Labour supports financing wealth fund to tune of $100m a year

Labour leader, David Cunliffe. Photo / Michael Craig

Labour has given a nod to the Greens and New Zealand First with a plan to set up a $100 million-a-year sovereign wealth fund that would invest in "strategic'' assets, including clean energy, and may even buy back power company shares.

Leader David Cunliffe has ruled out using the fund as a vehicle to nationalise the Tiwai Pt aluminium smelter in Southland, which NZ First leader Winston Peters yesterday said his party would consider.

Mr Cunliffe announced what is Labour's last big policy of the election campaign yesterday morning and talked up the benefits to about 300 party faithful gathered at the Panmure Bridge School.

He said the idea behind NZ Inc - as the fund would be called - was to build a publicly owned asset base "that can drive long-term sustainable growth" and create thousands of high-paying jobs.

"We're looking to power up a smart high-value economy and we're looking to transition towards a more renewable energy and clean technology profile,'' Mr Cunliffe said.

The $100 million a year Labour had earmarked for the fund would come from dividends from the Government's remaining stakes in state- owned power companies.

A Labour government would also review the royalties regime for the oil and gas industry with a view to increasing them for new oil and gas wells and fields.

However, as Mr Cunliffe was speaking in Auckland, Mr Peters was telling an audience in Invercargill a government he was part of would not let the Tiwai Pt smelter close with the loss of thousands of jobs.

Any decision on the future of the smelter should take into account "the full national interest'', Mr Peters said, and "New Zealand First will not rule out direct government investment in the smelter by way of New Zealand First's own initiatives if that is in the national interest''.

However, Mr Cunliffe said nationalising Tiwai Pt was "not something we're open to''.

Nevertheless, he said there were elements to NZ Inc that "we would expect probably would appeal to New Zealand First''.

The idea did not appeal to National Party associate finance spokesman Steven Joyce, who said it was "just another way of pre-committing money that has already been committed by Labour a few times over".

The money Labour would allocate to NZ Inc appeared in their fiscal plan issued several weeks ago under "yet to be announced policies''.

NZ Inc

• A sovereign wealth fund initially set up using $100 million a year in dividend payments from partly privatised state-owned companies.

• Further contributions likely to come from increased oil and gas royalties.

• Managed by the NZ Super Fund board, NZ Inc would invest in "strategic companies'' to drive "sustainable growth'' such as clean technology.

•Labour would also hold remaining SOE assets through "KiwiShare'', a structure intended to make it difficult for future governments to sell them.