NZ Super fights for investment rights

Fulfilling National's pre-election pledge to direct 40 per cent of its investments into local assets was always going to present practical difficulties for the New Zealand Superannuation Fund (NZS) - it may also be illegal under the current arrangements.

NZS chief, Adrian Orr, and chair, David May have pointed out in a letter to the Finance Minister, Bill English, dated June 2, that in meeting its 40 per cent quota the fund would likely have to take a controlling interest in any decent local assets - given there aren't that many NZ projects that would meet the NZS criteria.

"Our ability to maximise some opportunities may be constrained by Section 59 of the [NZS] Act," the letter states. "This section states that the Guardians must use their best endeavours to ensure that the Fund does not control an entity."

The letter, published on the NZS website this Monday, was not picked up by local media.

The basic facts have been reported previously but the letter still makes for a fascinating read, if you're attuned to the tense relationships between investment professionals and politicians.

As well, May and Orr speculate in the letter that if the government wants NZS to invest more at home it would have to spend more money developing "in-house expertise" - can't see Bill English getting excited about that. After castrating the NZS with the Budget, the government wouldn't want the fund to drain any more precious bodily fluids from Treasury to prop up an increasingly limp organisation.

But the NZS is sticking up for its investment principles, despite its loss of mana.

"Given the unpredictable nature of future commercial, prudent investment opportunities, we are unable to offer an assurance as to how much, if at all, the Fund's New Zealand assets will increase," the letter says.

NZS was intended to be an 'arms-length' organisation - that fiction has been exposed - however, it's still able to give Bill English the finger.

 

David Chaplin

 

 

Pictured: Adrian Orr. Photo/Paul Estcourt