Cosgrove Clayton: New Zealand Superannuation and Retirement Income Amendment Bill Taxation (New Zealand Superannuation and Retirement Income) Bill — Third ReadingsText is incorporated into the Bound VolumeCosgrove Clayton: New Zealand Superannuation and Retirement Income Amendment Bill Taxation (New Zealand Superannuation and Retirement Income) Bill — Third Readings[Sitting date: 20 October 2015. Volume:709;Page:7365. Text is incorporated into the Bound Volume.]Hon CLAYTON COSGROVE (Labour): We in Labour support this bill. We support it wholeheartedly in that we believe that any improvements to the New Zealand Superannuation Fund or what is colloquially called the Cullen fund as set up by the Hon Dr Michael Cullen are to be applauded.I do take on what the Minister of Finance said in terms of the independence of the fund. When it was set up and the Guardians of New Zealand Superannuation were put in place by Dr Michael Cullen one of the key features was that independence and not only that but there was a requirement—and it may seem self-evident to some—for the fund to invest according to world’s best practice. There has been from time to time political pressure from some parties that would like to designate rather than encourage or promote that the Superannuation Fund invest in X or Y or invest very heavily in New Zealand—which of itself is a laudable aim—or invest in responsible investment even though the definition of that is somewhat vague and it depends on who you ask. The guardians and the legislation have always resisted that proposition because at the end of the day those guardians are managing taxpayers’ money. They are managing money that is supposed to—certainly up until the suspension of payments from the Government’s coffers into the fund in around I think 2009 the aim of that fund was to offset as the Minister of Finance has said national superannuation and to provide a buffer in respect of the pension.I would note though with interest that it was the National Party for the record that opposed the fund. This is the second bill where National Ministers have got up and had a road to Damascus experience. What is the biblical term? The scales have fallen from their eyes and they have—Dr David Clark: You were there on the road to Damascus.Hon CLAYTON COSGROVE: Was I? Thank you reverend. I bow to my religious colleague in the front row. They have sort of had a turn-round on what they opposed vociferously in Opposition often calling some of these things communism and other things—great colourful language. Once they got their feet under the Cabinet table they worked out that OK it was not their idea but it was a damned good one.I think the tragedy of this fund—and I do along with the Minister thank the guardians and those professional investors who have grown this fund. Since its inception in 2003 the fund has returned on average 10.3 percent a year. It returned 18 percent on its investments last year and lifted its value to $29.6 billion as at June 2015. The tragedy however is that since the Government suspended its payments in 2009 had those payments continued it is estimated by independent advice that the fund would be worth something in the order of $47.8 billion. The argument was “Well we’re not going to borrow money to put into the Superannuation Fund and invest.” even though we were getting on average 10.3 percent gains which was a hell of a lot better than anybody else was getting at the market right through the duration of this fund. But actually the Government was prepared of course to borrow for a tax cut. It was not prepared to borrow to invest; it was prepared to borrow for a tax cut.I note Mr Bennett will be the next on his feet to give us a very authoritative dissertation on this piece of legislation. We await with bated breath. The tragedy is that those payments were not kept up. The Government decided to suspend them. The Government has said that it will not resume them until net debt is 20 percent of GDP and on current predictions that is 2020-21. So that is a tragedy because all New Zealanders I think across the political spectrum supported the inception of the fund. Many were a little bit concerned you know about a Government setting up a fund in this way but the Minister did make comments and I do support them in respect of maintaining the independence of the fund from the sticky fingers of politicians.I worry more about the sticky fingers of National politicians as they go searching for money anywhere they can—you know in the next round of asset sales perhaps as we debated last week. But it is appropriate because politicians of themselves are not experts generally—very few of them anyway; perhaps the Prime Minister is and I say that in all seriousness—in investing money and working and managing funds.Chris Bishop: That’s definitely true.Hon CLAYTON COSGROVE: Especially that member. So it is important for public integrity and public confidence that that independence is maintained.I share the Minister’s view about ensuring that the fund does not take a majority interest for the reasons that the Minister has said. It would take the focus off pure management of funds if you were effectively trying to run the companies that you have a majority stake in. I think this fund has proved its worth. I would argue that the sooner we can recommit to and re-engage in the Government instalments or the Government funding the better-off we will be. I suppose this combined with KiwiSaver is as good as you get unless you go to compulsory superannuation as our Australian cousins have. It is probably the next best thing. It is the Government being responsible.For those who opposed it they have been proved wrong; for those who were sceptics they have been proved wrong. It has more than exceeded its obligations well ahead of most other funds I am told in the market. So we support the bill. We would urge the Government to resume as soon as possible payments into that fund. You know $47.8 billion as opposed to $29.6 billion is a huge gap. Imagine where we could have been if the Government had met the previous Labour Government’s commitments and continued that funding regime. The Government would actually be ahead of the game. If you balanced up the revenue against the interest paid on the loan it would be well ahead of the game on an average 10.3 percent gain.So we support the legislation. I do not think there should be a lot of argument about this legislation. As I say some parties have the view perhaps that the fund should be directed almost in its investment profile. I do not share that view. The only requirement should be that it invests to world’s best practice because there are thousands—hundreds of thousands—of New Zealanders going forward as we age as a population who will come to depend and are depending on how this fund performs as a buffer for an ageing population.We wrote it; we initiated it; those members opposed it. We have now brought them onside which is great; they are now for it. It would be great if the Government could support its views with some dollars out of the coffers because mark-to-mark this is an extremely good investment and the guardians the investors and the fund managers of the Superannuation Fund should be congratulated for what they have done since its inception in 2003.