upnorthkyosa
30th October 2006, 05:12 AM
Does NZ have a central bank? If so, how is inflation in your country? Is your currency fixed to a gold standard? Or does it "float" like it does in the US?
Trigirl
30th October 2006, 05:18 AM
NZ central bank is called the "reserve bank" http://www.rbnz.govt.nz
Inflation just over 3%.
The currency floats same as in the US.
Inflation just over 3%.
The currency floats same as in the US.
upnorthkyosa
30th October 2006, 05:37 AM
NZ central bank is called the "reserve bank" http://www.rbnz.govt.nz
Inflation just over 3%.
The currency floats same as in the US.
How well are saleries keeping up with inflation? How stable are your economic cycles? Do kiwis have relatively good financial habits?
In the US, most people are up to there eyeballs in debt. It's a jumped up form of peonage.
Inflation just over 3%.
The currency floats same as in the US.
How well are saleries keeping up with inflation? How stable are your economic cycles? Do kiwis have relatively good financial habits?
In the US, most people are up to there eyeballs in debt. It's a jumped up form of peonage.
Trigirl
30th October 2006, 06:00 AM
sorry - can't help you with most of that. i know that the NZ govt is currently trying very hard to encourage more saving (introducing kiwisaver)
i imagine someone who lives over there may be able to help more though.
i imagine someone who lives over there may be able to help more though.
Avalon
30th October 2006, 09:51 AM
How well are saleries keeping up with inflation?
My understanding is that salaries are far from keeping up with real inflation (as opposed to the figure put out by the government). Best way I can look at it - is to think in terms of the actual cost of living, rather than government inflation which seems to ignore a lot of the price increases. In that case, interest rates, local house rates and fuel / transport costs have all gone up hugely in the last year and wages have certainly not matched it.
How stable are your economic cycles?
Not a clue. Way beyond my understanding im afraid.
Do kiwis have relatively good financial habits?
Not really. Household debt is spiralling here as much if not more than in the UK at least (dont know how that compres with the us. This seems to have been fuelled by the increase in House values, and people spending equity as well as an increase in the "buy now pay later" mentality and contant spending more money than is earned. Its matched with a lack of saving. The vast majority of any investing is done in the housing market only.
I found this from the reserve bank:
By mid-2006 the outstanding debt of households had increased around five times in dollar terms since 1990, more than doubling as a percentage of households' disposable income. Weighted average interest rates however had fallen from over 15% to about 8.5% per annum (over 90% of household debt is housing debt, at an average rate of around 8%). Interest servicing of the increased debt, as a percentage of incomes, was about a third higher than in 1990. At current levels, the ratio of household debt to income (excluding student loans) is similar to those found in Australia, the UK and USA.
My feeling is that if you are pretty wised up financially and know how to handle money - then you can do pretty well here.
Hope that makes some sense.
My understanding is that salaries are far from keeping up with real inflation (as opposed to the figure put out by the government). Best way I can look at it - is to think in terms of the actual cost of living, rather than government inflation which seems to ignore a lot of the price increases. In that case, interest rates, local house rates and fuel / transport costs have all gone up hugely in the last year and wages have certainly not matched it.
How stable are your economic cycles?
Not a clue. Way beyond my understanding im afraid.
Do kiwis have relatively good financial habits?
Not really. Household debt is spiralling here as much if not more than in the UK at least (dont know how that compres with the us. This seems to have been fuelled by the increase in House values, and people spending equity as well as an increase in the "buy now pay later" mentality and contant spending more money than is earned. Its matched with a lack of saving. The vast majority of any investing is done in the housing market only.
I found this from the reserve bank:
By mid-2006 the outstanding debt of households had increased around five times in dollar terms since 1990, more than doubling as a percentage of households' disposable income. Weighted average interest rates however had fallen from over 15% to about 8.5% per annum (over 90% of household debt is housing debt, at an average rate of around 8%). Interest servicing of the increased debt, as a percentage of incomes, was about a third higher than in 1990. At current levels, the ratio of household debt to income (excluding student loans) is similar to those found in Australia, the UK and USA.
My feeling is that if you are pretty wised up financially and know how to handle money - then you can do pretty well here.
Hope that makes some sense.
jo-and-jeff
30th October 2006, 10:42 AM
The vast majority of any investing is done in the housing market only.
This is becoming a huge problem in NZ right now. Historically, Kiwis have thought of the equity in their homes as their "savings accounts", reasoning that if they had their houses paid off when they retired, their pensions and the National Health system would take care of everything else.
