From the mouth of a billionaire, it’s a striking insult to hear.
“There are a few what you would call ‘rich pricks’ who advertise it and are really interested in it,” says Bruce Plested, the co-founder of Mainfreight.
But most wealthy Kiwis prefer not to make a big deal out of their assets, he says.
Rod Duke, another ultra wealthy businessman, agrees. And he goes further.
In the United States, those who broadcast their wealth and how much they give away to charities are “generally looked upon as a model citizen.” Not so in Aotearoa.
Duke says he feels “squeamish” talking about the money he gives away. “I don’t like talking about it at all.”
Duke and Plested are not unique in their reticence to talk about money. All of the wealthy people RNZ approached and spoke with for our series on wealth – RICH – were uncomfortable, reluctant or outright unwilling to talk about it.
New Zealand is a society unwilling or unable to speak candidly about wealth, certainly compared to America anyway.
So what is it about Kiwis that makes financial success a taboo topic? And is it even a problem?
There are no words
New Zealand clings to a view of itself as an egalitarian nation, says wealth and inequality expert Max Rashbrooke. The inequality and class division in the United Kingdom and America doesn’t apply here, we tell ourselves.
In order to keep up the facade, wealth has historically been mostly hidden from view.
“We try to pretend we don’t have very, very wealthy people at the same time as very significant levels of poverty,” says Rashbrooke.
“A lot of the New Zealand one percent do a much better job at camouflaging themselves than the one percent in other countries. Particularly the men, appearing like they’re still everyday Kiwi blokes.”
We even lack the language for talking about wealth, says Rashbrooke.
“In America, there’s a discourse about plutocrats, in Britain people are very used to talking about the nobility and classes. In New Zealand, we just don’t have that tradition.
“We used to be an egalitarian country and even though we’re not anymore – our distribution of income and wealth is more or less indistinguishable from Britain – we are in denial about that and we haven’t really developed the language for talking about wealth inequalities in particular.”
The wealthiest five percent of households own about 37 percent of New Zealand’s wealth, according to Stats NZ.
“They own a third of all the productive capital in the country … and it’s not something we think about often. A small number of people have a huge level of control over the economy.”
For Rashbrooke, the recognition of wealth – and an open discussion about it – is tied directly to its redistribution for a more equitable society.
“I think we need to have a deeper conversation about it. I think we shy away from it because it’s embarrassing.”
For others, like Commerce Minister Andrew Bayly, the notion of a more fluent conversation about wealth is welcome. It’s just what comes next that he’d disagree with Rashbrooke about.
Bayly is thought to be one of the wealthiest MPs in Parliament, the result of a successful career in merchant banking. He says tall poppy syndrome afflicts the rich in New Zealand, which in turn hurts the nation as a whole.
“It’s extraordinary. We don’t do it for sport, but we do for business. It’s a weird thing in New Zealand,” Bayly says.
The new billionaires
If New Zealand did have a more open conversation about wealth, what would we talk about?
First may be a recognition that the pathways to mega wealth are changing.
The owners of toy company Zuru – Nick and Matt Mowbray – were this year named in the annual NBR Rich List estimates as the wealthiest people in the country with an estimated $20 billion fortune. They easily knocked Graeme Hart off his long held top spot with an estimated worth of $12.1bn.
The Mowbrays and Hart declined to talk to RNZ for this series, but EY Partner Brad Wheeler says the ascension of the Mowbrays epitomises a new breed of entrepreneurs.
“This new generation of wealth creators are all tech enabled and have created that wealth in a very short period of time,” Wheeler says.
“Graeme Hart’s world that he built that wealth in is a completely different world than we live in and operate in today.”
Today’s successful entrepreneurs operate from New Zealand, but New Zealand is not their market, he says.
“Their market is the globe.”
Tech entrepreneur Carmen Vicelich and Sharsies founder Brooke Roberts are among this new wave, growing companies in ways that Duke, Plested and Hart could only have dreamed of when they started back in the 70s and 80s.
This kind of technology-led export growth is the key to creating more wealth in Aotearoa, says Bayly. He wants to make it easier for companies, especially the smaller to medium sized businesses that typically find it harder to find funding, to list on the New Zealand Stock Exchange so they can attract investment, grow and sell to the world.
He plans to reduce the personal liability obligations on directors, which puts many off from listing on the stock market, to aid this.
But he also wants to grow the pool of money that’s available to invest in these companies, by boosting retirement savings and encouraging KiwiSaver funds to invest in local enterprises.
At a lunch in a boardroom overlooking Auckland’s waterfront a few months ago, Bayly laid out his wishes to more than a dozen chief executives of the country’s largest KiwiSaver funds.
“We have $200 billion of capital in New Zealand and most of it is deployed overseas and in funds, and I’m talking principally about KiwiSaver. There’s $110 billion, roughly 85 percent of it’s parked off overseas,” he says.
In comparison, Australia’s $3.7 trillion pension fund industry invested about 18 percent in local companies.
At the lunch, Bayly brazenly asked the KiwiSaver bosses why they can’t do the same.
“They gave three reasons…but I don’t think there’s anything stopping them and it should be their choice whether they do it or not. But I am making sure there are no restrictions because having some of that $110b invested in great New Zealand companies would be a pretty good start.”
Simplicity KiwiSaver chief executive Sam Stubbs, who attended the lunch, says the reasons proffered by the big players as to why that can’t invest more locally were: the lack of listed investments; that it’s more expensive to invest this way; and the need to have daily liquidity.
