Wedd Catherine; Willis NicolaCATHERINE WEDD (National—Tukituki): Thank you Mr Chair. It's great to stand up here and look at this bill and we really enjoyed the second reading where we did see cross-party support for this very very important issue of the Superannuation Fund in New Zealand. You know we'll all agree that there's been some great success with this fund and with the ageing population that we are seeing in New Zealand at the moment it's critical that we have some good investment and we can grow this fund so that we can sustain this ageing population.But I was particularly interested because obviously this opens up more opportunity for investment not only internationally but also in New Zealand whether that be in infrastructure or even looking at—particularly agriculture at the moment have seen some wonderful successful investments from the Guardians of New Zealand Superannuation around agriculture whether that be in our orchards in horticulture or whether that be in dairy and I've seen some viticulture investment as well. So that's really positive and obviously this amendment is going to open up more of that opportunity.But I was particularly interested in amended section 49A(b) inserted by clause 5 an entity that is formed or controlled by the Guardians for the purpose of holding facilitating or managing the investments of the Fund" and just around I suppose the implications of that moving forward when we are looking at investment around New Zealand. Obviously one of the members did point out before that it is very important that the Guardians do act independently and make sure that there is that independence when they are making those decisions around those investments. But if the Minister in the chair Nicola Willis could perhaps just make a few comments around that that would be much appreciated.Hon NICOLA WILLIS (Minister of Finance): Well the question relates to the sorts of investments that the fund may wish to have a controlling interest in and the circumstances in which it would make that choice. The member in particular highlights a sector which I too have great confidence in and optimism for which is the New Zealand primary industries which certainly have a very bright future in a world that is looking for sustainable protein and nutrition—and we produce the very best.I'd start by saying that because the Super Fund is by its nature a long-term investor that does distinguish it from some other investors in that it has the ability to ride out short-term market volatility and can instead wait to sell assets until the market has improved and it is right to do that. By its nature it has a long-term horizon and so isn't investing for short-term gain or short-term return and that lends itself very well to the concept of having a controlling interest. If an investor is investing in something seeing long-term potential sometimes what that will require is changes to the way that a business is operating—recapitalisation in different ways new personnel new approaches—which necessarily require a controlling interest in order to exercise those changes. These two things come together when you think about an industry like the primary industries where potentially there are areas that if there was significant new investment or new innovation could over the medium- to long-term offer significant additional return.So all of this is a complicated way of me saying that I will never and should not tell the Super Fund who it should invest in or what it should invest in but it does seem to me that agricultural industries would be a category of investment that the fund would consider and that having a controlling interest in would enable them to consider a broader range of investments.More generally beyond agriculture it is obvious that when we look at New Zealand we've actually seen a reducing proportion of the Super Fund's investments being in New Zealand over time. Well we can envisage that happening if we don't allow it to broaden out to investments which require a controlling stake which is to say I think there's a risk if we weren't passing this legislation that the Super Fund would feel increasingly constrained by what investments it could make in New Zealand because it wouldn't be able to have a controlling stake and therefore would look increasingly offshore for those sorts of growth opportunities and innovation opportunities.So I would put to members that by allowing this change this controlling stake we're opening up a whole new range of investments for the Super Fund medium and long term assets and there could be some significant economic benefit from having another investor at scale investing in growth industries and businesses in our own country.Certainly when you look around the world at pension funds and similar funds in other jurisdictions as they have grown larger as they have accumulated scale they have made increasingly sophisticated investments where they do hold those controlling interests and in some cases have built up expertise in particular industries or particular ways of investing. It is not impossible Catherine for me to envisage a world in which the Super Fund would develop expertise in a particular sector or a particular area and would have its controlling interests aligned with that. So I do thank the member for the question—I think it's a good one."