However, not only is the benefit amount of pensions not keeping up with inflation, people who were counting on their pension to be their only income did not include in their calculations the fact that property taxes (rates) would increase significantly over the years. Consequently, many of them are having to sell their homes to make ends meet.
Just as in the U.S., the average age of the NZ population is increasing (http://www.stats.govt.nz/products-and-services/Articles/pop-ageing-Feb00.htm) (the Baby-Boomer Effect), so in the next 10-30 years, the taxes from proportionally fewer working-age people will have to provide pensions for a proportionally higher number of retirees.
I suspect that the government will respond to this the same way they have responded to the rising health-care costs due to the aging population (http://www.nzherald.co.nz/section/story.cfm?c_id=1&objectid=10407439): by reducing the relative amount of benefits that they provide to everyone. They don't have to actually lower the benefit amount to accomplish this. All they have to do is not increase pension amounts to match the cost of living.
What this means for us as migrants is that we need to be serious about saving money in addition to building equity in a home, because it's almost certain that the pension and health care systems are not going to cover all of our expenses in retirement.
Jo
This is becoming a huge problem in NZ right now. Historically, Kiwis have thought of the equity in their homes as their "savings accounts", reasoning that if they had their houses paid off when they retired, their pensions and the National Health system would take care of everything else.
However, not only is the benefit amount of pensions not keeping up with inflation, people who were counting on their pension to be their only income did not include in their calculations the fact that property taxes (rates) would increase significantly over the years. Consequently, many of them are having to sell their homes to make ends meet.
Just as in the U.S., the average age of the NZ population is increasing (http://www.stats.govt.nz/products-and-services/Articles/pop-ageing-Feb00.htm) (the Baby-Boomer Effect), so in the next 10-30 years, the taxes from proportionally fewer working-age people will have to provide pensions for a proportionally higher number of retirees.
I suspect that the government will respond to this the same way they have responded to the rising health-care costs due to the aging population (http://www.nzherald.co.nz/section/story.cfm?c_id=1&objectid=10407439): by reducing the relative amount of benefits that they provide to everyone. They don't have to actually lower the benefit amount to accomplish this. All they have to do is not increase pension amounts to match the cost of living.
What this means for us as migrants is that we need to be serious about saving money in addition to building equity in a home, because it's almost certain that the pension and health care systems are not going to cover all of our expenses in retirement.
Jo
voxel
1st November 2006, 03:44 PM
I suspect that the government will respond to this the same way they have responded to the rising health-care costs due to the aging population (http://www.nzherald.co.nz/section/story.cfm?c_id=1&objectid=10407439): by reducing the relative amount of benefits that they provide to everyone. They don't have to actually lower the benefit amount to accomplish this. All they have to do is not increase pension amounts to match the cost of living.
Or phase public pensions out. Canada and Sweden have gone this route(been 10 years now?) with private tax-sheltered self-directed pensions. Yes, the most socialistic countries!
People looking to retire in 10-20 years or so are probably okay. It's my generation that will retired in 35+ years and be left with nothing because my parent's generation overspent and undersaved. At least in Canada, we were told this in high school.
The US Social Security system is in a world of hurt. I see no pleasant way out for that country.
Or phase public pensions out. Canada and Sweden have gone this route(been 10 years now?) with private tax-sheltered self-directed pensions. Yes, the most socialistic countries!
People looking to retire in 10-20 years or so are probably okay. It's my generation that will retired in 35+ years and be left with nothing because my parent's generation overspent and undersaved. At least in Canada, we were told this in high school.
The US Social Security system is in a world of hurt. I see no pleasant way out for that country.
jo-and-jeff
1st November 2006, 04:28 PM
People looking to retire in 10-20 years or so are probably okay.
They may still get some kind of pension benefit. But at the rate things are currently going in this country (http://www.emigratenz.org/forum/showthread.php?t=8467), I think it's highly likely that, by that time, the gov't benefit will not be large enough for a New Zealander to survive without a supplementary form of income.
They may still get some kind of pension benefit. But at the rate things are currently going in this country (http://www.emigratenz.org/forum/showthread.php?t=8467), I think it's highly likely that, by that time, the gov't benefit will not be large enough for a New Zealander to survive without a supplementary form of income.
voxel
7th November 2006, 12:22 AM
They may still get some kind of pension benefit. But at the rate things are currently going in this country (http://www.emigratenz.org/forum/showthread.php?t=8467), I think it's highly likely that, by that time, the gov't benefit will not be large enough for a New Zealander to survive without a supplementary form of income.
