Govt's savings group meets, discusses deficits and low per capita GDP

Govt's savings group meets, discusses deficits and low per capita GDP

The government appointed Savings Working Group discussed the country's persistent balance of payment deficits, high net foreign debt and low per capita Gross Domestic Product at its first meeting.

The Group, which is chaired by chairman of accountancy firm Grant Thornton and ex-BNZ chairman Kerry McDonald, has called for submissions on issues within its terms of reference and will seek advice from experts on savings related research.

Other members of the Group, which is being supported by the Treasury, include Capital Markets Research director Craig Ansley, Motu Economic and Public Policy Research senior fellow Andrew Coleman, financial columnist and Auckland University senior lecturer Mary Holm, Reserve Bank assistant governor John McDermott, PricewaterhouseCoopers partner Paul Mersi and Bank of New Zealand head of research Stephen Toplis.

Read the Group's statement below:

The Savings Working Group focused at its first meeting on New Zealand’s immediate economic situation and the challenges it poses for our future.

The Savings Working Group’s first meeting was held on 3-4 September. The group focused on the persistent balance of payments deficits leading to a very high level of net foreign obligations and debt (think Ireland, Spain and Greece); relatively low per capita levels of GDP and wealth - which are growing slowly compared with many other countries; the relatively low stock of capital in the business sector; and New Zealand’s poor productivity performance.

Many of these have links with savings, and the group discussed the nature and implications of the linkages and how they might fit into its work programme. Amongst a number of important issues were New Zealand’s high dependence on foreign capital and how market shocks – including a foot and mouth outbreak or a natural disaster – could affect national savings; and the implications of the low capital-labour ratio.

The group also had an initial discussion on a wide range of savings related issues, including the availability and quality of relevant statistics, the main issues in relation to the Government, household, business and external sectors, the significance of inflation, taxation (in various forms), markets and regulation.

It also considered, in broad terms, the likely implications of different levels of national savings and of savings sector by sector. The discussions identified a substantial number of significant issues, extensive data and information requirements and a somewhat clearer basis for tackling the group’s work programme.

An interesting, overarching question facing the group is: How is New Zealand engaging with a dynamic, globalizing economic environment?

The preliminary answer from a savings perspective might be: not very well. But the group has a lot of work to do before a more soundly based answer can be given.

The Savings Working Group decided: 

To invite, via its website, submissions on matters within its Terms of Reference. 

To approach a number of experts for information and advice on current savings-related research. 

To alert organizations with a particular interest in Savings to the invitation for submissions.

The Savings Working Group’s next meeting will be towards the end of September 2010.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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As soon as I saw Mary Holm was on the panel I realised nothing ground breaking was going to come of this. She is a one trick pony ('Kiwisaver is the best thing in the world, ever'), and appears to have not the slightest grasp of anything remotely unconventional (such as investing in precious metals). She is also fatally wedded to the view that 'over the long term stock markets always rise'. Go tell that to the Japanese Mary.........

andyh - Nice one!  However all the others are just as bad as MH.  How many of them have gold as an investment?  Submissions - a complete waste of time.  What's the chances that JK will turn round and say that their recommendations are politically unachievable?  The problem in NZ is the Government at every level.  If people were able to keep more of their hard earned money they would be able to save!  

Fooeee...what a load of BS. The working group will work away on matters that avoid the real problem but should ensure the media are supplied with a steady stream of effluent sufficient to encourage the brainless to think some real action is being taken..but on no account are they to let on that they are just a waste of space time and money. They should manage their time wasting in such a manner, that those members of the public who would normally attack the govt over such poor decision making, will be distracted and given to thinking they can have a role in the formulation of govt policy, by entering into correspondence with said time wasting working group.

Hey it worked for the tax working on being silly why not pull the same trick. Public are too dumb to remember!

By my chinny, chin, chin, it is enough to make me gag on my sheep a la English.....

Where does one start ?

Could it be the fact that Mr Craig Ansley is still being titled "Capital Markets Research director" when in fact he works for Russell Investments - sheep in wolves clothing ?

Or is it that they and Treasury are already a week behind the schedule - no self respecting pack member would dare to miss the start of a hunt....

