not only about people but diversification of investment. The fund is always going to have the substantial majority of its investments in other parts of the world. But let's not forget that even if they're investing in other parts of the world that is drawing income into New Zealand it's helping our balance of payments and that is contributing positively to our standard of living.I also wanted to note that the fund makes money in considerable part through this thing called capital gain. That's gain in the value of stocks shares real estate companies etc. and that's the same as KiwiSaver. They gain a lot of their return or our return through capital gain. It's the same as many Kiwis do in investing for our collective future. Capital gains are not evil. They occur over time and through inflation. They're nominal. They are about protecting and enhancing the real value of assets over time and achieving capital gains is not without risk and cost. Capital gains incentivise saving and investment and that is without doubt a good thing certainly if you want to grow the economy and help address housing-supply shortages. Indeed without capital gains many investments simply would not happen. Incentivising investment rather than consumption is also a good thing for our balance of payments which is one of our greatest financial weaknesses especially because we keep borrowing from the rest of the world day after day to pay for our living standards.But the fund is already doing some excellent nation-building. It invests in productive farming and since 2019 under the Labour - New Zealand First coalition the Guardians have been responsible for the $300 million Elevate New Zealand venture fund which is about growing emerging businesses which I think is a fantastic thing. But fundamentally the fund is about delivering the best possible risk-adjusted return. Now that may or may not allow investing in nation-building infrastructure but the judgment must be made by the Guardians—not by politicians trying to put weight on the Guardians but by the Guardians.In the New Zealand investment environment if the returns in New Zealand are poor if we could collectively create an environment that the Guardians don't think is worth investing in guess what! They and a whole lot of other people will invest somewhere else and that is not good for the future of New Zealand because capital is very very mobile. So the better our governance the better our stability the better our integrity the better our protection of property rights the better our productivity our infrastructure our education system and our tax and our regulatory systems are the more attractive we are not only to the super fund but to all investors whether they are New Zealanders or overseas people.But back to the fund. The independence of the Superannuation Fund and its Guardians is essential and section 58 on that is absolutely clear. It says that "The Guardians must invest the Fund on a prudent commercial basis and in doing so must manage and administer the Fund in a manner consistent with—(a) best-practice portfolio management;". They need to "[maximise the] return without undue risk to the Fund as a whole;" and they must "[avoid] prejudice to New Zealand's reputation as a responsible member of the world community."I'd like to say that we are in very very good hands and a little history might demonstrate this very very well. The fund's clear objective is to offset the growing cost of superannuation on the taxpayer. But there are a lot of assumptions built into this. The fund is projected to pay on average about 16 percent of the total cost of superannuation—get this—between 2040 and 2090. So I know Tom Rutherford spoke earlier about saying this is future stuff but Tom I can assure you that you'll be benefiting from this a long long time before that.Tom Rutherford: I can't wait—after my 40 years here!ANDY FOSTER: I think you can wait for a little bit.The Government made an initial investment of $2.4 billion in 2003 and the fund has performed exceptionally well. The average annual return since then has been 9.9 percent before tax but after costs. The Government has invested just $26 billion since 2003 and it's now worth as I said approaching $75 billion. That's a pretty darn good return. It's $40 billion more than the cost of the debt borrowed to invest it. So I would say to the folks particularly on this side of the House don't take another holiday from investing in that fund because it's been a good investment. The return is $16 billion to $17 billion above the passive benchmark fund and we need to keep on with it.In short the Superannuation Fund has delivered an outstanding performance and wait it gets better. The fund has received a large number of awards and this goes to the ESG side of things. They fall into three areas and together they tell you that our Superannuation Fund is right at the top of the game. In each of the last three financial years—2022 2023 and 2024—it is ranked the world's top-performing sovereign wealth fund—top-performing sovereign wealth fund—based on a 10-year return. So over 10 years it has been the best in the world. That is something to be very very proud of. It's also an exemplar recognised for quality of communication—again over a whole decade of performance. Also the fund is very highly regarded as a responsible ESG investor with a suite of related awards.So I think the fund is performing exceptionally well. Really what I'm saying is we should keep on relying on the legislation we've got there which is to let the Guardians of the fund get on and do the job that they are doing so well.Look I'd like to make two final points. First it was really interesting to look at a list of sovereign wealth funds. Of the 88 funds I looked at 37—including our Superannuation Fund—are described as "non-commodity" 14 were based on minerals and 36 were based on oil and gas and the biggest of those of course were the Norwegians who have a very very high standard of living. They have the highest use of electric vehicles but where do they get a lot of their wealth from? Selling oil and gas to other people.The last thing I wanted to say is that during this third reading—again going back to Dr Lawrence Xu-Nan he touched on superannuation eligibility and he said that it would be good if recent migrants were eligible for superannuation more quickly than the 10-year residency requirement we've currently got. Actually he's slightly wrong on that because this bill actually says that it's between 10 and 20 depending on the age of the person that's come in. But I completely disagree with him because if we start doing that kind of thing then the health and superannuation costs will really count against migrants of should we say more mature age being attracted to New Zealand. So I commend this bill to the House and I'm looking forward to it being passed into law tonight. Thank you."