John Key MP National Party Leader

15 October 2008

National: Investing in our future

National Party Leader John Key says a National-led Government will use the resources of the New Zealand Superannuation Fund to help achieve a step change in our infrastructure and drive greater productivity in our economy.

"National believes that a greater proportion of this increasing pool of capital, which belongs to all New Zealanders, should be invested in New Zealand to grow our economy. It is better to use more of those funds here at home to invest in our productive sector and broaden and deepen our own capital markets.

"This will have both short-term and longer-term positive impacts.

"In the short term, in a world where money for investment is going to be more tightly held and more closely guarded, it will help ensure New Zealand has the investment capital we need to get out of recession and into a period of solid and sustainable growth.

"In the longer term it will give New Zealand businesses a greater opportunity to grow from a domestic base and grow under New Zealand ownership further than they would otherwise have been able to."

Mr Key says National's policy is for the Super Fund to invest a greater proportion in New Zealand, while also safeguarding the fund as a source of future New Zealand superannuation payments, and overseen by independent guardians.

National will: * Amend the New Zealand Superannuation and Retirement Income Act 2001 to allow the Minister of Finance to give a direction to the Guardians of the Fund in relation to the proportion of the fund which is to be allocated to New Zealand. * Set the target of at least 40% of the Super Fund to be invested in New Zealand.

"In every other regard, the Guardians of the Fund will continue to invest as they do now. They will invest on a prudent, commercial basis, and by making their own decisions about what asset classes to invest in, in line with best-practice portfolio management.

"In particular, the guardians will determine the appropriate rate at which to increase their investment in New Zealand to 40%, taking into account their need to manage their overall risk profile, the availability of quality investments, and the impact of increased investment on local markets."

The range of investment opportunities available to the Fund include the following: * New Zealand listed equities * Government bonds * High-quality commercial paper * Local Government fixed-interest securities * Private equity * Property, infrastructure, forestry, and commodities

Mr Key says National will also work to create more investment opportunities that the Super Fund can take up in New Zealand, including longer-dated infrastructure bonds.

"Additional investments in New Zealand infrastructure made by the fund as a result of this policy change will be over and above the increased government commitment to infrastructure that we have already announced.

"This announcement adds to the economic management plan that we released last week. We will have more to say on economic policy in the days to come.

"We must ensure that we emerge from the international credit crunch without severe damage to our economy, and that we have in place policies that will put this country onto a serious growth path at a time when the economies of our trading partners will still be subdued. The reality is that the underlying issues facing the New Zealand economy remain unchanged.

"We have, of course, already announced our three-year plans for personal tax reductions, which we believe will play a very positive role in assisting our economy, and which will reincentivise New Zealanders to work hard in this country, to the ultimate benefit of all of us."

ENDS

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