National to legislate for at least 40% of NZ Super Fund to be invested in NZ

October 15th, 2008 at 12:50 pm by David Farrar

John Key has announced a massive policy – that as a response to the global credit crisis, at least 40% of the NZ Super Fund be invested in New Zealand. The full policy paper is here.

 

New Zealanders are entitled to take a view as to where this large pool of capital,funded by taxpayers, is invested. They are entitled to decide that these resources willbe used to invest in our future growth and to underwrite our future prosperity.

At a time when credit and capital are both going to be in short supply, we would be negligent if we did not employ our own superannuation fund to grow our own economy.

National, therefore, believes that a greater proportion of the New Zealand uperannuation Fund, which belongs to all New Zealanders, should be invested in ew Zealand to grow our economy.

It is better to use more of those funds here at home to invest in our productive sector nd broaden and deepen our own capital markets. This will have both short-term and lnger-term positive impacts.

In the short term, in a world where money for investment is going to be more tightly held and more closely guarded, it will help ensure New Zealand has the investment capital we need to get out of recession and into a period of solid and sustainable growth.

In the longer term, it will give New Zealand businesses a greater opportunity to grow from a domestic base and grow under New Zealand ownership further than they would otherwise have been able to.

National go on to say that they will not direct the Fund Guardians as to what sort of companies, bonds or funds to invest in – just that the proportion in NZ should be at least 40%.

Even since the Cullen Fund was established, I have had fears that as it grows larger, politicians would want to start directing where it is invested. My problem is not the 40% in NZ target, which could well be a very good response to the credit crisis. My problem is the precedent it sets for future Governments.

We already know the Greens want to ban it from investing in almost every company on Earth. This will bolden them to try and give politicians a greater say in what specific companies can and can not be invested in. And then you don’t have it generating the returns needed for it to fund future superannuation.

So while the announcement is a bold move in response to the credit crisis, it is one which causes me some concern.

I guess I would say if ever there was a time to step away from a purist approach to the fund, then the threat of a global crisis and depression, is a good time to do so. From that point of view it makes sense investing more at home.

But long-term this may lead to more interference in the Fund, and that would be a bad thing (and National is careful to say they will not interfere apart from setting the 40% target). We don’t want MPs in charge of a $100 billion fund . Think how many donations to the Spencer Trust that would generate! This is why I have never been a supporter of having the Cullen Fund.

No tag for this post.

163 Responses to “National to legislate for at least 40% of NZ Super Fund to be invested in NZ”

  1. Paul (1,315 comments) says:

    Hmm where to start.

    I thought the maxim of the right was choice, where is the choice in this. Tax cuts are all about ‘giving people choice’ after all it’s their money and they know best where it should be spent or invested. But Key is telling the fund managers where they must invest money, so confusing so hypocritical.

    He’s doing this because he’s cut the R&D fund, business hates it and he needs something to make them palatable to business again.

    Remember Labour cut business tax before it cut personal tax.

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  2. RRM (9,924 comments) says:

    Classic National campaign advertisement from black & white TV days:

    “Then one morning you wake up and find that the government owns practically everything.
    And you know what that’s called, don’t you?”

    (Cue dancing Cossacks, from stage right)

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  3. milo (525 comments) says:

    I disagree with this policy.

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  4. philu (13,393 comments) says:

    sheesh..!..

    the nats have knicked the green party policy..

    ..and the policy labour announced yesterday..!

    phil(whoar.co.nz)

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  5. cocamc007 (31 comments) says:

    i would like to see more detail but on the surface would be a wise move. There are a number of companies that are struggling to raise funds for what are extremely good business models – e.g. Farming systems in Uruguay or PGG and Silver Farms.

    Why not direct some of this investment and we can reap rewards down stream from the success of those companies?

    Lets remember these are extreme times and in Europe and the USA the government(s) will end up owning a lot of the banks to protect and facilitate growth back into the economy.

    the super fund has circa $14billion so why not use some of it to stimulate growth on and off shore

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  6. gee90 (90 comments) says:

    From Washington to Wellington, we are all socialists now.

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  7. Tauhei Notts (1,714 comments) says:

    If those farming systems in Uruguay were as good as the blurb says they would be able to access funds.
    They are not as good as the blurb.
    PPCS shareholders must be relieved that Norgate got stymied.
    With anybody, except Key, in power this policy would be silly. I have huge faith in Key’s expertise in financial matters. But English, McCully and Williamson on this tack would not be comfortable.

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  8. RRM (9,924 comments) says:

    Sorry, flippant post.

    If the Nats believe the money is safer invested here, then I’d happily roll with that, not having any opinions on investment safety of my own. It has to be invested SOMEWHERE; so if a rational analysis shows that at present NZ businesses are a safer bet than offshore ones, then why not? The #1 goal has to be health of the fund.

    I just don’t understand how this sits with their staunch view that the Govt should not own things like airports and railways.

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  9. Ryan Sproull (7,153 comments) says:

    At least fund money invested here won’t be manufacturing landmines or nuclear-weapon parts.

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  10. Paulus (2,627 comments) says:

    I believe in the longer term that a proportion of the “Cullen” fund should be melded into KiwiSaver – after all it is taxpayers money.

    There are too many KiwiSaver Fund managers, and some of them are going to fail. Kiwisaver is a long term liability covering from say 18year olds to 65years and “forever”.

    Let the Fund Guardians remain independent and brook no interference from any government although remember Tamahere’s 15 year Socialist timetable – their time will come again.

    However this predicates that the KiwiSaver fund me made into a compulsory fund (similar to Australia) with a slow movement pari passu over a period of time, of up to say 40% of Cullen being delegated to each “fund share” account.

    At the present fiscal update no government will be able to afford to put any money to the Cullen fund for many years.

    In addition to enhance our economic growth some SOE’s, and such as AirNZ, should be devolved to reduce/retain Government shares of only 51%. These funds in the open market would allow both individual investors and these “funds” to participate with greater public view of responsibilities and returns.

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  11. pdm (844 comments) says:

    As a potential beneficiary of this fund, probably subject to means testing by the time I get there I am opposed to this move. If we are going to have such afund I expect it to produce the maximum possible growth. This will only come from a diversified fund with a weighting to International Equities. It will not do this by investing 40% in NZ – maximum NZ exposure should be 30% and preferably including Australia at that level. I am also not interested in so called `ethical investing’ as it returns that count in this instance.

    My preference is to disband the fund and KiwiSaver and set up a compulsory scheme with individuals investing directly by wage/salary deduction to the approved Fund Manager of their choice. If the Government wants to give tax incentives then these would be added to the individual funds each year when people file their tax returns – with relevant providers providing evidence of contributions as is the case with interest and dividends now.

    Much simpler than KiwiSaver and will be a first start in reducing bureacracy as IRD will be able to shed a few hundred of the staff required to handle the present cumbersome scheme.

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  12. pdm (844 comments) says:

    Paulus – I think we are on the same track. The problem I have is how to fairly distribute the Cullen Fund to KiwSaver investors. Maybe someone has some ideas on that.

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  13. PaulL (5,981 comments) says:

    I’m with Paulus. This is politically driven, Key knows it isn’t a good idea. I’d rather not have a Cullen fund. If we have one, I’d rather we didn’t direct it where to invest. But, if we have one, and we direct it where to invest, then what we need to do is hurry up and fold it into Kiwisaver.

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  14. pdm (844 comments) says:

    I meant to add – why invest into 2% of the world markets, which is what New Zealand represents and exclude 98%.

    There are companies overseas that are many times bigger and much much more efficient than the New Zealand economy.

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  15. tknorriss (327 comments) says:

    Well, it is likely the next government will see the need to do something to stimulate the economy in troubled times. I prefer this scheme, which involves working with budgeted funds, rather than going out and mortgaging ourselves up to the hilts to pay for labour’s secret mini-budget agenda.

    Anyway, doesn’t the government already dictate that a small percentage of the fund be invested in NZ. So we are only talking about degree, not principle.

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  16. freedom101 (504 comments) says:

    What a stupid idea. It will end in tears.

    1/ The NZ economy cannot absorb this much money without the government becoming a huge elephant in the room.\

    2/ Political meddling – we are a small community and everyone knows everyone else at a certain level in business. No matter which way you turn this proposal will generate the inference of corruption, if not the reality. I would have expected this measure from Dr Cullen (all credit to him that he has not done this).

    3/ Diversification – and I would have thought that John Key would have understood this basic concept.

    Let’s imagine we have a major earthquake or a large volcanic eruption (both when, not if), at exactly the time when we might need to call on all our resources, those same resources if invested in NZ will be in a distress realisation situation. Plain dumb.

    Give ACT your party vote for goodness sake to save us ……

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  17. burt (8,272 comments) says:

    RRM

    I just don’t understand how this sits with their staunch view that the Govt should not own things like airports and railways.

    It’s about investing the money to earn return on investment, not spending the money to gain ownership and control.

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  18. Kimble (4,440 comments) says:

    What a completely fucking stupid policy!

    The Super fund was set up to fund a future liability. Any move away from this objective means a greater amount of risk.

    Investing 40% in a single little bumfuck tin pot nation in the South Pacific is increasing that risk to a fucking stupid level.

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  19. burt (8,272 comments) says:

    I don’t know if 40% is the correct proportion, but when it comes to investment strategy I wouldn’t argue with John Key. Natuarally Labour will argue with him and it will be fun to watch them expose their ignorance.

