Friday Opinion: New Zealand, Access to Capital & Vicky Rose
August 28, 2014
HSBC had called New Zealand a stand-out economy and there is no doubt that the little kiwi battler at the bottom of the world has stood out. In fact, when I sat down to write this Friday’s opinion piece I had to do so from outside the country – not inside. The truth is even though I was born in New Zealand I haven’t lived there for more than a decade and it’s always tough opining about a place from a distance.
With an election looming in New Zealand it is wise for the country to consider where to next and so, instead of focussing on social or mainstream political issues, I thought I would offer a different take, an entrepreneurial take and a take on what I call freeing up access to capital.
The feedback that I get from many people, irrespective of the country where they are located, is that access to capital is a major problem. People with great ideas are often left to cash flow the business start-up with nothing other than personal savings because of bank loan criteria. But, New Zealanders living in Australia (or who have returned home) have something that many other countries don’t have which is tens of millions and hundreds of millions of dollars sitting in Australian based superannuation funds.
The prospective law changes back in 2012 only dealt with the portability of funds and the principles were designed to protect the integrity of the Australian scheme – meantime as the Australian scheme grows in age and many New Zealanders make the move back to New Zealand they do so by forgetting just how much money is sitting in forgotten accounts.
In my view we should take another look at the scheme to free up some of the money that does return to New Zealand to be able to be used for capital to fund a business start-up because let’s face it if kiwi’s come home and have access to capital then not only could they start their own business and become self-employed they will begin creating opportunities for others – employing others.
There are still tax considerations to be made but the imperative should be that those who return are able to access funds to create their own support through business start-up or investment as opposed to becoming reliant on others “in particular the State.”
One of the additional key considerations is how this approach could work for Maori and frame Maori economic development into the future. According to the 2011 census there were 128,430 Maori living in Australia and we all know that over time many do in fact return home. When they return they often bring a lot more than when they left such as skills, qualifications, experience and you guessed it – capital. However, if capital was off the table why couldn’t they be able to access superannuation held in Australia for the same purpose? If Maori can return home and start a business then we know, anecdotally, that they often employ other Maori through friends and family networks.
There are a range of ways that criteria can be developed for access such as the need to complete a vetted business plan and cash flow forecasts and it could be possible to suggest that the capital amount able to be accessed is only a percentage of the total value of the fund – this would make it easier to mitigate risk of failure by retaining a core amount of the principle.
It would be great to see us talk more about not only how we can attract talented kiwi’s back to New Zealand but also providing access to capital.
There are of course some new people looming on the political horizon that are not part of the mainstream such as Vicky Rose. Vicky and I used to work together as case managers at what used to be New Zealand’s Ministry of Social Development. In simple terms we used to be at the coal face of working with the unemployed. In recent times she, like me, moved to Australia where she has been working with members of the expatriate kiwi community who probably should have thought again about the grass being greener on the Australian side of the Tasman.
She has seen it all from boom to bust and boom again. Unlike those of us who sit on the sidelines and commentate she is putting her neck on the line by standing in New Zealand’s upcoming General Election in the seat of Ikaroa Rawhiti. People like Vicky Rose are important because it’s at times like these you need fresh ideas and fresh thinking.
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