Taskforce faces the chop/ Consumers say goodbye to the economic blues/ Govt super to outsource

Consumer confidence in New Zealand has reached its highest level in three years ac-cording to the latest WestpacTrust McDermott Miller survey.

Results for the December 1999 quarter show a net 24.3 per cent of respondents expected good economic times in the next 12 months, up from the net 1.3 per cent expecting bad economic times for the coming year in the September 1999 quarter. The gloomy outlook of consumers a year ago, where a net 23.1 per cent predicted bad economic times for the year ahead

Consumer confidence in New Zealand has reached its highest level in three years ac-cording to the latest WestpacTrust McDermott Miller survey.

Results for the December 1999 quarter show a net 24.3 per cent of respondents expected good economic times in the next 12 months, up from the net 1.3 per cent expecting bad economic times for the coming year in the September 1999 quarter. The gloomy outlook of consumers a year ago, where a net 23.1 per cent predicted bad economic times for the year ahead, appears to have been completely reversed.

Head of McDermott Miller, Richard Miller, says that for the first time in almost three years all regional and socio-economic groups are strongly optimistic.

“The groups of consumers who have been persistently pessimistic (the 50+ age group, the unemployed and lower income groups) are now almost as optimistic as the younger and higher income consumers,” Miller says.

He says widespread predictions of economic recovery, the change of government, im-proved trading conditions and the prospect of rising exports have all contributed to a broad lift in confidence among New Zealanders.

WestpacTrust chief economist, Bevan Graham, says the result confirms that the eco-nomic recovery is becoming broad based with the most significant rise in confidence coming from rural and secondary areas.

“It has long been our assertion that as export fortunes improved, rural and secondary centre confidence would rise, while the better-economic-prospects induced rise in interest rates would stabilise in the more interest rate sensitive metropolitan centres,” Bevan says.

“The upshot is that while the recovery is becoming broader based on a sectoral basis it is also becoming broader based regionally.”

He says the survey result combined with a better than expected third quarter GDP figure has caused WestpacTrust to lift its forecast for growth from 3.7 per cent to 4 per cent in the year to March 2001.

“The negative corollary to this, however, is that it reinforces our expectations of tighter monetary policy, with interest rates expected to rise over the next 18 months.”

The new Government has given the Super 2000 Taskforce formal notification of its in-tention to wind up the project.

The Taskforce was originally scheduled to produce its final report on retirement savings issues in November this year but is now expected to be dissolved by the end of February.

A spokesman for the Minister of Social Services and Employment says much of the work initiated by the Taskforce is being “actively considered” and may be continued.

A paper on the issue will be presented to Cabinet for discussion at the end of January.

Money Management understands that several of the Taskforce’s major projects including surveys of living standards and the labour market, the school superannuation competition and the long term fiscal modelling work, will be carried through to completion.

Chair of the Taskforce, Angela Foulkes, says while the disbandment of the Taskforce is disappointing the project did produce some positive results.

“It is unfortunate that the opportunity to look at the whole picture has been put on one side,” Foulkes says.

“However, the Taskforce work program was a good investment and it got things under-way that had to be done. And to some extent it has lifted the public profile of the demo-graphic issue.”

The Taskforce will not meet again and has sent a snapshot of what it has produced and the issues it would have explored to the new Government. Foulkes says the lack of broad political support for the Taskforce, with Labour and the Alliance both refusing to take part, did undermine its usefulness.

“The Taskforce failed in its aim of building consensus around the issue of superannua-tion,” Foulkes says.

“All one can hope is that the information it produced will take people forward towards some solution and consensus.”

New Zealand Treasury is considering outsourcing management of the $3.5 billion Gov-ernment Superannuation Fund (GSF) as it seeks to deploy its assets more effectively.

Manager of Crown financial policy at Treasury, Steve Cantwell, says examining the GSF investment strategy is part of an on-going review of the department’s asset management strategy.

“If the GSF was a private fund it would be insolvent as it has $8.5 billion in liabilities,” Cantwell says.

He says allowing the private industry to manage GSF assets is one possibility the review will cover.

The fund, which is governed by its own legislation, is currently managed by Treasury and invests solely in government and high grade corporate stock.

“The current legislation permits outsourcing to private fund managers but all funds have to be used for the benefits of members,” Cantwell says.

“This would preclude paying fees to managers.”

There is no deadline for completion of the review and Cantwell says it may or may not go ahead depending on how the new Government prioritises the process.

The Labour Party’s pre-election promise to introduce a dedicated tax to fund the national pension scheme remains in doubt as neither of its partners in Parliament have given full support to the idea.

Labour’s pledge to set aside eight per cent of tax revenue to fund future payments of New Zealand Superannuation was one of the key planks in its election campaign.

However, with its position in power dependent on the support of the Alliance and the Greens, the Labour plan remains in limbo.

A spokesman for the Alliance says that while they can “see where Labour is coming from”, the Party still remains sceptical about the dedicated superannuation tax.

“In our estimation we are still able to afford the current superannuation system,” the spokesperson says.

He says the Alliance believes a lot of the talk about the ageing population is “mere panic, emanating largely from the right”.

The Green Party has given only qualified support to the Labour plan, saying while it does not oppose the idea in principal more detail would need to be released before a deci-sion is made.

The Greens also say it would only vote for the legislation if all parties in Parliament sup-ported it.