NZ First, Alliance back National, sell out support
13 June 2001
The Green Party has accused NZ First and the Alliance of selling out their supporters by voting to allow the public service pension fund - the GSF - to be invested on the international sharemarket.
"I can't believe NZ First and the Alliance are prepared to vote against their principles by supporting public servants' savings being gambled on the global casino economy," said Green co-leader Rod Donald.
"NZ First claims it puts New Zealanders first and that it's committed to building our country's economy yet it is voting for billions of dollars of Kiwi savings being invested off shore instead of at home.
"The Alliance, particularly the Democrats, talk about providing government funds at low interest to build strategic infrastructure and strengthen our social fabric yet they are also voting for the massive shift away from investing in the public sector and towards playing the share market.
"Meanwhile National can't believe their luck that Labour and their allies have implemented their policy to privatise the investment and administration of public servant's savings," he said
Only the Green Party opposed the Government Superannuation Fund Amendment Bill which has just been reported back from the Finance Select Committee.
The Bill sets up a Crown entity with the power to invest $3.4B of public servants' superannuation savings in the sharemarket. The fund had been administered by the Ministry of Economic Development and could only be invested in Government bonds and other debt securities.
As at 30 June 2000, $2.229B (65% of the fund) is invested in NZ Government Bonds, $242 million (7%) in SOEs and Crown entities and $330 million (9%) in other bonds and securities. The current rate of return (after tax) on these investments is 3.75%, down from 5% in previous years.
"We oppose this bill because it is neither prudent nor desirable to change the present model for investing the savings of public servants. While the current rate of return is low, this is balanced by the fact that the Government will end up paying higher interest costs as the fund stops investing in government bonds.
"The fact that fund managers 'achieved' a 9.4% negative rate of return on their investments in overseas stocks for the March year demonstrates the risks of the Government's proposed investment policy.
"The Government is obliged to fund from taxation the difference between public service pension payments and the Fund's income. It would therefore be forced to cut spending in other crucial areas or raise taxes or increase borrowing to fund any shortfall in expected revenue, let alone an outright loss, as a result of the volatile sharemarket."