Stewart Group
New Year Motivation and Goal Setting for Kiwis: ...

During 2024, I was fortunate to hear an interview some Canadian colleagues had with NYU Professor Scott Galloway.  His direct approach to success and life planning struck a chord with me.

Stewart Group
Crypto: Not a golden ticket

Crypto operates on the greater fool theory. Because it has little real world use currently, investors are buying it on the premise that they will be able to find someone down the line willing to buy it off them – the greater fool, or some optimist who believes they have found their own golden ticket.

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When the Ram Touches the Wall

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Article #473

Picture the young family who’ve saved for years. They pay the builder their deposit, the framing goes up, and then the phone stops being answered. The company’s in liquidation. The director walks away, the guarantee dies with the business, and they’re left with a half-built home and almost no recourse. 

That collapse has a second victim you don’t see – the honest builder down the road who quoted the job properly, priced in his tax, and lost the work to a rival who never intended to pay his way. 

The idea of walking away from your debts is as old as commerce itself. The Romans had a grim phrase, murum aries attigit – the ram has touched the wall. A battering ram was tipped with a heavy bronze or iron ram’s head, and once that head struck the city wall, the defenders could expect no mercy under the customs of war – the siege was over, and quarter was no longer owed. The image was one of a point of no return. Yet modern commerce has inverted that ancient severity. The ram touches the wall, the debts fall due, and the aggressor strolls off to trade next week under a fresh name, the old company left as rubble for the creditors to pick over. 

The numbers tell the story. Over 3,000 companies have gone into liquidation in the past year, leaving company failures at levels not seen for more than a decade. Construction still accounts for the largest share, with 764 liquidations; hospitality remains under pressure too, with 422 failures, up 42%. Inland Revenue is now the applicant behind roughly 70% of winding-up applications, as the leniency of the Covid years gives way to a long overdue reckoning. 

Source: Waterstone Insolvency

Here is the moral hazard. During Covid, the Labour government asked Inland Revenue to go easy, and at the time that was fair and humane. Businesses were shuttered by decree, cash flow evaporated overnight, and a temporary forbearance kept many good firms alive. But leniency without an end date breeds zombie firms – businesses trading on, not paying their GST or their PAYE, quietly undercutting the honest operator who cannot possibly compete with someone who simply isn’t paying their way. Audits went uncompleted for years, enforcement was paused, and the tax owed built quietly in the background like water behind a dam. 

And who ultimately foots that bill? You do. Every dollar of GST and PAYE that a ghost firm never pays is a dollar the honest taxpayer must cover, whether through higher taxes tomorrow or services forgone today. GST, remember, is money the firm has already collected from its customers on the Crown’s behalf; PAYE is money already deducted from its workers’ wages. When a ghost firm fails to hand it over, it has not merely gone broke, it has spent money that was never its own. The zombie firm does not just wound its competitor, it quietly picks the pocket of every citizen who does pay their way. 

The distortion runs deeper than a single lost contract. When a firm can undercut the market by the margin of its unpaid tax, it sets a false price for everyone. Honest competitors are forced to choose between matching an impossible number or losing the work. Some cut corners to survive; some cut their own obligations; a few simply give up. In this way the rot spreads outward from one bad actor, and the market slowly learns that paying your way is a competitive disadvantage. That is precisely the lesson a healthy economy cannot afford to teach. 

I noted one in the list of failed firms that had gone to the wall, having proudly offered a lifetime guarantee on its workmanship. It sounds reassuring, and no doubt it won the firm plenty of work. But a lifetime guarantee is only as good as the lifetime of the company. When the business is gone, so is the promise, and the customer is left holding a worthless piece of paper, or a whispered word gone with the wind. 

The remedy is not cynicism, but vigilance. So the burden falls back on you, the customer, to do your due diligence. It is not the headline price that counts; it is the fine print. As a mentor of mine puts it, pay attention to the fine print: it is far more important than the selling price. So ask the questions. Is your builder a Registered Master Builder? Does the firm carry serious credit accreditation and a clean Centrix credit history? Are they carrying forms of debt they cannot service? These are not rude questions, they are prudent ones, and the reputable operator will welcome them. 

Damien Grant, the principal of insolvency firm Waterstone, sees the same pattern from inside the system. “One of the challenges of doing business in New Zealand is that it is too easy for firms not to pay their PAYE or GST, and they can do so for years before the IRD moves to liquidate them,” he says. “Many of these zombie firms continue on well beyond the point at which they should have ceased trading.” 

The result, he argues, is twofold: honest firms are forced to compete against businesses carrying an unfair tax advantage, and when those businesses finally fail, the unpaid bills and wider economic damage are larger than they needed to be. 

And we close here. When you’re handing over your deposit, or your life savings, the cheapest quote can prove the most expensive decision you ever make. This is where a fiduciary matters – someone whose duty is to tell you the unspoken truth, not to sell you comfort. Do the homework before you sign, because when the ram touches your wall, it is already too late. 

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

References

  1. RNZ, “Last call: 3000 hospitality businesses gone in a year as business feels the crunch”, 1 September 2026. Centrix reported 3,092 company liquidations in the past 12 months, up 14 percent year-on-year, with construction recording 764 liquidations and hospitality recording 422 liquidations, up 42 percent. 

  2. McDonald Vague / LawNews, “Dealing with the spike in IRD-induced business liquidations”, 26 June 2025. McDonald Vague reported that Inland Revenue accounted for seven out of every ten liquidation applications in the referenced period. 

  3. interest.co.nz, “Liquidations are rising, but the real problem isn’t Inland Revenue enforcement”, 18 April 2026. The article reported 365 winding-up applications in the first quarter of 2026, the highest first quarter in a decade, and noted Inland Revenue’s significant role in March 2026 applications. 

  4. Newsroom, “Inland Revenue audit surge is tapping deep, deep well of unpaid tax”, 4 June 2026. Newsroom reported that Inland Revenue’s boosted compliance activity followed a period of Covid-era leniency and that compliance returns remained strong, suggesting persistent tax gaps. 

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The Trains Ran but the Dividends Did Not

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Article #472

In August 1845 the index of British railway shares stood at 1,984. By April 1850 it was 673. [1]

What makes the Railway Mania worth remembering is not that it was a swindle, largely it was not. The technology was real, and what the money built is still there.

Parliament authorised thousands of miles of new line and the network more than tripled by 1850. At the peak, railway construction ran close to seven percent of national income, roughly half of all capital formation in the country. About a third of the authorised lines were never built. The rest ran for a century and a half. [2]

The story was right. The shareholders were still ruined. Clergymen, widows, country solicitors, Charlotte Bronte. People not greedy so much as correct about the future and wrong about the price. Something similar has just finished happening in China.

What China was promised, and what it delivered

Ten years ago, the story almost wrote itself. China would overtake the United States, and its currency would take a seat among the world’s reserve currencies. On 1 October 2016, the renminbi was fast tracked into the IMF’s Special Drawing Rights basket. [3]

The growth half largely came true. China’s economy grew from roughly USD 11 trillion in 2015 to USD 19.63 trillion in 2025, and is expected to cross USD 20 trillion this year. [4] Seventy percent in a decade, off an already enormous base.

