Incomes are low. The Organisation for Economic Co-operation and Development (OECD) puts New Zealand in the bottom half of the OECD for gross domestic product (GDP) per capita and wages.
Strong house price gains (for a variety of reasons), have encouraged people to save via the house and chase capital gain. Surging house prices has seen home equity surge over the past decades. Housing net equity is around 60 per cent of total household net worth.
New Zealand does not the offer the depth across capital markets (think the NZX) as investment alternatives.
We are slow to punish bad behaviour, so investors have gone with the tried and true which has been bricks and mortar.
Why save if the Government and taxpayer is going to pick up the complete tab for retirement income?
Households have had a strong preference for consuming today over investing and savings for tomorrow. We live in the Freddie Mercury economy - we want it all and we want it now.
It's one reason interest rates in New Zealand have tended to be higher than in other countries.
"Spending" has needed to be reined in via higher rates. Exporters via a high currency have been the losers.
New Zealand does not save enough to fund our investment needs and we need to either borrow more overseas or sell assets to foreign investors. That's a choice but comes with financial risk and foreign investment perception risk.
With banks drawing back on offshore borrowing and foreign investment coming under more of a spotlight, how New Zealand funds its investment needs, given a savings shortfall, is becoming a real issue.
Household savings also tends to be inversely correlated to the fiscal position. If the government is saving, households tend to save less. When the government is dissaving, households tend to save more.
It's hard to save when money is eaten up in core expenses though. New Zealand has had the benefit of low inflation but is not a cheap place to live.
A lack of scale, distribution costs and the tyranny of distance are pointed out as reasons. There is some truth to that. But you don't have to look far before questions can be raised.
Constructions costs in New Zealand are high. Housing costs are eating up more and more of disposable income.
Research by the Productivity Commission has pointed to poor productivity and much higher costs for building items compared to Australia.
And yet recent developments in New Zealand point to a "race to the bottom" pricing strategy for some - chasing revenue and not profit.
The New Zealand banking sector has an after-tax return on equity of just under 15 per cent. The big four Australian banks are more than 20 per cent more profitable in New Zealand than they are in Australia (benchmarked relative the size of the economy). Interest margins are higher than they are in Australia.
Retail New Zealand has asked why New Zealand retailers pay a lot higher fees for accepting credit cards than in Australia or the UK.
Petrol companies are under the spotlight for their pricing behaviours.
Local authority rates continue to rise faster than the rate of inflation, though that's partly a function of the rating-based model being flawed and insufficient to fund local authority demands.
Ask anyone who visits from overseas about their supermarket bill in New Zealand.
The Organisation for Economic Cooperation and Development's 2017 assessment noted significant price-cost margins.
The fourth industrial revolution and technological disruption will heighten competitive pressures and put pressure on margins. Households are the winner when competitive pressures intensify.
Some sectors need to be looked at anyway. The wheels are turning.
The Commerce Amendment Bill will give the Commerce Commission the power to undertake market studies. This is standard for other countries.
They will be able to identify whether there are factors that are standing in the way of competition. Reform is directed at preventing anti-competitive conduct by prohibiting misusing market power. That's aimed at stopping big business squeezing out little business.
The Productivity Commission has been used to investigate various issues. They should be asked to do more, resourced to do so, and more of their recommendations acted upon.
The New Zealand Treasury should be more proactive in assessing markets, barriers to entry or other dynamics that are restricting competition.
Some sectors such as local authorities need to do the reverse and consolidate.
Lifting household savings needs to be given a higher priority. One way to do it is more competitive pressure in some sectors.
