Green fund returns vague

The Government’s $100 million Green Investment Fund isn’t targeting an overall rate of return, but will instead weigh up each investment on an individual basis.

Treasury deputy secretary Struan Little told Parliament’s finance and expenditure select committee on Wednesday that the department had supported the Government’s plan to get the fund operating, and that it was now incorporated as a company.

He said he wasn’t aware of any work being done on returns, or an acceptable discount, given the focused nature of the fund.

“We will, of course, be particularly interested in its returns, but that’s a matter for the future,” he said.

Chief economic adviser Tim Ng said the ultimate returns will depend on the portfolio, but agreed with Act Party leader David Seymour that, all things being equal, “you would expect if you have a smaller slice of the market portfolio than otherwise, you would expect a higher risk or lower return — some combination.”

Seymour has in the past criticised the fund as corporate welfare, saying it will be picking technologies that can’t attract capital in an open market.

The fund was a commitment in the Labour and Green parties’ governing arrangement and will focus on investing in decarbonisation outside renewable energy, which already forms the backbone of New Zealand’s electricity generation.

It has a benchmark of the five-year government bond rate plus 2 percentage points. The yield on the five-year rate was recently 1.22 per cent, implying a hurdle of about 3.22 per cent.