The other half did not. It did not overtake the United States, which reached USD 30.77 trillion in 2025, and the IMF has quietly cut its own 2030 projection for China from USD 27.5 trillion to USD 23.1 trillion. [4] [12] Still, anyone who bought the growth story in 2015 was not badly wrong about growth. The mistake was assuming that national growth would translate cleanly into shareholder return.

Source: Statista | Largest economies worldwide 2026

What the shareholders got

For the period to 31 July 2026, the MSCI China Index returned minus 2.13% a year over five years and 4.88% a year over ten. These are net returns, after the withholding tax a foreign investor actually pays. Compounded, the five-year result is a cumulative loss of about 10.2%. [5]

Over the same periods, the MSCI All Country World Index returned 10.85% and 12.32% a year, while emerging markets returned 8.03% and 9.19%. [5] Put simply, a dollar in the world index grew to about USD 1.67. A dollar in China became about USD 0.90.

China did not merely lag the Americans, which is the comparison everyone reaches for. It lagged the emerging world it was supposed to be leading.

Nor is the ten-year figure as flattering as it looks. It was rescued by two strong years at the end.

Explore the full MSCI China Index Factsheet HERE

The middle of the period is where the damage was done. The index fell 21.72% in 2021, 21.93% in 2022 and 11.20% in 2023. [5] Together, those three losing years compounded to a cumulative loss of nearly 46%. A dollar invested at the start of 2021 was worth about USD 0.54 by the end of 2023.

The recoveries of 2024 and 2025, at 19.42% and 31.17%, look handsome in isolation. They are the arithmetic of climbing out of a hole. A 46% fall needs an 85% gain simply to get back to even.

Note what the ride cost. Over those five years, the index carried an annualised standard deviation of 27.89%, against 15.07% for the world index, and a Sharpe ratio of minus 0.08 against 0.53. [5] In plain English, China delivered nearly double the volatility and still a negative return. Investors were not paid for the risk. They paid for it.

An investor who bought at the loudest point fared worse still. The Shanghai Composite peaked at 5,166 on 12 June 2015 and, eleven years on, has not been back. [9]

The currency that never arrived

The reserve-currency promise is the cleaner failure, because it was measurable from the start. In the first quarter of 2026, the renminbi accounted for 1.99% of global foreign exchange reserves, down from 2.18% at the end of 2024 after dipping to 1.92% in the third quarter of 2025. The US dollar sat at 57.13%, and the euro at 20.03%. [6]

The IMF attributes most of the latest uptick to exchange-rate valuation rather than to reserve managers buying, and COFER revises prior quarters as reporting is corrected. [6] The useful reading is the broad trend, not the second decimal place: flat to down across a decade of ambition. Reserve managers proved unwilling to hold a currency they could not move freely.

New Zealand's exposure was in the order book

For New Zealand, the direct investment loss was probably not the main story. Very few New Zealanders held Chinese shares directly. Our exposure arrived through customers rather than the share register, which is harder to rebalance because nobody runs an annual review on their order book.

Wine is the clean example. Shipments to China rose 47% in the year to mid 2025, to $56 million, against total wine exports of $2.10 billion. [7] Volumes are climbing again this year, but prices are falling, with a bulk wine price war running through Marlborough as a record harvest looks for a home. [8]

The saviour story turned out to be champagne without the fizz. The litres arrived. The dollars did not.

The point runs past wine. A grower or packhouse built around one fast-growing market holds a concentrated position as real as any portfolio holding, and far less liquid. Plantings take years to come into production, and cool stores, packing lines and market accreditation are not reallocated over a weekend.

Worse, that exposure correlates with everything else on the balance sheet. Land value, the borrowing secured against it, the labour bill and forward sales all move in the same direction. When the market that was going to take everything decides to pay less, the hit lands everywhere at once.

The order book is the least diversified asset most owners have, and the only one they rarely review as an investment risk. If the business is already a concentrated bet on one market, the owner’s portfolio has no business becoming a second concentrated bet on the same story.

The grain of truth

The other side deserves its best case. Chinese shares are cheap: 14.09 times trailing earnings against 23.24 for the world index, 10.97 times forward earnings against 17.13, and a dividend yield of 2.26% against 1.59%. [5] Shanghai also posted its strongest year since 2020 and touched decade highs in March 2026. [9]

The trouble is that cheapness has been available the whole way down. China traded at a discount for most of the decade, and for much of it the discount widened. That did not stop 2021, or 2022, or 2023. A low multiple is not a floor. It is the market pricing risk, and sometimes it prices that risk correctly.

Nor should the recent strength be mistaken for a full recovery. The rest of the world ran hard over the same stretch, so China has closed no gap, and the five-year number is still negative after it. Selling today solely because of the last five years would repeat the 2015 error in reverse. The direction changes. The mistake does not.

Evidence favours patience. Let the froth settle before committing, like a freshly poured beer you do not drink while it is all head.

The fiduciary question

The plain question is who was telling you the story, and what they were holding while they told it. Growth narratives sell funds, conference tickets and column inches. That is not a conspiracy; it is how incentives work. But none of those people were in your portfolio when the five-year number came in negative.

A fiduciary has the less enjoyable job of saying that a good story and a good investment are not the same thing, and that the gap between them is where most money is lost.

A frog in a well

Sun Tzu put it plainly. A victorious army wins first and then goes to battle, while a defeated army goes to battle first and then looks for the victory. [10] The asset allocation is settled before the market does anything.

Calling economic growth a return does not make it a return.

The trains ran. The dividends did not. Both things were true at once in 1850, and both have been true again.

So before the next irresistible story arrives, seek advice and wise counsel. Remember what Zhuangzi wrote some twenty-three centuries ago: a frog in a well cannot be talked with about the sea, for he is confined to the limits of his hole. [11]

The frog was not wrong about his well. The well was real. It simply was not the ocean.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

References

1. Campbell, G. and Turner, J.D. (2012). Dispelling the Myth of the Naive Investor during the British Railway Mania, 1845-1846. Business History Review, 86(1). Railway share price index at 1,984 in August 1845, falling to 673 by April 1850.

2. Arnold, A.J. and McCartney, S. (2022). Managerial Failure in early Victorian Britain: Network and capital expansion during the Railway Mania. Business History. Network reached 6,621 miles by 1850, tripled since 1844; railway capital formation near 7% of GDP in 1847; about a third of authorised lines never built.

3. International Monetary Fund. Currency Composition of Official Foreign Exchange Reserves (COFER), dataset notes. The renminbi has been separately identified in COFER from 2016Q4, following its inclusion in the Special Drawing Rights basket on 1 October 2016.

4. International Monetary Fund, World Economic Outlook, as compiled by Statista and Worldometer. China nominal GDP of USD 19.63 trillion (2025) and an estimated USD 20.85 trillion (2026); United States USD 30.77 trillion (2025).

