OPINION: In reading economists’ predictions for our economy, one thing seems to be overlooked, or underappreciated: the impact of KiwiSaver.
I don’t blame the economists for this, they are paid to predict the next quarter, not the next 20 years. And they tend to think of KiwiSaver money as just another pool of investment savings.
But it’s not. Every dollar of KiwiSaver savings invested in our economy is probably more valuable than any other.
Why? KiwiSaver has several unique characteristics that make it investment gold.
The first is its sheer size. Already $62 billion, KiwiSaver is on track to top $200 billion by 2030. That’s 200,000 million dollars, the largest pool of domestic savings New Zealand has ever seen. It’s an additional 2.3 per cent of GDP in extra investment every year.
And to understand what money of that scale does to an economy, look at Australia. Its $3 trillion of savings has shielded it from recession for the past 26 years. It hasn’t escaped Covid, but expect its capital-rich industries to bounce back quickly.
This sheer scale allows our savings to be used for investments previously too big to contemplate.