Cullen wants everyone to have a share

Finance Minister Michael Cullen's call to buy more shares and move away from residential property has been labelled an attempt to outflank political opponents on the right.

Dr Cullen told a business audience in Auckland yesterday that New Zealanders "would benefit from being a nation of shareholders as well as a nation of homeowners".

"My sense is that there are definite gains to be made, both economic and social, in increasing the savings level of New Zealanders and in encouraging diversification in assets away from the residential property market."

He refused later to expand on the speech but others leaped on the comments which reminded some of the 1980s privatisation drive in Margaret Thatcher's Britain, to turn the nation into a country of "worker-owners".

The Government is brewing up a package of savings initiatives involving superannuation, home ownership and tertiary education for the May 19 Budget.

National leader Don Brash, the former governor of the Reserve Bank, said he had no quarrel with the need to encourage savings, but Dr Cullen was offering no details.

The best thing for households to do was pay off their mortgages first, he said.

"For a young married couple, say with two or three kids and a mortgage, investing in managed funds is absolutely bonkers."

Dr Brash did not think Dr Cullen was outflanking National politically. "I guess he's trying hard for the votes of the funds management industry."

Green Party co-leader Rod Donald said Dr Cullen was outflanking National to the right.

Act leader Rodney Hide said the Finance Minister was stealing the language of the right but not delivering the policy.

Stock exchange chief executive Mark Weldon said Dr Cullen's comments were "tremendously significant". "Dr Cullen's put it all together and said we actually need a mindset and a culture that's comfortable in investing in productive instruments, and that means the sharemarket for a number of reasons - to grow savings and grow the economy.

"Without a savings pool business investment doesn't tend to happen."

He said the bigger message was that having too much wealth tied up in households was risky for families.

However, Real Estate Institute of New Zealand president Howard Morley said he was not sure most people would agree with Dr Cullen.

He said 1.6 million people had confidence in residential property and it was a big part of many people's savings plans.

"In the end most people would want a roof over their heads when they retire, and not to have to rely on the state or other local authorities for accommodation."

By the numbers

* $41b: What we owned in shares - $20b overseas - as of December 2003.

* $69b: Value of the sharemarket yesterday.

* $310b: Value of NZ's housing as of December 2003.

* 19 May: Date Government will present its Budget and savings initiatives.