5. MSCI (2026). MSCI China Index (USD) Index Factsheet, data as at 31 July 2026. Net returns in USD: MSCI China five year minus 2.13% and ten year 4.88% annualised; MSCI ACWI 10.85% and 12.32%; MSCI Emerging Markets 8.03% and 9.19%. Annual net returns 2021 minus 21.72%, 2022 minus 21.93%, 2023 minus 11.20%, 2024 19.42%, 2025 31.17%. Fundamentals: MSCI China P/E 14.09, forward P/E 10.97, dividend yield 2.26%; MSCI ACWI P/E 23.24, forward P/E 17.13, dividend yield 1.59%. Five year annualised standard deviation 27.89% against 15.07% for MSCI ACWI; five year Sharpe ratio minus 0.08 against 0.53.

6. International Monetary Fund (1 July 2026). IMF Data Brief: Currency Composition of Official Foreign Exchange Reserves, World Aggregates, First Quarter 2026. Renminbi 1.99% (from 1.95% in 2025Q4), US dollar 57.13%, euro 20.03%. Earlier briefs give the renminbi at 2.18% in 2024Q4 and 1.92% in 2025Q3. COFER revises prior quarters as reporting is corrected.

7. New Zealand Winegrowers (2025). Annual Report 2025. Exports to China up 47% to $56 million; total wine exports $2.10 billion.

8. Vino Joy News (July 2026). China's white wine boom has triggered a Marlborough price war.

9. Shanghai Stock Exchange data via CEIC and Trading Economics; Global Times (January 2026) reporting the Shanghai Composite's 18.41% gain in 2025 and its return to decade highs.

10. Sun Tzu, The Art of War, Chapter 4, Tactical Dispositions. Rendered by Thomas Cleary as: a victorious army first wins and then seeks battle; a defeated army first battles and then seeks victory.

11. Zhuangzi, Outer Chapters, The Floods of Autumn (Qiushui), 4th century BCE. James Legge translation: a frog in a well cannot be talked with about the sea, he is confined to the limits of his hole.

12. ChinaPower Project, Center for Strategic and International Studies (2026). Unpacking China's GDP. IMF projection for China in 2030 revised from USD 27.5 trillion (April 2023) to USD 23.1 trillion (April 2025).

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Don't Buy All You Can Borrow

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Article #471

Your parents lied to you.

Not about Santa Claus, or carrots improving your eyesight, or the dog going to live on a farm. About something far more expensive, and something you probably did with a pen in your hand and a banker smiling across a desk.

“Buy the best house you can afford,” they said, somewhere between the roast lamb and the pavlova. “Property always goes up.” They smiled knowingly, the way parents do when they think they have just handed you the map to the treasure.

They handed you a map, alright. To a different kind of buried thing entirely.

There is a peculiarly New Zealand religion around property, and we are its most devoted congregation. We flip through TradeMe listings the way other cultures read scripture, and attend open homes on Saturdays like it is church. We have been raised to believe that the house is the thing. The bigger the better. Stretch for it. The bank will say yes.

And the bank will say yes. That is precisely the problem. Banks are not your parents and they are not your friends. They exist to extract a return from the spread between what they pay for money and what they charge you for it, and are content to lend you every last dollar you can theoretically service. The bank's interest is not your interest. Literally.

Property Always Goes Up

Except when it does not. Cotality data released this month shows that in the second quarter of 2026, 13.1% of New Zealand homes resold at a loss, the highest since 2012, at a median $60,000 below purchase price and $159 million across the quarter. Investors fared worst at 13.5%, against 12.2% for owner-occupiers.[1] In fairness, 86.9% still resold at a gross profit, so this is a slide rather than a rout, and it has come without the mortgagee sales of the global financial crisis.

Source: Cotality | Explore Insights and Report HERE

But the number that matters most for this argument is the hold period. Profitable resales had been owned for a median of 10.4 years, a record high. Loss-making resales, 4.3 years.[1]

That is the whole case in two figures. Time rescues a property purchase, and borrowing to the absolute ceiling is what takes time away from you, because when the rate cycle turns or the premium arrives or the job changes, you sell when you must rather than when you choose. The buffer is not a luxury. The buffer is the hold period.

The counter-case deserves an honest hearing. Property has, over long periods, rewarded those who bought as much as they could as early as they could, while inflation eroded their debt. That is true, and it is also survivorship talking. The three conditions that made maximum leverage work, being falling interest rates, cheap and available insurance, and council rates rising near inflation, have now reversed at once.

The Rate Rollercoaster

Between November 2021 and May 2023 the Reserve Bank lifted the OCR from a record low 0.25% to 5.50%, and by January 2024 the average one-year fixed rate had climbed to 7.5% from 2.58%.[2] Households borrowed to the maximum of their serviceability were suddenly underwater. Rates came down through 2025 as the Bank cut nine times to 2.25%.[3] On 8 July 2026 it raised the OCR for the first time in three years.[4] The cycle is shorter than anyone expected.

Source: www.rbnz.govt.nz/statistics - New residential mortgage standard interest rates

Then Comes the Insurance Bill

House insurance averaged $2,815 in the final quarter of 2025, a 37% jump in three years, and Consumer NZ puts the rise at three times general inflation since 2011.[5,6,7]

Explore the full Consumer Insurance Report HERE

But price is no longer the whole story. Availability is, and that is a different order of problem. A premium is a negotiation. A refusal is a wall. You cannot get a mortgage without insurance, so a house that cannot be insured cannot really be sold. The valuation does not fall because the building changed. It falls because the finance did.

In January 2026 AA Insurance told the Buller District Mayor it would stop issuing new home, business and landlord policies across the postcode covering Westport, Carters Beach and Cape Foulwind.[8] Existing customers could renew. New buyers could not get cover at all. Within weeks it paused new policies in Woodend, citing seismic exposure rather than flood, then declined new business across Blenheim, Renwick and Seddon.[9] Legal commentators call this the beginning of a new kind of insurance retreat.[10] AA Insurance was simply the one that announced it. Others declined quietly.

Closer to Home

In April 2026 it emerged that Tower Insurance was refusing to cover some homes in Parklands Residential Estate, a modern council-owned development near Park Island in Napier. Buyers entering estate addresses into Tower's website were told cover could not be offered, the insurer citing a high risk of flooding from sea surge.[11]

These are new homes, with ground levels the council says were set above significant storm surge scenarios. And yet a major insurer would not touch them. Napier City Council is meanwhile spending $37.4 million on stormwater to protect Te Awa and Maraenui.[12] Public money, directed at a problem an insurer had already priced into its underwriting.

Cyclone Gabrielle caused $2.17 billion in insurance losses across this region, and the review that followed found new housing in areas of known flood risk suggested past lessons had not been learned.[13,14] Nobody mentioned any of this at the open home. Before you sign, enter the address into an insurer's website, read the LIM, and look at the flood hazard maps. That is the due diligence our open-home culture trains us to skip in favour of admiring the benchtops.

And Then There Are Rates

Not mortgage rates. Council rates, which are moving the same way. Stats NZ has local authority rates and payments up 8.8% in the year to March 2026, against headline inflation of 3.1%, and rates were the single largest contributor to that inflation figure.[15] Where water charges are shifting to a separate delivery entity under Local Water Done Well, the number on the rates notice is no longer the number leaving your account.