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  20. cocamc007 (31 comments) says:

    Kimble – sorry you feel that way about NZ.
    Great ideas and companies come out of this country – Fisher and Paykel for one

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  21. burt (8,272 comments) says:

    cocamc007

    Good point, I bet if the entire Cullen fund was donated to Winston he still wouldn’t declare it.

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  22. Kimble (4,440 comments) says:

    “I don’t know if 40% is the correct proportion, but when it comes to investment strategy I wouldn’t argue with John Key.”

    Fine, then YOU dont have to argue with him, but dont just agree with him out of ignorance.

    “Great ideas and companies come out of this country – Fisher and Paykel for one.”

    Yes, for ONE. How many more can you name? How many more do you think you need to name to make this 40% a worthwhile investment?

    Dont let patriotism blind you to logic. Face facts. New Zealand is a blip on the financial map. Our stock market is a joke.

    Yes, we can be world leaders in some small industries, but in general we are always going to be at a disadvantage.

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  23. Brian Smaller (4,023 comments) says:

    “Great ideas and companies come out of this country – Fisher and Paykel for one”

    Then they go out of the country.

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  24. tknorriss (327 comments) says:

    Obviously, this is a stop-gap measure to make up for the lack of capital available in the market place due to current conditions. So long as it is only a stop-gap measure, I support the idea.

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  25. cocamc007 (31 comments) says:

    Kimble – i could name many, e.g. Rakon, 42 Below, Trademe, Fletcher Building, etc and those are just higher profile ones.

    What about all the smaller private companies that end up going offshore for investment and we lose their presence here and the ability to share in the successes.

    If we continue to think we are too small then we should stop the debate and just be as we were – a primary producing company that sends sheep and dairy products offshore.

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  26. Kimble (4,440 comments) says:

    National is taking one of Labours least bad acts and making it much, much worse.

    The Super fund needs to invest in equities.

    How big is our stock market? How much will the investment of the Super fund move the market? How much will it move the market when they have to sell down?

    It wont be able to investment meaningfully in most listed companies, because it would quickly achieve a controlling stake. So it will have to invest in only the biggest companies. How many of them are there?

    Will these restrictions force the Fund to change its allocation from equities to bonds?

    Stupid stupid stupid.

    Leave it the fuck alone.

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  27. cocamc007 (31 comments) says:

    Brian – yes they do and become world leaders on the global stage – great success. Where’s the next Fisher and Paykel?

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  28. MikeE (555 comments) says:

    This is fucking stupid.

    National Socialists, just like NZ First.

    What they should do is put ALL of super into kiwisaver and leave it up tot he individuals to decide how much risk they want…

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  29. Kimble (4,440 comments) says:

    “What about all the smaller private companies that end up going offshore for investment and we lose their presence here and the ability to share in the successes.”

    Yes, why not just have the fund invest in smaller start up companies! Brilliant! Why dont we just let it play lotto?

    The market cap of the NZX50 is $33billion dollars. How much would it move the price if the NZ Super fund was forced to invest and extra $10b in New Zealand?

    Telecom makes up $20billion. Think about that.

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  30. LC (162 comments) says:

    How about cashing in the super fund and giving it all to Kiwisaver?

    Then tell people that their Super is their responsibility – invest well!

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  31. Ross Miller (1,704 comments) says:

    Gueez wept … some knee jerk pathetic comments here. Newsflash for those of you with your heads up your arse. The worlds economy is in crisis and liquidity has dried up. So just what in hells name is wrong with investing 40% of our own money back in our own economy for say infrastructure development at say 8% return … or would you prefer to see it go in Bank of Iceland Bonds?

    Some of you need freeing from your ideological straightjackets.

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  32. Sam (502 comments) says:

    The point of the matter is that the Cullen Fund has as an objective: the future liability that is the superannuation needs(?) of our ageing population. It’s objective has nothing to do with propping up the NZ economy in lean times. If the latter could be met without adversely affecting the primary objective of the Fund – as it was sold to us – then all good and well, go ahead and invest locally (and I am sure that fund managers would do so anyway). If it does adversely affect the principal objective of the fund, then it should simply not be allowed to happen. No one has shown how this could be of benefit to the primary objective.

    Of course, the objectives could be rewritten, but then it is no longer a superannuation fund. Put it this way, we are spending future superannuation savings on this scheme – is that what we want to do? And DPF (and other comments) are right – if the primary Fund objective is as malleable as this, it is a small step to use it for other purposes as well. We could wake up in our retirement with much less than we imagined when the Fund was sold to us in the first place as a result…

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  33. coventry (321 comments) says:

    The can invest the CSF funds in my soon to be established ‘government guaranteed’ finance bonds… OPM (Other Peoples Money) offering 20% returns on amounts up to $4.95Bn (23 month fixed term).

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  34. coventry (321 comments) says:

    At least fund money invested here won’t be manufacturing landmines or nuclear-weapon parts.

    Why not ? I am sure Bruce of Aardvark could knock something up. Could be a nice little earner, NZ the Peace Keepers and providers of the $2 munitions.

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  35. Adolf Fiinkensein (2,903 comments) says:

    To all the naysayers, I say – take a couple of breaths and settle down. John Key has got ten times more brains than Clark and Cullen put together.

    pdm, who is ‘in the business, worries that 40% is too high but 30% is OK. I suggest everyone should take a step back and ask themselves what is the point of having a retirement fund invested in other countries if, as a result of underinvestment in our own country, we fail to make enough money to keep paying into the fund? That’s why John Key is right on this one. In this case there is a ‘greater good’ in the form of early exit from recession and I doubt any of you has contemplated the positive knock on effect that would have to the value of your super fund. I think 40% is entirely appropriate for now given the circumstances in which we find the economy and the likely more dire position we find when National opens the real books in November.

    It is entirely appropriate for the government of the day to set the boundaries for the NZ Super Fund. That’s strategy and that’s what investment committees do. It is entirely inappropriate for the government to interfere in the management of the fund by directing or coercing the managers to invest in particular industries such as an ailing rail networks. That’s tactics. That’s why I wouldn’t trust Michael Cullen as far as I could kick him. He and Clark have demonstrated far too often the alacrity with which they personally interfere where they should not and in so doing cost other people billions in lost contracts, lost profits and lost market value of assets.

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  36. gd (2,286 comments) says:

    IMHO the Gimint should go back to the good old days and allow LTAs to issue Bonds for infrastructure spending and also do it itself for infrastructure spending

    For those of us of the older generation these were used post WW2 until the 70s when they were phased out.

    My grandparents used to invest in them and also used to buy them for myself and their other grandchildren.

    They paid a reasonable rate and were tradable

    But as for 40% invested in NZ As others have said that aint a good spread talk about all your eggs in one basket

    And from an investment banker to boot.

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  37. getstaffed (9,186 comments) says:

    Ross, the problem is that National have now set a precedent. Future tales of woe will be spun, and the funds intended to provide secure ‘tomorrows’ for retiree NZers will be re-directed to provide more certain ‘todays’ for whoever controls the treasury benches.

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  38. Crampton (215 comments) says:

    1. International portfolio diversification just makes sense.
    2. Failure to engage in such diversification exposes government to massive risk where an adverse shock to the NZ economy simultaneously hits both the superfund AND the tax revenues that otherwise be used to stop the gap.
    3. Keeping political meddling out of superfund constitutes a bright-line rule. Any breach of this makes any other nonsense later on much more likely.
    4. If Key is elected and goes through with this, I hope he is held to proper account should #2, above, eventuate. Just like Barney Frank properly ought to be held to account for his role in creating the subprime mess. Key will be every bit as culpable.
    This policy is bad enough to outweigh damn near any other marginal benefit that might have been had from a change in government. Because I’m pretty sure that even if Cullen is mouthing words in the direction of similar policy in the leadup to the election, I’d bet he’d break the promise come December. I don’t think Key would.

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  39. ZenTiger (435 comments) says:

    Investing in NZ is a fair idea:

    1. Our investments will also not be affected by exchange rate variations.
    2. So many Kiwis now live overseas, so we could pretend investing in NZ is a “Foreign Investment”
    3. 60% is still available to invest in Nigeria, Fiji, North Korea, Latvia and Cuba.
    4. High taxes on company profits means we make a quid either way.
    5. It will give small Kiwi companies enough capital to hire better accountants to help avoid paying taxes, so small businesses also profit.
    6. SOEs wouldn’t have to resort to selling their assets to complex US company tax write off schemes (remember Transpower??)
    7. Bob Geldof might ease the pressure given that such investments might be considered charity.
    8. We might have the money to buy back the assets we gave away under the Treaty Claims.
    9. We could relocate more snails and then increase coal mining.
    10. We could drill for oil whereever the hell we felt like, damn the expense.

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  40. Tamaki Resident (66 comments) says:

    A good investment fund should be diversified, not only in the types of investments (cash, shares …), the types of companies invested in, but also the countries invested in. In short, 40% is too much to be invested in one country.

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  41. burt (8,272 comments) says:

    Kimble

    Fine, then YOU dont have to argue with him, but dont just agree with him out of ignorance.

    Where did I agree with him Kimble ?

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  42. berend (1,709 comments) says:

    Yeah, this is all great stuff from John Key. The knock off effects will be huge. I’ts just stupid to think you have 100 billion dollars that’s there to make sure people can retire with as much a return as possible. That’s long term strategy.

    Who gives a rat that investing overseas will give elderly folks a better retirement life? Invest here, returns are not important, it’ll get the votes, those oldies are otherwise voting for NZ First anyway, who also wants to do this.

