Kiwis are notoriously bad at saving. Photo / Getty Images
Numerous factors have collided to see our collective debt burden rise by more than $60 billion in a year.
The latest figures show that the grand total rose to $790b from $739b the previous year.
Speaking to The Front Page podcast, NZ Herald business editor-at-large and host of the Money Talks podcast Liam Dann says New Zealanders just don’t save enough to offset that growing burden.
“In a country like Japan, where they are also a really good saving nation and have a lot of money and investments in the bank in their retirement funds, the nation basically funds its own debt,” says Dann.
“In New Zealand, we have to go offshore to fund that debt. We go to foreign-owned banks and we go offshore to government money through selling government bonds. And that means we generally have an account deficit. This is the difference between what goes in and out of the country – and that’s currently sitting at around a $33 billion deficit a year or 8.5 per cent of GDP.”
While the situation isn’t dire yet, Dann says that if the current trends aren’t stopped it could eventually become too big.
Listen to the full episode of The Front Page podcast for a breakdown of all these issues, and keep an eye on the Herald to see more debt coverage as part of the Nation of Debt series.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. It is presented by Damien Venuto, an Auckland-based journalist with a background in business reporting who joined the Herald in 2017.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.
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