No, it has to be this phrase:

"An interesting, overarching question facing the group is: How is New Zealand engaging with a dynamic, globalizing economic environment?"

Says it all really - why wait for the final outcome if it is going to be filled with meaningless drivel like this ?

Here is the wolfpack's input - take your engagement and place it somewhere dark and clammy....politics will call the shots in the end....

The group focused on the persistent balance of payments deficits leading to a very high level of net foreign obligations and debt (think Ireland, Spain and Greece); relatively low per capita levels of GDP and wealth - which are growing slowly compared with many other countries; the relatively low stock of capital in the business sector; and New Zealand’s poor productivity performance.

Fer-christ-sake hasn't this been the situation for forty years?

Tax luxury imports

Raise the minimum wage

Stop robbing savers via taxes and inflation.

Just who is it that decides what exactly a " luxury good " is , in the first instance ?

Scrap the minimum wage .

Scrap " Working For Families " .

Set a flat tax rate , for all ................ Then stand back , and watch the economy grow ! Ka-Zowie : Gummy Bears in every pantry through-out your country !

"Just who is it that decides what exactly a " luxury good " is, in the first instance ?"

We used to have such a system GBH. There is no reason sales tax rate has to be the same for a bag of potatoes as it is for a Ferrari, and of course  we have the tobacco and alcohol tax

Is it really a problem for you of "who decides" or is it just the luxuries of the rich you want protected.?

In any case, slugging the rich was not my intention, nor really the luxury aspect, where we do have a problem is with imports. What we should be doing is, where there is no local production - say consumer electronics - raise the sales tax.

The low minimum wage is lowering our productivity. See how they build roads in India if you want proof of that.

A flat tax rate and scrapping the WFF (with the level of Govt spending we now "enjoy") would make half the households in NZ destitute.

Is that what you want? Are you Roger Douglas?

Government spending is way above what Kiwis can afford . You do not deserve a first world health system nor a comprehensive welfare state . You do not earn enuff to pay for it .

Gotta set your sights lower .

And you want to employ more bureaucrats to decided wot is defined as a luxury good and wot is not ? Truely bizarre !

You're making stuff up now GBH. Nowhere have I said I want a bigger government or anything at all about the health system.

I have said we should try and get our balance of payments problem sorted out and some suggestions towards that end as well as some ideas towards raising our productivity.

I believe we don't so much have a savings problem as an overseas debt problem due to decades of trade imbalance. Perhaps you might explain how your neo feudalist , trickle, Rogernomics ideas are going to help. From what I've seen they've made things worse not better.

Dodgey Rogie allowed rich mates and overseas corporations to pick up SOE's for pennies in the dollar . That was utterly foolish . Many SOE's  could have been 51 % held by the government ; 49 % floated onto the NZX .

How much better to enrich and encourage Kiwis into ownership of their own infrastructure companies , than to shepard them into managed funds & superannuation .

Before attacking the productivity issue , look to government spending . It is way of of whack .

100% agree GBH

Thumbs up for "tax luxury imports" KD.  Amazed that this has never been much of an issue.

(they can't do any worse than today's tradesmans)


What the would you know? What might you happen to be other than some idiot who puts all tradesman under one umbrella?

Bugger off please.

Nice turn of phrase but I think IP's arguments have more substance.

Agreed KiwiD.... but does he have to post a Magna Carta ...every ....bloody ....uh..time.

I've got eyeball ache.

Well paragraph one alone could be your stumbling block Iain.......You sent it to the Greens..?

First of all if you want them to read it........ you need to send it in.. Vegetarian  Menu Format  

You will find repeated reference to amethyst a real attention getter.  

Sign off in honey scented candle wax... for effect.

But most of all Iain ..most of need to word it.. in such a way to make them think ..they gave you the idea... in the first place.


Wonderful comments! I am not alone in feeling it really is not worth making a submission to people I don't know and have no reason to respect. The tax working group was so unbelievably lame and totally lacking in creativity, will this bunch do any better?

The weird and stupid statement they put out is not a good sign.

