Yellow Pages deal shows why we must save
Telecom's sale of its Yellow Pages subsidiary to a joint venture involving a Canadian pension fund underlines the value of a large domestic pool of retirement savings, Finance Minister Michael Cullen said today.
CCMP Capital Asia and Teachers' Private Capital paid $2.24 billion for the Yellow Pages group. Teacher's Private Capital is the private investment firm of the Ontario Teachers' Pension Plan.
"If New Zealand had more of its own savings under management, then we too could make major acquisitions of local and offshore companies," said Dr Cullen.
"As I have long argued, enlarging the local pool of savings is essential if we are to raise our economic performance. Australia, which has encouraged savings for decades, now has a trillion dollars of funds under management. New Zealand has around $64 billion.
"Greater savings will reduce the reliance on the savings of foreigners and so help retain ownership of Kiwi companies in New Zealand. It lowers the cost of capital for our companies, reduces inflationary pressures by switching consumption into savings and helps reduce the current account deficit - our indebtedness to the rest of the world.
"That's why this government is actively encouraging savings. The New Zealand Superannuation Fund now has about 22 per cent of its funds invested locally.
"And I am confident that KiwiSaver, which is designed to make saving much easier for many New Zealanders, will also make a considerable difference."
Background
KiwiSaver is a voluntary scheme where employees elect to contribute 4 or 8 per cent of their gross salary. Those starting a new job will be automatically enrolled and will have eight weeks to opt out. To kick-start the scheme the government is providing a $1000 contribution and paying some scheme fees in order to improve the returns for savers. Employer contributions to KiwiSaver schemes will be exempt from tax, subject to a cap of the lesser of the employee's contribution or 4 per cent of their gross salary or wages.
CCMP Capital Asia and Teachers' Private Capital paid $2.24 billion for the Yellow Pages group. Teacher's Private Capital is the private investment firm of the Ontario Teachers' Pension Plan.
"If New Zealand had more of its own savings under management, then we too could make major acquisitions of local and offshore companies," said Dr Cullen.
"As I have long argued, enlarging the local pool of savings is essential if we are to raise our economic performance. Australia, which has encouraged savings for decades, now has a trillion dollars of funds under management. New Zealand has around $64 billion.
"Greater savings will reduce the reliance on the savings of foreigners and so help retain ownership of Kiwi companies in New Zealand. It lowers the cost of capital for our companies, reduces inflationary pressures by switching consumption into savings and helps reduce the current account deficit - our indebtedness to the rest of the world.
"That's why this government is actively encouraging savings. The New Zealand Superannuation Fund now has about 22 per cent of its funds invested locally.
"And I am confident that KiwiSaver, which is designed to make saving much easier for many New Zealanders, will also make a considerable difference."
Background
KiwiSaver is a voluntary scheme where employees elect to contribute 4 or 8 per cent of their gross salary. Those starting a new job will be automatically enrolled and will have eight weeks to opt out. To kick-start the scheme the government is providing a $1000 contribution and paying some scheme fees in order to improve the returns for savers. Employer contributions to KiwiSaver schemes will be exempt from tax, subject to a cap of the lesser of the employee's contribution or 4 per cent of their gross salary or wages.