In a written answer to a question from Green MP Rod Donald, Treasury secretary Alan Bollard has admitted that the NZ Superannuation fund is only earning 5.2% while Government borrowing is costing between 4.8% and 6.8%.

"Dr Cullen and the Labour-Alliance government have conned the people of New Zealand with promises that their superfund would earn 7.5% after tax," Rod Donald said at today's Institute for International Research Conference in Wellington.

"Instead Treasury have now revealed that the cash balance held by the NZ Debt Management Office on behalf of the NZ Superfund is earning the official cash rate (OCR) of around 5.2%.

"It's highly likely that the Government is losing 1% on the money it has set aside for super given that the ten year bond rate is currently around 6.2%. That's a far cry from the profit the Government projected the superfund would make.

"The only consolation is that if money in the fund had been invested on the global share market the loss would have been even worse!" Rod Donald said.

Treasury declined to identify specific funding costs attributable to the cash transferred to the fund but interest rates on Government securities (Treasury Bills and government bonds) issue in New Zealand since July 2001 have ranged between 4.8 and 6.8%.

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