Reviewing the Budget Policy Statement, upton-on-line was struck by the breathtaking scope of the new policy. By 2003, over $1 billion a year of taxpayers’ funds is to be invested in the super fund even though the Government has failed to say what the money would be invested in or explain why such a strategy is better than paying back debt.
Investment advisers are stunned that such a clever man should be proposing such a crazy strategy. The whole thing amounts to a spectacular gamble on overseas stockmarkets with other people’s money.
It will be interesting to see how other parties supporting the Government react to the inexorable logic of a tidal wave of taxpayer-financed offshore investment. There is nowhere else the funds could rationally go. But if they decide to pump money into New Zealand stocks, the heavy weight of foreign ownership simply means that the rise in share prices (that buying pressure ensures will follow as night follows day) will largely be a windfall for off-shore owners!
Upton-on-line is sure of only one thing: the uncanny silence coming from so many in the financial community suggests that fund managers just can’t look a gift horse in the mouth. If directors and managers haven’t been able to create any wealth in recent years perhaps Dr Cullen can by flooding the market with money…
Simon Upton is the National Party's spokesman on superannuation.
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