John Armstrong: Different leaders, same message: No

Winston Peters. Photo / APN

Their respective tones may have differed markedly, but National and Labour basically gave Winston Peters the same message yesterday: You can try to impose bottom lines all you like before post-election negotiations, but we won't make the mistake of agreeing to them. At least not for a long time yet. And quite probably not this side of election day next year.

Labour's David Cunliffe greeted Peters' announcement that his party's new KiwiFund policy would be a bottom line in coalition negotiations with politeness, but sounded less than enthusiastic about the idea of creating a government-backed fund to handle KiwiSaver contributions.

John Key did not bother with the pleasantries, saying you would get more sense out of the Mad Hatter's Tea Party than New Zealand First.

The Prime Minister was scathing about Peters' sudden insistence on bottom lines, predicting they would melt away once the hard talking started after the election.

The reaction of both major party leaders was understandable. Not only are they unwilling to be hostage to bottom lines. In part that is because though it might be tempting to try to butter Peters up before an election in the hope of pay-offs afterwards, as Key says, it probably counts for little when the real negotiating begins.

Moreover, neither National nor Labour wants to be committed to this particular bottom line. KiwiFund is too good to be true. It seeks to be all things to all people. It would compete against privately run and owned KiwiSaver providers with the huge advantage of a Government guarantee covering contributions.

This might well tempt people to shift from their private provider. But it would impose a significant risk for taxpayers if the state-run fund's managers made poor investment decisions or another global financial crisis set sharemarkets tumbling.

Peters' bone is with management fees, claiming private fund managers are "sucking the lifeblood out of KiwiSaver". Although Peters' fund might offer lower fees, it would likely adopt a conservative stance on investments which would curb potential gains by way of returns to individual portfolios.

That is because the fund would carry added risk from being obliged under Peters' plan to have it investing primarily in New Zealand , including buying back state assets, "critical infrastructure" and farmland. It would also be a source of capital for "smart local companies" to develop new products and create jobs.

The unanswered question is how much of the fund would be devoted to rebuilding New Zealand Inc as against that allocated for investment using normal criteria seeking a commercial return.

That begs a bigger question. Would Peters' KiwiFund in effect be playing roulette with people's savings to push his populist agenda of economic nationalism?