Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


More kiwi wealth tied up in small businesses, English says

More kiwi wealth tied up in small businesses than previously thought, English says

By Paul McBeth

April 11 (BusinessDesk) - New Zealanders have more of their savings tied up in small business ventures and less in the perennial favourite housing than previously thought, according to Finance Minister Bill English.

The minister has tasked the Reserve Bank and the Treasury with getting a better handle on the make-up of household balance sheets, which have typically been presumed to over-rely on property as the primary form of savings.

The wonky figures mean the nation's household savings rate, which turned negative a year after its first annual improvement in 19 years in 2011, may not be as weak as previously thought with greater investment in businesses, English told the Wellington Employers Chamber of Commerce today.

"The Reserve Bank hasn't measured that aspect of the growth in wealth in New Zealanders," he said. "When you add that in it shows a significant change of what we thought was the New Zealanders average balance sheet."

The Reserve Bank estimates the country's housing wealth at $648 billion, or 73 percent of assets, and official figures show net financial household wealth at $48 billion at the end of 2012, implying net wealth is in the realms of $696 billion.

A Treasury working paper on measuring New Zealand's saving rate, published in February, found the country's saving rate might not be as low as standard estimates imply. The paper, written by Emma Gorman, Grant Scobie and Youngjoon Paek, estimates some $170 billion in equity is held in unincorporated business and unlisted incorporated businesses, and not included in the official figures.

"It shows housing makes a significantly lesser proportion of our total savings and that investment in businesses is a significantly greater proportion of our total savings than was previously officially thought," English said.

English told the audience in Wellington that attitudes towards savings are influenced by a range of factors, and "it's unlikely they are being systematically stupid."

The country needs a "searching debate on New Zealanders' savings habits," and once those reasons are better understood, the government can do more to support more of it.

"We tell New Zealanders they can have low cost child care, free primary and secondary education, interest free student loans for tertiary education, $100 per week per child until their family turns 18 and one of the more generous universal pension schemes in the world, plus free healthcare," English said. "When they're promised all that free stuff it's no wonder that they don't believe need to save."

English planned to focus the 2011 budget on savings and investment, though that was dashed by the February earthquake in Canterbury that year which levelled much of the country's second-biggest city, Christchurch.

A paper published by Treasury official Anna Marie-Brook at a Reserve Bank-led workshop on exchange rate policy last month recommended the best way the government can contribute to national saving is to increase its own saving, which would probably be done best through expanded New Zealand Superannuation Fund contributions.

She found opinions were divided on effective ways to improve private saving, though KiwiSaver had been successful and making it mandatory would probably provide a further boost. Reforms to KiwiSaver, New Zealand superannuation and tax should be undertaken together.

Last year, English ruled out automatic KiwiSaver enrolment until the books are back in black, and he's expecting an operating surplus within the margin of error in the 2014/15 financial year.

In 2010, the government-appointed Savings Working Group’s pressed for tax reform as a means to improve the nation’s savings rate, and found people under the age of 45 don’t have security for pension income because national superannuation can’t survive in its current form.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news