More on Super Fund
February 26th, 2009 at 9:47 am by David FarrarThe Herald canvasses the parties on whether there should be a freeze on contributions:
Should the Government suspend contributions to the NZ Super Fund?
* National: Won’t rule it out.
* Labour: No
* Greens: Yes
* Maori Party: No policy
* Act: Yes
* United Future: No
* Progressives: No
The best argument for common sense comes from Russel Norman:
But Greens co-leader Russel Norman said last night that in the present context, New Zealand should suspend its contributions.
“We are borrowing in order to invest in pretty uncertain financial markets at a time when the Government’s fiscal position is rapidly deteriorating and it’s really worried about its gross debt level.
The scond stupidest statement is from Phil Goff:
Labour leader Phil Goff strongly opposes any suspension of contributions of about $2 billion a year.
“The pensions of tomorrow need to be protected today.”
So Phil thinks borrowing today, which will need to be repaid tomorrow, will protect he pensions of tomorrow. That has to win some prize for stupidity.
Then we have Jim:
Progressives leader Jim Anderton said that “raiding the piggy bank today means there is less in the piggy bank when it is needed”.
Jim thinks you can fill up a piggy bank by borrowing money for it. This is like telling your child that even though they did not have any left over pocket money, they should go borrow some money, and stick that borrowed money in a piggy bank, so they will think they have saved some money.
UPDATE: Whale calls Labour’s borrow to save plan as their “Blue Chip” plan for our future. That’s a good way to look at it. I mean think if a finance company did what Goff and Anderton did, and said we will secure your future by borrowing money you don’t have, to save money for you. The SFO would be talking to those directors in very quick time!
Related posts:
- Roughan on Super Fund
- Editorials on Super Fund
- The NZ Super Fund
- Absolute hypocrisy from Labour over NZ Super Fund
February 26th, 2009 at 9:59 am
Phil has a plan for the future of labour and himself.
It seems to be a really crap plan.
Vote:February 26th, 2009 at 10:10 am
Goodness, is Jimblanderton back? Where has he been since the election? He certainly doesn’t appear to have been in Parliament.
Vote:February 26th, 2009 at 10:18 am
Stunningly dense lefties there.
Vote:February 26th, 2009 at 10:29 am
Of course by the same logic, (we’ve always been in debt) Cullen’s folly was NEVER of ANY economic merit – the average householder gets it – pay off the mortgage first – but not the deckchair fiddlers from the left.
Can the whole thing and cash it up but we cannot afford to cash it up now at the firesale prices we would get – we would need to cash it up in a couple of years or so after some level or reasonable market recovery
Vote:February 26th, 2009 at 10:46 am
Strangely enough Cullen gave the government of the day the ability to suspend payments to the super fund in circumstances similar to what we have now. Goff is now criticising that power. Numpty. I doubt that there will be many offers of board positions for him when he retires from polictics.
Vote:February 26th, 2009 at 10:48 am
Good god – the Greens and Act agreeing on a policy? Surely not.
Vote:February 26th, 2009 at 11:01 am
Goff is staying true to type.
Labour wrecked our economy while in charge, and want continue that fine tradition while in opposition.
Idiots.
Vote:February 26th, 2009 at 11:10 am
beanee, They’ve voted together on stuff like sedition, drugs, graffiti and terrorism http://theyworkforyou.co.nz/parties/green/act , possibly for different reasons, but I would think not in those cases.
Vote:February 26th, 2009 at 11:29 am
Jim is mad.
Nuff said.
Vote:February 26th, 2009 at 11:42 am
Borrowing money so you can invest it in potentially loss making markets really adds up – especially if you are in opposition or lost in an ideological haze. Far better spent on infrastructure or not borrowed at all. In the meantime the Cullen fund need to be ring fenced and left to be managed by the appointed guardians. I hope this remains a national asset immune to political interference of any kind.
Vote:February 26th, 2009 at 11:45 am
The Standard are pushing the “buy low sell high” argument. The problem with that line of thinking is that we don’t know how low things can go in the current conditions.
Vote:February 26th, 2009 at 12:07 pm
I’ll take that quote while I can get it!
Of course, the Greens think that the Super Fund is based on flawed assumptions in the first place, so they’re bound to take that position.
Vote:February 26th, 2009 at 12:12 pm
Do I trust the Government to gamble on the stockmarket for me? No. I don’t trust most of the muppets who’ve been doing this professionally in the last few years either. Taking our taxes and then investing in shares is the last thing a Government should be doing – unless it has other particularly good reasons for a stake in a company.
Vote:February 26th, 2009 at 12:12 pm
The Stranded are only pushing that line because it supports Labour’s warped idea of economic wisdom. If National were proposing the ‘borrow money to invest in loss-making activities’ they’d be screaming about increasing debt, crazy capitalism etc etc.
