Donald Rod: Estimates Debate —  
Donald Rod: Estimates Debate —  
[Volume:610;Page:7165] 
ROD DONALD (Co-Leader—Green) 
: 
 It is time for Labour to listen and it should start by listening— 
Rodney Hide 
: To the Greens? 
ROD DONALD 
: —to the Greens too; I thank Mr Hide for that. However let us start with the advice of the Government-dominated Finance and Expenditure Committee of which Mr Hide is a member. And I am actually talking about last year’s advice because it is always important to look at what we were proposing in the previous year to see how well the Government has done in terms of what it is predicting for the coming year. 
Last year the Finance and Expenditure Committee said: “We would expect the Government Superannuation Fund Authority to reconsider its investment strategy in the light of its recent losses to determine whether its level of investment in overseas equities is appropriate and whether to amend its strategy to reduce its exposure to less reliable investments.” Has it done that? I would say no because the Minister of Finance stuck his neck out 2 years ago and said that investing on the overseas sharemarket would make more money than keeping the Government Superannuation Fund in Government Bonds. 
The Government Superannuation Fund Authority is still planning to invest 42.5 percent of its fund on the overseas sharemarket despite suffering substantial losses since embracing this strategy. Yes we are grateful that it has reduced its target from 52.5 percent to 42.5 percent but that is cold comfort to the country the members of the fund and all the rest of the taxpayers who have to make up the difference. The consequence of ignoring the Finance and Expenditure Committee’s advice last year is that the unfunded liability of the Government Superannuation Fund has gone up by $2.4 billion in 1 year. I know that Dr Cullen will say that that is mainly due to the discount rate and that is true. But the fact is that the fund itself was estimated to be worth $2.99 billion at the end of June this year—that is what the statement of corporate intent says. That is $590 million less than when Dr Cullen set up the authority. 
Dr Cullen said the Government Superannuation Fund would earn 2.9 percent more than Government Bonds—that was his whole rationale for doing this. What did Government Bonds earn over the previous 5 years? They earned 8.96 percent. What is the Government Superannuation Fund Authority’s new investment target for 2003-04? It is a 9 percent return on its overseas investments. 
Can even that target be believed? Last year the target was 9.6 percent on the overseas investments. Overall for all investments the forecast net return from investment activities was $272 million. What is the authority’s new investment estimate? It is a $6 million return on investment activities—that is the total overall estimate for the year ended June 2003 compared with the projection of $272 million. That is an absolutely appalling result which exposes the disaster of this Government’s policy of taking the Government Superannuation Fund and putting it on the overseas sharemarket. 
Last year the authority predicted a net increase in net assets of $83 million; its new estimate is a decrease of $193 million in net assets. I am sorry to say it but “We told you so.” We are telling the Government that the same thing is about to happen to the New Zealand Superannuation Fund which is commonly known as the “Cullen fund”. 
The Government is planning to hand over $3.8 billion in this financial year to the so-called Guardians of New Zealand Superannuation—to do what with it? To invest it on the overseas sharemarket. Given that the Government Superannuation Fund has failed to meet its own performance targets why follow the same investment strategy for the New Zealand Superannuation Fund? We urge the Government to think again and to listen to its own advice and I am referring in particular to the recently released social report. 
As one of the two examples of significant cross-sectoral issues that are highlighted in the report’s conclusion stated: “It is common knowledge that the New Zealand population is ageing.” It goes on to state: “What the social report makes clear is that outcomes for those currently young who will be the workforce when the baby-boomers retire are not good. Youth suicide youth unemployment and children living in families with low incomes do not bode well for the skills and resilience of New Zealand’s future workforce.” Here is the key point: “Counter-intuitively one of the best ways to prepare for an ageing population may be to invest in the young.” That is exactly what we want this Government to do.