Cullen Fund loses $4.7 billion in 19 months

1. New Zealand Superannuation Fund"”Funding 1. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Is the Government considering any changes to funding the New Zealand Superannuation Fund; if so, why? Hon JOHN KEY (Prime Minister) : Yes; because under section 42 of the New Zealand Superannuation and Retirement Income Act 2001, Treasury must, each financial year, recalculate the Government's required contribution to the fund. Hon Phil Goff: What is the Prime Minister's response to comments made by the chief executive of the Superannuation Fund, Adrian Orr, and by Brian Fallow in the New Zealand Herald that it is totally misleading to claim that New Zealand is borrowing to pay for the Superannuation Fund, given that he himself has made that claim? Hon JOHN KEY: It is factually correct. The Government will be borrowing if it continues to make payments into the fund. At the prescribed rate, it will be borrowing $50 million a week to make those funds. Although one does not want to take away from Adrian Orr's performance or that of the New Zealand Superannuation Fund, let us put a few facts on the table. Between 1 July 2007 and 31 January 2009, the Crown borrowed and paid into the fund $3.4 billion. All of those contributions have been lost, plus a further $1.3 billion. The fund has lost $4.7 billion in 19 months. Hon Phil Goff: Is the Prime Minister saying in that answer that Brian Fallow and Adrian Orr are wrong to state that it is arbitrary to draw a circle around any one item around the Government's outlays and to say it is funded by debt, and that we could equally claim that the tax cuts are funded out of borrowing? Hon JOHN KEY: In answer to the first part of the question, yes. Hon Phil Goff: Does the Prime Minister understand, given National's track record in the 1990s of tampering with superannuation"”in 1991 and 1999"”that his and Mr English's recent comments both undermined the certainty that people need around planning for their retirement future and the political consensus that superannuation should no longer be a political football? Hon JOHN KEY: Let me make this assurance. Because the Leader of the Opposition seems to be unable to ask the obvious question, I will ask it of myself: is the Government considering the payments into the fund? The answer to that question is yes. As part of the Budget process I have asked the Minister of Finance to get Treasury to look at the possibility of temporarily contributing a lesser amount to the fund. That is expressly provided for under a section of the Act. Let me say, in answer to the question that the Leader of the Opposition asked, there will be no change to superannuation payments for New Zealanders. They are not linked to this fund. I have made it quite clear that if superannuation was to be cut"”and I will make the same claim here in the House today"”then I will resign as Prime Minister and resign as a member of Parliament. Hon Phil Goff: The problem is that the Prime Minister will not be the Prime Minister by the time the problem arises. Does the Prime Minister understand that in 20 years' time one in four New Zealanders will be in retirement and, therefore, that it makes sense, while the baby boom population is still in the workforce, that we pre-fund the scheme to ensure that the entitlements he promises can be guaranteed for the future? Hon JOHN KEY: Yes, I understand that, and, yes, I support the pre-funding of superannuation. But the Government also"” Hon Phil Goff: But you're not going to do it. Hon JOHN KEY: Well, the Government faces some very difficult challenges, and that means that over the course of the next few years, the Government will be borrowing tens of billions of dollars. The question for the Government is simply whether for a period of time it pays less into the fund in order to take the pressure off its borrowing requirements. I have asked the Minister of Finance, as part of the Budget process, to consider that option.