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

 

Research: ‘Ageing Well’ Science Challenge Launched

Science and Innovation Minister Steven Joyce today launched the Ageing Well National Science Challenge, confirming initial funding of $14.6 million. More>>

ALSO:

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news