Bishop Chris: New Zealand Superannuation and Retirement Income Amendment Bill — Second ReadingText is incorporated into the Bound VolumeBishop Chris: New Zealand Superannuation and Retirement Income Amendment Bill — Second Reading[Sitting date: 07 May 2015. Volume:705;Page:3319. Text is incorporated into the Bound Volume.]CHRIS BISHOP (National):It is a pleasure to take a call on the New Zealand Superannuation and Retirement Income Amendment Bill. This is a sensible and prudent bill that will allow the guardians of the Superannuation Fund to run it better—the Cullen fund as it is affectionately known by Labour members. I do want to start my speech with a couple of points in rebuttal of Mr Robertson’s comments. The first is about the case that he has been prosecuting recently about the National Government’s apparent failure to achieve a surplus in the 2014-15 financial year. Of course we will not actually know whether or not that has been achieved until some time in the next financial year. But it is I have to say a rather comical complaint from Mr Robertson and Labour members after 7 years of complaining about the cuts that the National Government has made—or the fiscal restraint as we would term it on this side of the House—and after 7 years of claiming that the only thing the Government is getting wrong is that it is not spending more money. I remember the days of David Cunliffe and other finance spokespeople—there have been a few of them in the Labour Party over the last 7 years—talking about Keynesian spending and deficit spending being required. After all that time and after the fiscal legacy left to us by the Labour Government it is rather amusing I have to say to—Dr David Clark: Nine surpluses in a row.CHRIS BISHOP: It was not nine surpluses in a row actually Mr Clark. It was not nine surpluses in a row. The 2008-09 financial accounts ended up with a deficit of $4 billion because of your woeful mismanagement of the Crown accounts. So it is comical to hear the Labour Party complain about the failure to achieve surplus.The second point in rebuttal I want to say is to the claim by the Labour Party that the Government should have been basically putting money on the State credit card to invest in the sharemarket over the last 7 years through the Cullen fund. Because let us make no mistake about it: the equivalent of what the Labour Party has said is that over the last 7 years the Government should have been whipping out the Government credit card going down to the ANZ cashpoint on Lambton Quay whipping out as much money as possible paying exorbitant interest rates on that money and investing it in the sharemarket. Another equivalent would be borrowing more money on a mortgage in order to invest in the sharemarket. Well the Government I think quite rightly and quite wisely took the view that that was not a prudent use of taxpayers’ money in a time of fiscal restraint and declined to do that.Let me come to the objective of this bill. The major change the bill makes is to amend Part 2 of the Act to allow the guardians to control what is known in the terminology as fund investment vehicles or FIVs as some have called the and of course the current section 59 of the Act stops the guardians from controlling any other entity. The submission by the Superannuation Fund’s guardians was that this is inconsistent with the obligation under the Act to invest consistently with best management practice. The change this bill makes allows the guardians to lower their cost to manage their risk better and to structure their investments more efficiently. I think there is widespread unanimity across the House that this is a sensible change to make. It was interrogated pretty clearly and diligently by the Finance and Expenditure Committee. I was not a member of that committee having entered Parliament only in September 2014 but I have diligently gone and read the select committee report as all diligent members of Parliament do. That is right is it not Mr Mitchell?Dr David Clark: Very hard-working committee it was.CHRIS BISHOP: It is a very hard-working committee indeed. I have got to say that since the new chair and deputy chair have stepped on to that committee the workload has really increased. It really has. I also have to pay tribute to the ranking member from the Labour Party on that committee who has been a very conscientious member of Parliament on that committee.Let me talk briefly about the Superannuation Fund because I think it is not wrong to acknowledge that it is one of the better things that Michael Cullen did. The member who spoke before me Grant Robertson described Michael Cullen in a newspaper article at the weekend as one of his political heroes. That is fair enough. Michael Cullen kept things pretty tight fiscally for the first 6 years of his administration but I have got to say that in those last 3 years from 2005 to 2008 spending went massively out of control—and I might add for actually no tangible outcome. It was the Salvation Army in 2008 that lamented the lack of social progress under the last Government despite the very large increase in State spending.It is fair enough that Michael Cullen set up this fund. It is also fair to acknowledge on this side of the House that the National Party in those days opposed the setting up of the fund. But I think we would acknowledge nowadays on the Government benches that the Superannuation Fund has proven to be a useful effective and as the Minister of Finance rightly pointed out in his first reading speech on this bill quite elegantly structured scheme in order to maximise returns for taxpayers. It is essentially a form of pre-funding New Zealand superannuation essentially preserving tax rates at the rates they are now and in effect lowering real tax rates for taxpayers today to avoid increases in the future. Of course Grant Robertson rightly pointed out that the fund has made pretty good returns in the time since it was set up in 2003.I do want to briefly deal with the suggestion that we should change the independence of the Superannuation Fund. Every now and then you do get political parties or commentators or people involved in the financial industry who say that the fund should do something different from what it does now. The beauty of the fund as it is at the moment is that it is wholly independent from the Government. I believe and members on this side of the House believe that that is the right structure for the fund. When it comes to dealing with something like $30 billion worth of assets for the Crown about 40 percent of the Crown’s balance sheet that has to be managed prudently and effectively and that means independence from Ministers. But you do hear groups every now and then say that the fund should do something with the money that is invested in it.I was reading back through the first reading of this bill and we had a suggestion from Russel Norman that the Superannuation Fund should perhaps consider investing in the forestry industry. Well that is fair enough. It is Russel Norman’s prerogative to call for that. If he thinks it is a good investment I invite Mr Norman to go and borrow some money and invest in the forestry industry if there is a good return. But actually the right thing to do is to make sure that it is not what individual politicians standing in Parliament think; it is actually people who know how business works and actually people who know how to maximise returns. I am certainly not in a position to do it. No disrespect to my colleague Mr Norman but I do not think he is in a position to do it. You just heard a concession from Mr English the Minister of Finance that he is not either. So you have got to leave it to the experts. There is a real risk with interfering with the independence of the fund.You also hear a suggestion every now and then from the New Zealand First Party—which I have got to say is all over the shop on this issue—that there should be some tie-up between the New Zealand Superannuation Fund KiwiSaver and KiwiSaver guarantees. Indeed just a few moments ago you heard from Grant Robertson a suggestion that the fund should consider redirecting some of its money into small and medium sized enterprises. Again that is a thing that Mr Robertson wants. It is fair enough for him to call for that but I think when you start to have politicians interfering in the direction of the fund what you do is you potentially compromise the returns to the fund. The view on this side of the House is that you should have experts independent from the Government investing the funds on behalf of taxpayers and trying to maximise returns. Once you start fiddling with the independence of the fund there will be no end to what areas you might get involved in.The New Zealand Superannuation Fund is independent. It is regarded as one of the best sovereign wealth funds in the world. People often say that New Zealand should set up a sovereign wealth fund. Well we actually already have one and it is regarded as one of the best-practice sovereign wealth funds in the world. The changes promoted by this bill will allow the guardians of the Superannuation Fund to exercise their responsibilities to maximise returns for taxpayers. Mr Robertson rightly pointed out a bit of back and forth in the committee about allowing the use of funding investment vehicles. The Finance and Expenditure Committee came to the view that the changes would be OK and I acknowledge the Supplementary Order Paper being moved at the Committee stage by the Minister to further preserve the independence of the fund. I commend this bill to the House.