Yesterday, Finance Minister Bill English made a big deal over the loss the New Zealand Superannuation Fund incurred last year.
When you don’t need the money for twenty years, the current value of your asset is irrelevant. When there’s a boom on the paper value of what you have will skyrocket, when there’s a bust your asset value will plunge. It doesn’t matter. What matters is that over the long-term you are getting a good return on your investment and that the money will be there when you need it.
As I noted on Tuesday, during a recession people are willing to sell you things cheaply. If you don’t need the money for decades, that’s the time to buy. Remember, the old saying is ‘buy low/sell high’, not ‘buy high/panic low’.
Also, the NZSF legislation allows the Government to cut or suspend contributions temporarily but requires it to make up those contributions and the return on them in the future. Unless the legislation is changed, the money has to be spent anyway at some point.
Bill English knows all these things. So what’s his real motive for laying the groundwork to cancel the government’s investment in the Fund?