We have long identified lack of savings as a problem for the NZ economy. Rabo Direct has performed a survey of 1000 NZ'ers and found that they are dismal savers. The more important question is why don't they save. I have a number of suggestions for this problem:
1. Lack of investment opportunities: There are few investment vehicles in NZ, i.e. The equity market is pretty thinly traded and is dominated by just a few stocks.
2. Lack of business opportunities: NZ is at the arse-end of the world with a small market. You would have to go to Easter Island to find a country with worse investment demographics.
3. Population demographics: NZ is home to welfare dependents, unaspiring lifestylers and retirees waiting to die. If you are looking for career opportunities, business opportunities in NZ, you are not likely to maximise your possibilities here.
4. Access to the Australian market: NZ really needs improved access to the Australian market. Of course it is coming, but Australia is not going to rush because its better for NZ given that Australian incomes are 30% higher. Mind you, it probably balances out because Australian savings are probably 30% higher. i.e. There disposable income to spend on NZ products is probably similar.
5. NZ financial literacy is pretty low: Most NZ'ers do not participate in financial markets from an early age, so they are less inclined to have stocks, and will take longer before they have a house. If they do invest in any property they would probably buy a 'batch' pad and they would not even consider it an investment, even if it is a poor store of wealth.
6. Slim job prospects: It is hard for NZ's to find jobs. There are few job creation opportunities, few people in this population demographic are going to be consummate spenders, so there is little economic activity. Depopulated rural towns struggle to even support their proprietors.
All of these factors are better in the cities where there is population is growing, its more international, better educated, more aspirational and wealthier in terms of their appreciating assets and disposable savings. But the culture does not match Australia because its not as pervasive. A big factor is rising incomes and property prices. NZ needs to move into higher value job creation which will generate more export earnings. It desperately needs to seamlessly integrate with Australia if it can swing that. It needs better communications (data-VoIP) capacities.
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