Saving New Zealand: Reducing Vulnerabilities and Barriers to Growth and Prosperity: Final Report to the Minister of Finance

Published 1 Feb 2011
Page updated 9 Feb 2011

The Savings Working Group presented its final report to the Minister of Finance in January 2011. The Minister of Finance authorised the final report to be released here on 1 February 2011.

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Letter from Savings Working Group Readers' guide Part 1 Overview Conclusions Recommendations Part 2 1 Introduction 1.1 Objectives 1.2 The saving problem 2 New Zealand's economic situation 2.1 The main issues 2.1.1 Poor economic performance 2.1.2 Weak productivity growth 2.1.3 Low saving relative to investment 2.1.4 Build-up of foreign debt 2.1.5 Implications of high levels of foreign debt 2.2 Understanding saving, wealth and debt 2.2.1 New Zealand’s saving rate 2.2.2 New Zealand’s wealth and assets 2.2.3 The adequacy of household wealth and assets 2.2.4 The need to entrench higher household saving 3 Implications of New Zealand's national saving position 3.1 Vulnerability 3.1.1 Macroeconomic vulnerabilities are of concern in New Zealand 3.2 Growth and efficiency 3.2.1 Issue 3.2.2 Features of poor growth and links to saving 4 Factors contributing to New Zealand's national saving performance 4.1 Introduction 4.2 Households 4.2.1 Incentives and disincentives for household saving and building wealth 4.2.2 Private-sector debt and factors affecting it 4.3 Fiscal situation 4.3.1 Issue – the move to structural deficit 4.3.2 The move to structural deficit 4.3.3 Pressures on government saving position projected to grow 5 Future scenarios 5.1 Future prospects under business-as-usual 5.1.1 The income burden of external debt 5.1.2 Implications of no policy change 5.1.3 Comparison with other countries 5.1.4 Reducing New Zealand’s vulnerability 5.2 Modelling national saving scenarios 5.2.1 Results of an increase in national saving 5.2.2 Results of increased national saving plus a lower cost of capital 6 Government saving 6.1 Fiscal policy 6.2 A high-performing public sector 6.1.1 Government savings and productivity 6.1.2 Public sector performance 6.1.3 The Crown’s balance sheet 7 Household and business saving 7.1 Introduction 7.2 Tax policy 7.2.1 Taxes and saving: a brief overview 7.2.2 Current structure of the New Zealand tax system 7.2.3 Income tax incentives – can they increase national saving? 7.2.4 Increasing the level of national saving by changing the structure of the tax system 7.2.5 Thin capitalisation rules 7.2.6 Reducing the inherent over-taxation of savings in income tax 7.2.7 Indexation 7.2.8 Company tax rate 7.2.9 Other 7.3 Long-term saving 7.3.1 PAYGO versus SAYGO 7.3.2 NZ Superannuation Fund 7.3.3 Compulsion 7.3.4 KiwiSaver design 7.3.5 Annuities 7.3.6 Other long-term saving 7.3.7 Declining home ownership 7.4 The role of business in the national saving debate 7.5 Financial education 8 Measurement issues Part 3: Additional reference material 9 Additional analysis 9.1 Understanding saving, wealth and debt (2.2) 9.2 The probability of a sudden stop (3.1) 9.3 How financial and economic crises came out of the blue: three examples (3.1) 9.4 Household saving - what are the government's objectives and how can it best achieve them? (4.1) 9.5 The impacts of KiwiSaver on saving (7.3) 9.6 Other approaches to partially prefunding the NZ Superannuation Fund (7.3) 10 Terms of Reference for the Savings Working Group 11 List of submissions 12 References	swg-report-jan11.pdf (1,186 KB) pp. 1–161

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