We have had inflation for so long that we think it normal and have come to live with it. Inflation is savings destruction. The way to get ahead has been to borrow and buy assets. The assets then give a growing return as prices rise and the borrowings lose value. Voila! Kiwis may be a bit slow but now most have figured this out.

Presumably we need a savings destruction policy to prevent a return to a feudal society. However, the concentration of wealth in the US looks more and more feudal by the day. There must be a better way.

This is deep stuff but hopefully someone has a bright idea, er, someone,,,,

 "the concentration of wealth in the US looks more and more feudal by the day"

The politicians are trying desperately to ensure that the debt stays on the books -  pitchforks and lamposts being the alternative. The financial elite have publicly come out and said it "let the banks fail and we take society down with us" So  debt (and tax) peonage for the middle and lower orders is the neo feudalists prefered option.

But what can't be paid won't be paid and, after a multi decade credit expansion, the level of unpayable debt has reached it's limit - the global financial ponzi is in it's final days.

Phil posted up the other day about some very ordinary house in Sydney going for a million. Now the occupants weren't hot shot business people or bankers or super qualified engineers or anything, these were suburban dance instructors or dog groomers or something. To illustrate how bizarre things have got, these folks clothes would have been made up by a seamstress in China or Vietnam on 50cents an hour. So this house represents the total of 1,000 years labour for the seamstres. There is something very out of balance here and I suspect it is not down to the exceptional productive capacity of said dog groomer.  What absurdity of circumstance allowed this level of complexity to develop?

Seems to me this debt structure is resting on the most flimsy of foundations with a huge game of "lets pretend" being played out before our eyes. What's the end game when it's realized that all debt (and therefore fiat money) is worthless - hyperinflationary collapse?

End Economic Apartheid in New Zealand.

 Maybe some repetition might help:

Earnings, got it yet? And,


End Economic Apartheid in New Zealand.


All together now ...


Cheers, Les.

Before you can save you have to pay off your debt.  Paying off debt will kill the banking system.  The working group has to answer this question first, and the only possible answer is to restructure the banking system so that there is something other than "bank credit money" in circulation.

And so basically you have a group  of people who specialise in relieving us of our money seeking innovative ways of getting us to stop doing that.

To the Savings Commission.

Dear Persons of Note.. 


I should like to make a submission....of course I shall expect a consultation fee from the public purse.....say....$113000.00 plus travel (should it be required).

I await your response in lucid anticipation.

1) Axe taxes on interest

2) Axe the corporate tax. Tax incomes, not reinvested profits.

3) Abolish the minimum wage. If you want to help low income earners, don't tax them. Raise the threshold for zero tax, and keep raising it. This also gives welfare beneficiaries more incentive to work.

4) Listen to Paul Callaghan. "From Wool to Weta". Farming and Tourism are the backbone of a LOW WAGE economy. Every acre we convert to industrial, commercial and urban use, puts NZ ahead on every score. Making industry and their workforce pay hundreds of times as much for their land as farmers, is economic suicide. Abolish urban limits.

5) Workplace law needs to be realistically established according to whether we are doing more harm than good by disincentivising employers and potential employers. How many people leaving for Aussie every week are "once were employers" or "might have been employers"?

6) Permitting development needs to be put firmly back on a "rule of law" basis. There should a a book of rules, and it should be possible to look it up and see yes/no I can/can't do that here/there and the cost will be "x".

Also, if we abolish urban limits, house and land packages will be so cheap that people will pay off the mortage decades earlier and be ABLE to start saving.

Besides the baby boomers having been through a period where obscene capital gains could be made on property, they also remember a period when inflation was so high that there was no POINT saving money.

Here is what needs to be seriously looked at.

What is the relationship between "buying now and paying off"; and "saving up and buying later"? If it is actually CHEAPER to "buy now and pay off", we have a serious, immoral problem. Margins between lending interest rates and borrowing interest rates are only part of the equation - the governemnt's role in all the other factors, monetary and fiscal, are what counts.

And of course there is the "disposable income" issue. This will get very much worse as long as oncoming generations have to pay several times as much for homes (and mortgages) as their grandparents did.

Here's a point, PB.



You seem to be missing it.