What could the future of New Zealand look like if we saved more, invested more and put more of our own capital to work here at home? In part two of our conversation with Sam Stubbs, Co-Founder and Managing Director of Simplicity, we explore his vision for a wealthier New Zealand, from KiwiSaver and infrastructure investment to tax, inequality, AI and the need to think beyond the next election cycle.
Could KiwiSaver help fund the future of New Zealand?
For Stubbs, KiwiSaver has the potential to play a much bigger role in the future of New Zealand than simply helping individuals prepare for retirement or buy their first home.
He points to the scale KiwiSaver has already reached, with around 3.5 million New Zealanders having an account. In his view, making KiwiSaver compulsory could create a growing pool of domestic capital that could be invested into New Zealand businesses, housing and infrastructure over the long term.
Simplicity Living provides an example of what that could look like. Stubbs says the organisation has gone from a standing start five years ago to building around 1.3 homes a day, using KiwiSaver and investment fund money without debt.
Scale that idea across infrastructure and he believes hundreds of billions of dollars could eventually be invested by New Zealanders into the infrastructure they use.
The impact, however, wouldn’t necessarily be immediate. Stubbs compares long-term investment to a rising tide: the change may be difficult to notice initially, but over time it can begin lifting the wider economy.
Three ideas for a wealthier New Zealand
When asked what he would change if he were writing a 50-year economic plan for the future of New Zealand, Stubbs outlined three priorities.
The first is changing the tax system. He believes New Zealand should tax income slightly less and capital or wealth slightly more. His argument is that income growth alone may not generate enough tax revenue to maintain the public services the country needs.
Second, he wants to see more domestic investment. That means creating opportunities for New Zealanders’ savings to be invested back into the New Zealand economy, particularly through infrastructure, venture capital and other productive assets.
His third priority is protecting the institutions he believes make New Zealand a desirable place to live. He points to public healthcare, schools, ACC, Pharmac, the Treaty of Waitangi and the Waitangi Tribunal as examples of institutions he believes should be protected from continued erosion.
Behind those three ideas is a relatively simple formula: save more, invest more, produce more, make more, tax more and ultimately have more available to spend on the services New Zealand needs.
Stubbs points to Australia and Singapore as examples of countries where greater levels of savings have helped build significantly larger pools of capital.
Rethinking how New Zealand taxes income and wealth
Tax also plays a major role in Stubbs’ argument around inequality.
He questions whether New Zealand should tax people on lower incomes before they reach what he considers a reasonable income level, particularly because much of that income is spent on consumption and therefore already attracts GST.
At the other end of the spectrum, his concern is that wealthy individuals can earn significantly more than they could reasonably spend. The remaining capital can continue compounding, allowing wealth to become increasingly concentrated.
For Stubbs, the issue isn’t simply how much money people have. It is how financially excluded people feel compared with those around them.
He argues that a society where some people feel they have no realistic opportunity to improve their position creates wider social problems. Creating a wealthier country, therefore, also means ensuring people feel they have a genuine opportunity to participate in that prosperity.
Why short-term thinking could be holding us back
One of the biggest obstacles to long-term change, according to Stubbs, is short-term thinking.
He points to New Zealand’s three-year electoral cycle and the wider attention economy as factors that can make it difficult to focus on policies that may take decades to produce results.
That mentality isn’t limited to politics. Instant access to information, products and services has conditioned people to expect results quickly. But building a business, accumulating wealth or changing an economy rarely works that way.
There will be good days and bad days along the way.
Stubbs believes New Zealand needs to create an environment where people can pursue opportunities while still ensuring the basics are available. It is difficult to tell someone to become a successful entrepreneur, he argues, if they are cold or hungry.
For him, the opportunity lies in combining capitalism’s ability to create wealth with a society that ensures people have the foundations required to participate in it.
Giving Kiwis a reason to be optimistic
Despite the challenges, Stubbs remains optimistic about New Zealand’s long-term prospects.
He believes there is far more entrepreneurial ambition in New Zealand today than when he was younger. Building a business, taking risks and pursuing wealth have become more accepted, creating greater opportunity for a new generation of New Zealanders.
The challenge is ensuring people believe those opportunities are available to them.
Social media can make that harder. Constant exposure to other people’s wealth and success can leave people feeling as though they are falling behind, even when what they are seeing doesn’t reflect everyday reality.
Stubbs says that when he speaks around the country and explains why he believes the next 30 years could be among New Zealand’s best, people respond positively once they can see the reasoning behind that optimism.
Will AI change everything?
Artificial intelligence is another major source of uncertainty about New Zealand’s future, but Stubbs is cautious about assuming the most dramatic predictions will eventuate.
He has heard similar warnings before: computers would remove jobs, spreadsheets would make accountants redundant and online shopping would close physical stores.
Technology has undoubtedly changed industries, but rarely exactly as predicted.
His view is that technology’s short-term impact is often overstated while its long-term impact is understated. He is generally optimistic about AI, while acknowledging that its full impact remains impossible to know.
AI is already changing how consumers make decisions. Stubbs says around 10% of Simplicity’s sign-ups are coming directly from AI, without an intermediary involved.
That creates pressure for businesses to offer genuinely strong products and services, because consumers have increasingly powerful tools to compare what they are buying.
What could the future hold for KiwiSaver?
Stubbs expects KiwiSaver to eventually become compulsory, particularly as more people recognise the impact it can have on personal wealth and the wider economy.
He would also make several other changes.
One idea is to make KiwiSaver compulsory from birth and redirect existing subsidies towards children, with $500 contributed to each child’s account every year. The money would remain invested rather than being available to spend, giving young New Zealanders an early opportunity to see how savings can grow.
From there, he would gradually increase contribution rates.
The result, he argues, would be a much larger pool of New Zealand-owned capital available to invest in housing, infrastructure, private equity and venture capital. That investment could create new businesses, jobs and higher salaries while helping New Zealanders build wealth beyond property.
For Stubbs, the formula ultimately comes back to one starting point: saving.
Key takeaways
- KiwiSaver could become a much larger source of capital for New Zealand housing, infrastructure and businesses.
- Stubbs believes New Zealand should consider taxing income less and capital or wealth more.
- Greater domestic savings could allow more New Zealand money to be invested back into the New Zealand economy.
- Long-term economic progress requires thinking beyond election cycles and the demand for immediate results.
- Reducing inequality isn’t only about wealth itself, but whether people feel they have a genuine opportunity to get ahead.
- Stubbs remains optimistic about AI and believes the short-term impact of new technology is often overstated while its long-term impact is understated.
- Compulsory KiwiSaver and higher contributions could, in his view, help New Zealanders build greater wealth while providing capital for productive investment.
- His economic formula is simple: save more, invest more, produce more, make more, tax more and have more available to spend on the services New Zealand needs.
Next steps
Explore Simplicity’s approach to KiwiSaver, investing and long-term wealth creation here.
Want to hear more from Sam? Listen to Part One of our conversation, where we explore his outlook for New Zealand and what could shape the country’s financial future.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
