Donald Rod: Questions for Oral Answer — Questions to Ministers 
Donald Rod: Questions for Oral Answer — Questions to Ministers 
[Volume:609;Page:6631] 
4.  
ROD DONALD (Co-Leader—Green) 
 to the  
Minister of Finance 
: What is the projected change in the net unfunded liability of the Government Superannuation Fund for the year to 30 June 2003 and how does this compare with the projected net change in the 2002 Budget? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Since the 2002 Budget Economic and Fiscal Update the unfunded past-service liability for the Government Superannuation Fund has increased by $2.4 billion. 
Rod Donald 
: How much did overseas investment losses contribute to the deterioration of the unfunded past-service liability of the Government Superannuation Fund in each of the last 2 years and how do these results compare with the performance expectations of the fund—that there is a no more than 1-year-in-6 chance of an unexpected deterioration of more than $200 million in any one year? 
Hon Dr MICHAEL CULLEN 
: Unfortunately I do not have those exact numbers but I can tell the member that the bulk of that $2.4 billion change is due to interest rate changes and the application of a discount rate that has reduced over the last year. Those tend to be cyclical changes which reverse out over time. The international markets have been bear markets for the last 3 years and as I heard somebody comment at the weekend if we all invested just in property—as a certain party does—we would not necessarily do any better over the long term. 
Hon David Carter 
: With the Government Superannuation Fund having made significant losses during the last 2 years how confident is the Minister that the New Zealand Superannuation Fund will achieve a greater than 9 percent annual return as he has consistently predicted? 
Hon Dr MICHAEL CULLEN 
: Those are not my predictions; those are Treasury’s numbers applied to—[ 
Interruption 
] It is not a matter of washing one’s hands. In my experience no Government in recent times has been responsible for the numbers. The basic numbers apply to the Government; Treasury produces the numbers. The board of guardians of the New Zealand Superannuation Fund—[ 
Interruption 
]I am interested to learn that that is what the National Party did. I shall go back and look with interest at some of their Budget exercises now. 
Rod Donald 
: Can the Minister confirm that the Government Superannuation Fund will now need to earn 9.6 percent after tax for the next 8½ years to meet its own investment target of 6.5 percent over its first 10 years; and is he concerned that the New Zealand Superannuation Fund will fail to meet its expected performance targets too given that the deputy chair of the Government Superannuation Fund is the chair of the New Zealand Superannuation Fund and that both funds use Frank Russell Co. as advisers? 
Hon Dr MICHAEL CULLEN 
: There are a number of questions there. The principal advisers to the board of guardians are not the firm of Frank Russell Co. It uses different advisers and has only subsidiary advisers in Frank Russell Co. The member should wait for the asset allocation before rushing to comment on it. The board has not made up its mind yet on that. This fund is not to be drawn down for 20 years so performance over the next few years is largely irrelevant—taking the longer-term view. I remind the member again as I remind members opposite that over the last 80 or 90 years on average equities have outperformed Government bonds etc. and any fund that takes a long-term view will be balanced between the two. 
Hon David Carter 
: With the Government Superannuation Fund having made significant losses during the last 2 years how confident is the Minister that the New Zealand Superannuation Fund will achieve a greater than 9 percent annual return—as Treasury had predicted and on which figure he then sold this package to New Zealand? 
Hon Dr MICHAEL CULLEN 
: That was not the basis on which the package was sold; the basis was securing the future of New Zealand superannuation. I note that only a couple of parties in this House are clearly prepared to sign up to that package in terms of both funding and payment. 
Rod Donald 
: Does the Minister agree that extending the 6 percent savings incentive currently available to employees earning more than $60000 to those hard-working New Zealanders who earn less than $60000 would be a better way to use taxes than the Superannuation Fund gambling them on the overseas sharemarket; and how much would such a policy cost? 
Hon Dr MICHAEL CULLEN 
: To extend what is proposed in the bill introduced this afternoon and go to that 6 percent differential would cost an additional $54 million a year—I think it is. But the member misses the point. That is about private savings. I trust that the Green Party is not now suggesting that there is a trade-off between private savings and New Zealand superannuation.