Bennett David: New Zealand Superannuation and Retirement Income Amendment Bill — In CommitteeText is incorporated into the Bound VolumeBennett David: New Zealand Superannuation and Retirement Income Amendment Bill — In Committee[Sitting date: 30 June 2015. Volume:706;Page:4893. Text is incorporated into the Bound Volume.]DAVID BENNETT (National—Hamilton East): This bill is one that has been in front of Parliament for some time now and there has been a change at this level of the debate. One of the fundamental purposes of the New Zealand Superannuation Fund and one of the requirements of how it is managed is to make sure that there is a sense of independence from the Minister of Finance in the way that that fund is organised. It is a very fundamental point of policy in regard to the setting up of the New Zealand Superannuation Fund.The Finance and Expenditure Committee did in its great wisdom consider the issues around the Superannuation Fund at that time and one of the issues was in regard to land ownership. As that last speaker Stuart Nash spoke about the Superannuation Fund does—contrary to what he says—own considerable amounts of farmland. That farmland is predominantly in the South Island and those farms are effectively businesses in their own right. The issue the Superannuation Fund has is that as an owner of farmland it effectively controls that business entity.Under the rules of the Superannuation Fund it cannot have control of a New Zealand entity. So effectively the Superannuation Fund was engaging in those kinds of purchases in a roundabout way to enable it to get land purchases to give it that diversity in its book. In doing so there then comes the issue of where you take it to the next level around control and management. So it was considered by the Finance and Expenditure Committee and the select committee felt at that time that the Minister may have the ability to do an approval process for such investments. That was the original intent of what came before the House in the original bill.Subsequently that policy agenda of independence that policy driver that is fundamental to the Superannuation Fund has been decided to be the predominant policy rather than to look at how that control aspect may work. So to provide for that independence Supplementary Order Paper 89 takes away that test of having the Minister of Finance as the overall approver or disapprover of an investment so it maintains that independence.The other part of the bill which is a substantive change that was sought is in regard to investment through passive mechanisms for the Superannuation Fund. Effectively when you get to the scale of investment that they are at in the market and the rule is that they are not allowed to control the New Zealand business it becomes very difficult for them to invest to a significant level. What this bill does is it enables them through a passive investment vehicle to hold larger stakes. They will not actually be controlling those enterprises as such but they will have that passive ability to be a large-scale investor. Basically the thing we have got to look at in this bill is that giving them that ability to do so through the fund investment vehicles basically enables that passive investment by relaxing the control restriction that was section 59.Taking into account the fundamental principle that you want independence for this body as well there was no need for the Minister of Finance to have that other test on top of those investments. So that is the rationale behind why the bill is in its current state. It makes sense when you look at the fundamental principles of the legislation and why the Superannuation Fund was set up. It also enables the Superannuation Fund now to have much more flexibility in its investment portfolios and to take advantage of assets that it can actually invest considerably in for the benefit of all New Zealanders. We do have a small capital market and we do have a small number of significant players in that capital market. The Superannuation Fund is one of those significant players. We would not want to have them limited in their ability to fund the New Zealand market and to assist in the growth of the New Zealand entities by having unnecessarily controlled restrictions. The aspect of the change in this bill to enable those passive investment vehicles to make substantial holdings is for the benefit of all New Zealanders and the Superannuation Fund going forward. Thank you.