Goldsmith Paul: New Zealand Superannuation and Retirement Income Amendment Bill — First ReadingText is incorporated into the Bound VolumeGoldsmith Paul: New Zealand Superannuation and Retirement Income Amendment Bill — First Reading[Sitting date: 19 March 2014. Volume:697;Page:16811. Text is incorporated into the Bound Volume.]PAUL GOLDSMITH (National):It is my pleasure to speak on this bill the New Zealand Superannuation and Retirement Income Amendment Bill. It is interesting that Mr Parker makes the claim: “Vote Labour and get your fair share.” It will be a fair share of not very much at all but it will still be a fair share. The problem with Labour is that it is all about spreading the gains but not about actually making the money in the first place. It is the same party that has in its manifesto that we are all about equality of outcomes. How we are going to achieve that in today’s world without a high degree of force is beyond me. That I think is the essence of the problem that we have with the Labour Party at the moment. [Interruption] It is listed in Labour’s manifesto.Hon Bill English: That’s not their policy.PAUL GOLDSMITH: My understanding is that the introduction to the Labour Party’s policy platform from David Parker himself is going to guide the manifesto when Labour is all about equality of outcomes. That means that everybody has got to have the same outcome no matter whether they work hard or do not work hard or whether they are lucky or they are not lucky or whether they are good at rugby or not good at rugby or whether they have got five kids to five different parents—they are all going to have the same outcomes. You do not have to look too far in history to see that you can achieve that only through some very serious force.But getting back to the first reading of this bill its main purpose is to enable the New Zealand Superannuation Fund to invest more efficiently and ultimately generate more return per unit of risk. This is important because the Superannuation Fund invests money on behalf of the Government some $25 billion at the moment and this will help to pay for the increased costs of superannuation in years to come. The long-term growth-orientated invested fund has about $25 billion in assets including about $3.7 billion in New Zealand but most of it is offshore. It is managed by the Crown entity the Guardians of New Zealand Superannuation. The Superannuation Fund as we have heard started in 2003 with $2.5 billion in cash and since then it has returned about 9 percent a year and is a world-class sovereign wealth fund now standing at $25 billion. It constitutes about 40 percent of the Crown’s portfolio. [Interruption]We hear members on the other side from New Zealand First say: “Oh well if they are such great returns why do we not borrow lots of money and put it into the fund?”. They do not seem to realise that there is a connection. The Government suspended its contributions in 2009 because with fiscal deficits as they were the Government debt was already increasing rapidly and it was imprudent to borrow more to invest in global investment markets.I think most people understand that in their own household budgets. You do not go and get your mortgage extended in order to invest on the stock exchange because you know that certainly you have to pay your money back to the bank regardless of what happens but there is no guarantee that what you invest in the stock exchange will necessarily be the same amount as the money that you put in. You can lose money. That is how it works. There is no question that the Superannuation Fund has done a very good job of its investment and it is to be commended absolutely.This bill relaxes the control restrictions in section 59 of the New Zealand Superannuation and Retirement Income Act to allow the guardians to control passive holding subsidiaries which are described in the bill as fund investment vehicles. These changes will enable the fund to structure investments more efficiently and give them some more flexibility.I think that makes sense after the fund has been in existence for just slightly more than a decade. It will continue to be prevented from holding or taking substantial controlling interests in any underlying operating entity such as through takeovers. We do not particularly want them running or controlling separate companies but we do want them to have the ability to control passive holding subsidiaries. The fund has been seeking these as a high priority to enable them to do their best job for New Zealand and to give us the ability to offset some of the money that we will be spending on superannuation in years to come.The income arising from the fund is included in the New Zealand tax base and that is important. We do not want any particular tax treatment of this to be unusual. The bill amends the Income Tax Act 2007 so that any fund investment vehicle or companies in which interests are held by the guardians for the fund will not be subject to the exemption for public authorities so that they can make their decisions based in a tax-neutral setting.The bill also seeks to amend the powers that can be delegated by the board to the guardians. Currently the Act provides that the board must not delegate any of the following powers: the power to grant a power of attorney the power to appoint an investment manager and the power to appoint a custodian. The bill proposes to remove these restrictions. The effect will be that the Crown Entities Act 2004 will apply in full.I am very much looking forward to the submissions and the select committee process in the Finance and Expenditure Committee. I am glad that the Labour Party members have indicated their support for this bill and I hope that together we will be able to work on this legislation and make sure that it is absolutely fit for purpose as I am sure it is as introduced and I look forward to that discussion. Thank you.