    There’s no one wiser or smarter to spend the money that is supposedly ours than the government, you all understand?

    And don’t be concerned this fund might lose money. The government guarantees your economic well-being for now and happily ever after. Sleep well.

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  43. DamnedAngry (231 comments) says:

    The Labour Trolls seemed to have woken up DamnedAngry today!

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  44. tknorriss (327 comments) says:

    Firstly, there already is a directive that a percentage of the fund is invested in NZ (5% I think) so we are only talking about how much, not whether we should or not.

    Secondly, if a greater proportion of the fund fund is invested in NZ there are a number of advantages:

    1. Lower interest rates due to a higher supply of money.
    2. More jobs, lower unemployment, less paid out in benefits, and more tax revenue.
    3. Reduces the need to go into Cullens stupid black-hole stimulation package.
    4. Might mean we can get out of deficit sooner so we don’t have to borrow money to fund the Cullen fund as is the case now while in deficit.

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  45. gd (2,286 comments) says:

    BTW Not to threadjack but can DPF or anyone else give us a quick tot up of the Billions of surpluses Cullens racked up over the past few years and tell us where ist all gone to.

    I would have thought this should be one of the major talking points of the election from the Nats.

    I mean how do you trust someone who has over taxed X Billions and where is the money.

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  46. insider (1,028 comments) says:

    I think this is to blindside Labour. Now they will find it harder to accuse him of not backing NZ and NZers and wanting to sell assets. If he;s smart it could be a vehicle to privatise assets, but he has said the timeline to acheive 40% is not set.

    But the whole thing does have a ‘rob peter to pay paul aspect’. The taxpayer funded superfund has to now buy taxpayer funded roads and cables. Wouldn’t it be cheaper to fund infrastructure directly than instruct NZSF to buy bonds?

    And why should all those NZ companies get a captive shareholder. Shouldn’t they be competing for funds? What’s ADrian Orr going to do if he can earn 11% offshore but only 7% locally? Surely he couldn’t in good conscience go for lesser returns.

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  47. PaulL (5,981 comments) says:

    DamnedAngry: the people who looked to be damned angry on here are mostly the right wingnuts. Because this isn’t exactly a right wing policy – it could easily have come from Cullen. At least they have the honesty to attack it just as much when it comes from Key as they would have if it had come from Cullen.

    For me – don’t like it, but I’ll readily acknowledge I’m prepared to swallow it because Key is still a better choice than Clark.

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  48. Kimble (4,440 comments) says:

    “the people who looked to be damned angry on here are mostly the right wingnuts.”

    Yeah, thanks for that PaulL. I doubt there is much I have said here that could be contrued as wingnuttery but thanks anyway for throwing me under the bus.

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  49. stephen (4,063 comments) says:

    “I mean how do you trust someone who has over taxed X Billions and where is the money.”

    I know a lot is in paying off debt, Kiwisaver and the Cullen Fund, the rest vaguely in health, education WFF, and what have you.

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  50. ZenTiger (435 comments) says:

    If only National would campaign to reduce ‘what have you’ spending by 50%. We’d save billions, and we’d still have enough what have you to share around.

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  51. Adolf Fiinkensein (2,903 comments) says:

    Ross Miller, I presume you are not the Rev Ross Miller, noted contemporary theologian? Just asking.

    I agree with you. We are in an emergency and John Key is showing he can think outside the square which is more than most of these commenters can do. They fail to see that when we have our house in order in three years or so, he then can legislate to move back to 30% or 10% or what ever is deemed to be strategically IN THE BEST INTERESTS OF NEW ZEALAND.

    I marvel at the logic of those who say 40% is too much to invest in one country when it happens to be their own country. These people would send NZ broke before they would take the patriotic action which is needed to sustain our prosperity. Labour’s biggest crime has been to bring us this close to the brink. Just shows you what pissing away nine year surpluses can do.

    BTW it would be interesting to compare the Cullen Fund’s paper losses on NZ equities compared with it losses on international equities over the last six months. Such analysis might bring many here to start shrieking that 40% is not enough.

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  52. DamnedAngry (231 comments) says:

    So I doubt that this will cause them to lose any of their base votes, but it will have a major impact on attracting some of Labour’s.

    Have we forgotten already that Culllen’s fund has recently taken a huge hit due to its exposure to global markets?

    And surely if this policy reduces our need to borrow for future infrastructure projects, then it makes good sense to me.

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  53. Rex Widerstrom (5,354 comments) says:

    One of the reasons we struggle to name successful NZ companies like Fisher and Paykel is that venture capital and investment generally is impossible to find in NZ unless you’re already an enormous (in relative terms) public company, preferably with a stranglehold on an essential service (Telecom shares, anyone?).

    Talk to entrepreneurial business people and ask them what they want – as I did when a business writer and when in politics – and they’ll scream for capital – for R&D, for expansion, to open export markets. Yet we blunder on hoping we can keep selling animal carcasses and waiting tables for tourists.

    I’m not sure about the 40% figure – it does seem high – and I’d definitely add the proviso that the politicians must have absolutely no control over how the funds are invested, but in principle this is a visionary policy which could, if managed properly by people with the acumen to make sound judgments, prove a shot in the arm to our productive capacity.

    In fact this alone would almost be enough to make me bother casting a vote (if I had one) in National’s direction.

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  54. Kimble (4,440 comments) says:

    “So I doubt that this will cause them to lose any of their base votes, but it will have a major impact on attracting some of Labour’s.”

    And that is a big part of what pisses me off. It is a bad policy that is purely designed to win votes. It is the sort of thing Labour would do and Key had an opportunity to be above all that, at least for the first term election.

    “We are in an emergency and John Key is showing he can think outside the square which is more than most of these commenters can do.”

    If thats the square then fuck the square. Politicising the Super fund was a bad policy when it was the Greens doing it and it is bad policy when National does it.

    “BTW it would be interesting to compare the Cullen Fund’s paper losses on NZ equities compared with it losses on international equities over the last six months. Such analysis might bring many here to start shrieking that 40% is not enough.”

    The super funds returns over the last 6 months is COMPLETELY IRRELEVANT TO THIS DISCUSSION. Anyone that says that it is just shows that they are out of their depth. And anyone that says that 40% is not enough is nothing short of completely fucking clueless.

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  55. PhilBest (5,121 comments) says:

    Paul (1189) Vote: Add rating 1 Subtract rating20 Says:
    October 15th, 2008 at 12:56 pm

    “Hmm where to start.

    I thought the maxim of the right was choice, where is the choice in this. Tax cuts are all about ‘giving people choice’ after all it’s their money and they know best where it should be spent or invested. But Key is telling the fund managers where they must invest money, so confusing so hypocritical…..”

    Paul, you deserve that negative karma. How does what the politicians tell “the fund managers” to do with NZ taxpayers money, have anything to do with “giving people choice”, given that the fund managers are selected in the first place by politicians, not through “giving people choice”.

    Anyway, to revert to my type, isn’t it ironic how politicians end up having to jack up grandiose schemes to address a problem that politicians created in the first place – like the problem that people don’t save money, and don’t save for their retirements; which problem, if we look at the evidence, commenced precisely from that era that politicians started taxing interest and other earnings from investments; I mean, SURPRISE, SURPRISE, rocket science intellect stuff……..

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  56. Lee (610 comments) says:

    Smart politics. Of course I would like to see a far more libertarian approach to these issues. But totally abolishing kiwisaver is a vote loser for now. This election THE CLARK REGIME MUST GO, and this move is clearly designed to fend off Labour’s nationalist “kiwi first” ads.

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  57. Ross Miller (1,704 comments) says:

    Adolph … I have been called many things but Reverend doesn’t figure in any of them. No, just a broken down ex army officer and make-believe peasant farmer struggling under the weight of socialist oppression.

    And at the risk of incurring David’s ire for threadjacking isn’t it just great that the once mighty Winston First Party could gather together just 22 missfits to contest the election. Big big drop from the glory days of yesteryear.

    And I do think there is a certain correlation between the numbers of electorate candidates and the party vote. The 5% barrier just got higher for NZF ….. pours whisky in anticipation of much celebration.

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  58. gee90 (90 comments) says:

    It’s amazing that a major economic policy can be justified simply because a) it could win votes (debatable) and b) “Trust John”.

    This policy is to the left of Labour. That doesn’t particularly bother me, because I’m not voting for a change of government. It would sure as hell worry me if I was.

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  59. Shunda barunda (2,983 comments) says:

    I am no economist but I think you fella’s that think John Key is about to trade in the blue tie for a red one are jumping the gun more than a smidgin.
    For goodness sake, John Key a socialist?
    Lets be realistic here for a moment, with the uncertainty of the world markets and how bad it may get, time is limited to prepare the country for a recession or even a depression.
    This move by Key could be an important temporary measure, it may actually be a very smart move, we have an economic crisis that requires thinking out of the box.
    The concerns DPF raises are totally valid in my opinion, but not because of National.
    What this whole issue reveals is the sad state of affairs NZ is in, we feel we can’t take prudent measures cause we are worried about what the socialists might do down the track.
    The problem is we are about to enter a potentially very serious crisis and can’t afford to not use all the tools in the shed, fear of what labour/greens might do down the track has to be put aside for the short term until we see how NZ copes with this crisis, there are unfortunately bigger fish to fry.

