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Super Fund Performance Does Not Cause Contribution Rethink

Contributor:
Fuseworks Media
Fuseworks Media
Bill English. Pic: NZPA
Bill English. Pic: NZPA

Wellington, June 3 NZPA - A rebound in the New Zealand Superannuation Fund's return will not lead to the Government rethinking its contributions suspension, Finance Minister Bill English said today.

The Crown accounts over the 10 months to April show the fund recorded a positive 6.74 ($0.8 billion) percent growth for the month.

This follow followed a profit in March of $200 million after a year that saw billions of dollars wiped off its assets.

Mr English said he hoped the fund and other Crown investment agencies would continue to grow the $30 billion invested in the markets, but this was not an influence on the contributions suspension.

"Our decision on the super fund isn't related to the performance of the fund, it's fact we face deficits of up to $10 billion and deficits that last for ten years," Mr English said.

"The decision to save money is about whether we have got any to save... at the moment we have a large overdraft and when we get that under control we will contribute to the super fund, when we are back in surplus."

Labour continued to attack National for the suspension decision when Parliament sat today saying it was shortsighted and put future pension entitlements at risk.

National has pledged to retain super payments at the current rates and age and argues the fund only play a small part in paying for pensions in 20 years time.

Mr English said based on comments made by Labour MPs after the budget, the deficit would have risen to $15 billion next year if they had written the budget compared to the near $7 billion under National.

This would have meant a credit ratings downgrade and interest rates being pushed up by 1.5 percent

Labour said the Government accounts would be between $8 billion and $23 billion worse off -- including the cost of borrowing -- by suspending the contributions.

They also pointed to a letter written to the Dominion Post by Mr English's predecessor Dr Michael Cullen asking that reporters to now call it the English Fund and not the Cullen Fund.

Mr English has said Dr Cullen envisaged suspension of contributions because he wrote it into the law. Labour says a 10 year suspension is the same as a cancellation.

Today's accounts showed the Government's fiscal position was slightly better than forecast, mainly due to improved returns from investment funds, although the prolonged recession saw the accounts remaining deeply in deficit.

The operating balance for the ten months to April 30 was a deficit of $7.69 billion, or 12.9 percent better than the forecast made in last month's budget of a deficit of $8.83 billion.

The Treasury said the improved deficit was largely because of gains of $1.5b from various state investment funds.

It said tax revenue was around $400 million above forecast, mostly as a result of timing issues, which would be reversed before the end of the fiscal year.

The operating balance excluding gains and losses, which strips out unrealised investment gains or losses, was a deficit of $1.8b, $100m lower than forecast.

Net government debt stood at $17.74b, which was $207m higher than forecast, equating to 9.9 percent of gross domestic product, against a forecast 9.8 percent.

The Government's net cash position, the difference between all income and spending -- operational and capital -- was a deficit of $9.76b compared with a forecast deficit of $10.04b.

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