One More Thing: The Election

Every party to the left of centre now favours taxing property in some form. The differences are of instrument and degree, not direction.

Labour is campaigning on a 28% capital gains tax covering residential investment and commercial property, applying only to gains made after 1 July 2027, with the family home, farms, shares and KiwiSaver exempt. It would replace the bright-line test.[16,18]

The Greens go further, proposing a 2.5% annual super-rich tax on net assets above $10 million per individual, and a Capital Acquisitions Tax charging 33% on inheritances and gifts received above a lifetime threshold of $1 million, with family homes and family farms carved out and the tax paid by the recipient rather than the estate.[17] Opportunity, formerly TOP, proposes a land value tax of 1.75% urban and 0.5% rural.[19]

Te Pāti Māori has not published its 2026 tax policy, so its numbers for this election are not known. The direction is. The party campaigned in 2023 on a wealth tax rising to 8% on net wealth above $10 million, a 2% annual levy on property appreciation and taxes on undeveloped and vacant land, and KPMG counts it among those pressing for structural reform this time round.[16,20] Treat the 2023 figures as history rather than policy until the manifesto lands.

National, ACT and NZ First are not the mirror image of this. Neither proposes new property taxes, and their emphasis is on lower-tax settings and targeted reforms to boost investment.[16] That is closer to holding the current line than reversing it, and the current line is already favourable, with the bright-line test back to two years since July 2024 and full interest deductibility restored from April 2025. Their position is continuity, not a counter-offer.

KPMG notes that a capital gains tax is now the common denominator across the likely alternative government, although Chris Hipkins has ruled out Labour backing a wealth or inheritance tax.[16] None of it is law, and coalition negotiation will decide what any of it looks like. Voters decide on 7 November. But on one side of the House the direction of travel points squarely at property, and on the other it does not move at all.

What the Buffer Actually Buys

Take two buyers on the same street and the same income. One borrows $900,000 against a $1.05 million house. The other borrows $700,000 against an $850,000 house ten minutes further out. At 5.5% over thirty years, the gap in repayments is roughly $1,100 a month.

Nothing separates them while conditions hold. The difference appears when something moves. A one percentage point rise on $900,000 costs about $9,000 a year, against $7,000 on $700,000. A 37% jump in the premium lands on a household that has $1,100 a month of room, or on one that has none. A redundancy is a difficult year for one and a forced sale for the other.

That $200,000 was never really about the house. It was about buying the ability to wait, and the resale data says waiting is the whole game.

The Boring Alternative

Buy less than you can borrow. Keep a buffer. Sleep at night.

The house ten minutes further from the school zone that costs $200,000 less is not a failure. It is a margin of safety, and more to the point it is time. It is the difference between selling at 4.3 years because you have to and holding for 10.4 years because you can. It is the room to fix the roof without going back to the bank, and to stop doing anxious arithmetic at 2am. If you think professional advice is expensive, try using an amateur.

Property can be a wonderful long-term asset. But the best house you can afford is not the best house for you. It is just the biggest risk you were allowed to take.

The bank will tell you what you can borrow, not what you should. For that, seek impartial advice and wise counsel.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

References

1. Cotality - Share of NZ Homes Selling for a Profit Falls to Lowest Level Since 2012. cotality.com/nz, 17 August 2026. https://www.cotality.com/nz/insights/articles/share-of-nz-homes-selling-for-a-profit-falls-to-lowest-level-since-2012

2. Mortgage Express NZ - Is Now the Right Time to Lock in Your Home Loan Rate? mortgage-express.co.nz

3. Canstar NZ - In Which Direction Are Mortgage Interest Rates Headed? canstar.co.nz, June 2026

4. Reserve Bank of New Zealand - Official Cash Rate raised 25 basis points to 2.50%, 8 July 2026. rbnz.govt.nz

5. Quashed - Why Is My House Insurance So Expensive? 2026 NZ Premium Hike Guide. quashed.co.nz

6. Reserve Bank of New Zealand - Insurance Availability and Risk-Based Pricing, Financial Stability Report, May 2024. rbnz.govt.nz

7. Consumer NZ - What's Going On With Home Insurance? consumer.org.nz, February 2026

8. RNZ - Insurer Temporarily Halts New Policies in Westport Due to Flood Risk. rnz.co.nz, 28 January 2026

9. NZ Herald - Major Insurer Declines New Home Insurance Policies for Blenheim. nzherald.co.nz, 3 February 2026

10. Minter Ellison - Insurers Dial Back Flood Risk Exposure: Where Will This Lead? minterellison.co.nz, May 2026

11. 1News - Insurer Flags Sea Surge Risk for Some Napier Estate Properties. 1news.co.nz, April 2026

12. Napier City Council - $37.4M Stormwater Investment Unlocks 400 Homes and Flood Protection for Napier. napier.govt.nz, December 2025

13. Insurance Business NZ - Hawke's Bay Homeowners Face Insurance Woes, Rising Security Risks. insurancebusinessmag.com, November 2024

14. Insurance Business NZ - Hawke's Bay Flood Review Highlights Need for Improved Risk Management. insurancebusinessmag.com, July 2024

15. Stats NZ - Annual Inflation at 3.1 Percent in March 2026: Local Authority Rates and Payments Up 8.8 Percent. stats.govt.nz, April 2026

16. KPMG New Zealand - Summary of 2026 Election Tax Policies. kpmg.com/nz, August 2026

17. 1News - Greens Propose Wealth, Inheritance Taxes to Fund Income Tax Changes. 1news.co.nz, 21 June 2026

18. Buddle Findlay - Labour's Capital Gains Tax: Time to Think Ahead. buddlefindlay.com, 2026

19. The Post - Opportunity Party Reveals Policies on Land Tax, Universal Basic Income and KiwiSaver Reform. thepost.co.nz, May 2026

20. RNZ - Te Pāti Māori Proposes Suite of Changes in New Tax Policies. rnz.co.nz, 27 July 2023. No 2026 tax policy published as at 20 August 2026

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The Mozart Problem and the Bill New Zealand Keeps Refusing to Read

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Article #470

Everything costs more, yet by every measurable standard, we are producing less. Welcome to Baumol's cost disease, with a Wellington twist. 

Picture a string quartet performing Mozart in 1790. Four musicians, half an hour, a finished piece of music. Now picture the same quartet performing the same piece in 2026. Four musicians, half an hour, the same music. 

The output is identical. The cost is not. 

This is Baumol's cost disease - economist William Baumol's 1966 observation that some sectors cannot get more productive no matter how clever you are [1]. You cannot ask the violinists to play twice as fast. Yet they must still be paid enough not to quit and retrain as software engineers. And engineers' wages keep rising because their productivity does. So performing the piece costs more every decade, while the performance itself never changes. 

Baumol's insight was never an argument against paying the violinist. It was a warning about where the money comes from. Rising wages in less productive sectors are affordable only because a productive sector somewhere is generating the surplus to fund them. Pull out the productive sector and the whole arrangement stops being generosity and starts being arithmetic. 

