New Zealand is coasting on its economic track record and is at risk of international banks "turning on us", according to a veteran finance journalist.
New Zealand Herald journalist Liam Dann, said Aotearoa was not paying its way in the world which made our economy vulnerable to "international shocks" at a WORD event at Tūranga, the central Christchurch library, on Sunday 1 September.
The writer of BBQ Economics said the country needed new areas of growth because our good economic rating of AA+ was based on our track record as a stable, advanced and developed economy despite some poor financial measures such as our high levels of private debt which "rating agencies worry about".
"New Zealand spends more than it earns. We are vulnerable to international banks turning on us."
New growth engines were needed as the gains from the dairy boom and trade with China had played out.
"We were floundering in the 1980s before Kiwifruit and dairy came along. Where are the next growth engines?"
Liam was concerned about rising power prices. "Growing grass and dehydrating milk is what our economy is built on. Fonterra is in trouble if power prices go up."
He advocated placing solar panels on the roofs of New Zealand houses; something that was working well in Australia. Closing Tiwai, the power-hungry aluminium smelter near Bluff, would "solve a lot of South Island issues" too.
If the NZ Herald Business Editor at large was Prime Minister for a day he would introduce a compulsory savings scheme which would reduce our international vulnerability. Australia's compulsory scheme was one reason why our neighbour's economy was more "dynamic" than ours.
He also favoured the Capital Gains Tax (CGT) proposal delivered by a previous government's Tax Working Group (led by the late Sir Michael Cullen). The revenue-neutral proposal would have delivered more money to workers as it would have enabled a cut to income tax and by taxing property, the CGT would have encouraged more investment in other areas of business.
However, Liam was loathe to criticise Kiwis for investing in real estate even though it inflated property prices, had a "disastrous" impact on affordability and sent more profits to Australian-owned banks. The scars from the 1987 sharemarket crash cut deep into the New Zealand psyche and buying a house and "doing it up" encouraged Kiwis into good savings habits.
Another PM for a day policy was more financial literacy education in New Zealand schools and to that end he liked the sound of reworking some of his own book into a graphic novel.
Recalling his younger days, Liam admitted he was conservative when it came to investment. Taken to the races as a boy he only bet on the "favourite to place" and so only made $1.20.
This conservative approach to risk has not changed greatly over the years. "I have been covering Bitcoins for years but never bought any."
And the secrets of the millionaires Liam had spoken to? They were passionate and dedicated to their business venture in the way others love a hobby such as gardening, collecting stamps or playing music.
There were no guarantees of success. Many shot for the millions and many fell by the wayside. The strike-rate of major business success was comparable to the few musicians who made it as "rock stars".
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