The way countries solve this is:
1) Increase birth rates.
2) Increase (young) skilled migration.
(2) is happening. Though the outflow is somewhat disturbing (Canada had the same issue - but no longer due to the stronger dollar, better domestic industries, and US politics).
A NYtimes article talks about US public pensions:
NYTimes article (http://www.nytimes.com/2006/11/06/business/06pension.html?hp&ex=1162875600&en=ee329a0011ee6307&ei=5094&partner=homepage)
I think NZ will be fine if they can emulate Ireland's success... and the govt is pretty fiscally sound.
The way countries solve this is:
1) Increase birth rates.
2) Increase (young) skilled migration.
(2) is happening. Though the outflow is somewhat disturbing (Canada had the same issue - but no longer due to the stronger dollar, better domestic industries, and US politics).
A NYtimes article talks about US public pensions:
NYTimes article (http://www.nytimes.com/2006/11/06/business/06pension.html?hp&ex=1162875600&en=ee329a0011ee6307&ei=5094&partner=homepage)
I think NZ will be fine if they can emulate Ireland's success... and the govt is pretty fiscally sound.
jo-and-jeff
7th November 2006, 09:35 AM
A NYtimes article talks about US public pensions:
NYTimes article (http://www.nytimes.com/2006/11/06/business/06pension.html?hp&ex=1162875600&en=ee329a0011ee6307&ei=5094&partner=homepage)
The NYTimes article about pensions isn't really relevant. There really isn't such a thing as a public pension in the U.S.. "Government" pensions are for government employees only, and they are administered as if the government is a private employer. Pensions in the U.S. have always been administered privately by employers (although they have been disappearing rapidly in the last couple of decades, replaced by 401k-type programs -- where the employee, not the company, contributes the money -- or by nothing at all).
The (rough) equivalent of the NZ pension/benefit system is the U.S. Social Security System, benefits from which have been severely diminished over the last couple of decades -- and the Bush administration is trying very hard to dismantle it entirely. Because the Baby Boom was followed by an era of more controlled population growth, the increasingly older average population age in the U.S. will increasingly take much more money out of the SS system than is coming in. I do not expect to receive anything from it by the time I retire.
I think NZ will be fine if they can emulate Ireland's success... and the govt is pretty fiscally sound.
The point I've been making isn't about the fiscal soundness of the government -- which, by the way, I think, is rather an illusion.
Sure, the government is trumpeting that they have an $11 billion surplus, but where do you think that money came from? It came at least partially from not increasing public services, such as health care and pensions, to keep pace with the rise in cost of living and inflation of the NZ dollar.
Right now, pensioners are having to sell their homes (http://subs.nzherald.co.nz/organisation/story.cfm?o_id=108&objectid=10395245) because their pension isn't high enough to cover both their living costs and their property rates/taxes.
When you read that tens of thousands of people are being denied the medical care (http://www.scoop.co.nz/stories/PA0606/S00406.htm) that they need by being purged from health care waiting lists (http://tvnz.co.nz/view/page/425826/701381), and that health care services like lab testing (http://www.stuff.co.nz/stuff/0,2106,3839839a7144,00.html), previously provided by the government, will no longer be free to patients (http://www.scoop.co.nz/stories/PA0610/S00459.htm), you can see why the government is running a surplus. They are "robbing Peter to pay Paul". In this case, Peter is the NZ citizen, and Paul is the NZ government.
Furthermore, the NZ government just published a document explaining how they plan to trim the benefit system (http://tvnz.co.nz/view/page/488120/871048); one of the provisions includes denying people over 60 who are deemed capable of working from receiving a benefit, therefore forcing them to take a job -- any job.
These are trends that are getting worse; just pay attention to the articles as they come out in the NZ Herald and Scoop. Having reduced and/or taken these public services away, at what point will the NZ government magically decide to give them back?
The answer is that they won't.
It's my belief that if New Zealanders expect that the government will still cover most of their living and health care expenses in retirement 20 years, maybe even 10 years, from now, they're going to be in for quite a rude shock.
Bottom line: if you're in New Zealand and you're not already saving for your retirement, you should probably start.
Jo
NYTimes article (http://www.nytimes.com/2006/11/06/business/06pension.html?hp&ex=1162875600&en=ee329a0011ee6307&ei=5094&partner=homepage)
The NYTimes article about pensions isn't really relevant. There really isn't such a thing as a public pension in the U.S.. "Government" pensions are for government employees only, and they are administered as if the government is a private employer. Pensions in the U.S. have always been administered privately by employers (although they have been disappearing rapidly in the last couple of decades, replaced by 401k-type programs -- where the employee, not the company, contributes the money -- or by nothing at all).