Which brings us to the Wellington twist. We have the disease. We do not have the cure. 

The number that is not moving 

On 1 April, the adult minimum wage rose again, to $23.95 an hour, up 45 cents, a 'moderate' two percent lift the government was quick to call balanced [2]. On the same day, main benefits rose 3.11 percent, indexed to the CPI. New Zealand Superannuation lifted 2.9 percent, indexed to wages. The default KiwiSaver contribution ticked up to 3.5 percent. The living wage moved to $29.90 an hour. The government indexed its obligations, sent out the press releases, and moved on. 

Businesses do not get to index theirs. They just get the obligation, and the bill that comes with it. 

Here is the part nobody in Wellington wants to say out loud. Stats NZ's own figures show multifactor productivity fell 0.9 percent in the year to March 2025 [3]. Labour productivity nudged up 0.8 percent, but only because firms shed workers faster than output dropped [3]. We did not get more productive. We got smaller, slightly less inefficiently. 

Our labour productivity gap with the top half of the OECD has widened from 34 percent in 1996 to roughly 40 percent today [4]. We sit alongside Mexico, Greece and Portugal [5]. Construction is the starkest case of all: the sector is producing at roughly the same rate it managed in 1985 [6]. Four decades of technology, and the shed goes up at the same speed. 

Baumol's violinist was paid out of a surplus the rest of the economy threw off. Ours is paid out of an economy that has stopped producing one. Every April the floor climbs. The output that is meant to fund it goes sideways at best. The gap does not close. It compounds.

Source: NZCBIA Report No 2024-01

California told us how this ends 

In April 2024, California lifted the minimum wage for large fast-food chains from USD 16 to USD 20 an hour: a 25 percent jump and one of the biggest single-sector hikes in American history [7]. The most rigorous peer-reviewed study to date found the sector shed around 18,000 jobs in the first year, roughly a 3.2 percent fall relative to the rest of the country [7]. 

But the more telling story is what came next. Two years on, researchers tracking the same restaurants found the damage had changed shape. Workers kept their jobs but lost hours, lost overtime, and increasingly lost out to a kiosk [8]. One franchise group saw shift work fall by more than 20 percent. Another chain cut labour hours across its outlets by nearly 12 percent [8]. 

The wage floor did not lift those workers so much as quietly saw off the bottom rung of the ladder they were standing on. 

This is not an argument that people should be paid less. It is an observation about what happens when the price of labour is set by decree rather than by what that labour can produce, and about who gets hurt when the two drift apart. It is never the people who set the number. 

What Baumol never saw coming 

For sixty years, cost disease was incurable precisely because you could not automate the quartet. The violinist was safe. So was the waiter, the till operator, the aged-care worker. Their inefficiency was their job security. 

AI is the first technology that credibly threatens that assumption, and it arrives at the exact moment the wage floor is climbing [9]. The jobs most exposed to a rising minimum (entry-level, routine, repeatable) are precisely the jobs AI is coming for first [9]. In California, the same franchises facing the higher wage bill were the ones rolling out ordering kiosks, app ordering and AI drive-throughs fastest.8 Raise the cost of the role and hand the employer a cheaper substitute in the same quarter, and you do not need an economics degree to see which way that goes. 

The 17-year-old looking for a first job is now competing not just with a higher wage bill, but with a piece of software that never calls in sick, never takes a smoko break, and never asks for a raise. 

Slicing versus baking 

Which brings us to November. 

Here is what the election will be about, and what it should be about, and they are not the same thing. 

Every party will campaign on how to slice the pie. Who pays more tax and who pays less. Who gets the transfer, the credit, the exemption. Where the floor should sit and how fast it should rise. It is a rich, noisy, deeply satisfying argument, and it will absorb the entire campaign. 

Almost nobody will campaign on baking a bigger pie. 

Yet the pie is the whole argument. A minimum wage is affordable when output is rising, because there is more to go round and the violinist gets paid out of the surplus. When output is flat, the same policy is not generosity. It is a redistribution of a pie that is not growing, and someone at the margin - usually the least skilled, the youngest, the last hired - pays for it without ever being told they are paying [10]. 

We even had a Productivity Commission. Set up in 2010 at ACT's insistence to ask precisely this question, it drifted - by the end it was inquiring into immigration settings and just transitions, and ACT itself abolished it in 2024, and nobody much mourned [11 The one body built to ask how we bake a bigger pie had spent its final years arguing about slices. That is the country in miniature. 

So here is the question worth putting to whoever knocks on your door between now and 7 November: not what will you lift, but what will you grow? What, specifically, will be more productive in three years than it is today, and how will you know? 

If the reply is a slogan, you have your answer. 

What this means for you 

If you own a business: stress-test your margins against a wage line that rises every April whether or not your revenue does. Automation is no longer an efficiency play. It is defensive. 

If you invest: sectors leaning hardest on minimum-wage labour - hospitality, retail, aged care - carry a structural cost risk that never shows up in a glossy prospectus. Price it in. 

If you are a parent: the entry-level job your kids would once have used to get a foot in the door is the one most at risk. Have a Plan B for how they build experience when the first rung keeps getting sawn off. 

The government can index its obligations every April and move on. Businesses cannot. 

They will tell you a rising tide lifts all boats. They never mention the ones still tied to the wharf. And every April, the tide comes in a little higher. The trouble is, the businesses are anchored, and the school-leavers cannot swim yet.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

References 

  1. Baumol, W. J., and Bowen, W. G., Performing Arts: The Economic Dilemma: A Study of Problems Common to Theater, Opera, Music, and Dance, Twentieth Century Fund, 1966. 

  2. Beehive.govt.nz, Minimum Wage Increase Balances Business and Worker Needs, 12 December 2025; Employment New Zealand, Minimum Wage Is Increasing on 1 April 2026, 9 March 2026. 

  3. Stats NZ, Productivity Statistics: 1978–2025, 23 April 2026. 

  4. BERL, Relooking at Our Productivity Gap, 2024. 

  5. MBIE and MFAT, New Zealand's Productivity in a Changing World: Long-Term Insights Briefing, 17 December 2025. 

  6. Newsroom, Construction Sector Productivity Stuck in '80s, 9 August 2024; Beehive.govt.nz, Construction Sector Productivity the Same as 1985, 9 August 2024. 

  7. Clemens, J., Edwards, O., and Meer, J., “Did California's Fast Food Minimum Wage Reduce Employment?”, NBER Working Paper No. 34033, July 2025. 

  8. Owen, S., Ripley-Rodriguez, E., Jenkins, M., Walsh, S., and Tang, K., Let Them Eat Big Macs, Crunch Wraps, and Whoppers: A Working Paper Describing the Statewide Impact of California's $20 Fast Food Minimum Wage, University of California, Santa Cruz Institute for Social Transformation, November 2025. 

