Hard News by Russell Brown

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Hard News: Through the Looking Glass

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  • Che Tibby,

    i have a serious question. if the cullen fund is invested overseas, and growing, isn't that a bit like drawing foreign money into the country? something we need?

    <che exposes his almost complete lack of macro-economic learning>

    the back of an envelope • Since Nov 2006 • 2024 posts Report Reply

  • andrew llewellyn,

    large pubic fund

    </cough>

    Since Nov 2006 • 2073 posts Report Reply

  • Russell Brown,

    i have a serious question. if the cullen fund is invested overseas, and growing, isn't that a bit like drawing foreign money into the country? something we need?

    Someone will doubtless know much more about this than me, but I think one of the drivers of our current account deficit is interest and other investment income going out of the country. If we're investing elsewhere, such revenue comes back in too.

    Auckland • Since Nov 2006 • 18707 posts Report Reply

  • Peter Ashby,

    Yes as Russell says it is better for foreign investments to come back in from our investments overseas than to attract foreigners to invest in NZ as the their profits leave the country.

    NZ could do with better Ventral Capital funds too. It is the country that gave the world the jetboat, the automatic rotary milking machine etc, etc. One of the good things about being at the arse end of the world miles from anywhere else is that necessity often has to be the mother of invention. We should be investing in those.

    I often wonder exactly how much the recent hitching of science to the 'Knowledge Economy' has actually yielded vs the previous situation as well.

    Dundee, Scotland • Since May 2007 • 425 posts Report Reply

  • Gareth Ward,

    I'm a little torn on the forced NZ investment. I'm all for local capital availability, but forcing a fund designed to "pay for our futures" to make investments it doesn't necessarily want could get a little messy.
    If NZ businesses put up strong enough models etc then the money should be available.

    It has interesting impacts for Kiwisaver as well - I've tended to the belief that many of the Kiwisaver funds are smaller and will tend to back a local operation more readily given they understand the market and can face-to-face the people.

    Auckland, NZ • Since Mar 2007 • 1721 posts Report Reply

  • Lyndon Hood,

    Lately we have also been treated to the spectacle of Jim Anderton decrying National for not supporting businesses.

    Ventral Capital funds

    They grow out you stomach?

    (Sorry)

    Wellington • Since Nov 2006 • 1095 posts Report Reply

  • Don Christie,

    Che - that's right. One of the lessons learnt from the Asian crisis of the 1990's was to shore up savings and overseas investments.

    Looks to me as though National are planning to borrow from the fund on order to have their tax cuts, sorry, infrastructure investments. I guess this raid was bound to happen but I did expect it to be later rather than sooner.

    Wellington • Since Nov 2006 • 1615 posts Report Reply

  • Gareth Ward,

    Looks to me as though National are planning to borrow from the fund on order to have their tax cuts, sorry, infrastructure investments

    I think that's a little rough. It won't change the accounting of them if the NZSF or SuperMegaChinaInvestmentFund are the ones buying the infrastructure bonds.
    The risk is that the investment bonds will not be as rigorous as they'd otherwise be, because they know full well that the NZSF has to invest in them to meet it's 40% criteria...

    Auckland, NZ • Since Mar 2007 • 1721 posts Report Reply

  • Craig Ranapia,

    Meanwhile, I did wonder if my PAR piece last week was a little too harsh on National and Labour. This week, I've come to the conclusion that I wasn't tough enough -- they're not only incompetent to run a kindie cake stall, I wouldn't take my eyes off Cullen and English if they got within arm's length of the cash box.

    I've got some advice for both camps: Pick a face. Then decide which side of the selected mouth you're going to speak out of, and stick to it.

    And don't announce any more policy with costings that have been pulled out of your arse so recently they're still fragrant and slimy -- assuming we're not being told to wait and see until after the election.

    North Shore, Auckland • Since Nov 2006 • 11864 posts Report Reply

  • Glen Wright,

    If the Super Fund invests in NZ infrastructure, doesn't that make it a Public-Public Partnership?

    Since Nov 2006 • 29 posts Report Reply

  • Che Tibby,

    @don & RB thx.

    i'll now be quiet on the matter, as this is a policy question...

    the back of an envelope • Since Nov 2006 • 2024 posts Report Reply

  • Craig Ranapia,

    Still, it is bloody brilliant politics, if shit public policy. I believe this is what I/S has taken to calling a "gazump", so what do you think Labour is cooking up to gazump National's gazumping of their campaign launch.... oh, you get it. Can't we just give 'em all our pocket change and sent them off to Sky City if they really want to play craps?

    North Shore, Auckland • Since Nov 2006 • 11864 posts Report Reply

  • Zippy Gonzales,

    I'm giving Key/English the benefit of the doubt on this one. There's acknowledgement that the move to increase the domestic investment level of the fund would take some time, due to the current rush of global de-leveraging going on at the moment. Secondly, there's the assurance that the Guardians of the Fund will remain apolitical, with due diligence on investment decisions.

