Super Fund payments to resume

One of the first priorities for the new Government will be resuming payments to the NZ Super Fund with $500 million of contributions planned before the end of June next year.

In the 12 months after that, another $1 billion will be invested, followed by $1.5b in the 12 months after that.

The NZ Super Fund was set up in 2003 by then Labour deputy prime minister Michael Cullen to help pay for NZ Super as the population aged.

But ACT leader David Seymour said restarting contributions was ‘‘adding to the mortgage to play the share market’’.

National ceased contributions when it returned to power in 2008, a time when New Zealand was in recession, but in the run-up to the election Labour pledged to restart payments.

In its fiscal plan, Labour projected that the sovereign wealth fund would be worth more than $53b today, not $36.4b, had contributions continued.

But Seymour said the Super Fund was the wrong priority.

‘‘Household debt is the Greek problem that New Zealand faces. We need to actually get that under control. I think we should be cutting taxes and running less of a surplus in order to give some relief to households,’’ he said.

The NZ Super Fund chairwoman Catherine Savage, speaking last month on the fund’s 20.7 per cent return in the year to the end of June, said the fund’s long-term returns had been more than double the cost of government debt.

‘‘The fund has now returned 10.2 per cent [a year], more than double the cost to the Government of contributing to it, over a period of nearly 14 years.’’

Seymour described the fund’s performance as ‘‘extraordinary’’, but said that reflected the levels of risk the fund was taking. ‘‘Only a fool believes past performance is any indicator of future performance.’’