The (rough) equivalent of the NZ pension/benefit system is the U.S. Social Security System, benefits from which have been severely diminished over the last couple of decades -- and the Bush administration is trying very hard to dismantle it entirely. Because the Baby Boom was followed by an era of more controlled population growth, the increasingly older average population age in the U.S. will increasingly take much more money out of the SS system than is coming in. I do not expect to receive anything from it by the time I retire.
I think NZ will be fine if they can emulate Ireland's success... and the govt is pretty fiscally sound.
The point I've been making isn't about the fiscal soundness of the government -- which, by the way, I think, is rather an illusion.
Sure, the government is trumpeting that they have an $11 billion surplus, but where do you think that money came from? It came at least partially from not increasing public services, such as health care and pensions, to keep pace with the rise in cost of living and inflation of the NZ dollar.
Right now, pensioners are having to sell their homes (http://subs.nzherald.co.nz/organisation/story.cfm?o_id=108&objectid=10395245) because their pension isn't high enough to cover both their living costs and their property rates/taxes.
When you read that tens of thousands of people are being denied the medical care (http://www.scoop.co.nz/stories/PA0606/S00406.htm) that they need by being purged from health care waiting lists (http://tvnz.co.nz/view/page/425826/701381), and that health care services like lab testing (http://www.stuff.co.nz/stuff/0,2106,3839839a7144,00.html), previously provided by the government, will no longer be free to patients (http://www.scoop.co.nz/stories/PA0610/S00459.htm), you can see why the government is running a surplus. They are "robbing Peter to pay Paul". In this case, Peter is the NZ citizen, and Paul is the NZ government.
Furthermore, the NZ government just published a document explaining how they plan to trim the benefit system (http://tvnz.co.nz/view/page/488120/871048); one of the provisions includes denying people over 60 who are deemed capable of working from receiving a benefit, therefore forcing them to take a job -- any job.
These are trends that are getting worse; just pay attention to the articles as they come out in the NZ Herald and Scoop. Having reduced and/or taken these public services away, at what point will the NZ government magically decide to give them back?
The answer is that they won't.
It's my belief that if New Zealanders expect that the government will still cover most of their living and health care expenses in retirement 20 years, maybe even 10 years, from now, they're going to be in for quite a rude shock.
Bottom line: if you're in New Zealand and you're not already saving for your retirement, you should probably start.
Jo
voxel
17th November 2006, 09:08 PM
Bottom line: if you're in New Zealand and you're not already saving for your retirement, you should probably start.
This is the case in ALL developed countries. I already mentioned socialistic governments with large federal surpluses and large current account surpluses cutting pensions because of changing demographics. It's France and the US which are pig-headed and refuse to acknowledge their public pension system (i.e SS) is bankrupt unless there is a massive baby boom or large scale skilled immigration into their countries. Milton Freidman died today - he didn't like SS and I guess he'll get his way.
At least in NZ and other socialistic countries there is a floor - although the floor is pretty low.
This is the case in ALL developed countries. I already mentioned socialistic governments with large federal surpluses and large current account surpluses cutting pensions because of changing demographics. It's France and the US which are pig-headed and refuse to acknowledge their public pension system (i.e SS) is bankrupt unless there is a massive baby boom or large scale skilled immigration into their countries. Milton Freidman died today - he didn't like SS and I guess he'll get his way.
At least in NZ and other socialistic countries there is a floor - although the floor is pretty low.
upnorthkyosa
19th November 2006, 03:31 AM
One of the things that I noticed as I poked around on the NZ central bank's site is that the bank is owned by the government. This is huge, because most Central Banks in industrialized countries are owned by private interests...that is hard to even imagine.
Anyway, this offers NZ alot of advantages in regards to its monetary policy. First and foremost being that the government has more oversight. In the US, if the Federal Reserve started making decisions that benefitted itself, no one could stop them. This can't happen in NZ.
Overall, I think this seems like a pretty stable system. Also, I find it ironic that their own website describes what they do as unorthodox. Yeah, that is an understatement.
Anyway, this offers NZ alot of advantages in regards to its monetary policy. First and foremost being that the government has more oversight. In the US, if the Federal Reserve started making decisions that benefitted itself, no one could stop them. This can't happen in NZ.
Overall, I think this seems like a pretty stable system. Also, I find it ironic that their own website describes what they do as unorthodox. Yeah, that is an understatement.
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