The NZSF usually has a statement in its annual reports about its investment return objective over the long term.
In a 'total accounting context', it is a target the NZSF must achieve.
Of greater significance to taxpayers in the context of the NZSF should be the cost of long-term borrowings by the government.
The average rate of return earned by the NZSF over 2004-2009 was 3.
Table 2 shows an approximate calculation of the accumulated notional deficit in the government's overall balance sheet that the NZSF has produced in relation to the hurdle rate from October 2003 to 30 June 2009.
In other words, holding all else constant, if the government had not established the NZSF but rather had reduced debt (that would otherwise have cost it the hurdle rate of interest over each of the six years measured), the overall balance sheet for the government would have been better off by about $2.
To retrieve this position financially, the NZSF will need to exceed the hurdle rate over the coming years by an accumulated $2.
The key issue, however, is whether over the period to 30 June 2009, the government would have had the fiscal discipline to apply the net NZSF contributions to debt reduction.
By maintaining the NZSF, the government is effectively in the business of portfolio investing, arguably not a natural function of a government.
On average, the NZSF has failed to achieve that minimum target over the last six years.
New Zealand's recent history suggests that, if the NZSF had existed since the early 1990s, it would have also failed the basic test by missing the hurdle rate.
91%, is not very different to the gap over the last six years since the NZSF started (a negative 2.