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  60. casual watcher (289 comments) says:

    Cullen is losing his marbles – yesterday or the day before he was advocating greater investment by the Cullen fund in NZ but today it is a bad idea because Key has said 40% is the proportion we advocate. Labour are desperate, headless chooks – they have not ever contemplated what is happening to them at the moment and I am luvin it. As to the wisdom of what Key and Cullen propose – if the appropriate governance rules are in place – as I assume they are now – then investment in infrastructure bonds or something similar makes a lot of sense.

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  61. aussiegeorge (2 comments) says:

    This is a crap policy.

    The Cullen Fund itself is crap policy. Its real purpose was to stop the Alliance and the Greens from spending the surplus (that was back in the day when Michael Cullen really did believe that there were limits on what governments could usefully spend money on).

    But at least it was crap policy done well. Cullen made much of the “double arms-length” idea: he appointed the committee that nominated the guardians who selected the funds managers. And the Fund was told to maximize return, and not run businesses, meaning that it had to invest overseas.

    Now National wants crap policy done badly: ministers will be decising what the fund should invest in.

    Could all managers of failing businesses please form an orderly line outside Mr Key’s Office.

    Even stupider (and this is now a stupid part of a bad way of doing crap policy), is the idea that the Fund will invest in NZ Government bonds. So the government will raise taxes, put them in the Fund, which will then lend the money to the Government which will then spend the money on something.

    National just lost my vote.

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  62. Graeme Edgeler (3,289 comments) says:

    RRM – the Daning Cossacks were in colour (just) … of course, you may have had a b&w TV :-)

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  63. aussiegeorge (2 comments) says:

    And just to make very clear, this policy will do very little to boost the NZ economy, especially in the long term.

    On interest rates, because of the opennes of our capital account, long-term interest rates in NZ are set by world capital markets. The RBNZ can use monetary policy to influence rates at the short end, but increasing the supply of funds from the NZ Super Fund will just crowd-out foreign leneders: the amount and price of money avaliable in NZ will not increase, there will just be a change in owner.

    On the stockmarket, worse will happen. Share prices will rise (becuase the quantity of shares is in fixed supply). Good for the existing owners of shares, bad for those entering the market. Also probably bad for the workers in the companies, as investors will want to get the world rate of return on their investment (new higher price of shares times world interest rate), so companies will have to increase their profits, which means reducing costs and paying lower wages, expecially to those without internationally mobile skills.

    So what will be the impact:

    zip on the debt market

    a one-off windfall gain for existing oweners of shares

    lower wages for the least well-off in our community.

    All the the name of economic nationalism.

    No thank you!!!!

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  64. gee90 (90 comments) says:

    Winston Peters and Russel Norman have both given a positive response to National’s move today. That’s gotta be a first.

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  65. Lee (610 comments) says:

    Ideological purity is for people who like losing elections and want to see another three years of jackbooted fascism from Clark and Cullen.

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  66. Jack5 (5,137 comments) says:

    Just (5.14pm 15 Oct) heard Key easily outgun Foamin Mary on Radio New Zealand news.

    The economic correspondent, Nigel Stirling, she brought in, then quoted Brian Gaynor saying money should go “where it earns most”. Brian often talks a lot of sense, but he’s not always right, and he’s off-target if he thinks all the money would just slosh into the sharemarket. There are heaps of other State, local body, and quasi state investments that are looming.

    Key’s right in this case. NZ is now desperate for investment capital, and the amount he suggests putting into NZ will help. He might modify it by inserting a band or proportion that can be invested in NZ OR Australia. That might help our economy even more. Better still if Key could come up with a hybrid company structure that would allow NZ savings go into joint ventures with the co-operative companies (Fonterra and four or five hundred others) that remain the core of our export economy.

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  67. dave strings (608 comments) says:

    “a single little bumfuck tin pot nation in the South Pacific”

    If ever there was cause for demerits, this is it IMO

    Having lived, with wife and kids, in England, Brazil the USA and Canada, I can assure you that the decision to migrate here in 1992 was not taken lightly. Nor was the subsequent decision, in ’02, to Naturalise made for any reason other than passion for this wonderful country of OURS. There are too many people in New ZEaland who think that knocking the place is right – it’s not! IF you want to know who knocks New ZEaland, it’s ONLY New Zealanders (well, sometimes Ozzies too but only when they’re losing to us in sport.

    One big problem with the country since I’ve been here has been the lack of decent amounts of risk, venture and redemption capital. This policy can put that problem to bed once and for all, and enable the entrepreneurs of the country to obtain sufficient investment, at appropriate stages in their business’ development life-cycle, to facilitate growth and profitable market share. What John Key has demonstrated today is a clear understanding of what the capital markets are, how they operate and how a ’30s or even ’87 like recession can be conquered through that understanding and a long term perspective. Good on him.

    As for the knocker – go elsewhere and don’t bother investing any more of your time and energy on thinking about the issues New ZEaland faces – we don’t need attitudes like yours!

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  68. Lee (610 comments) says:

    Latest poll
    October 15

    Labour 35.7 (45)
    National 48.2 (60)
    NZ First 2.9 (0)
    ACT 2.0 (3)
    Greens 6.8 (8)
    United Future 0.4 (1)
    Maori Party 2.3 (6)
    Progressives 0.0 (1)

    National and Act could govern alone. :)

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  69. DamnedAngry (231 comments) says:

    Where was that poll Lee?

    I’m looking forward to the mass exodus of Labour supporters that can’t live under a National Govt! Better start packing your bags…bye Carol (Trotter’s blog groupie).

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  70. singlemaltsocialdemocrat (6 comments) says:

    It is not a new poll as such, just the NZPA rolling poll, updated to include the recent TV1, TV3, and Roy morgan polls.

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  71. getstaffed (9,186 comments) says:

    dave strings, just on the off-chance… did you work for a CA firm in Wellington in 1992?

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  72. Southern Raider (1,830 comments) says:

    A couple of thoughts
    – Key had to do this to trump Cullen. Keys been out played this week and needed to get in first as Labour was already hinting at a similar scheme
    – NZ startups need capital and startups (the successful ones) can make huge gains in value and NZ used to have a good innovative culture until Clark and co came along
    – Key is planning to also use this money to invest in PPP’s to help speed up investment in infrastructure which creates jobs, pushing up productivity and ultimately should result in better than average growth

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  73. getstaffed (9,186 comments) says:

    NZ startups need capital

    Slightly off-tiopic… but amen to that! The problem isn’t a lack of capital, it’s the completely unreasonable terms expected by investors. I’ve been there several times – in early stage and late stage startup businesses.

    NZ simply has to become better at making ‘stuff’ the the rest of the world wants. Fibre to the home is all well and good… but will we produce more? Will we birth the next Google, eBay or Mircosoft? Or will farmer Brown just get his rocks off faster? I think the latter, beacuse we have a tall poppie syndrome here in NZ, and failure is mocked more that enterprise is lauded. We MUST fix that..!

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  74. Southern Raider (1,830 comments) says:

    First step GS is to dump Helen because having a kiwi google or ebay means more rich pricks and we can’t have that.

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  75. Paul (1,315 comments) says:

    Rod Oram on Newstalk ZB was very critical of this move, and his reasoning made sense.

    1. The fund will not be able to maximise profits from other sources as it’s compelled to invest in lower yielding nz investments.
    2. It will force out or overshadow other kiwi investments as it artificially forces up the stock or value of investment in NZ.

    I can’t argue with that.

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  76. Southern Raider (1,830 comments) says:

    Rod Oram is a stupid fuck. He never comes up with any ideas of his own and just slags off everyone else.

    What is his claim to fame? As far as I’m aware he’s never been a successful business man or investor.

    I would put more stock in what Morgan would have to say.

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  77. getstaffed (9,186 comments) says:

    SR – correct. The problem with ‘rich pricks’, of couse, is that they think for themselves, and cost far too much to buy off. Hardly the graft of the traditional Labour voter.

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  78. Paul (1,315 comments) says:

    Southern Raider – is that it? Is that what you call political or economic reasoning. Well if that’s how you are willing to debate the issue good on you sunny.

    Could we ask what are your credentials and your claim to fame?

    Further apart from your love of the man, what exactly is wrong with his reasoning?

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  79. Kimble (4,440 comments) says:

    “There are too many people in New ZEaland who think that knocking the place is right – it’s not!”

    Get the fuck over yourself.

    Just because I think that NZ is an investment backwater doesnt mean I dont think it is a good place. We have maybe a dozen stocks the NZ Super fund can realistically invest into decent amount into. There is a single stock that makes up a huge amount of the market. A single stock.

    Why isnt there much venture capitalism in NZ? Huh? Money has been cheap for years, why is there a lack of venture capital?

    If you dont know why there is a problem how can you be sure the best way to fix it is for the “Government to do something”?

    The Super fund is set up for a specific purpose. Deviating from that purpose increases the chances that it wont fulfill its purpose and therefore is very irresponsible.

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  80. Kimble (4,440 comments) says:

    1. The fund will not be able to maximise profits from other sources as it’s compelled to invest in lower yielding nz investments.
    2. It will force out or overshadow other kiwi investments as it artificially forces up the stock or value of investment in NZ.

    Two very good points.

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  81. gee90 (90 comments) says:

    Bernard Hickey was on Newstalk ZB, slamming it (I don’t know if Oram was as well).

    If critics of Key’s proposal are just going to be dismissed “ad hominem”, then practically every business/investment commentator is going to be lined up for abuse. Who actually supports it (apart from people like Peters & the Greens, mentioned above)?

