Greens not on board with super yet
Speculation is mounting the Green party won't support the Government's plans to partially pre-fund New Zealand Super.
Monday, May 28th 2001, 12:45AM
Finance minister Michael Cullen reckons he has the numbers to get the New Zealand Superannuation Fund bill through Parliament, but others aren't so sure.
Voting for the bill so far are Labour, its coalition partner the Alliance and Peter Dunne's United Future which gives the government a tantalising 60 votes - one short of a majority.
National and Act are likely to vote against the bill, however spokesmen from the respective parties, Bill English and Rodney Hide, told the Super Summit in Wellington last week that their parties had yet to make up their minds.
Attention is instead being focused on the Greens and New Zealand First. NZ First has indicated that although the fund isn't in individual accounts it will vote for the bill.
Greens co-leader Rod Donald says his party hasn't made up its mind.
"We haven't given our support to the bill yet," Donald says. "We haven't made a commitment."
He says the Greens are still working out their position on superannuation and will be making an announcement on June 3.
Speculation is mounting that the Greens will vote against the bill. (They abstained on voting whether or not to send it to the select committee).
Donald says the Greens support the first part of the bill that sets the rate for NZ Super at 65% of the average weekly wage. However, it wants to see the bulk of the dedicated fund invested in New Zealand and it wants the fund to be invested in a socially responsible way.
Some haveread Cullen's speech to the Super Summit as being dismissive of ethical investment.
"Any attempt to fetter fund managers with non-commercial – such as ethical – constraints is seen to lower the long-run returns achievable, Cullen said.
"You can have ethical investment, but at a cost because it limits the full range of choices a fund manger has. The subsidiary argument is that giving fund managers dual objectives always gives them an excuse: if returns are low it was because they were pursuing ethical investments; if they invest in controversial companies it was because they were seeking better returns.
"The jury is out on this".
Donald says "if Dr Cullen is panning ethical investments that obviously is going to contribute to our decision making process. It's not helpful if Dr Cullen dismisses ethical investments at this point of the process."
Cullen says he was not panning ethical investments.
He says he supports the idea of investing in a socially responsible way. Rather his comments were pointing out that this is a whole new area of investing and the super fund's Guardian shouldn't be tied into a current practice.
He says the ways of investing ethically may change and the Guardian's need to be able to change with the times.
On the broader front the Greens are not sure pre-funding addresses the key issues.
Donald says the Government can't be seen to be giving special treatment to the retired. He says it has to do things for other parts of society including the sick, beneficiaries and the unemployed.
Secondly he questions the debate around dependency ratios. Instead of looking at the ratios based on age, consideration needs to be given to how many people over 65 are in the workforce.
Donald says decisions may be made on bad data if the dependency ratio based on age is used.
Other issues of concern are that under the fund proposal a significant portion of Government revenue is being given to the private sector to manage, the fund will be liquidated at the same time other assets are being sold to fund pensions, hence values maybe eroded. Also the Greens ask whether it is better to put surpluses into the fund or to use them to pay off Crown debt.
"We have to be confident that the fund is going to create greater returns on investment than the cost of borrowing."
Donald says the Greens are "strongly opposed" to the idea of putting the money into individual accounts.
You can read Philip's blog here: http://www.goodreturns.co.nz/blog/
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