Days to the General Election: 24
See Party Policies here. Party Lists here.

CEO Matt Whineray says NZ Super Fund still keen on Auckland light rail project; also interested in climate adaption projects & expects government contributions to continue

CEO Matt Whineray says NZ Super Fund still keen on Auckland light rail project; also interested in climate adaption projects & expects government contributions to continue

By Gareth Vaughan

The New Zealand Superannuation Fund hopes to hear within a couple of months whether it and its Canadian partner will be the Government's delivery partner for the Auckland light rail project, and it's also interested in domestic long-term climate adaptation opportunities, CEO Matt Whineray says.

Whineray told interest.co.nz that the Super Fund remains enthusiastic about the Auckland light rail project, having made an unsolicited approach to the Government in May 2018 in partnership with Canada's Caisse de depot et placement du Quebec (CDPQ) to design, build and operate a network. In early March Transport Minister Phil Twyford said the Government was considering whether the Super Fund and CDPQ or the New Zealand Transport Agency, should lead the multi-billion dollar project.

"Yes, we remain enthusiastic about it [Auckland light rail]," Whineray says. "I think there's questions to be asked about what does this type of crisis do to drivers around use of public transport and density of living, that kind of thing. But yes, we remain very enthusiastic." 

"The Government's obviously had a few things to deal with of late so there hasn't been a decision yet on who the preferred delivery partner is. So whether that's NZ Infra, which is us and our partner CDPQ, or NZTA. But we expect that there will be a decision on that in the next month or two. And if that's us we can crack on with it," says Whineray.

Despite the coronavirus crisis he says a solution to Auckland's transport issues is still required. In a changing environment the Super Fund assesses whether the "usage case" changes for the proposed light rail investment, as with any investment, he says.

"I think we're going to continue to need a solution to Auckland's transport issues and we think that this is a good one. It's a mass transit, it's also very consistent with the principles released by the Climate Change Commissioner around the business recovery, which is to say 'let's not do something that puts us backwards from a climate perspective. Let's use a good climate lens so that we're building things with lasting benefits'. And clearly that's what the light rail does," Whineray says.

"It shifts people from driving in a car with an internal combustion engine into something that's driven by our predominantly renewable generation electricity system. So I think there's some positives in there...We don't want to do these things just to get sugar hits for the economy. They need to have lasting benefits and not lock in lasting detriments."

Talking climate adaption with Rod Carr

Other investment opportunities the Super Fund's interested in include climate adaption ones. Whineray says he has been talking to Climate Change Commission chairman Rod Carr about climate change adaption projects, beyond climate change mitigation.

"Things that he thinks about like upgrading the transmission capacity to be able to distribute that so that when you do transition your transport fleet to electric rather than fossil fuel driven, you've got the means to distribute that safely and effectively [using a renewable energy source]." 

"There's other interesting ones that are much more nascent. Things like retreat or protect projects, where you're thinking about where are those places that are going to be physically impacted by the change in climate, the rising sea levels, the increased storm activity? And what are local governments doing about changing that and how would you finance that? That's quite an interesting area for further work," says Whineray.

Expecting government contributions to continue despite much tougher fiscal environment

The current Labour-led government resumed taxpayer contributions to the Super Fund in 2017 after the National-led government suspended them in 2009. Despite the increasing fiscal challenges the Government is now facing, with soaring debt, Whineray expects contributions to the Super Fund to continue when Finance Minister Grant Robertson reveals the 2020 Budget on May 14.

"Yes I've no reason to believe that it won't. I hope that [it] continues. We saw the impact of ceasing them last time. It cost the country quite a significant amount of money in terms of foregone returns. But ultimately the Government has to manage its fiscal position. But [there's] no reason to believe that won't continue," says Whineray.

On March 20 the Super Fund said it had shed $8.90 billion, or almost 20%, of its value since the turn of the year as the coronavirus crisis smashed global financial markets. Whineray says things have improved since then.

"We have seen a significant rally since those times in the middle of March when markets really were tanking. So end of December we were about $46.5 billion, end of March we were at about $38 billion and in the middle of March we were lower than that. And now we $41.5 billion, $42 billion somewhere around there. We've seen a significant reversing of the significant falls and we've recovered more than half of the fall that we'd seen. It has been a very volatile time and that continues from one week to the next."

Established by the Helen Clark and Michael Cullen Labour-led government to help meet the rising cost of superannuation payments to retirees, the Super Fund began investing in September 2003 with about $2.4 billion. From around 2035/36, the Government is expected to begin to withdraw money to help pay for New Zealand superannuation. On current forecasts, a larger, permanent withdrawal period will commence in 2053/54.

