Adrian Orr
Feature - Upfront
Adrian Orr
by Matt Nippert
The hopes of Baby Boomers edging into their retirement years rest in the hands of Adrian Orr. As head of the New Zealand Superannuation Fund (NZSF), Orr manages billions earmarked to pay the pensions of our ageing population. But, while the fund is growing nicely, why are taxpayer dollars still being invested in companies making tobacco and nuclear arms?
You took over as head of the NZSF the same day an article came out in the Listener linking the fund to tobacco and nuclear weapons firms. How was that for a baptism of fire? The very first morning when I walked in the door we were having a meeting of the responsible investment committee, and the Listener was tabled among the rest of the agenda. It was a good, timely article: “Welcome to the New Zealand Super Fund, Adrian! These are some of the issues that we have to grapple with.”
And how’s that grappling going? It’s a really complex issue. An example that’s been used is Boeing. They’re making a certain component that goes into nuclear weapons manufacture, but Air New Zealand has just bought a bunch of planes off them and the government is a major shareholder in Air New Zealand.
Wouldn’t it be easier to just avoid the political flak and dump companies like Boeing? Well, diversification is the one free lunch that exists in economics. You can get the same return for less risk if you diversify your assets. The second bit then is “Well, if I start to constrain the world I’m operating in, I’m limiting my ability to diversify and starting to take on more risk than perhaps I need to.” If we started to limit all sorts of different things – everyone queued up and was allowed to think of one thing that we weren’t allowed to invest in – very quickly you’d have a very limited group of assets you could invest in. You’d just about end up with cash, and I’m not sure in which country – because I’m sure everyone would have a view on which countries as well.
So you’re treading cautiously in reviewing your responsible investing policy? This is not to say that we won’t draw a line in the sand and make a decision. Not everyone might be on the same side of that line, and we have to understand why and be able to explain and defend that.
The NZSF is worth $13.1 billion and has been growing at 15 percent annually. Are our Golden Years financially sorted? One concern is that people see this big, billion-dollar figure and think “Oh good, that’s sorted.” What we have to keep reminding people is that, at best, all we’ve done is reduce some of the costs for the government. New Zealand Super will be no more generous than it is currently, and if people want more than that then it comes down to individuals considering their own savings and their own investments.
In 2001 you were Pacific Business Person of the year. Are you the only ginger to achieve this feat? I don’t know if it’s unique. My grandfather came from the Cook Islands. He arrived in Taupo in the early 1930s and was one of my great mentors. I’ve always celebrated that part of my heritage.
Any inside tips from your time as No 2 at the Reserve Bank on where interest rates are headed? Oh, no, I won’t comment. I couldn’t possibly.
Well, how about some advice on hosting a successful hangi? Ensure that you’ve got plenty of rocks and a lot of heat. Never go short on the heat, as it’s very hard to reheat a hangi. And, of course, have your contingency ready – which is a barbecue with a full gas bottle, just in case. I suppose the No 1 tip would be to shower between putting the hangi down and greeting your guests.
When you were chief economist for the National Bank in 1996 you analysed the connection between All Black performance and general election results. Ah, this is stretching my memory way back. I think that the results showed that incumbent governments generally were favoured by happy people – and happiness was strongly related to All Black victories.
And this was a serious piece of analysis? No, it was a spurious correlation. But the paper was a lot of fun to write.
