'Let Saver fund assets'

Transmission Gully could be one of a host of shelved projects to get the green light under a radical idea that would see KiwiSaver funds channelled into long-term strategic infrastructure assets.

The brainchild of Tower Investments chief executive Sam Stubbs, Public KiwiSaver Partnerships (PKPs) would allocate a proportion of funds directly into core infrastructure projects, freeing up government cash for investment in goods and services.

"If you look at high-growth economies, they recycle superannuation or pension funds into long-term strategic assets. Take the British: they have reinvested a huge proportion into assets like hospitals, airports and roads," Mr Stubbs said. "The only way New Zealanders can invest in New Zealand infrastructure is by buying up shares in the likes of Infratil. That's not right. No wonder all the money managed on behalf of New Zealanders ends up invested in strategic assets offshore."

About $2.5 billion has collected in the KiwiSaver pot since the scheme's launch in 2007. That number, say providers, will rise exponentially as more sign up over time (just a third of the 3.8 million people eligible are members), funds continue to roll in and global markets recover.

With the National-led government's mantra clearly one aimed at boosting productivity, Mr Stubbs says the onus is on ministers to invest heavily in infrastructure over the next 20 years to close the gap on other OECD members.

Toll roads, public transport initiatives and power stations are examples Mr Stubbs flags as likely targets for PKPs, ventures which would be funded and operated through a partnership between government and KiwiSaver providers.

Not only would PKPs provide funding to fast-track tomorrow's infrastructure, KiwiSavers would become shareholders in the assets, which throws up further benefits.

"Typically, it's crown entities and local authorities that get opportunities to invest in our strategic assets," Mr Stubbs said. "The only other option available to New Zealanders is commercial property, which is not having the best of times at the moment.

"As shareholders they would demand projects were finished on time and to budget; boards would be answerable to Kiwis. It could bring an end to people lying on trolleys in hospital corridors, you could build your double tunnel [through Mt Albert] or get Transmission Gully up and running."

As stakeholders, those KiwiSavers who plumped for infrastructure-focused investments within their fund would see a slice of the profits returned to their personal pots.

"It doesn't matter if it's rising power prices, rail fares or road tolls, as stakeholders they all get a piece of the pie," said Mr Stubbs.

Though radical and not without obvious issues legislation would have to be altered for a start the idea struck a chord with Mr Stubbs' peers.

David Boyle, head of distribution for current KiwiSaver kingpin ING, told BusinessDay it was a "well thought-out idea" that would help boost liquidity in the markets and drive productivity. "You have to ask yourself, what would be the rewards? I think it would be a lot," he said. "Look at what the Australians have achieved with superannuation over there they've been busy buying up assets."