In bricks and mortar we (will still) trust

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Friday, February 19th 2010, 11:33AM 2 Comments

by Philip Macalister

It was a bit of coincidence yesterday that we were finishing an article on what the government’s utterings about tax and property investment really meant when it put out the response to the Capital Markets Taskforce. The story, for the NZ Property Investor Magazine asked, amongst other things, whether changes to tax rules would end the Kiwi love affair with residential property. It will come as little surprise that the answer was no. Kiwis will continue to place their faith in bricks and mortar. There are many reasons for this but one which came up a number of times was that there is little faith in other assets like shares. Also distrust came through of corporate, big business and managers. The coincidence here was that the government’s response to the Capital Markets Taskforce addressed this very subject. In looking through the responses it seemed there was little there which would change Kiwis attitudes. Sure they the government supported a few ideas like putting investment statements into plain English, adding warnings when products were “particularly risky or complex” and a few other things provide a bit better quality of information to investors. However, some of the things which are key to improving New Zealanders investment outcomes is better financial education and literacy. The taskforce recommended that initiatives are employed to raise investment literacy including a targeted campaign promoting key investment messages. To this the government said “further consideration required”. Then there was this one: Include investment literacy concepts in the school curriculum and resolve the issues preventing approval of the Personal Financial Management unit standards. The government says it doesn’t need to as schools are self managing and they can include financial literacy if they consider it appropriate. Surely the government can be more proactive than this? If it wants economic growth and a step change in the economy then having a financially literate population is a must have.

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