Questions have been raised over whether the Government’s proposed super fund is an expense or a capital item.
That issue was the subject of a major spat between Finance Minister Michael Cullen and National finance spokesman Bill English.
Cullen has been saying since late last year that the fund should be included as an additional expense on the government’s balance sheet.
The problem with this is that it would not meet GAAP accounting standards, which would require the fund to be listed as a capital item.
“In common sense terms, I would prefer to see it listed as part of government spending,” Cullen said.
Under the GAAP standards, transfers to the fund would be treated as a capital item and offset by the asset being built up.
“I think that while that is correct in accounting terms in common sense terms it’s being a bit cute,” Cullen said. “It does raise the possibility you could borrow the whole lot and transfer it to the fund.”
That comment drew fire from the National opposition because of its implications for the official size of the government sector.
The Labour Alliance regime has a target of 35 per cent of GDP for the size of the state sector, compared to the target of 30 per cent which held for much of the previous nine years under National.
The current level is about half way between the two. However, if the superannuation fund is treated as the GAAP standards say it should, the Labour Alliance government is unlikely to reach that target without a considerable rise in government spending.
