“They needed reassurances their savings were safe,” GSF chairman Basil Logan told the committee.

The fund is topped up each year by the taxpayer. Until 2001 it was required to invest conservatively – primarily in government stock. However, from October that year Finance Minister Michael Cullen has allowed the fund to invest where it believes it can get the best return. The aim of the policy shift was to reduce the liability to the taxpayer.

However the move was the victim of bad timing: the GSF began to diversify within weeks of the September 11 attacks and the slump in world equity markets.

For its first couple of years the diversified strategy saw the government having to put in even more money than it had previously.

Donald described the policy as a “think-big free-market gamble [which] has failed spectacularly” and said that if the fund had stayed in government bonds it would have made $210 million before tax, instead of losing $76 million after tax in its first year.

Donald says it is still the fluctuations he is concerned about.

"It’s about the risks to the taxpayer, not the individual members.

“The fact that when it makes a loss the taxpayer has to put in more money is what concerns me.”

The fund produced an after tax return of $316.8 million for the year to June – an 10.16% return on assets.