3 June 2001 Media Statement

Happy to make super an election issue - Cullen

"The Government has always said that if we cannot get a majority in this Parliament for our superannuation policy, we will be more than happy to campaign on it in the 2002 elections," Finance Minister Michael Cullen said today.

"That remains very firmly our position. The electorate is anxious to get
stability and security in this area and the New Zealand Superannuation Bill is by far the most robust and fairest product on offer."

Dr Cullen was responding to the Greens' announcement that they will vote against Part II of the Bill - the section which deals with the structure, governance arrangements and management of the Fund.

"Parties not faced with the hard decisions of government can opt for the easy course. I think the Greens have done that.

"They will vote for Part I of the Bill guaranteeing New Zealand Super' at current entitlements. But they will not vote for the mechanism to pay for it - and they have not put up a credible alternative.

"The net cost of NZS is now 4 percent of all activity in the economy. Within 50 years, that will have risen to 9 percent. Unless some forward provision is made to smooth those costs, future governments will have to either cut the pension [which the National Party supports but the Greens do not] or raise taxes [which both are ominously silent on.]

"And the 'solution' the Greens offer is vague. They talk about creating full employment, stronger communities, preventative health and combating climate change. All worthy goals and all being advanced by this Government. But they don't say how that will help face the problems of an ageing population.

"They want to spend the same dollar three times - on social services, on economic development and on holding debt. That is no more credible when they say it than it is when National says it.

"Just as individuals must save for their old age, so must societies. The demographics require that we run strong surpluses now, and build up assets. To go on a big spend-up is to gamble with our children's futures," Dr Cullen said.

"The Government shares the Greens' concern that the New Zealand Superannuation Fund should not participate in unethical investment. That is why the legislation requires that the Guardians of the Fund must invest in a manner consistent with avoiding prejudice to New Zealand's reputation as a responsible member of the world community.

"This instruction is buttressed by several other requirements," Dr Cullen said.

These included a requirement that the Guardians establish a formal set of investment policies, standards [including ethical standards] and procedures; that they review these annually and that they produce an annual statement certifying compliance.

This would ensure adequate scope for Parliamentary and public scrutiny of the Fund's activities.

"On top of this, the Bill also provides that there has to be an independent review at least once every five years of how effectively the Guardians are performing their functions and duties.

"But there is an important balance to be maintained between this and ensuring that the Fund is run without political interference and that it is allowed to remain focused on its purpose which is to secure New Zealand Superannuation at current levels into the future.

"To clutter it up with other objectives is to risk its ability to deliver on that objective and is also to invite government meddling in the Fund's day to day investment decisions - an outcome which nobody would want.

"The amendments sought by the Greens would clearly mean crossing the line in terms of political direction and control of the Fund. I am not prepared to do that," Dr Cullen said.

ENDS

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