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  82. Adolf Fiinkensein (2,903 comments) says:

    Kimble et al. What gives you the idea that investmensts in NZ might be low yielding? Rod Oram is a leftist sympathiser. I ask again, will you find out the comparable losses sustained by the Cullen fund over the past six or twelve months from NZ equities compared with international equities? Come back when you’ve got some answers, not just hot recycled leftie air.

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  83. Southern Raider (1,830 comments) says:

    Grandfather fought in the war.

    Brought up in a family where my dad left school at 14 with no qualifications and worked his way up to a managerial position.

    Brother owns a small contracting company he started from scratch.

    I worked with no school/public holidays from the time I was 16 to 21 to put myself through Polytech to get an engineering degree. Worked my way up from the “factory floor” to a managerial position and paid for myself to get an MBA.

    Basically no free rides or bludging.

    Yourself? Policy analyst in a Govt Department by any chance?

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  84. Southern Raider (1,830 comments) says:

    Adolf agree. A low yielding NZ stock would have to be better than a 20% loss in yeild over the past 12 months.

    Even better than that a return on a toll road wouldn’t be affected by the international markets as much.

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  85. Paul (1,315 comments) says:

    OMG good god “Two very good points” Kimble and I have agreed on something. this is huge. I’d like to claim credit, but it was that useless hack Rod Orams points.

    It just doesn’t make sense.

    Nice, we’ve got your credentials.

    Grandfather fought and died in the war
    Dad left school at 15 worked 27 years in glass factory till they shut it down. Played Rugby for Canty colts. One of 14 kids.
    I own a small company I started from scratch
    Brother spent the last 8 years making way too much bloody money in Dublin, but against Key’s thoughts he’s back in NZ looking to start a business (they do return – and bought his wife)
    Put myself through varsity twice. First time around finished varsity at 5pm cycled to the box factory then worked to 3am, got a degree. Worked until I was in position to start own business.
    Put myslelf back through varsity ($50k student debt now) to help skill up for new business.
    Father still works two jobs. Just payed off mortgage and switched to KiwiSaver last month, now has his project savings halved by national 4 years out from retirement.

    Is that the sound of the world’s smallest violins playing for the both of us?

    As for your analysis of what Oram had to say.

    IS by compulsion making 40% of the fund invest in NZ, in quite possibly smaller returns a good thing. It certainly isn’t self maximising as it’s intended to do, or should do.
    Is flooding the market in NZ, with over inflated stocks and other equities a good thing considering it will possibly drown out smaller investors, who will take money overseas to find returns they can afford to invest ini.

    Are these both good ideas and how are they bad if you don’t agree with Oram

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  86. double d (225 comments) says:

    why is nz media full of “business analysts” with such obvious left leaning ideals and why are their opinions given any credence.

    its like asking a labour sycophant who won the debate last night – despite all evidence to the contrary and regardless of logic or rationality, i still had to lisyen to red tinged colleagues talk about how strong hulun is today ……

    because they are called a business commentator doesnt prevent ideolgy colouring perspective.

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  87. Paul (1,315 comments) says:

    “Rod Oram is a leftist sympathiser” so that precludes him form making sound economic analysis.

    As pointed out above, how come the only people that think it’s a good idea are National, Winnie, Norman and the national hacks here tonight. On the face of it, with that level of compulsion, it’s not too far off Keynesian ideals, and by it’s very nature somewhat leftist.

    The Cullen fund and other massive investment funds like those were forecast to have to ride the roller-coaster or high returns and low to negative returns, this still doesn’t make compulsion a good idea. I seriously can’t believe I’m having to argue these right wing ideas for you guys, doesn’t feel right.

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  88. gee90 (90 comments) says:

    More “hot recycled leftie air” (Adolf) from Rodney Hide, who has called it “Muldoonism”, and here’s Ben Thomas in the NBR:

    http://www.nbr.co.nz/opinion/ben-thomas/election-handouts-just-took-a-terrifying-turn

    Sir Roger Douglas will give a press conference tomorrow morning. I’m guesing he won’t mince words.

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  89. Paul (1,315 comments) says:

    “obvious left leaning ideals”

    again I ask, does this so called bias make them any less qualified to comment, or are you suggesting the right can only make informed comment about economic policy? Because we all know that is bollocks.

    Seems he’s a right average hack too though.

    Triple award-winner at the 2004 Qantas Award, as business columnist of the year, business feature writer of the year and winner of the NZTE travel scholarship for his writing on innovation in New Zealand.

    In the 2006 Westpac Business & Financial Journalism Awards Rod won the Reporting on Corporate Responsibility, Sustainability or Community Engagement category.

    He’s called upon by Larry Williams to talk about it. And Larry is no friend of the left, and he had to agree whole heartedly with Rod Oram

    Bernard Hickey’s having a go, every economic analyst is having a go at it.

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  90. berend (1,709 comments) says:

    National socialists, you guys just won the debate. We should invest your retirement where it earns most, but where it is most needed. That’s the final world (sic).

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  91. Shunda barunda (2,983 comments) says:

    One again, economics is not my thing, so please forgive my ignorance in advance, but some questions I have are:
    If the world economy is turning to crap how is investing in the world economy a good thing?
    Wouldn’t bringing some of that money back here be a good idea to strengthen our economy?
    If our economy fails and the government steps in and takes over the banks, dosen’t that mean they then own most of the land?
    Wouldn’t that be the goal of any socialist govt?
    Surely this whole debate would change depending on how bad the global economic situation becomes.

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  92. GNZ (228 comments) says:

    It seems now that anyone on the Right should rationally vote for ACT (or even UF) instead of National because National seems to be labour lite all the time except when it is doing silly things like this. Any vote for ACT will give them a little more power to stop National doing anything too stupid.

    Or if you are on the Left you should vote green or Progressive or even maori party – they wont get a hell of a lot more power but you can at least punish a extra labour member or two for kissing up to winston and their electoral finance act, anti smacking bill etc etc.

    None of those being likely to be a wasted vote.
    Of course that still leaves winston for the fruit loops to waste their vote on.

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  93. double d (225 comments) says:

    my point was – where do we get a msm opinion that is not tainted?

    is that fair?

    was hulun at her nastiest on one news tonite?

    (shudder)

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  94. Paul (1,315 comments) says:

    Watching CNBC over the last couple of days, as some of the analysts say, there has never been a better time if you’ve got the money to invest to get some of the best bargains seen in decades.

    Take for instance stock like Apple. Not a bad company and in 1 week hasn’t become an awful company, the fundamentals are huge, massive cash reserves, good projections etc, but stock halved in a little over a couple of weeks.

    The problem isn’t with finding somewhere to put your money, the problem is those who need to borrow to supply capital or refinance capital and investments. The credit crunch that has hit Western investors precludes them from being able to borrow to pay the bills. So someone like Apple who doesn’t need to borrow to invest in capital is a good investment.

    Despite what you think, many champagne socialists like myself kinda like to let the economists do their job, as long as their job doesn’t impact negatively on the economy or the social fabric.

    If every economic correspondent I’ve read or heard from over the last week is to be believed, then there simply is no better time than right now to look for investment options, especially in equity, and that includes all of the right wind media, CNBC Wall St Journal , Financial Times etc etc.

    Like you, economics isn’t a speciality, but that doesn’t mean we can’t listen and learn. And the over all goal of champagne socialists isn’t to see everyone at the same level of the lowest common denominator, it’s actually to see everyone as champagne socialists.

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  95. Southern Raider (1,830 comments) says:

    Couple more points
    – already 24% are invested in NZ. We are only adding another 16% its not like we are going from 0 to 40
    – there is no time limit set on reaching the 40% as it is a goal and as Key rightfully points out it needs to be done in a way that doesn’t effect existing investments

    You talk about diversity only applying to spreading the risk between countries.

    Last time I looked at investment strategy it equally applies to spreading investment across different investment vehicles like cash, property, govt bonds, shares and futures.

    Are you honestly trying to tell us none of the existing Cullen Fund would be investing in international Govt bonds?

    Wouldn’t that money be better invested in NZ Govt Bonds or infrastructure bonds where the return is likely to be higher and it is boosting the NZ economy?

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  96. Paul (1,315 comments) says:

    GNZ, I think what you say has a lot of credence. If people like myself think that Helen is done, then I will most definitely be giving my vote to the greens (not that it was really in doubt), and the right should also see some firming up.

    There’s plenty of evidence around voting behaviour to suggest that if people see the election as a Fait accompli, then they will for once vote with their true convictions. The last election was too close to call and the two centralist parties firmed up their vote.

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  97. Southern Raider (1,830 comments) says:

    Paul any thoughts on the fact that Key raised with Helen Clark at least 4 times since 2002 (including a couple of formal letters) about his deep concerns in regards to the activities of finance companies in NZ like Bridgecorp and the need for the Govt to take some proactive steps.

    He got no response.

    Of course she wouldn’t reply as all those finance companies where making the Labour faithful feel rich and allowing them to get that new car or big screen tv. She would hate to wreck the illusion that she wasn’t actually growing the economy.

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  98. Paul (1,315 comments) says:

    “NZ Govt Bonds or infrastructure bonds” are more or less worthless now that banks have become government guarantee (like govt bonds) and are offering higher returns than bonds. Not my analysis, some right wing git in braces from CNBC, and reiterated here by someone here from Business NZ.

    there is no time limit set on reaching the 40%, so why have it. Surely the time will never be right or why introduce it at all. But legislating it, they are saying that it won’t happen on it’s own so we are going to make it so.

