New Zealand has in the past struggled to save enough to invest in technology and equipment that makes our workers more productive and allows us to pay higher wages.

That appears to be changing and there's no better example than Refining NZ's proposal to invest $365 million to replace an ageing part of its Marsden Point plant with a new, more efficient CCR (Continuous Catalytic Regeneration platform) plant.

Five years ago, New Zealand as a nation would not have been able to make that investment from its own savings. The banks that would have lent the money to Marsden Point in 2007 would have, in turn, gone into international capital markets to borrow from foreign investors.

New Zealanders were spending almost $1.10 for every $1 they earned, often using the fast-rising values of their houses as the excuse. Banks borrowed heavily overseas to make that happen.


Not any more. This time these banks will be funded by deposits and bonds from local KiwiSaver funds and local individual investors.

In the past 10 days alone, three banks raised more than $1.2 billion from local investors.

A wave of cash is flooding into bank accounts and KiwiSaver funds in a way New Zealand hasn't seen for decades. New Zealanders are spending less consuming things and are, instead, saving for the future, either out of fear about what might blow up next in the Global Financial Crisis or out of hope that it might be used to repay our foreign debts and invest in better jobs for their kids.

Now the crucial task is to invest it wisely in a way that makes New Zealand more productive and allows us to pay higher wages. There are signs some of it is being poured into the bottomless pit of ever-rising prices of homes in Auckland, but we have yet to see it spread wholesale to the rest of New Zealand.

So it's great to see at least one investment decision that ticks all the boxes from a New Zealand Inc point of view.

Refining NZ wants to expand its petrol refining capacity to 65 per cent of New Zealand's needs from 55 per cent and do it in a way that uses 15 per cent less energy, produces fewer greenhouse gases and has an internal rate of return of over 17 per cent a year. The project will generate an extra $60 million of operating earnings each year for shareholders and be able to repay the debt within four years. Dividends would increase.

It will create hundreds of jobs in the struggling Northland region while it is being built and will save billions in foreign currency over the 50-plus years life of the plant because extra refining capacity here means fewer imports.

This is how our savings should be invested, creating high-quality jobs that help us pay our way in the world.