A personal finance columnist for the NZ Herald

Inside Money: Think-tanking by numbers - a self-interested portrait

It's not the Chinese, but the Aussies who are the big investors in New Zealand. Photo / Thinkstock
It's not the Chinese, but the Aussies who are the big investors in New Zealand. Photo / Thinkstock

As much as it can be, the inaugural report of the recently-rebranded The New Zealand Initiative is relatively free of overt ideology.

Formed last year as a blend of lobby groups the Business Roundtable and New Zealand Institute, the NZ Initiative (NZI) describes itself as "an association of business leaders that is also a research institute".

"And we believe that these are not contradictions," the NZI website says.
But don't expect hypothesis-testing scientific neutrality from the NZI either: this is research from a particular point of view.

Nevertheless, the group's first release, titled 'New Zealand's global links: foreign ownership and the status of New Zealand's net international investment', is mainly about the numbers.

The report compiles an impressive range of data with the aim, as NZI chief Oliver Hartwich says in the introduction, of illuminating "the state of New Zealand's integration into the global economy".

Essentially, the study, authored by NZI senior fellow and principal of consultancy firm Capital Economics, Bryce Wilkinson, is intended to hose down concerns about foreign capital in general, while also debunking current specific worries that the Chinese are buying New Zealand holus-bolus.

When, in fact, the NZI report says "it is the Australians who have been taking over New Zealand at the margin".

"At 31 March 2001, Australians owned 31.5% of the FDI [foreign direct investment] stock in New Zealand," the study says. "By 31 March 2012, it was 55.8%. Meanwhile, the share owned by ASEAN countries only rose from 1.9% in 2001 to 3.1% in 2012."

There is more to the report than that and its 112 pages is full of interesting numbers that I couldn't absorb in a morning, or probably a lifetime.

But one point of interest in the research, picked up by other media, is the finding that New Zealanders are actually not too bad at saving - contrary to received wisdom.
"In fact, NZ resident units overall customarily spend less than they earn," the NZI report says. "On the latest available estimates, national saving has been positive for 38 of the 41 years between 1972 and 2012, the exceptions being 1992, 1993 and 2009."

And while it doesn't mention it by name, the study puts a dampener on the higher economic goals often attributed to KiwiSaver.

"Policies aimed at raising the savings rate as an objective in its own right may also produce disappointing results in terms of competitiveness and productivity growth," the report says.

Indeed, the NZI study - whose members include ANZ and Westpac - is pretty ambiguous about the whole savings ethos.

"Certainly, if NZ resident units saved more and invested the same amount more wisely, they could enjoy higher future consumption than otherwise, other things being equal," the report says. "But it does not follow that they would regard the forgone consumption initially as a sacrifice worth making."

The NZI alternatives to saving are not surprising: higher productivity; reduce "wasteful spending".

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A personal finance columnist for the NZ Herald

David is a freelance journalist who has covered the financial services business on both sides of the Tasman for over 15 years. He is the editor of industry website Investment News. David has edited magazines and websites for the financial advice, investment and superannuation industries.

Read more by David Chaplin

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