  9. IDC / Deel, AI at Work: The Role of AI in the Global Workforce, November 2025. 

  10. Stats NZ, Unemployment Rate at 5.3 Percent in the September 2025 Quarter, 5 November 2025. 

  11. New Zealand Government, New Zealand Productivity Commission Act Repeal Act 2024, New Zealand Legislation, 2024. 

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We've Seen This SpaceX Movie Before

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Article #469

Last month I warned readers: when the noise gets loud, ignore it; seek advice and wise counsel instead. 

The noise around SpaceX's IPO has been deafening. It priced at USD 135, ripped above USD 225 within days, and briefly made Elon Musk the world's first trillionaire on paper [1]. Then reality hit. 

I said the evidence favours patience. Let the froth settle before committing, like a freshly poured beer; you don't drink it while it's all head. 

Here's how it settled. SpaceX has crashed straight back to Earth through its own listing price. More than USD 1 trillion, around NZD 1.7 trillion, has been wiped from its value. From a June peak of USD 225 it closed at USD 114.92 on 6th August, below even its USD 135 listing price. Musk's paper fortune has fallen by more than USD 500 billion [1] [2] [3]. The company posted a consolidated net loss of USD 4.9 billion last year, swollen by its xAI acquisition, yet trades at more than 100 times sales [2].  

The analysts can’t even agree with one another. Bullish desks pinned targets north of USD 250; HSBC has just opened coverage at USD 115, roughly where it trades; Morningstar reckons fair value sits lower still [2] [3]. When the experts disagree by that margin, you’re not looking at analysis. You’re looking at a story, and stories are priced by mood. 

Around 23,000 Kiwis bought in to SpaceX through Sharesies, mostly in the after-market, well after the smart money had taken its seat [1]. By then, the offer-price allocation had happened offshore and the wild ride from USD 135 to USD 225 (and back) was well underway. Those who felt they were getting in early were, in truth, the exit liquidity for those who actually had. 

To those investors, I would gently say: none of this is new. 

USD 114.92 - SpaceX Closing Share Price on 6th August 2026

Buying for Blue Skies 

Our own market taught this very lesson just over a decade ago. You don’t need a crystal ball; only a memory.  

In 2014, listings came thick and fast. Travel-software firm Serko and measurement-device maker ikeGPS both floated at $1.10. Both quickly traded below their issue price, with ikeGPS down more than 18 percent on debut [4]. As one fund manager astutely put it: the market had been paying for blue sky three months earlier, and simply wasn't paying anymore [4]. The hype had outrun the businesses. Serko, to its credit, later found real success. Yet even now it trades below the heights the froth once implied, proving that even a ‘good’ company bought at a hyped price can still disappoint for years.  

It brings to mind something an old horse trainer once told me: “When they start, they've got the money and I've got the experience; when they leave, I've got their money and they've had the experience.” 

News articles on Serko and ikeGPS in 2014

The Quiet Opposite 

In the same 2014 rush, an old Hawke's Bay apple and logistics business called Scales came to market at $1.60, the very bottom of its indicative range, and had such a subdued debut it too slipped below its offer price in the first few days [5] [6]. No blue sky, no celebrity founders; just apples, coolstores, cargo, with about two-thirds of the business rooted right here in the Bay. Tellingly, the private equity seller kept a 20 percent cornerstone stake rather than bolting for the exit; skin left in the game, not cashed out at the top [6].  

IPOs floated by private equity usually attract scepticism, and the inevitable doubters lined up. They were wrong. Net profit came in some 87 percent above the float forecast, and shares today sit near record highs around $6, several times the issue price [7] The overlooked apple grower quietly outran the blue-sky darlings that had stolen the headlines on listing day. 

What separates the winners from the wreckage is simple: what you are buying, and who is selling and why. When insiders cash out at the peak, you are not the early investor. You are the exit. 

Scales YTD Share Price (December 2025 - August 2026)

The Devil in the Details 

There's a sting in the tail many day-one chasers never see coming. It’s buried in fine print, which as I always say, matters more than the selling price.  

New Zealand has no general capital gains tax, so most assume share profits are tax-free. Alas, not always. A “stag” buys a float purely to flip on the pop. Buy shares mainly to sell them, and Inland Revenue treats the gain as income, taxed at your rate, up to 39 percent. Buy to hold, and the same shares may not be taxed at all. Intention is everything [8]. Many who chased SpaceX bought the after-market and are now underwater. They’re carrying the flipper's tax intention without the flipper's profit, and are unable to offset the loss. 

There's a further wrinkle for anyone with a decent offshore holding. Once your overseas shares pass a cost threshold, proposed to double from NZD 50,000 to NZD 100,000 from the 2026–27 tax year, the foreign investment fund rules can tax a deemed slice of the value each year, whether or not you sold anything [9]. A newer method taxing only realised gains exists, but it is narrow and does not apply to ordinary listed shares like a US-listed SpaceX [9]. These settings are still working through Parliament and turn entirely on your circumstances. None of this is tax advice, but it is exactly the sort of thing you ought to check before you act. 

Choosing Patience over Hype 

Betting on a day-one pop with no real idea what you own is not investing; it is a coin toss with a tax bill. The alternative is not timidity, and the lesson is not anti-technology. High-growth tech can reward the patient, diversified investor handsomely. It is anti-hype. 

A disciplined, evidence-led approach can still be flexible and tactical, positioning around genuine opportunity when the evidence supports it, without chasing froth or mistaking a hyped listing for a considered decision. Scales was the quiet reward for buying a business; the blue-sky floats of Serko and ikeGPS were an expensive lesson in buying a story. SpaceX is that same lesson in a shiny new package. 

There is even a footnote of hope for the burned. Facebook fell more than 50 percent below its 2012 float price within four months, then clawed it all back within about fifteen as earnings caught up. A badly priced float can find a floor and recover in time… but that’s cold comfort to whoever paid top dollar on day one, and certainly no substitute for buying well in the first place [3] 

When the noise gets loud, the best investors don't chase the rocket. They read the audited accounts, understand who is selling and why, and let time and compounding do the work.  

In short: they seek advice and wise counsel. It may behoove others to consider doing the same.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

REFERENCES

1. NZ Herald / Newstalk ZB, "Share crash wipes $1.7 trillion from the value of Elon Musk’s SpaceX, crimps thousands of Kiwi investors" (July 2026) 

2. Yahoo Finance, "SpaceX Stock Just Violently Crashed Below Its Opening-Day Price" (July 2026) 

3. BeInCrypto, "SpaceX Stock Crash Wipes $500 Billion From Musk’s Fortune" (July 2026) 

4. NZ Herald, "ikeGPS plunge may show tech IPO party over" (July 2014) 

5. Scoop / BusinessDesk, "Scales shares edge lower on NZX debut" (25 July 2014) 

6. NZ Herald, "Scales shares set at bottom of range for IPO" (July 2014) 

7. NZ Herald / Direct Capital, "Scales’ Golden Apples"; Stockopedia SCL share data (2026) 

8. Inland Revenue, "Share investments": ird.govt.nz 

9. Inland Revenue Tax Policy, "Foreign investment fund changes" information sheet (May 2026); Budget 2026 FIF threshold proposal 

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Wholesale Investor Rules: Calling a Cat a Fish

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Article #468

Abraham Lincoln liked to ask how many legs a dog has if you count the tail as one. Four, he said: calling the tail a leg doesn’t make it a leg. New Zealand’s wholesale investor rules have spent a decade calling tails legs. Last week a Christchurch courtroom finally counted.

