Capital Markets: Investment opportunities and the case for compulsory KiwiSaver contributions – The Front Page

KiwiSaver is still opt-in, while in Australia, contribution to their superannuation scheme is compulsory. Photo / 123rf

The global economy is still recovering from a difficult few years, and New Zealand is not immune.

The NZX 50 has been struggling recently, the recent mini-reporting season saw largely disappointing results for many companies, and the usual investment opportunities are not delivering.

In these times of difficulty though, there are plenty of opportunities for new industries to invest in, and different countries for New Zealand to look to for trade.

NZME Business editorial director Fran O’Sullivan covered all these ups and downs in her latest Capital Markets and Investment special.

She told The Front Page the investment industry is at an interesting inflection point.

“There’s a very excellent article in the report by Jamie Gray, which looks at what’s happening, for instance, with direct share markets versus money that just goes through private equity or directly into companies.

“People are in two minds about having exposure of their business to share markets and quarterly reporting, that type of thing, particularly in the United States. And so we’ve seen quite a shift there,” she said.

New Zealand has been posting an infrastructure deficit for at least 15 years – ASB estimates it at over a trillion dollars.

One of the things we could consider is whether we will access KiwiSaver funds to help with the demand on replacing infrastructure and funding future projects, O’Sullivan said.

“For instance, the stock exchange, the NZX, has pointed to the massive amount of funds that have already been aggregated in KiwiSaver in New Zealand, and suggestions that if we just had the same amount pro-rata as with Australia, with their funds coming into infrastructure, that would go a long way.”

O’Sullivan said New Zealand was too slow off the mark when it comes to our super fund, KiwiSaver, which is still opt-in – while in Australia, contribution to their superannuation scheme is compulsory.

“It has operated probably for 20 years ahead of New Zealand. We passed by the opportunity to do this back in the 70s and 80s when we should have.”

She said New Zealand should also make it compulsory to contribute to KiwiSaver.

“And it’s quite barking that we haven’t done so. I mean, this should have been done years ago. This is one area of laissez-faire that really in the best interests of the entire population should have been dealt with earlier.

You can find the Capital Markets magazine in today’s issue of the New Zealand Herald or online.

Listen to the full episode to hear more about:

• Capital investments and markets
• Public-private partnerships and whether New Zealand should allow them
• Investment opportunities on our horizon
• What countries are interested in investing here

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.

You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.