by Rob Hosking
Stopping over the ditch to see how our New Zealand superannuation Fund works, Australian Finance Minister Nick Minchin says New Zealand is ahead of Australia in some area but less so in others. Minchin is in charge of the Australian government’s Future Fund.
The Future Fund is aimed at paying for the Australian government’s unfunded pension liabilities.
It’s akin to our Government Superannuation Fund in terms of who it is looking after, and, as Minchin notes, the GSF puts the New Zealand government in a much better position.
There’s no need to extend the Future Fund to covering the state pension in Australia, he says – and in this area the Aussies do have an advantage over us.
The compulsory workplace superannuation introduced in the 1980s takes a lot of the pressure off that area, and the state pension is means tested, he points out.
Compulsory superannuation has had its other, more subtle advantages, he says. Although there has been some debate over how much of the Future Fund should be invested offshore, it has been nothing like the big issue it became – and still is in some quarters – for the New Zealand Superannuation Fund.
“It’s more important than it is for New Zealand for us to invest domestically because of the differences in scale. But it hasn’t really been a big issue.
So many of our big funds invest offshore, and there’s an understanding of how these things work.”
The Future Fund has been set up along similar lines to the New Zealand Superannuation Fund – “we’ve even pinched the name ‘guardians’”, says Minchin – with similar arms-length governance and similar requirements to maximise returns and not make investments which bring the Australian government into disrepute.
It will be funded by proceeds from the sale of Telstra shares – and, if that sale does not go ahead, Telstra shares will be transferred to the fund – and ongoing Budget surpluses.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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