On Friday 24 July the High Court placed six companies in Bernard Whimp’s Chance Voight group into liquidation. Associate Judge Dale Lester found a pattern of obfuscation, incompetence and evasion, an entirely unsustainable model, and a scheme that could only pay existing investors by finding new ones. Founded in 2021, the group had raised more than $54 million from perhaps 230 people to pour into property-based wholesale debt promising returns of 10 to 13 per cent a year. By September 2025 it sat on a negative net asset position of $11.8 million. The evidence, the judge said, was overwhelming.

One detail is almost too good. Whimp asked the court to delay the hearing until he could unlock money from his late father’s estate, which, he said, would in turn fund a $110 million land development. The judge was unmoved, calling the request a microcosm of how the whole group had been run. Quite. You cannot conjure a solvent business from a deceased estate any more than you can pull a rabbit from an empty hat, though plenty have tried. Meanwhile a related Whimp entity had drawn some $9.2 million in “management fees”, around 24 per cent of all money invested, even as the group booked a $5.5 million trading loss in a single half-year. Fees, in other words, for failure.

Here is what should trouble every reader. Chance Voight’s investors were, in the main, aged 65 and over, and the first liquidators’ report found many had only a limited grasp of the risks. Yet each had been certified a “wholesale” investor: sophisticated enough, in law, to need no protection at all.

You can call a cat a fish, but you can’t teach it to swim.

The mechanism is simple. The Financial Markets Conduct Act lets companies raise money without disclosure, licensing or supervision, provided the investors are wholesale. Under the “eligible investor” rule, anyone can claim that badge so long as a financial adviser, chartered accountant or lawyer signs to agree. Tick the box, and every retail protection evaporates. And this was no discreet, professional affair: the court noted Chance Voight was marketed in regional and local newspapers, on Facebook and at in-person promotional events, the mass channels of the retail world, not the closed room of the true professional.

A long process for a too-low bar 

The regulator has been uneasy for years. When the FMA took a test case to force issuers to verify the investors sent their way, it lost: Justice Fitzgerald found the permissive regime was a feature of the law, not a bug. But she put her finger on the fault. The problem, she observed, was not so much the content of the certificates as that certificates with patently defective grounds, or none at all, were being confirmed regardless. It is the confirmation process that is falling down; and if it cannot protect investors, the balance struck in the legislation may need resetting, a matter, she said, for Parliament and not the court.

That was the judiciary handing the problem to the politicians. This month, at last, they picked it up. Commerce Minister Cameron Brewer has released an MBIE consultation, part two of the plan to lift our capital markets, that concedes what advisers have muttered for years: our settings are an international outlier, “unique” and “relatively permissive,” with “some evidence” that inexperienced investors are getting into wholesale offers. Its options read like a reply to Fitzgerald: a more objective eligibility test, a cap on how much an eligible investor can put at risk, a requirement that applicants take independent financial advice, restrictions on wholesale advertising, and, squarely, real onus on the professional confirmer, with an infringement offence for inadequate certifications.

Click above to read more on Wholesale Investors from the Financial Markets Authority

What still needs attention 

Those are the right levers, and they should be pulled. None of this is an argument for tearing the regime down. Genuine sophisticated investors exist, and raising capital from them without the full disclosure burden is a legitimate and valuable part of a working market. MBIE rightly notes that certificates lasting only two years already make life needlessly costly for real professionals. The point is narrower. The bar has been set too low, left to rot, and waved through by people with every incentive not to look too closely. Consider that none of the thresholds, $5 million in net assets, a million-dollar investment history, a $750,000 minimum subscription, has been adjusted for inflation since the Act took effect in 2013. Thirteen years of asset-price growth, house prices above all, has done the widening for Parliament: the same numbers now capture people they were never meant to reach. The bar did not get more generous; the country simply ran up more nominal dollars against a line that never moved. Last year the FMA referred 22 accountants and eight lawyers to their professional bodies over the misuse of these very certificates.

Two gaps deserve more than the paper gives them.

The first is the advice layer. A retail adviser must put the client’s interests first and prove a recommendation is suitable: goals, cash flow and appetite for risk, all understood and documented, the file running to fifty pages. A wholesale-only adviser owes a bare statutory duty to give priority to the client’s interests, but needs no FMA licence, follows no Code of Professional Conduct, and never has to establish that the advice was suitable. The relationship can be purely transactional: take the $5 million, place it in a syndicate, move on. If you think professional advice is expensive, try the amateur variety.

The second is the Crown’s own hand. Of the roughly 70 managed funds on Invest NZ’s “acceptable” list for Active Investor Plus migrants, against nearly $1.5 billion of committed capital, all but a handful are wholesale, and few are household names. Invest NZ’s own disclaimer states that inclusion is not an endorsement or recommendation by it or the Government. We invite wealthy newcomers to make this country home, steer them onto a state-curated list, then wash our hands of what follows. All care, no responsibility. A wealthy migrant, a surgeon, a farmer, someone who simply inherited well, may know nothing of geared, illiquid property debt, yet is stamped “wholesale” on a net-asset figure alone. Funds on a Crown list should answer to retail-grade disclosure, not hide behind the wholesale tag.

Underneath it all sits a regulator half in the dark. The IMF warned back in 2017 that there was insufficient data to assess the risks in our wholesale sector; nine years on, the FMA has admitted it still has very little sense of the size, structure or practices of that market. You cannot police what you have never measured.

Two centuries ago the little port of Kōrorareka, on the same Bay of Islands coast that cradled New Zealand’s first capital, was infamous as the Hell Hole of the Pacific, a settlement beyond the reach of any law. We renamed it Russell, gentrified it, and told ourselves the lawlessness was history. But a regime that lets an operator gather tens of millions from retirees on a one-page certificate nobody properly checks, through advisers who owe them little and a regulator the courts say owes them nothing, has not left the frontier behind. One judge has wound the companies up. Another has told Parliament what to fix. Submissions close on 25 August. Make sure the reform closes the loophole, rather than merely repaints the saloon.*

* Stewart Group does not provide advice to investors under the wholesale investor rules. We took that decision years ago, in the view that all investors deserve full disclosure and a fiduciary relationship. 

Further Reading: For those interested in the wholesale investor discussion, this guide provides a practical overview of the key differences between retail and wholesale investors, including eligibility criteria, investor protections and regulatory requirements.

REFERENCE GUIDE

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

REFERENCES

1. “Court slams Whimp entities into liquidation; Kerr bankrupted in the UK.” David Chaplin, Investment News NZ, 26 July 2026.

2. “‘Unsustainable’ Chance Voight companies put into liquidation.” NBR, 24 July 2026 — judgment of Associate Judge Dale Lester; Teneo’s John Fisk, Lara Bennett and Malcolm Hollis appointed liquidators; comments of FMA enforcement head Margot Gatland.

