Labour has revealed that it will create another future fund if it wins next year’s election – which would begin with a $200 million investment.
It’s the party’s first major policy release in two years.
The fund would exist alongside the Super Fund, but Labour said a greater amount of investment would be made in New Zealand, compared to just 11% currently from the Super Fund.
Leader Chris Hipkins said “New Zealanders are inventive and resourceful, but years of underinvestment have left too many great Kiwi ideas without support, while the wealth we create flows offshore”.
When the Super Fund was set up in 2003 by then Finance Minister Michael Cullen, $2.4 billion was invested. As of August 31 this year, the total has increased to $85.6 billion.
The first withdrawal of $32 million dollars is set to be made in 2028, with withdrawals of $1 billion plus expected to come from 2036.
Labour said the new Future Fund would operate in a similar manner, with its primary focus being infrastructure and business.
The party’s information pack said it would allow “the next Trade Me, Xero or Rocket Lab [to] grow and thrive here”.
It would be handled independently by the Guardians of the NZ Super Fund with the Minister of Finance as the sole shareholder.
The Minister of Finance would set a broad letter of expectations, but wouldn’t have the power to direct individual investments.
Hipkins believed this was their alternative to the Government’s economic plan.
“Christopher Luxon has no plan for our economy – he is relying on house prices, the Reserve Bank and foreign investors. Labour’s plan is about backing New Zealanders and their potential starting with the creation of the New Zealand Future Fund,” Hipkins said.
Labour said it would be established with an initial capital contribution.
They said there would also be seed capital from a small number of Crown assets, with the dividends being ring-fenced.
Labour added the party would also use the fund to protect the seeded assets.
Any asset that sits within the fund would be prevented from being sold in legislation.
Assets not within the fund would require explicit ministerial approval before being sold.
Hipkins believed the fund would give more opportunities for people to stay in New Zealand.
“Right now, more than 200 New Zealanders are leaving every day. National has no plan to grow the economy and keep people here. But it doesn’t have to be like that. New Zealanders have a clear choice – an economy going backwards because of National’s short-term thinking, or one built by New Zealanders, for New Zealanders.”
The party referenced Singapore’s Temasek fund – which is state owned and run by their government – as a testament to the success of wealth funds.
It began with a NZ$476 million investment in 1974 and is today worth NZ$584 billion.
Labour’s Finance spokesperson Barbara Edmonds said: “For too long great Kiwi ideas have struggled to get the investment they need. That ends with the Future Fund, which will turn innovation into real businesses and real jobs here at home.”
“Labour will partner with business, iwi, unions and communities to build the industries of the future and keep more wealth in Kiwi hands. The Future Fund is the first step,” she said.
Labour also outlined what they say will be the first term priorities if they get back into government next year.
They say they want to “make and keep more wealth in New Zealand,” and also referred to wanting to create a tax system that rewards work and investment over speculation.
The party has indicated that it will release its tax policy before the end of the year. A capital gains tax remains as the widely rumoured option.
Other focuses included clean and affordable energy, where the party said it would upgrade the grid.
Skills and tech adoptions, improving faster access to quality and affordable public services as well as modern and resilient infrastructure were also focuses.
