Rodney Hide has a great column in the NBR. These are his comments about the Cullen Fund:
The previous administration invented the pretend policy of having a giant government piggy bank to pre-fund future payments. Journalists understand the concept if not the practice of a piggy bank and bought the policy without hesitation and without a thought.
They wrote the policy up as though it made a difference. Finally, they wrote, someone has done something to fix the problem: future pension payments are to be pre-funded.
The policy has proved a great political success even though it serves no useful public purpose. The $20 billion fund doesn’t change the cost of pension payments one bit. It just ever so slightly shuffles a very small part of the cost forward.
Besides, if the government knew how to invest money to make a buck there would be no need for tax. The government could earn its own money. That we are still taxed suggests the government’s investment skills are no better than the rest of us.
But here’s the thing: Both National and Labour now agree that borrowing money to sink into the Cullen Fund is dumb. But why are we even borrowing money when we have the fund?
There’s $20 billion in the Cullen Fund. That’s twice what the government hopes to make selling off half a stake in power companies and Air New Zealand.
The same logic that sees payments to the Cullen Fund suspended should see the entire fund on the block. Getting rid of the pretend policy would also focus minds on the need for the real policy.
The trouble is politicians have been pretending for so long that the Cullen Fund serves a useful purpose that they now can’t sell it.
But at least it’s easy to see what New Zealand will look like in 20 years: just look at Greece now.