However, from 2031 onwards, “withdrawals from the Super Fund are expected in every year”.
This does not mean that the fund will shrink in the short-term. The fund will continue growing for some time as withdrawals will be smaller than the overall growth in the fund.
“Withdrawals help cover the costs of superannuation, so taxpayers don’t face the full cost each year,” Willis said.
“The Fund currently has $80 billion of investments. On reasonable assumptions, Super Fund returns will outstrip withdrawals, and the Fund will continue to get bigger every year,” she said.
$100m to be invested in Elevate fund
Willis announced the Government would invest $100m into Elevate, a Government venture capital fund which is designed to grow New Zealand’s start-up scene.
“This will be funded through a combination of the 2025 contribution to the NZ Super Fund of $61m, topped up with an additional $39m from the Budget 2025 capital allowance,” Willis said.
Willis said the Fund, which was established by Labour in 2020, had been a success.
“The fund was created to fill a funding gap at the so-called Series A/B stage of startup funding – the point at which startups typically need $2–$20m to scale beyond early seed funding.
“The Elevate fund operates as a fund-of-funds. That is, it invests not directly in startups, but in private venture capital funds which must also attract private co-investment,” Willis said.
“In doing so, it supports the commercialisation of science and technology and helps export-focused startups to attract global investment. It also helps to attract global investment to New Zealand by showing there is a pipeline of companies reaching the Series C stage,” she said.
Willis said the fund had “committed $221m across nine funds and attracted $536m of private capital - a ratio of 2.4 dollars of private equity for every $1 committed by the fund”.
Willis cited Dawn Aerospace and Halter as two successes Elevate had helped to fund.
New Zealand Growth Capital Partners (NZGCP), the body that operate’s Elevate, said it looked forward to “putting this capital to good use backing New Zealanders who are solving big problems, building great businesses and taking on the world”.
ZGCP Chief Investment Officer James Pinner said the underlying venture capital funds it invests in must match or exceed the government contribution with private capital, which is then invested on a purely commercial basis.
Elevate was set up to help boost New Zealand’s growth and productivity by supporting development of New Zealand’s early-stage venture capital markets. It’s been successful at attracting in external capital that is invested at a key stage in the development of new companies.“
Willis said Elevate should eventually be self-sustaining, with new investments funded by freeing up capital from old ones.
Elevate said that in the past 12 months it has seen capital returned following exits from underlying investments in Movac, GD1, Nuance, Hillfarrance and Pacific Channel funds.
Government’s allocation in what are tight fiscal times is a strong
“Alongside the Government’s new $100m cash injection, we will be recycling approximately $23m of capital from investment realisations into New Zealand’s future business success stories.
“We expect that number to continue to grow from additional exits, whereby Elevate supports companies as they expand, achieves a return on that investment in the future, and then identifies new opportunities to invest in - creating a self-sustaining model,” Pinner said.
Willis also hinted at measures to grow Kiwisaver in the Budget, although she did not say what these would be.
Thomas Coughlan is the NZ Herald political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the Press Gallery since 2018.
