New Zealand has no alternative but to embrace compulsory superannuation if it wishes to stem the flow of companies and people overseas, says NZX boss Mark Weldon.
Disclosures on Monday that the NZX's third largest company, the $4.1 billion Fletcher Building, was considering relocating its headquarters to Australia highlighted the
need for a rethink of savings policy.
The kiwisaver scheme, due to be introduced next year, requiring employers to offer voluntary superannuation schemes to their employees, was a good start. However, more would be required.
"For the savings pool to become deep and meaningful, you will, at some point, need something on top of that and that has to be compulsion, like they have in Australia."
Weldon says Fletcher Building's examination of a move, the raft of takeovers of New Zealand companies by their Australian rivals and the weak pipeline of new listings can be traced to the growth of superannuation funds across the Tasman. Australia has A$800 billion ($950 billion) of funds and that should grow by almost A$100 billion in this year alone. With so much cash looking for a home, Aussie companies' financing costs are cheaper, a strategic advantage over those on this side of the Tasman.
"The key single reason, overriding reason that dwarfs all else is the underlying health of the Australian savings pool. The savings available for companies to grow out of is just more robust than it is in New Zealand, which has not addressed the issue.
"You hear a lot of people say look where the Australian economy has got to. My view is that they are only going to go from a trot to a run as a result of what they have got.
"If you are going to use an anatomical metaphor, your savings pool is like your backbone, you really just have to have it. It connects everything else and we have to invest in that."
Weldon concedes enlisting support for such a scheme, especially in the wake of the referendum on compulsion in 1997, overwhelmingly defeated by a vote of 91.8 per cent against compared with a vote of 8.2 per cent in favour, would be difficult.
