The NZ Super Fund’s bid to build Auckland light rail lines has finally realised Norman Kirk’s vision of pension fund capital building local infrastructure. Now today’s Labour Party should embrace it too, Peter Dunne writes in his inaugural column for Newsroom.
Norman Kirk’s 1974 contributory New Zealand Superannuation Scheme provided for the Scheme’s Fund to be able to buy up to 15 percent of the shares of any public company in New Zealand. It was intended to use the fund to strengthen the country’s capital base, and boost our self-reliance, yet it was attacked at the time as providing the potential for a Government takeover of the economy by stealth.
The criticism reached its peak in the now infamous Dancing Cossacks television advertisement used by Rob Muldoon’s National Party to win its 1975 election landslide, and so consign the Kirk scheme to the dust, before it ever got properly off the ground.
Over the years, as the New Zealand economy stagnated and the cost of Muldoon’s directly taxpayer funded National Superannuation exploded, there were many who lamented the premature demise of the Kirk scheme, and the Investment Fund that would have been building up, but the political scars of Labour’s and National’s superannuation about-faces in the 1980s and 1990s to control mounting costs were still too raw for there to be any political appetite to do anything about it.
Politicians simply wanted superannuation off the agenda altogether in those years. Even when the Superannuation Fund was re-established in the early 2000s, there was still not great enthusiasm for it to invest too much in the domestic economy, and so, the vast bulk of the fund was invested offshore. This wariness has been confirmed this week by the fund’s former chief executive’s criticisms that the previous government stymied the fund’s attempts to become involved in the Christchurch earthquake rebuild. Yet the infrastructure deficit was becoming more apparent as fiscal pressures meant governments had very little wherewithal to invest. The approaches taken by successive governments to bridge the gap have achieved limited degrees of success.
That is why last week’s announcement from the Superannuation Fund that it is looking at the feasibility of investing in and possibly running Auckland’s proposed light rail system is a potential circuit-breaker in so many ways.
At one level, it signals a clear and welcome change of approach from the fund to consider significant domestic investment, so providing a potential answer to those still mourning the absence of the Kirk Fund (which had been scheduled to reach its full potential around 2014). The option has been readily welcomed by the centre-right of politics as sensible and pragmatic, perhaps not surprising given that this type of thinking emerged in Britain under then Prime Minister Tony Blair’s “New” Labour Government.
At the same time the irony of the right’s embracing of a mechanism for domestic investment that it once regarded as communistic is palpable and will not go unnoticed. But then it was John Key who went, in the space of a few years, from deriding Labour’s Working for Families tax credits as socialism by stealth to extending them significantly in government!
Perhaps more important, though, the move provides a way for our current Labour Party to get off its self-constructed hook. After all, the Superannuation Fund was the brainchild of Sir Michael Cullen. Yet Labour under Cullen and subsequently has been very rigidly opposed to any form of private capital investment in core infrastructure development, which it regards as solely a government responsibility. Witness its unyielding opposition to private investment in prisons, health and education services, and its heavily-caveated approach to such investment in transport as examples. Labour’s opposition, which has been on ideological grounds in the main, at a time when it has been struggling to recapture its soul, at least in the public mind, has consequently been fervent and obstinate – perhaps until now.
A successful investment in Auckland public transport by the fund, supported by the Labour Mayor of Auckland, will provide an opportunity for the Labour Party, now in government, to soften its approach and become gradually more accepting of similar investment possibilities elsewhere in the future. They could even dress it up in traditional Michael Joseph Savage-like tones – “hard-working, decent New Zealanders contributing to their ongoing security and building the future of our nation” through their superannuation contributions.
Time will tell whether the Superannuation Fund’s current proposal eventuates, let alone succeeds, but its move is an important step forward in terms of New Zealand’s future development. Linked perhaps with a reinvigorated investment bonds for infrastructure programme, it has the potential to unlock much of New Zealand’s infrastructure development logjam.
And, as a branding exercise, it could have Labour, from Savage to Kirk, Cullen and now to Ardern, written all over it. Labour: ‘Using the nation’s resources to build the nation’s future.’ You can hear the slogan right now.
The pity is the last ones to be convinced of the possibilities seem to be the Labour Party themselves. Preserving today’s ideological purity seems selfishly and sadly more important.