The Dom Post editorial:
Things are simple on Planet Winston Peters. There, all that is necessary for something to happen is for Mr Peters to declare it to be so.
Hence, delivering inhabitants of Planet Peters a higher rate of return on their retirement savings is simply a matter of him promising a “world class model unsurpassed by anything in the world”. Protecting those savings from sudden market drops is an equally simple matter of guaranteeing the capital invested in the scheme. No downside, no need for individuals to monitor the performance of their investments. Just leave it all to Mr Peters. In fact, vote for Mr Peters and you can have your cake and eat it too.
Unfortunately, Planet Earth orbits a different sun from Planet Peters. In this universe, the value of investments is determined not by political decree but by events beyond the control of individuals and governments. The price someone is prepared to pay for a hectare of land in Dannevirke, 500 grams of butter in Paris or a shareholding in Air New Zealand is influenced by the weather in southern Europe six months ago, the progress of negotiations over the debt ceiling in the United States, the political situation in China and a thousand and one other imponderables.
Mr Peters, for all his claims to omniscience, does not control those things. Markets go up and markets go down. What was a solid investment last week is a poor investment this week and vice versa.
The only way Mr Peters can guarantee the capital invested in any particular fund is to require those who have not invested in it to foot the bill if its managers misjudge the market. The only way he can guarantee a superior return for his “KiwiFund”, especially when he proposes to handicap its performance by directing where it invest its funds – “substantially in New Zealand” – is by pumping public moneys into it when the inevitable happens and other funds outperform it.
The editorial is spot on. Peters is proposing that taxpayers underwrite $20 billion dollars or more of investments.
As I said earlier this week, Peters should set up his own KiwiSaver Fund and lets see how many people actually trust him enough to invest in it.