Robertson Grant: New Zealand Superannuation and Retirement Income Amendment Bill — Second ReadingText is incorporated into the Bound VolumeRobertson Grant: New Zealand Superannuation and Retirement Income Amendment Bill — Second Reading[Sitting date: 07 May 2015. Volume:705;Page:3317. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central):In 2 weeks’ time when the Minister of Finance who has just resumed his seat comes to deliver the Budget we on this side of the House will be looking expectantly forward to what we were told we would be getting in the Budget this year which is a surplus which in turn would have allowed the Minister of Finance to restart contributions to this fund. Sadly from what we have heard in recent days the finance Minister is set to break the promise to New Zealanders that there would be a surplus this year and presumably in turn he is set to break another promise which is that he would restart contributions to the Cullen fund—the Superannuation Fund—once we got into surplus.It is on this side of the House regrettable that the fund does not have that. It is performing extremely well—that is true—but the bottom line is that in order to continue to provide New Zealanders with security in their retirement in the future we would like to see contributions restart. I know that Chris Bishop wants to see contributions to the scheme restarted but that will occur only when this Government sorts out its finances finally follows through on what it promised New Zealanders and actually gets us into surplus. Sadly from what we heard today from the finance Minister in question time I do not think we are going to see any new ideas. I think those members are out of ideas they are out of touch and they are not able to come up with things that will allow them in this Budget to restart contributions to the New Zealand Superannuation Fund.The Labour Party will be supporting this legislation although I do note that it will be good to see the Supplementary Order Paper that the Minister of Finance referred to. It did not come through the Finance and Expenditure Committee and it will be interesting to see it arrive I guess on the floor of the House at some point. Obviously we would want to read that before committing to supporting it. In general this bill is largely of a technical nature. The Guardians of New Zealand Superannuation came to the committee and explained in some detail the way in which they wanted to use fund investment vehicles to continue to grow the fund in a sustainable way.At the moment as the Minister has articulated section 59 of the principal Act the New Zealand Superannuation and Retirement Income Act prevents the guardians from controlling any other entity. When the legislation was created the purpose of that was to ensure that this was genuinely an investment fund a fund that took the resources of New Zealanders and turned that into superannuation payments for the future based on strategic and good investments. It was not based on the guardians of the fund being the controllers or the owners or the directors of entities but rather they used those resources to invest—guardians of investment. Section 59 made that clear.What has become clear to the guardians and what they brought to the committee was the notion that actually in order to be the most effective investors of New Zealanders’ funds they needed to be able to make use of funding investment vehicles. They were challenged in the committee about what this really meant. Did this make them the controllers of these entities in some way or other? But they were able to make a case to the committee that actually what it will mean is that they will control the assets created by these entities but they do not have control of the businesses themselves.To put it in layperson’s terms we are not expecting the guardians to go out and run farms or forests or whatever it is that they invest in but we are expecting that they have asset investment vehicles that will allow them to be more efficient and more effective in getting returns for taxpayers. On that basis we on this side of the House consider that that approach is good. There are enough rules around ensuring that the investments are prudent. We feel that means that the overall balance of the Act is not unduly changed by this particular amendment but clearly it does make a change to section 59 and we thought that that was justified in this case.The Minister raised some questions about the role of the Minister of Finance and whether or not a particular funding decision should be made. I want to make clear that we on this side of the House support the independence of the guardians. We think that has served the fund well. Quite clearly the guardians operate under whatever the parameters of the Act are and today we are changing one of those parameters.It would be completely possible and conceivable and within the spirit of the law for a future Government to decide to change some of those parameters. An example of that would be in the consideration of how much investment happens in New Zealand. That would not be telling the fund what investment to make. It would not be directing the fund and saying: “You must invest in a particular company or in a particular class of asset.” But what it would be doing is recognising something that the fund itself has said which is that it would like to increase the proportion of its investments into New Zealand.From a Labour Party point of view we do think that is something worthy of consideration. We do think that for example it would be possible to take a very small portion of the fund’s resources and see it invested in small and medium enterprises or in funds that would in turn support small and medium enterprises. That is not the Minister of Finance directing how an investment would be made; it is merely creating the framework in which the guardians would operate. So I do not think the Minister should take any indication that we are interested in the fund having a kind of role that compromises the way that the guardians work or the way that their independence operates. We certainly on the main provision in the bill have been convinced by the argument advanced by the fund and by the controls that are around that.There are a number of other matters that are dealt with that are largely of a technical nature. I want to refer to one of those now and that is the question of the application of the Official Information Act and the Ombudsmen Act to these new fund investment vehicles that are going to be created or the use of them that is going to be enabled under this legislation. We did discuss this in some detail in the select committee. One of the things that the Minister and others have noted is that the transparency of the fund is a good thing. For instance it enables parties in this House to raise concerns about some of the classes of assets and some of the investments that the fund makes and that is exactly as it should be. However what we discussed at the select committee was whether actually it is right that the actual fund investment vehicles themselves will be subject to the Official Information Act.What was brought forward to us was of course the fact that the guardians themselves are subject to the Official Information Act. So in their actions all information that they hold about the fund investment vehicles is now subject to the Official Information Act. The fund investment vehicles themselves are at arm’s length and will now not be subject to the Official Information Act or the Ombudsmen Act. I have to say that on this side of the House there is a balance to be struck here and I think we need to see how the vehicles operate over time to ensure that we are getting the level of transparency that we have got used to in the overall operation of the fund.So we certainly can support that clause on the grounds that all of the information that the guardians themselves hold about an investment vehicle is subject to the Official Information Act and indeed through that to the Ombudsmen Act but that the fund investment vehicle itself is not directly under those Acts. We will watch to see how that works but I am pretty clear that we should continue to get the same level of transparency that we have had up to now. So those are two of the main issues that arose in the consideration of this.Just in the brief time remaining to me I want to say two things that arose around the time that we were considering this bill that are relevant. The first of those is the excellent returns of the fund. We should be proud that the fund has now got itself up to nearly $30 billion worth of value. It has done a good job and we should respect that. However that does not mean that the fund is not open to scrutiny for particular types of investment and at the time that this arose we learnt of the nearly $200 million that had been lost in the investment in the Portuguese bank the Banco Espírito Santo of Portugal. We are still concerned on this side of the House about the cash fund that is used for those investments. Investments that go through several pairs of hands will be inherently more risky and in this case they were trying to save a bank that was already known to be in trouble. So we do need our fund to be careful in that management. We do need to know that due diligence is done. The fund managers have assured us they did that due diligence but that kind of investment is the one that obviously we want to know about. We are not saying that it cannot be made but we do believe that that level of risk through that series of transactions is one we need to look out for.I and other members of the Labour caucus have met with those administering the fund. We have discussed this. We are aware that they are following through on this. We want to make sure that they do follow through. They believe what has happened is illegal and they should be able to have remedy through the courts but it is an example of where transparency is important so that we can see that kind of investment and raise questions about its suitability. But on this side of the House we are very proud about the Labour Government’s association with this fund. We thank Michael Cullen for his involvement in creating it and we do believe it continues to serve New Zealanders well.