Government looks to loosen Kiwisaver rules to allow investment in infrastructure

The Government is looking at ways of improving New Zealand's capital pools.

The Government is looking at loosening the rules around KiwiSaver to help boost the capital pool available for investment in infrastructure and productive businesses.

Commerce and Consumer Affairs Minister Andrew Bayly said the Government was committed to improving productivity and higher living standards.

He said part of the problem was New Zealand’s relatively shallow pools of capital meant businesses often struggled to raise money to invest in labour-saving technology and equipment.

The Government was looking at a package of reforms to unlock capital.

The package is made up of two strands of work that will begin now, plus a commitment to undertake further work in 2025, Bayly said.

The first strand included changes to make it easier for KiwiSaver funds to invest in unlisted assets, such as infrastructure projects and private New Zealand businesses.

The second strand was a series of adjustments to reduce the costs and barriers faced by companies listed or listing on the New Zealand Stock Exchange (NZX).

As it stands, more than $120 billion is invested in KiwiSaver funds.

Most of these funds are parked offshore in foreign stock exchanges, generating little good for New Zealand’s economy, Bayly said.

Similarly, only around 3% is invested in unlisted assets, compared to around 16% of Australian superannuation funds.

“Leveraging the money held in KiwiSaver to invest in unlisted assets, particularly domestic ones – such as transport projects, renewable energy generation or large-scale housing developments – would be a win-win,” Bayly said.

For Kiwi investors, exposure to different asset classes means risk diversification and potentially higher returns, he said.

Separately, the Government was looking at changes to improve the competitiveness and attractiveness of the NZX.

“The fact that only a handful of companies have chosen to list on the NZX in recent years speaks to the unattractiveness of our capital markets,” Bayly said.

“A particular concern is the cost associated with providing forward-looking financial information – known as prospective financial information – as part of an initial public offering and the burden of complying with the climate-related disclosures regime.”

To address these issues, the Government was introducing greater flexibility about how companies provide prospective financial information and proposing changes to the climate disclosures regime to better align New Zealand with international peers.

The two consultations, led by the Ministry of Business, Innovation and Employment, open today and close on February 14 next year.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.