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  99. Southern Raider (1,830 comments) says:

    Also Paul if you and your socialist mates are so fond of economists views why then does Labour never take into account their views about student loans, student allowances, WFF and also always dismiss the advice of Treasury?

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  100. Paul (1,315 comments) says:

    But was Key advocating Keynesian policies or intervention. Surely that’s what that is if he wants those places controlled.

    This is a very funny conversation.

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  101. reid (16,471 comments) says:

    Paul in my view you’d be most mistaken to be buying in the equities markets at this point. Commodities not equities are relative bargains right now and gold, silver and coltan are among them.

    As I said about twelve months ago.

    You buy equities now in companies that depend on consumer spending and you’ll be looking at a long hard row before it gets back to even break-even.

    Hopefully these commentators you’re listening to are not the same people that failed to see the ARM issue coming even when it was obvious years ago, to anyone with eyes?

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  102. Southern Raider (1,830 comments) says:

    So you are comfortable with the Greens having control of Environment, Tranport and Enregy?

    Also what ever happened to the knowledge economy?

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  103. OECD rank 22 kiwi (2,752 comments) says:

    Ryan Sproull says at 1:25 pm:

    At least fund money invested here won’t be manufacturing landmines or nuclear-weapon parts.

    Doesn’t Rakon make products that have uses in military applications? An injection of capital from the New Zealand superfund would do wonders for product development (and potential sales to the US military and US military industrial complex).

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  104. Paul (1,315 comments) says:

    Sunshine, I haven’t voted Labour since Lange kicked piggy out, so please don’t call them my socialist mates. Your looking for a fight where seemingly we were in danger of actually having a debate about the issues.

    As for the rest of it, you could never accuse Dr Cullen of being socialist.

    Finally they made those decisions based on ideology. I doubt very much if Cullen watches CNBC, I said I watch it.

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  105. Ross Miller (1,704 comments) says:

    I am slightly confused by all the ideological purists who claim that to invest 40% of the NZ Super Fund back into NZ is the harbinger of doom … and then I hear on the news tonight that the fund already invests 23% back in country.

    So, 23% is ok but 40% is the end of the world at a time of global meltdown. There are sure some dumb f***s out there on the fringes of fringe parties but I guess that is why they are fringe parties.

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  106. Southern Raider (1,830 comments) says:

    I am accusing him of being a socialist.

    Who else would rape the tax payer for nine years because he knew better how to spend the money.

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  107. getstaffed (9,186 comments) says:

    ross – re 23% vs 40%- might be the distinction between elective investment and mandated investment. for my part, the sole purpose of the fund is to provide a growing asset base which is to generate retirement income. its purpose is not to provide a capital football, on-demand and at the whim of the incumbant government.

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  108. Paul (1,315 comments) says:

    “Environment, Tranport and Enregy”

    Yes 100% as long as they take the advice from treasury they would be given.

    These things you talk about are not the domain of the right. How long has it taken Kiwi’s (read Aucklanders) to see the light of public transport. Vancouver is a classic example of my kinda town. Right wing govt with left wing social policy. They worked on the ideal that (unlike Auckland where $1B is wasted in productivity loss due to poor transport) that it is better to invest massively in public transport and get people to work or whatever as quickly and cheaply as possible. Everyone wins and the 3 times I have lived there I have never had to wait more than 7 minutes for a bus.

    How is Keys’ plan to scrap making NZ houses warm a good thing? If people are warm they are healthy, healthy people are productive and not a drain on the health and welfare purse. If houses are warmer we don’t need reliance on coal powered generation as further proposed by national. If energy isn’t tight then spot prices are steady and Comalco is a happy aluminium smelter. Win win. But if you are happy for massive waste energy just flying out of exceedingly poorly insulate NZ houses just because of ideology fine. Shame they are going to cap or reduce the civil service because it’s inefficient, yet inefficient expensive housing (and related health and productivity issues) are as inefficient.

    Reid. Normally in times like this Commodities like Gold Silver etc rise on poor equity, they have suffered as well. Gold is down 18% on highs of less than 6 months ago. All the old rules are out the window now. You are right though, some poor performing consumer equity stocks aren’t a good idea, but futures projections of solid (read companies with massive liquidity) stocks like Apple that aren’t generally affected too much by swing in low value consumer spending are a very good option.

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  109. Paul (1,315 comments) says:

    SR, he paid off massive overseas debt, and as a result just like Australia we don’t have as great a foreign risk in debt. You call paying off debt rape, that and your views on tax are pure ideology, and have f*** all to do with economic argument.

    Ross percentages are semantics. that fund needs to be investing where ever the greatest possible returns are. They aren’t in New Zealand. As suggested by most economic analysts, and even more so when the NBR calls Nationals plan as : blood-curdling” could I suggest to you it’s not a few so called fringe ideologues who think this is a bad idea.

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  110. Paul (1,315 comments) says:

    Even funnier headline on the NBR website is “Sharples to expose Key on TV tonight”

    I hope they bank out the rude bits I don’t need to see Key’s undies on TV.

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  111. burt (8,272 comments) says:

    Paul

    We saw his balls last night. Get over seeing his underwear.

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  112. OECD rank 22 kiwi (2,752 comments) says:

    Kimble says at 1:41 pm

    Investing 40% in a single little bumfuck tin pot nation in the South Pacific is increasing that risk to a fucking stupid level.

    Agreed. The New Zealand superfund represents a great sink hole that Cullen created to pour taxpayer money into in order to avoid giving tax cuts. Well the economy has now turned to custard. At the minimum National should be refusing to put one more cent into the New Zealand superfund. Even better would be to dissolve the fund and refund it back to the taxpayers that paid for it in the first place. It would make quite a nice rebate cheque. Ideally a future government that cared about New Zealand would scrap Kiwisaver and Bludging for Families as well, reduce government spending and reduce taxes. A growth first policy needs to be pursued.

    Finally a future National/ACT government needs to invest in a steel capped leather boot so that they can literally give Michael Cullen a good kick up the backside.

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  113. Paul (1,315 comments) says:

    Are those the balls that told the country one thing and Sharples another thing. I wish I had watched the ALT TV debate now.

    Funny though, I have never seen the NBR so critical of National. The Labour stuff almost writes itself with that lot, but going through the site, there’s not a lot there to suggest that the business community is excited about National.

    Funny, Labour cut company tax before personal tax last year. What is national’s company tax package?

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  114. Paul (1,315 comments) says:

    OECD, slow long ironic hand clap for the enlightened ideological rant.

    How pre tell does one plan to pay for the retirement of Kiwis in years to come given that we are facing an ageing society with next to no track record on personal saving. A little US styled 4 million homeless people – yes that’s right 4 million people sleep on the streets every night in the USA (not that I’m bagging them), but that’s a country that is meant to be savers and planners for college and retirement because the government wont.

    So leave the hobnail boots out of it and explain the rational for scrapping kiwisaver and replacing it with?

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  115. OECD rank 22 kiwi (2,752 comments) says:

    Paul says at 10:09 pm

    he paid off massive overseas debt, and as a result just like Australia we don’t have as great a foreign risk in debt.

    Good to know all those outstanding mortgages on over inflated properties in New Zealand haven’t been financed thanks to billions of dollars in overseas debt. Oh wait!

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  116. OECD rank 22 kiwi (2,752 comments) says:

    Paul says at 10:22 pm:

    How pre tell does one plan to pay for the retirement of Kiwis in years to come

    Private provision.

    Lets face it, New Zealand in all probability isn’t going to make it as an independent sovereign country in the medium term. When the country collapses into chaos what will be the end game? My guess is that New Zealand will be integrated into the Australian Federation. Australia will ultimately make the decisions New Zealanders lacked the courage and wisdom to make.

    Advance Australia Fair.

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  117. Paul (1,315 comments) says:

    OUCH! “I would put more stock in what Morgan would have to say.” to quote Southern Raider. OK so Chris Worthington of Infometrics, Morgans company thinks it’s ‘disastrous’ and will make ‘the entire country poor’

    Ouch, that’s wise economic direction from someone who’s banking on the time he has a an international financier, yet all around him from the right thinking it’s a disaster.

    This election wasn’t Helen’s to win, it was Key’s to loose, and with that sort of track record on week one of the campaign trail, he will sure as hell loose it. He’ll need ACT to win 15% to even think of government as he’s shot Maori off the scene.

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  118. Willie_Escaped (29 comments) says:

    It’s fascinating to see Tories *still* trying keep the hope alive that John Key will govern any differently from the current captain.

    First John Key said nothing, and the Tories said “oh, well just wait till he starts talking, then you’ll see”.

    Then he started talking, and they said “oh, well he’s just saying that off the cuff, wait until the policy comes out, that’s where the real meat will be”.

    Then the policy comes out and they say “oh, well he’s is just trying to win the election, I swear… I think! Wait till you see what he does when he gets in”.

    Then John Key wins the election…. and I wonder what will happen then….

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  119. GJ (329 comments) says:

    The problem as I see it is that two many decisions and policies are currently being made on the hop with an eye to “How many votes will this attract?” rather than “What is best for New Zealand?”

    I think this is dangerous for both the political parties and for our great country.

    Personally major decisions such as this should be made after the elections by the incoming government. (After all they will then be responsible and accountable for them)

    If that government was made up of National, Act and The Family Party, I believe between them with a good bit of brainstorming they could come up with some good constructive solutions.

    The current knee jerk reactions we are currently observing scare me, as people can tend to go back to what they are comfortable with, when they get uneasy, and that would play right into Labours hands which is exactly what I don’t want!