“But to my mind they are three excuses. And the reason I say that is because we’ve done the exact opposite.”
Stubbs estimates Simplicity is now one of the biggest venture capital investors and one of the biggest housing investors in the market.
Investing in unlisted companies is more time-consuming and expensive, but worth it, he says.
“It’s complex and difficult to do, but that shouldn’t be any excuse. The industry’s getting paid a fortune in fees. They should be making the effort.”
Building a bigger money pile
Bayly wants to see more people in KiwiSaver too, as a way to boost the pool of capital available for investment.
“In New Zealand, we do not do enough wealth creation. The average balance of KiwiSaver is now about $28,000. We need to help them grow their personal wealth and the best mechanism for that is actually through KiwiSaver.”
The cost of living crisis has taken any plans to make KiwiSaver compulsory off the table for now, says Bayly.
“But I’m sure that’s going to be something that’s on the agenda in due course.”
Labour MP David Parker, who before his long career in politics was a successful entrepreneur involved in several start-ups – including as the founding chief executive of A2 Milk – agrees with the need to increase savings.
Labour unsuccessfully campaigned on compulsory KiwiSaver in 2014, and has not campaigned on it since.
Parker, who has previously held the revenue, trade and export and economic development ministerial portfolios, says it is time to have another look at it.
“We do need to have, as a country, a discussion as to whether more people should be in KiwiSaver; should the rate of savings be lifted very slowly over time?
“I think everyone looks at Australia and thinks: ‘God they are so much wealthier than us’ – and they are – and this separation of their fortunes from ours essentially started about the time they started to have more savings.”
Stubbs believes New Zealand will “never be the rich country Australia is” unless KiwiSaver is made compulsory, but this will take “political courage.”
“If you do that, you end up in a situation like Australia, where they have five times our population, but they have 35 times our retirement savings. $3.5 trillion. And that’s why we’re losing nurses to Australia, because they have all this investment, which means the economy grows faster, which means they pay more taxes, and they can afford to pay their nurses more.
“You can’t spend more unless you save more.”
The government just needs to give the “signal” to KiwiSaver funds that it’s okay to invest in illiquid investments, says Stubbs.
“You just have to give them permission, because for the longest time the regulators and the government have said ‘we want complete liquidity, don’t take too many risks’.”
Overseas pension funds invested in illiquid assets such as infrastructure, and New Zealand funds could too, he says.
“It’s like turning an oil tanker, it takes time. But if the captain – and that’s Andrew Bayly – wants the ship to turn in the direction of investing in New Zealand and in KiwiSaver, it can be done.”
Parker, who famously resigned as Revenue Minister after his wealth tax plan was dropped by then-Prime Minister Chris Hipkins, is now involved in reexamining Labour’s tax policies.
He’s floating the idea of a Capital Income Tax, which is essentially a wealth tax.
It’s needed because of the “raging inequalities” in our tax system, he says.
Parker is referring to the 2023 IRD study which found the 311 wealthiest families in New Zealand pay half the effective tax rate of middle income wage earners – mostly because they pay no tax on capital.
“We are never going to fix that problem without some change to the tax system. So that’s the debate we’re having in the Labour Party at the moment.”
While Plested says he might be happy to pay a wealth tax, Duke is not.
Bayly is opposed to a wealth or capital gains tax, saying it will result in capital flight.
But Parker does not believe a wealth tax will drive the super rich away. Instead, it will make the economy stronger.
“Since the 1980s the amount of New Zealand’s what they call gross fixed capital formation, the amount going into plant and equipment and computing, has halved, and the amount going into housing has doubled. So that’s partly due to the tax system.
“If you want to have a fair society where there is a fair distribution of wealth and opportunity, then you need to have a tax system that does that, and you also need it so that you’re directing capital on the basis of the efficiency of the economy, rather than over investing in property and under investing in innovative companies.”
Making the nation’s wealth count
Tinkering with capital markets, investment signals and wealth taxes will redistribute income, but it will not necessarily redistribute wealth, says Rashbrooke.
“As well as having policies for generating wealth as a country, you also have to have policies for distributing it,” he says.
“That means measures to ensure that people who are actually working on the front lines of companies get a greater share of company revenue, and it means things like higher benefits.
“I would have things like a kid’s KiwiSaver scheme so that every child is having wealth built behind them right from birth, so they enter adulthood with some kind of stake behind them that they can convert long term into housing or retirement income or entrepreneurship.”
The idea of celebrating the super rich is also misleading, he believes.
“If you’re wealthy in New Zealand, you haven’t got rich by yourself. You’ve potentially worked hard – although increasingly you’ve inherited the wealth – but you’ve also driven on roads that are publicly provided, used the health care system, relied on state infrastructure and relied on the state to enforce contracts, provide justice and an educated workforce.”
Rashbrooke rejects the idea that an individual’s level of success is almost entirely a result of their own efforts. He cites a period between 1985 and 2005 when this ideology was most ascendant and income inequality grew quickly.
“When we most vigorously pursued that very individualist, sort of market fundamentalist view of the world, incomes for the entire poorest half in New Zealand went backwards.
“Wealth doesn’t trickle down, if anything, it flows upwards.”
* This story is part of a special RNZ series, [ https://www.rnz.co.nz/rich RICH: The meaning of wealth in Aotearoa]. Over several days, feature interviews by Corin Dann and Anusha Bradley with a diverse range of wealthy and powerful New Zealanders examine attitudes to wealth, ideas for making us a richer country and what to do with money when you have plenty of it.