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Capital markets report identifies challenge to growth

February 27, 2013

Capital markets report identifies challenge to growth

For New Zealand exports to rise to 40 per cent of GDP, $200 billion in capital is needed by 2020, much more than is currently invested in our export economy.

That's the scale of the challenge presented by the Building Capital Markets report issued today, said Kim Campbell, chief executive of the Employers and Manufacturers Association.

"It means we need to complete the work identified in the five earlier reports of the Government's Growth Agenda's if adequate capital is to migrate here," Mr Campbell said.

"The success of the Growth Agenda overall depends on it.

"But if this Capital Market agenda did nothing else more than reducing the premium on interest rates we all pay to the levels of our trade competitors it would be a great result.

"At present New Zealand's perceived risk profile internationally means we effectively end up paying one per cent more in interest than our trade competitors - a huge sum.

"What we need now is clear unambiguous policy settings and tighter time frames to attract the foreign investment we all know we need.

"The Capital Markets report identifies the Crown's own balance sheet, the domestic housing market, and private savings rates as important work streams - all laudable.

"Further examination is needed on how ACC and KiwiSaver investments could be leveraged, along with the SOEs and other state uses of capital in order to achieve the best productive use from government controlled funds.

"Our businesses must become less risk averse, more willing to innovate, and to accept capital from wherever it may come from, in exchange for growth."


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