*This article was first published in our email for paying subscribers. See here for more details and how to subscribe.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

35 Comments

12
up

Yeah I don’t think we want the Canadians building it anymore (if we ever did). Here’s an idea: let’s get the NZTA to build it using people who are allowed to be in NZ and who need a job!
I see transmission gully looks like further delays as the Aussies building it are no longer allowed in the country. And we had to bail out their cost overruns even though the whole purpose of a PPP is to avoid them. These PPPs just don’t make sense..

Who is this clown Whineray offering up half of a monopoly to overseas interests, when they offer little more than seed capital followed by endless amounts of dividends leaving the country for good.

Bet you he doesnt enter into an lease to buy schemes personally, so why try and sell this one to the poor taxpayer? Maybe he or someone he is answerable to stands to gain personally? Who knows, and we could possibly never given the secret nature of shadow banking and overseas tax havens.

First class interview, as was the previous one you did with Matt.

Looking back at the first interview, he knew that another financial shock would happen at some point, and that it would likely be for reasons that nobody saw coming. Also knew there would very likely be a recovery and had a plan for it. Stay the course, rebalance to maintain the risk target. Buy on the way down and you may actually come out the other end better off.

Matt/NZ Infra are very shrewd - which is exactly why the Government should tell them to take their light rail proposal and shove it. The terms are terrible for the NZ taxpayer. NZ Infra and their Canadian partners would make a killing off us with very low risk on their part.

On March 20 the Super Fund said it had shed $8.90 billion, or almost 20%, of its value since the turn of the year as the coronavirus crisis smashed global financial markets. Whineray says things have improved since then.

Gulp, glad we are in it for the long run - we all are, until we are not.

Never worked anywhere when losses of that magnitude did not result in personnel losses.

A single unsophisticated investor, no redemptions to worry about, illiguid investments you get to choose the revals on - it's the least stressful gig in the fund universe.

Whineray could and should have put all his chips in government bonds or cash, and done way better.

Apart from the property I live in, and investments where cashflow has and will be maintained, thats where my money is. And I'm not getting paid $1 million buks to do this.

These guys are nothing more than well dressed salespeople, who project confidence and deliver very little other than personal gains to themselves. Reminds me of Jonkey, who is nothing more than a self servicing egotistical saleman; who conned some $200 billion plus in wealth out of the poor NZ taxpayers. Follow the money!!

I'm deeply skeptical of the fund management industry in general, most Kiwi's could replicate what funds provide and save themselves 1.5% pa. Long-dated = illiquid = we get to say what it's worth = 10% fund increase annually. You have to ask yourself, why is the Fund paying fee's to foreign credit and private equity firms when we are crying out for investment back in New Zealand? Where is the expertise to build light rail within the Fund???

Light rails are lemons unless in high density geographic.
Skybus ran 10 minute bus service down dominion road from city to Airport untill Feb.
Cancelled well before Corona.Lack of demand.?go figure
Matt is a nice guy but easy to spend other peeps money.

And it runs to - an Airport, surely one of the less-likely destinations with a certain future in the 50+ year payback period this tram will take.

Skybus is an airport to city link. Light rail is a train from airport to city with 20 well placed stations along the way. The airport probably wouldn’t even be one of the busier stations. This is why the light rail was a much better option than all those airport centric alternatives: the airport was just a bonus, not the main business case.

The expected CBD>Airport trips (i.e. whole branch) as a portion of total trips taken is single-digit percentages. People who call it a 'tram to the airport' ignore the fact it services a huge area that already require Link Buses, a rapid transit corridor, the currently-ignored Mangere town centre and the Airport Oaks and other business parks before it gets to the terminal, which is just one single stop.

We don't call the North Western Lightrail line a 'tram to Westgate' because it obviously will stop at Rosebank, Tat Pen, Lincoln Road and Royal Road. So I fail to see the logic in people who seem intent on mischaracterising CC2M as a 'tram to the airport'.

A big part of me believes in the vision of light rail to the airport, doubling as a commuter corridor. However I wonder whether the execution risk is too high (I don't believe the Super Fund should be involved) and we should spend the money on the roads. Melbourne has no light rail, but it does have a motorway door to door and buses leaving every 5 minutes.

Melbourne does have light rail, quite famously in fact. The trams of Melbourne a grid like mass transit system linking population centres, exactly in the sort of fashion light rail is best used.

Unfortunately I live in Auckland, NZ where the most incompetent of transportation planners work for a Transport Minister of renowned stupidity. So we will get light rail positioned in a way that has never worked.

Not to the airport which is what I was referring to

I do agree that light rail to the airport is a silly idea.

I was using the Melbourne tram network to show that Melbourne knows the benefits light rail. They use it very extensively and in a way that works.

Only a country with Phil Twyford levels of knowledge could use light rail as inappropriately as NZ plans to.