    It's got me curious on how the Nat infrastructure roll-out is going to be laid out. The threshold for return on prudent domestic investment is going to need some very sound business plans behind them to pass the Guardians' BS detectors.

    Then there's the venture capital side of it. Dragon's Den sponsored by the Cullen Fund could prove entertaining, enlightening and enriching all at once.

    Wellington • Since Nov 2006 • 186 posts Report Reply

  • Zippy Gonzales,

    Oh, golly good Media7 show.

    How is it that book reviewers can report on weighty tomes in newspapers, but it is too much for a crime & justice reporter to read a 20 page essay of suggestions from Becroft J?

    Mind you, shouldn't be too harsh. Still haven't got round to reading the Law Commission's two volume phonebooks on police search & surveillance rules.

    Wellington • Since Nov 2006 • 186 posts Report Reply

  • Russell Brown,

    Then there's the venture capital side of it. Dragon's Den sponsored by the Cullen Fund could prove entertaining, enlightening and enriching all at once.

    I'm seeing it now. An NZ On Air-funded game show on state TV that hands out tax money previously directed by the government to a public investment fund. It's the new socialism!

    Auckland • Since Nov 2006 • 18707 posts Report Reply

  • Jeremy Eade,

    Muldoon was right, those communists can come from anywhere. We should have never stopped playing that ad.

    auckland • Since Mar 2008 • 1112 posts Report Reply

  • Jonty,

    Consumer NZ claim that the average return from the Super managed funds has been around 3.6% (not forgetting the recent $700 million loss).
    Maybe investment in, say, broadband throughout the country may indirectly achieve a better return?

    Katikati • Since Mar 2007 • 100 posts Report Reply

  • Kyle Matthews,

    i have a serious question. if the cullen fund is invested overseas, and growing, isn't that a bit like drawing foreign money into the country? something we need?

    I am far and away no expert on macro-economics, but surely only if the income drawn out of the overseas investments and brought back into the country (I don't think this has happened yet, but presumably will when the fund starts paying for our aging population) exceeds the additional investment moved overseas as the government puts more money into the fund.

    Currently, for each billion the government puts into the fund, most of it goes overseas.

    Of course, there must be a difference between capital and earnings. Capital is going out, earnings are coming back.

    Since Nov 2006 • 6162 posts Report Reply

  • Sacha,

    Ak • Since May 2008 • 16478 posts Report Reply

  • Sacha,

    Sorry, wrong thread (lot of that going on this morn..)

    Ak • Since May 2008 • 16478 posts Report Reply

  • DPF,

    I said "So while the announcement is a bold move in response to the credit crisis, it is one which causes me some concern."

    Also "Ever since the Cullen Fund was established, I have had fears that as it grows larger, politicians would want to start directing where it is invested.

    I doubt "the team" would see that as taking one for them. Yes I use mild language when criticising National, but I don't think many people would read my post as supportive.

    Wellington, New Zealand • Since Nov 2006 • 73 posts Report Reply

  • Don Christie,

    Of course, there must be a difference between capital and earnings. Capital is going out, earnings are coming back.

    Another long bemoaned weakness in the NZ economy is the lack of investment in overseas markets from NZ. The ratio of incoming versus outgoing investments has been worrying folks like the NZ Institute for some time. Again, the Cullen fund goes some way to redressing that imbalance.

    Wellington • Since Nov 2006 • 1615 posts Report Reply

  • Glenn Pearce,

    Consumer NZ claim that the average return from the Super managed funds has been around 3.6% (not forgetting the recent $700 million loss).
    Maybe investment in, say, broadband throughout the country may indirectly achieve a better return?

    I don't think so, otherwise the Telco's would be in boots and all.

    If by "indirectly" you mean other benefits to the economy that is almost certainly true but those indirect benefits can't be used to fund the retirement of the contributors to the fund.

    Auckland • Since Feb 2007 • 345 posts Report Reply

  • Rich of Observationz,

    I wouldn't take my eyes off Cullen and English if they got within arm's length of the cash box

    I think not enough kudos is being given to our government for having left us in a situation where no mainstream banks have gone bust and the fundamental economy remains pretty sound. This isn't the case in many other OECD countries.

    Governments are of course jammed between a rock and a hard place. It would have been desirable (as I pointed out many times) if the property boom had been choked off at an early stage through taxation and other measures. This wasn't done because the electorate had dreams of getting rich through house price speculation.

    Back in Wellington • Since Nov 2006 • 4419 posts Report Reply

  • Neil Graham,

    large pubic fund

    </cough>

    ...and now turn to the right.

    Christchurch • Since Nov 2006 • 110 posts Report Reply

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