Nope, those Stranded morons have the relevance, durability and allure of a fart in a lift.
Vote:February 26th, 2009 at 1:05 pm
Er .. it is the stocks that were bought a year ago, at much higher prices than they are now, that should not have been bought. But it’s hard to take that back. Ones acquired now are much more likely to be near the bottom and a very good investment. Not that I’d trust anyone (let alone the government) to accurately pick the bottom.
Any number of academic studies have shown that a simple “buy and hold” strategy provides good returns in the stockmarket over the long term and that trying to be smart and do better than that is very very hard.
In particular, saying “stocks have gone down recently so it’s a bad time to buy them” is very simple-minded.
Vote:February 26th, 2009 at 1:15 pm
Methinks that Goff is showing himself to be totally irrelevant to the political process. His ‘opposition’ is based on a perceived need to oppose. Perhaps he might enlighten us as to whether he is borrowing on his own account to buy equities in a falling market. Perhaps also he might care to enlighten us as to why (Labour’s) legislation provided for a suspension in contributions and, given that, under what circumstances would a Labour Government so act.
Anderton always has been.
And who cares what Peter thinks?
Vote:February 26th, 2009 at 1:16 pm
Bruce
Vote:The better strategy is to buy in a rising market and sell in a rising market and go cash. For the gamblers its sell in a falling market and buy back whilst still falling then go cash and wait for the turn.
February 26th, 2009 at 1:41 pm
FWIW – and as far as I understand it – the government doesn’t invest the money, they leave it to the ‘Guardians’ of the NZ Super Fund or some such thing, essentially a bunch of normal commercial investors.
Vote:February 26th, 2009 at 3:51 pm
DPF “So Phil thinks borrowing today, which will need to be repaid tomorrow, will protect he pensions of tomorrow. That has to win some prize for stupidity.”
You’re just not part of the choir he is preaching to.
At least I hope that’s the explanation.
You wouldn’t actually think Goff is really that stupid?
Vote:February 26th, 2009 at 3:52 pm
The scoundrels! They’ve also been pushing the “sky is blue” argument, and even the “water is wet” argument!
Vote:February 26th, 2009 at 3:56 pm
stephen says
FWIW – and as far as I understand it – the government doesn’t invest the money, they leave it to the ‘Guardians’ of the NZ Super Fund or some such thing, essentially a bunch of normal commercial investors.
correct ……
and there are enormous mountains of research that show that a minority of these “professional” investors actually beat the market – they cannot even beat index funds.
But borrowing to invest – madness
Vote:not selling off assets to pay off debt unless you’re pretty damn sure the asset will appreciate in value at a faster rate than the debt – madness
February 26th, 2009 at 4:06 pm
Jeeez As any sensible home owner knows first you pay off the mortgage and then you start to save unless you can get a guaranteed better return from saving than paying off the mortgage
What you DONT do is borrow to save in the hope that the value of the savings will be greater than the borrowings plus nterest which is what the bozo Cullen did.
Because you dont know what the value of the savings is going to be in the long term.As recent events have demonstrated dont look to history as a guide
We are in new unchartered waters Anyone who says they know the value of an investment in 25/30 years time is a fool and a liar
They dont.
Vote:February 26th, 2009 at 5:53 pm
If the Super Fund had liquidated all it’s equities and put everything into gold and silver six months ago, we would have more than a $2 billion net gain today.
It’s not too late to do that.
Also look at coltan.
I agree, but there are certain trends you can rely on. One is investing in the health industry, with the upcoming baby boomer population bulge, another is investing in the environmental technology industry. Both of those have stellar futures. Of course so does Defence, but apparently some people have problems with that, for some reason.
Vote:February 26th, 2009 at 6:40 pm
Just another case of trying to baffle them with bullshit. Telecom would be proud of the way phillip goff obfuscates.
Vote:February 26th, 2009 at 9:48 pm
So we can only borrow for tax cuts then?
Economics 101, has any Tory ever passed it?
[DPF: National's tax cuts were funded in full by reducing spending. No borrowing involved. Try again]
Vote:February 26th, 2009 at 10:05 pm
Are we, sonic? Really? Pray tell us the precise details. I was operating under the assumption that the Nats said we wouldn’t, and we aren’t, we haven’t and we won’t.
You appear to have certain insider info the rest of us politicos aren’t privy to.
Pray tell.
Vote:February 27th, 2009 at 1:43 pm
Really David, seen the government accounts lately?
Try again.
[DPF: Shall I type slowly, so you can understand? National's tax cuts were fully funded by reduced spending on (mainly) KiwiSaver. The borrowing the Crown is not due to the tax cuts (that were fiscally neutral) but due to a drop in taxable income and an increase in spending etc]
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