Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search


Cullen's greedy gamble costs $425 million so far

Cullen's greedy gamble costs $425 million so far

Green Party Co-leader Rod Donald is calling for the Government Superannuation Fund Authority to be disbanded, and public service pensions to be run again by a government department.

The call follows revelations that the authority has lost a further $138 million on the overseas sharemarket over the six months to December 2002, taking total sharemarket losses for the fund over 14 months to $380 million. The latest loss was revealed by Finance Minister Michael Cullen in response to written questions from Mr Donald.

"The Government Superannuation Fund had operated profitably throughout its 55-year history as a government department until Dr Cullen handed it over to the seven-member, private-sector authority and told them to invest retirement savings on the overseas sharemarkets," Mr Donald said.

"Dr Cullen must be called to account for the spectacular failure of his "Think Big" investment strategy, and the authority has to go. Dr Cullen promised in Parliament that investing in shares rather than Government bonds would generate better returns and reduce fiscal pressure on the Crown. Instead his greedy gamble has cost the country at least $425 million, so far."

Mr Donald said that the fund sustained sharemarket losses from 1 November 2001 to 31 December 2002 totalling $380 million. If the money had stayed in the safe haven of Government bonds it would have earned another $45 million after tax on top of that - taking the total opportunity cost to $425 million.

"The result is a long way from the $272 million profit forecast by the GSF authority for the current financial year. Even if the shares now miraculously earned the 9.6 per cent return forecast by the authority, it would take 32 months - nearly three years - to recover the losses to December 2002. It's likely the authority has lost even more money over the past two months."

Overall, the authority has invested $1.692 billion on the international sharemarket, from 1 November 2001 to the end of December 2002. Despite its sharemarket losses over the first eight months, the authority increased its investment in overseas shareholdings from 33 per cent of the fund at the end of June 2002 to 42 per cent at the end of December 2002.

"I simply can't understand why they threw another $230 million at the sharemarket when it was so fragile and volatile, especially after already losing $242 million. It was a dumb time to invest in the first place and even dumber to keep on doing it.

"Dr Cullen cannot be allowed to continue gambling public servants' savings away. He and the authority have to be stopped before this farce gets any more out of hand," Mr Donald said.


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines


Sector Opposes Bill: Local Government Bill Timeframe Extended

The Minister of Local Government Peseta Sam Lotu-Iiga has asked the Select Committee to extend the report back date for the Local Government Act 2002 Amendment Bill (No 2). More>>


Breed Laws Don’t Work: Vets On New National Dog Control Plan

It is pleasing therefore to see Louise Upston Associate Minister for Local Government calling for a comprehensive solution... However, relying on breed specific laws to manage dog aggression will not work. More>>


Not Waiting On Select Committee: Green Party Releases Medically-Assisted Dying Policy

“Adults with a terminal illness should have the right to choose a medically assisted death,” Green Party health spokesperson Kevin Hague said. “The Green Party does not support extending assisted dying to people who aren't terminally ill because we can’t be confident that this won't further marginalise the lives of people with disabilities." More>>


General Election Review: Changes To Electoral Act Introduced

More effective systems in polling places and earlier counting of advanced votes are on their way through proposed changes to our electoral laws, Justice Minister Amy Adams says. More>>

Gordon Campbell: On Our Posturing At The UN

In New York, Key basically took an old May 2 Washington Post article written by Barack Obama, recycled it back to the Americans, and still scored headlines here at home… We’ve had a double serving of this kind of comfort food. More>>


Treaty Settlements: Bills Delayed As NZ First Pulls Support

Ngāruahine, Te Atiawa and Taranaki are reeling today as they learnt that the third and final readings of each Iwi’s Historical Treaty Settlement Bills scheduled for this Friday, have been put in jeopardy by the actions of NZ First. More>>


Gordon Campbell: On The Damage De-Regulation Is Doing To Fisheries And Education, Plus Kate Tempest

Our faith in the benign workings of the market – and of the light-handed regulation that goes with it – has had a body count. Back in 1992, the free market friendly Health Safety and Employment Act gutted the labour inspectorate and turned forestry, mining and other workplace sites into death traps, long before the Pike River disaster. More>>

Get More From Scoop



Search Scoop  
Powered by Vodafone
NZ independent news