National Party leader John Key was proposing to establish a $10 billion private piggy bank for a future minister of finance's pet projects, Finance Minister Michael Cullen said yesterday.
Mr Key announced a National-led government would amend the New Zealand Superannuation and Retirement Income Act 2001.
The amendment would allow the minister of finance to give a direction to the guardians of the fund regarding the proportion of the fund which was to be allocated to New Zealand investment.
National would set the target at least 40% of the super fund to be invested in New Zealand.
The range of investments available to the fund included: New Zealand-listed equities; Government bonds; High-quality commercial paper; Local government fixed-interest securities; Private equity; Property, infrastructure, forestry and commodities.
Dr Cullen said from Auckland that Labour was opposed to giving the minister of finance the power to direct the fund.
He estimated that 40% of the "Cullen fund" in two years' time would be $10 billion"The whole purpose of making the fund independent of Government was to ensure investment decisions are made by professionals.
"This is a fund to support the provision of universal superannuation to all New Zealanders in the years ahead.
''It is not the finance minister's piggy bank to raid for pet funds."
Dr Cullen agreed with the Otago Daily Times that infrastructure projects in marginal electorates could receive preferential funding in an election year if a finance minister had control of a large part of the fund.
"You can imagine if [former prime minister Sir Robert] Muldoon had control of a super fund when he was running on `Think Big' projects."
It was essential that the fund made strong returns to secure the financial future of New Zealand superannuitants.
However, Mr Key was promoting a "money merry-go-round" which meant the 40% of the fund would have to be replaced by taxpayers at some stage to pay for their retirement, Dr Cullen said.
Mr Key said National believed that a greater proportion of the increasing pool of capital in the super fund - which belonged to all New Zealanders - should be invested in New Zealand to stimulate the growth of the the economy.
"It is better to use more of those funds here at home to invest in our productive sector and broaden and deepen our own capital markets."
There would be short-term and longer-term positive impacts.
In the short term, it would ensure New Zealand had the investment capital needed to get the country out of a recession.
In the longer term, it would 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, he said.
In every other regard, the guardians of the fund would continue to invest as they did now.
National would create more investment opportunities that the super fund could take up in New Zealand, including longer-dated infrastructure bonds.
National would release further economic policy in the days ahead, Mr Key said.
On Tuesday, Dr Cullen announced that a Labour-led government would consult the guardians of the New Zealand super fund and KiwiSaver providers about what changes to current settings would help to provide increased investment in New Zealand by their funds.
"Unlike National, we will not be legislating to give the minister of finance the power to direct the fund."
