It was advertised as the Labour Party's last big policy of the election campaign. When delivered, however, the plan to set up a $100 million-a-year sovereign wealth fund to invest in "strategic" assets, including clean energy, prompted only a scratching of heads. So small was it in size and so opaque was its intention that Labour's motive was anyone's guess. Was it meant to appease Winston Peters? Was it designed to appeal to the Greens? Was it meant for Labour's left-wingers?
Either way, it was a policy that had little in the way of either substance or merit.
The $100 million to pay for the fund, to be called NZ Inc, would be diverted from the dividends of partly privatised state-owned companies. The figure would increase if a review of oil and gas royalties led to these being increased for new wells and fields. "We're looking to power up a smart high-value economy and we're looking to transition towards a more renewable energy and clean technology profile," said the Labour leader, David Cunliffe. NZ Inc, he said, would be managed by the New Zealand Super Fund board, which would "make allocation decisions for investments as they see the opportunities arise".
Mr Cunliffe said this would prevent politicians micro-managing the fund. But given the relatively narrow scope of the fund, their fingerprints would be all over it. This would not be an autonomous operation like the Super Fund. The government can issue directions to it only on the basis of level of risk and return, leaving it free to make investments decisions in New Zealand and overseas on a purely commercial basis.
As a sovereign wealth fund, the Super Fund has an outstanding record, and boasts a current fund of $26.1 billion. Mr Cunliffe noted this and suggested NZ Inc would be equally successful.
That is far less likely if it must must invest in an area that often defies commercial rationale. Indeed, if there is a swag of clean-energy companies just waiting to deliver investors strong returns, it is reasonable to ask why the Super Fund has chosen not to put money into them. Obvious reasons are the experimental nature of many and a high failure rate overall.
Labour's suggestion that oil and gas royalties could be due an increase because they are "very, very low" is also problematic. They are low for extremely good reasons. New Zealand's location has always made exploration here an extremely expensive undertaking. The potential for enticing explorers has been further undermined by the discovery of vast stocks of shale oil and gas, especially in the United States. What may be good news for motorists is far from beneficial for this country. It would be very difficult to raise royalties without further diminishing international competitiveness.
Labour says another plank of its policy is to hold the remaining state-owned enterprise assets through "KiwiShare", a structure intended to make it difficult for future governments to sell them.
This seems like wishful thinking. Any structure could be overturned by any administration that wishes, for whatever reason, to dispose of a state-owned asset.
It would, in fact, be folly to have a blanket KiwiShare when there may, from time to time, be a very strong justification for selling an asset.
This country can boast clean-tech success stories. Governments could aid the emergence of others by laying a cohesive foundation for long-term growth.
But it should not be in the business of investing in what it deems to be a winning sector. That is best left to private investors willing to take on the obvious risks. Or to the Super Fund, which has benefited from not being burdened by a circumscribed area of investment. That, alarmingly, would be denied NZ Inc.
Watch David Cunliffe in conversation with Rachel Smalley and Herald panellists on his policies.