It doesn't have 20 well placed stations, for 2/3rds of its length it runs in motorway corridors where no one wants to live. Auckland Idiocy has designed a "mass" transit system with stations in the one part of its suburbs where no one wants to live. Light rail is supposed to be used to bring mass transit to masses of people, using the small footprint of light rail to access population clusters where other transport systems can't.

It's great they still want to build it, when I saw Auckland Airport pulled all of their future development projects I assumed the writing was on the wall.

The board, CEO and all the rest of the clowns running that joint should be in jail. No bail.

I'd get edited if I said what I really thought about that bunch of.fools. And by the way, they will break laws in a heartbeat if they get their way. Just look at the dodgy shit that happened for them to get a share in Queenstown Airport....
Jail them all.

Now here's a thing ................ if the Canadians want to build and pay for the light rail totally at their risk and cost then we should let them get on with it ...... they are welcome to run it for their account

If , however , they intend to shake us down to pay for it , and clip the ticket all the way along , then the should be told to piss -off

Well said. This is just a means to get a snout on the public teat. Let them take utilisation risk. The CRL is set to be a white elephant. Let’s not built a herd of them.

True. It makes an assumption about where Aucklanders will be living in the next 30 years. How about net zero or negative immigration (off to Australia) and the remaining population moving from west and south Auckland to live on repurposed cruise liners parked in the harbour? And of those that choose to remain improved computer conferencing means most work from home. And the small number of workers who are absolutely forced to commute into the CBD (maybe the guy who cleans the mayors car) will travel by robotic car.
If that sounds crazy ask anyone alive in the mid eighties about how they managed internet searches, contacting their teenage kids after curfew, use of paywave etc. The only certainty is everything will change. If they couldn't predict that bottled water would be a big seller how can they predict uptake of a specific mode of public transport. If they are confident it will pay its way in under 5 years then they can bet my rates on it otherwise lets just wait and see.

Off course contributions should cease. This guy should be able to account for every dollar of our money yet he’s so blasé about the billions he’s risking on white elephants. So, is it 41.5 billion or 42 billion! No finger on the pulse with this guy.
Why couldn’t he prevent the losses of 8 billion? because he knows just as much as the next person which in this climate (economic) is very little.

Man I can't wait to ride this light rail line to Mt Roskill next year like we were promised in the 2017 election.

At best we are in for a several years of pretty dark times economically. It will take a long time before people are happy about public transport again, and chances of trains being viable in future recedes further and further - their function will be replaced by far cheaper and more flexible autonomous vehicles from quad bike to bus sized sooner than the 5-10years that a major urban train project takes. Dump the 19th century tech, it's obsolete.

Working from home I get to see a lot of those electric mail vehicles. That’s the way future commuting is going. Small, nimble and no emissions. I’m no longer using any commute transport. Buses and trains are so last decade.

I am still waiting for my Jetsons flying plane... that will solve our city building problems

Your comment says the same thing as mine but so much better expressed.

Or we could say to NZR, here's the specs, sort it and make it happen.
Way to much BS being talked, just sort it. And NO ONE offshore with their hand firmly in the pie.

Swamp swamp swamp. Seriously - why does this guy have an opinion- it is our money. Cullen overtaxed - now worth $40+bn - put half of it back into the economy as tax cuts for income earners. He has been talking to the Climate change guy - another swamp dweller - a distributed power grid...from what generation source -somewhere close to fantasy land? Is this the best we have in charge of our assets?

More retirement money looking for a job to do...gotta question the logic in building the light rail to the airport when in essence the true constraint is the airport itself. Its been run into the ground and treated as a moneypress for decades and is really in badshape as a result. The airport needs a complete upgrade. Perhaps its time it was moved out of town then a more logical transport connection could be worked out at the same time? Plenty of flat land near huntly?

Bit far for people on North Shore

Not gonna happen, champ. No flights for 2 years = no political appetite for this. Focus on heavy rail heading north.

Lol...fair call regarding the Northshore, perhaps a couple of satellite airfeilds to supplement Ak international, like London has done?

Doug Harvey tried that in Waitakere City. He proposed turning Whenuapei Airforce base into a domestic airport but there was such a huge outcry from North Shore residents that the idea was eventually dropped.

Sydney has a fantastic heavy rail train service from Central out through Mascot to the airport and thats what Auckland needs. Not a slow 1800's era tram service.

It's really strange how the government is considering who they partner with (i.e. the NZTA or a 50% private vehicle) first rather than what the actual project is you wish to build. That's just a recipe for getting ripped off - enter the Auditor General. And in anycase, there is no way that the government could justify a PPP option, regardless of whether NZ Super is involved or not, since the government can finance the capital cost much more cheaply itself (unless they want to hide the liability from the government books i.e. smoke and mirrors). Based on experience abroad, typically the risk of these projects falls back on hapless governments anyway given their lack of business savvy or care factor.

Days to the General Election: 24
See Party Policies here. Party Lists here.