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  120. burt (8,272 comments) says:

    Paul

    I’ll bookmark that last comment, after November it will be interesting to review it. You may be right.

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  121. getstaffed (9,186 comments) says:

    Willie_Escaped – what will happen? Well… most cunning, corrupt and ethically shipwrecked political ‘leader’ in NZs history will no longer be in charge. yay, yay, yay. I’m prepared to risk the alternative on the assumption that nothing can be as bad as what we’ve endured under this giant, failed socialist experiment.

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  122. OECD rank 22 kiwi (2,752 comments) says:

    Willie_Escaped says at 10:57 pm:

    Then John Key wins the election…. and I wonder what will happen then….

    Much celebrating will ensue. Hels and Cullen will retire and disappear from New Zealand’s political scene. Labour supporter will feel depressed, which is good. People who depended on Labour to be in power for their politically appointed jobs will be screwed. There’s much fun to be had from a change of government.

    If ACT do well then a National/ACT government will make a change in the right direction for the betterment of the New Zealand economy. With Roger Douglas as Finance Minister there are no limits to New Zealand’s economic potential and for that potential to be realised.

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  123. Lee (610 comments) says:

    The issue of “homeless” people in the US has little if anything to do with retirement.

    There is no need for the state to be involved in providing retirement. Private provision of retirement could be phased in over time, with temporary help for those 40 and over.

    “This election wasn’t Helen’s to win, it was Key’s to loose, and with that sort of track record on week one of the campaign trail, he will sure as hell loose it.”

    Except he has done quite well so far, especially in making Helen look angry, out of touch and arrogant. Right or wrong, this policy will be very popular with many. Your own party boss likes it. Key does not need to win big business. He has to win the middle class.

    “He’ll need ACT to win 15% to even think of government as he’s shot Maori off the scene.”

    Hardly. Key and the Maori Party leadership get along very well. There is a very good chance that Maori will support National if the win more votes than Labour.

    By the way, did anyone take notice of the Maori Parties policy to abolish the dole? Brilliant! Sometimes the MP sound further to the right than ACT.

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  124. PaulL (5,981 comments) says:

    My turn!! Walked up hill to school every day (in bare feet, in the snow), then uphill all the way home again. Er…relevance?

    Oram’s points are half right:
    1. The fund will not be able to maximise profits from other sources as it’s compelled to invest in lower yielding nz investments. Agree
    2. It will force out or overshadow other kiwi investments as it artificially forces up the stock or value of investment in NZ. Disagree

    I agree that NZ is around 2% of the global sharemarket, and there are probably better investment opportunities elsewhere. Flip-side, most people currently investing in NZ shares could just invest overseas, so no particular issue with driving up values.

    As for NZ businesses being short of capital – well, I usually find that half-way decent investment ideas do draw in money. Perhaps the problem is a shortage of good ideas, good managers and good business plans? The thing is that when the private sector invest, they make a risk based decision on whether they’ll lose their money or not. And if they are choosing not to invest in NZ companies, doesn’t that tell us something? And if the government directs government entities to invest in NZ (irrespective of risk), doesn’t that tell us something about the likely outcome?

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  125. Paul (1,315 comments) says:

    Burt, I have no idea who will be PM come november, in Feb I was convinced it was Key. I honestly have no idea.

    “There is no need for the state to be involved in providing retirement” except that is exactly what it has been doing since it became a social democratic state way back (date super started anyone?) But why would we want US styled private provision, when just this week we watched as hundreds of thousands (possibly not exaggerating to say millions) of americans just had their college and retirement funds collapse around them?

    If his doing quite well so far has been to illict the criticism in the last 4 days of Business NZ, Manufacturers and Exporters Association (over the R&D tax credit cut) and now line up most if not all of the right wing economic commentators from Infometrics and Oram to Bernard Hickey. They’ve basically told ACT to get stuffed with their centralist policies (only Russel Norman and Winnie Peters think this is a good idea) and they’ve lied to Pita Sharples and Maori (possibly the worst thing you could do). IF the headline in NBR about Sharples is anything to go by, they seem to be getting along dandy. Also there is no way Maori will go with National, when only 11% of Maori support National, and they plan to scrap the seats. Tarian Turia is a pretty out there kinda MP, she could work with Key, the rest of Maoridom would more or less chase her off the Marae if she went with Key.

    Not a good look for Key this week, pissing off his core vote and the possible support parties. He aint going to get that many Labour voters (he’s probably got all the loose labour vote already). I’m not trying to be smug or anything here, it’s just not looking good for him. Sure he’s ahead in the polls but for how long if he’s just going to piss off the right more and more?

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  126. Paul (1,315 comments) says:

    ‘hole in middl road’ and coals for diner ( I was having fun with the violins).

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  127. dad4justice (8,222 comments) says:

    Did you teach rubbish collection when employed as a failure teacher Paul? I mean to say the shit you have written on this thread could more than fill a metro rubbish collection station.

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  128. expat (4,050 comments) says:

    pauls a retard.

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  129. Paul (1,315 comments) says:

    dad and expat, you have both illustrated quite perfectly to the rest of the world that you both have neither the intellectual capability of intestinal fortitude to counter the points that I have raised.

    Considering these aren’t my points they come from the right wing economic analysts and commentators. Infometrics, Bernard Hickey, NBR, Rod Oram, Business NZ and Manufacturers and Exporters Association have all criticised National economic policy over the last 4 days. Not a good look. But hey there’s salvation on the right, idiots like you two are the champions of their polciy. I can see it now an exclusive with the Wall St Journal “Mr Key how didi you pull off a surprise victory in the face of all that criticism” – “I owe it all to a litigious idiot in NZ called D4J”.

    Stimulating criticism guys, seems most others in this post were able to argue their points.

    I actually take sort of criticism as a badge of honour – cheers. Could you please fire off a quick email to Infometrics telling them they are idiots.

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  130. stephen (4,063 comments) says:

    “pauls a retard.”

    ‘I know you are so what am i’. What’re you, eight?

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  131. Paul (1,315 comments) says:

    Front page of the National Business Review today

    “Election handouts just took a terrifying turn
    Wednesday October 15 2008 – 03:54pm | 5 comments
    National’s announcement it will change the law to direct the Super Fund to invest at least 40% of its assets in New Zealand is positively blood-curdling. ”

    Now that’s funny. How could a guy from Merrill Lynch with such a great record manage to get the NBR to be so bloody critical. This isn’t a subtle slightly concerned headline, words like “terrifying” and “blood-curdling” is the stuff of a classic horror movie.

    Please D4insanity, your enlightened riposte.

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  132. dad4justice (8,222 comments) says:

    Real bee in your bonnet with me Paul. The internet is a breeding ground for keyboard cowards like yourself.

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  133. expat (4,050 comments) says:

    Paulk said “‘hole in middl road’ and coals for diner ( I was having fun with the violins).”

    Paul is a retard.

    LOL.

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  134. expat (4,050 comments) says:

    Hang on paul, are the nbr folk the same folk that you reckon know fuck all about anyting except ripping off your poor commie mates? and now you hold them up as all knowing? Are you a hypocrit as well as retarded?

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  135. stephen (4,063 comments) says:

    Hole in a road! Luxury, there were a hundred and sixty of us living in a septic tank, we had to get up at six o’clock in the morning, clean the tank, eat a crust of stale bread and then go to work down at the mill for 26 hours a day, etc

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  136. expat (4,050 comments) says:

    Classic labour tactic – try and brush off a beating with a patronising chuckle.

    later.

    LOL

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  137. Paul (1,315 comments) says:

    dad just a little economic or political insight, you were the one that came at me sunshine.

    Expat, did I say that about the NBR, I don’t think so. I don’t like the NBR but I don’t think that and you are just hiding behind stereotypes and prejudice in the face of inability to counter their points.

    These are Key’s mates, his core vote. It would be like the Greens announcing coal mining on the Corromandel and Greenpeace coming out with words like “terrifying” and “blood-curdling” .

    Or put it another way if Labour was to suddenly slash the dole and state housing and the Unions came out with words like “terrifying” and “blood-curdling”.

    How you could manage to piss off your core vote weeks out from, an election is simply stunning and quite frankly bloody hilarious. I’ve always thought he would be PM since about Feb, now I’m not so sure.

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  138. Paul (1,315 comments) says:

    we used to live in old water tank in rubbish tip…

    http://www.youtube.com/watch?v=Xe1a1wHxTyo&feature=related

    we were evicted from our hole in the ground

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  139. Paul (1,315 comments) says:

    expat, sow how does a tory beat off a beating by the NBR?

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  140. dave strings (608 comments) says:

    According to a report on the NZ Herald website, Labour will ‘ask’ the NZ Super fund to invest more in New Zealand

    More than the 27% already there. Perhaps another 13% ????

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  141. Paul (1,315 comments) says:

    Found it!!!

    One economic think thank isn’t pulling Key over the coals over his idea.

    Seems it’s Key, The Greens, Peters and David Skilling think this is a good idea. How there’s a collection for ya,

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  142. Owen McShane (1,226 comments) says:

    No such fund will invest in venture capital projects because it could not stand the political heat of the failures – which always come up before the success. The lemons ripen before the apples.

    When I was a venture fund manager we accepted that out of ten investments (equity remember – not debt) about 30% would go belly up, fifty percent would stumble along and 20 would generate the returns to make the fund viable.

    OUr most succesfful venture capital manager was Strada Holdings which for a few years in the early eighties was the world’s largest and most successful investor in Broadway and West End musicals. I still get royalties for Les Miserables.

