Key to change Super Fund

ONE NEWS: A National government will direct the New Zealand Superannuation Fund to invest at least 40% of its assets into New Zealand investments, party leader John Key says.

On Tuesday Labour announced it would look to ways to encourage the fund and KiwiSaver accounts to invest more in locally owned assets and strongly hinted that long term infrastructure bonds could be used.

Key went one step further on Wednesday and says he would legislate for the fund to have at least a 40% target in a range of assets including bonds to fund large infrastructure projects.

"National believes that a greater proportion of this increasing pool of capital, which belongs to all New Zealanders, should be invested in New Zealand to grow our economy," Key says.

The fund, set up by Labour, gets $2 billion a year from the government to invest, so the money can be drawn down on in the future to fund national superannuation.

Key says using that money would be better used to invest in the New Zealand productive sector and broaden and deepen the capital markets.

"In the short term, in a world where money for investment is going to be more tightly held and more closely guarded, it will help ensure New Zealand has the investment capital we need to  get out of recession and into a period of solid and sustainable growth," Key said.

"In the longer term it will 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."

Key says in every other way the Guardians of the Fund will continue to invest as they do now on a prudent, commercial basis.

"In particular, the guardians will determine the appropriate rate at which to increase their investment in New Zealand to 40%, taking into account their need to manage their overall risk profile, the availability of quality investments, and the impact of increased investment on local markets."

The range of investment opportunities available to the fund will include New Zealand-listed  equities, government bonds, high-quality commercial paper, local government fixed-interest securities, private equity, property, infrastructure, forestry, and commodities.

Key said National will also work to create more investment opportunities that the Super Fund can take up in New Zealand, including longer-dated infrastructure bonds.

"Additional investments in New Zealand infrastructure made by the fund as a result of this policy change will be over and above the increased government commitment to infrastructure that we have already announced," Key says.