Hon Dr Michael Cullen
Minister of Finance

6 November 2008 Media Statement

Boost for New Zealand Super Fund

Finance Minister Michael Cullen today announced that any surplus revenue from the premiums from the retail and wholesale finance guarantee schemes will be invested in the New Zealand Superannuation Fund.

"As these premiums are an offset against liabilities under the schemes it is important that they are not frittered away," Dr Cullen said.

In the first instance, premiums will be held in a ring fenced account in order to ensure that they are available to meet any liabilities under the two schemes but as those liabilities come to an end those funds will be invested in the New Zealand Super Fund.

"With markets likely to continue to be a in a weak state for some time, it makes sense to increase investment in the New Zealand Super Fund which does not need to be realising any of its assets for another 20 years or so," Dr Cullen said.

"The fund is there as a long term patient investor, so buying cheap in the expectation of substantial long term gains makes a lot of sense.

"Income from the wholesale deposit guarantee premiums could well run into the hundreds of millions of dollars, or even more, depending on the level of take up of the scheme.

"Investing any surplus from these premiums underlines Labour's long term approach to economic and fiscal management and will help pay for New Zealand Superannuation into the future.

The alternative of using this money to fund short term consumption would be both irresponsible and short sighted," Dr Cullen said.

ENDS

© Scoop Media