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  143. TheStig (3 comments) says:

    This is just BS Farrar and you know it. Even Gordon Brown isn’t dictating to banks that they must invest a certain amount in the UK – even he isn’t that stupid.

    Key is engaging in the most base populist politics. If I had money in Kiwisave, and thankfully I don’t, I’d want the best return for my money. I sure Key has followed the same principles in the past. Where are the man’s principles when they are needed?

    Bring back politicians of conviction like Ruth Richardson!

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  144. stephen (4,063 comments) says:

    TheStig, this isn’t about dictating to banks or Kiwisaver, it’s about the Cullen Fund.

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  145. Kimble (4,440 comments) says:

    “I agree that NZ is around 2% of the global sharemarket, and there are probably better investment opportunities elsewhere. Flip-side, most people currently investing in NZ shares could just invest overseas, so no particular issue with driving up values.”

    Much, MUCH less than two percent PaulL.

    Why would people invest overseas when the local market is appreciating in price?

    The issue of concern for me is not that the super fund can find a better return elsewhere, it is that they can find a return with less than if this NZ40% constraint was in place. They will be taking on more risk by investing in NZ, which increases the probability of not achieving their goal. That means that future governments will have to fund the shortfall and will either need to borrow or raise taxes, which is precisely what the fund was created to avoid.

    Bringing the funds “back home” is transfering wealth from the future to today.

    The other issue is what it would do to the overall asset allocation. There just isnt enough equity opportunity in New Zealand so a lot of the Super fund will have to be redirected to bonds.

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  146. Kimble (4,440 comments) says:

    “…with less risk than if this NZ40% constraint…”

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  147. Paul (1,315 comments) says:

    “Bringing the funds “back home” is transfering wealth from the future to today”

    Nice quote!

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  148. Sam (502 comments) says:

    no tags for this post… – I’d really hate for this post to be lost – it’s almost enough to turn one into a conspiracy theorist…

    Obviously an oversight – how ’bout:
    John Key, National, Election 08, Cullen Fund, Credit Crisis

    …and a couple of new ones:
    Election promises, State ownership of NZ Economy (aka Dancing Cossacks), Keysian Economics (no, that is not a typo)

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  149. Rodney Hide (61 comments) says:

    From Rodney Hide:

    There are two possibilities behind John Key’s announcement that $40 billion of the $100 billion Cullen Fund is to be directed into New Zealand assets.

    The first is that he knows it’s a dumb idea but thinks it smart politics. That would make the commitment woeful and irresponsible.

    The second is that he thinks it’s a good idea – now that would be truly appalling.

    Having the government buy up assets does nothing to improve economic performance. Nothing.

    At the same time, political direction undermines entirely the Fund’s purpose.

    The policy is nuts. The Nats need ACT more than I realised!

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  150. stephen (4,063 comments) says:

    The first is that he knows it’s a dumb idea but thinks it smart politics. That would make the commitment woeful and irresponsible.

    ‘Dumb ideas, smart politics’ – kinda National’s unofficial campaign slogan so far eh Rodney? Not sure if that is the actual Rodney – does Real Rodney talk about himself in the third person?

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  151. Kimble (4,440 comments) says:

    Stephen, National’s campaign is still preferable to Labours campaign of ‘Complete Emotional Breakdown’.

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  152. stephen (4,063 comments) says:

    “Stephen, National’s campaign is still preferable to Labours campaign of ‘Complete Emotional Breakdown’.”

    Quite.

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  153. somewhatthoughtful (465 comments) says:

    Like i’ve been saying, what the hell does holding a position in the middle management (yes, the first to get fired in a restructuring) qualify key to run the economy? That’s right it doesn’t, yet somehow people get bought into this, hell he may as well have been working in marketing, he’d probably have come out with the same knowledge. ie. fuck all, this just proves it. At least cullen’s honest in Keynesian leanings.

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  154. Kimble (4,440 comments) says:

    “what the hell does holding a position in the middle management (yes, the first to get fired in a restructuring) qualify key to run the economy?”

    The head of currency at a huge international investment bank is “middle management”?

    Wasnt Key the one doing the firing in the restructuring rather than the one being fired?

    Exactly what sort of moron are you?

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  155. somewhatthoughtful (465 comments) says:

    Nice one kimble, personal attack without actually offering any evidence of how he is actually qualified to be in charge of macro and microeconomic management. He’s probably a good corporate manager, probably excels at meetings and makes a mean powerpoint, I still don’t see how he has any credentials to be a politician and his super scheme proves it. He’s dangerous for our ecnonomy. Clark and Cullen aren’t ideal, but that’s what happens when one has to deal with the greens in a govt. Key and English are clueless.

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  156. labrator (1,850 comments) says:

    I still don’t see how he has any credentials to be a politician

    Well that pretty much rules them all out then.

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  157. Paul (1,315 comments) says:

    and on top of all that criticism Rodney Hide even took the time to come along and give a bollocking.

    strike 1, scrap R&D – piss of Business NZ and the Manufacturers and Exporters Association.
    strike 2, 40% legislation – piss off all bar one genuine economic commentator & forecaster (and only natural coalition partner)
    strike 3, lie to either Pita Sharples or the Public – piss everyone else off.

    How many strikes was it under National’s crime policy. I think Key qualifies for no parole.

    Now that’s comedy.

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  158. OECD rank 22 kiwi (2,752 comments) says:

    Rodney Hide says on October 16th, 2008 at 12:08 pm:

    The policy is nuts. The Nats need ACT more than I realised!

    The New Zealand Superannuation Fund is nuts. So it’s nuts on nuts.

    At least ACT has an “ambitious” Tax policy unlike National(What happened to “Amibitious for New Zealand”?). Looks like Prime Minster John Key will soon be appointing Finance Minster Roger Douglas and Minister for Education/SOE’s Rodney Hide to the “Cabinet expenditure control committee”. Good luck and happy hunting.

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  159. Paul (1,315 comments) says:

    Reid

    “Paul in my view you’d be most mistaken to be buying in the equities markets at this point… You buy equities now in companies that depend on consumer spending and you’ll be looking at a long hard row before it gets back to even break-even.”

    Funny, I pointed to Apple as a very liquid company with massive cash deposits and people laughed.

    Just in;

    “Apple’s unit shipments year-over-year grew 32% according to IDC, and 29.4% according to Gartner — more than six times the industry average.”

    “As Gartner measures it, Apple’s market share hit a record 9.5% in calendar Q3, up from 7.7% in the same quarter a year ago.”

    “It’s almost as if Apple were in a different business than Dell (DELL), HP (HPQ), Acer and Toshiba. While the average selling price of PCs continued to drop this summer — thanks, as Gartner notes, to the growing popularity of under-$500 “netbooks” — Apple kept its prices high as it added memory, power and stylish features.”

    (http://apple20.blogs.fortune.cnn.com/)

    To think in blanket terms of consumer instability in the equity market, that equity stocks aren’t the way to go, is to not see the trees for the forest to use a phrase.

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  160. getstaffed (9,186 comments) says:

    I still don’t see how he has any credentials to be a politician

    If you mean he’s not a lying, dishonest megalomaniac then I agree. The problem is that too NZers (incl you?) have been conditioned to believe that such traits are essential.

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  161. Kimble (4,440 comments) says:

    somwhatthoughful, you got two of your main facts 100% wrong, why should anyone give what you have to say any credibility.

    “strike 3, lie to either Pita Sharples or the Public”

    Why would he promise something for nothing in return? The story does not check out.

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  162. Paul (1,315 comments) says:

    Because he’s a tow faced liar.

    My god man where do you start,

    tranzrail shares, yes no maybe
    Maori seats, yes no maybe

    Voting papers in the country need to change

    “Who do you vote for. You can tick any box”? ”

    John Key
    Tick yes if he lied and you don’t care
    Tick no if he lied and should be thrown away without parole
    tick maybe if you can’t decipher the double talk.

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  163. Paul (1,315 comments) says:

    Update for you Reid

    “Paul in my view you’d be most mistaken to be buying in the equities markets at this point… You buy equities now in companies that depend on consumer spending and you’ll be looking at a long hard row before it gets back to even break-even.”

    From MacRumors.com

    “Apple announced their financial results today for the 4th quarter of fiscal 2008 . Apple posted revenue of $7.9 billion and net quarterly profit of $1.14 billion, or $1.26 per diluted share. These results compare to revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share, in the year-ago quarter. Gross margin was 34.7 percent, up from 33.6 percent in the year-ago quarter. International sales accounted for 41 percent of the quarter’s revenue.

    Apple shipped 2,611,000 Macintosh computers during the quarter, representing 21 percent unit growth and 17 percent revenue growth over the year-ago quarter. The Company sold 11,052,000 iPods during the quarter, representing eight percent unit growth and three percent revenue growth over the year-ago quarter. Quarterly iPhone units sold were 6,892,000 compared to 1,119,000 in the year-ago-quarter.

    “Apple just reported one of the best quarters in its history, with a spectacular performance by the iPhone — we sold more phones than RIM,” said Steve Jobs, Apple’s CEO. “We don’t yet know how this economic downturn will affect Apple. But we’re armed with the strongest product line in our history, the most talented employees and the best customers in our industry. And $25 billion of cash safely in the bank with zero debt.”

    Get that, more iPhones, more iPods, more Macs, ZERO debt and $25billion dollars worth of cash in the bank, now that’s a sensible stock to buy.

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