3. David Chaplin, “Wholesale investment: there’s a hole in the market.” BusinessDesk, 21 July 2026.

4. “Government looking at wholesale investor loophole.” Good Returns, 17 July 2026; “Government seeks feedback on loophole exposing unsavvy investors to risky deals.” NZ Herald, July 2026.

5. Ministry of Business, Innovation and Employment, capital markets reform discussion paper (part two), July 2026. Submissions close 25 August 2026.

6. First interim liquidators’ report on the Chance Voight group (PwC), 2026 — investor age profile and limited risk understanding; “management fees” of $9.2m, some 24% of funds invested; $5.5m half-year trading loss; negative net assets of $11.8m at 30 September 2025.

7. Financial Markets Authority, [2025] NZHC 2723 — judgment of Fitzgerald J (18 September 2025) on the confirmation process and the balance struck in the legislation.

8. Financial Markets Authority — referral of 22 accountants and eight lawyers to their professional bodies over misuse of eligible investor certificates.

9. International Monetary Fund, Financial Sector Assessment Programme, New Zealand, 2017; FMA review of custody arrangements, 2026.

10. Invest New Zealand / Immigration New Zealand, Active Investor Plus visa: list of acceptable managed investment schemes and non-endorsement disclaimer.

11. Financial Markets Conduct Act 2013, Part 3 and Schedule 1.

12. “Kōrorareka — the Hell Hole of the Pacific.” Te Ara / NZ History, Ministry for Culture and Heritage.

Wise Counsel of a Palliative Care Nurse: Living an Authentic Life

Article #467

Australian palliative care nurse Bronnie Ware spent eight years at the bedside of the dying, sitting with people through the last weeks of their lives. She recorded what she heard; first in a 2009 blog post, later in a book read by millions in more than 30 languages. The most common regret? "I wish I'd had the courage to live a life true to myself, not the life others expected of me."

As someone who has spent decades stewarding Hawke's Bay families through business succession and long-term planning, it’s a familiar refrain. We build empires of assets, careers and obligations, and somewhere along the way we drift from the authentic life we once envisioned.

The dying don't speak of missed promotions, bigger houses or the perfect investment return. They speak of roads not taken because they followed someone else's script - years spent chasing approval from parents, peers and society, or the expectations that attach themselves to a "successful" professional life. In our community and line of work, that pressure is real. Family businesses carry generational weight. Clients arrive burdened with keeping up appearances, maintaining the farm, the firm, or the lifestyle their circle demands.

Ware had a patient called Grace. Grace felt pressured to remain in an unhappy marriage; when freedom finally arrived, terminal illness arrived with it. She regretted not finding the courage sooner. It’s not so different to tales of the local farmer who poured decades into the land his father expected him to inherit, and never pursued the enterprise he truly dreamed of. Authenticity isn't rebellion for its own sake. It is the quiet courage to choose what endures.

Ware’s patients often realised too late that even close family members had little idea of their innermost dreams. The same disconnect can appear in professional relationships. Many assume their advisers fully understand their plans and values – typically, that isn't the case. It’s one thing to know a client's balance sheet, and quite another to know what they are building it for.

“I wish I hadn’t worked so hard.”

According to Ware, this second came from every male patient she nursed. They missed their children's youth and their partner's companionship. We tell ourselves the long hours are for the family, the security, the future. Yet when time is running low, we realise time itself is the one asset we cannot replenish or reallocate.

Here in Hawke's Bay – after cyclones, economic pressures and rates burdens – many of us have doubled down on work as a form of control. But true stewardship requires balance. Succession planning isn't as simple as handing over the keys. It's ensuring the next generation inherits not just wealth, but the example of a life well-lived. My own son’s interest in commerce is encouraging, yet he needs space to find his own path, including time overseas, before stepping into any role. The same goes for our daughter as she gains independence.

"I wish I'd had the courage to express my feelings."

Many of Ware’s patients had suppressed their feelings simply to keep the peace, settling for an existence they didn’t love as a result. In family enterprises and marriages alike, unspoken truths fester. Those who found peace reconciled old hurts while there was still time. The same holds in teams, partnerships and advisory relationships: address misalignments early, not once the damage is done.

“Friends slip away.”

Ware recalled a patient called Doris, all alone in a nursing home with her daughter living far away. Ware tracked down an old friend and arranged a phone call - it lifted Doris's spirits in her final days. Busy lives and distance make friendship easy to neglect, yet old mates anchor us. In our Scottish-heritage household, with its Royal Stewart tartan, we see the value of connection. The same applies in business: relationships built on trust and shared values outlast any transactional deal.

“I wish that I had let myself be happier.”

Happiness wasn't something that happened to them; it was a choice they postponed, waiting for the perfect conditions - retirement, the next milestone, the kids leaving home - only to find joy lives in ordinary moments and the gratitude for health while it lasts. As one of the sayings I live by puts it: if you think wellness is expensive, try illness.

It's amazing how many people can tell you the market numbers and bond ratings, but can't tell you their cholesterol or their calcium heart score.

The lessons we can apply in financial planning

This aligns with what we observe in sound financial planning. The best portfolios aren't those chasing the highest returns at all costs, but those built on disciplined, values-aligned decisions that weather volatility. The same holds for a life. Authenticity compounds. When your daily actions reflect your core beliefs around integrity, family, community, stewardship - regret finds little room to grow. Decisions get easier.

We are, ultimately, in the goal-achievement business. What use is beating the market if you achieve none of your goals?

None of this means abandoning responsibility. It’s quite the opposite: living authentically demands discipline. It requires clear priorities, the courage to say no, and planning for money and time to serve your goals rather than dictating them. It means protecting family time as fiercely as you protect the balance sheet – and mentoring the next generation not just in business acumen, but in character.

If someone in your advisory circle doesn't gel with your plans and values, it's okay to stop the bus and let them off. There's always another person who shares your vision and will carry it forward. I could sit comfortably and avoid telling clients what they don't want to hear, but that isn't the job. Our fiduciary responsibility is to lead, and to speak the unspoken truth.

As we navigate an uncertain world - policy shifts, economic headwinds, rates and infrastructure - the palliative nurse's counsel offers a north star. Build wealth, yes. Grow the enterprise, absolutely. But never at the expense of the life you were meant to lead.

The good news is we don't need a terminal diagnosis to change course. Start today. Revisit what truly matters to you and your whānau. Have you ever had a genuinely authentic discussion with your advisers - one about your values, not just your numbers? Surround yourself with like-minded folk who will carry your ideals forward long after you've gone: trusted trustees, key team members and professional stewards who understand the bigger picture.

In the end, true success isn't measured in dollars or status. It's measured in a life lived true to yourself - with courage, presence and heart. Often, Ward’s patients understood this only when it was too late. The living can seek wise counsel while they still have the time to act on it.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

REFERENCES

  • Bronnie Ware, The Top Five Regrets of the Dying: A Life Transformed by the Dearly Departing (2011); originally the 2009 blog post "Regrets of the Dying," bronnieware.com

  • The Top Five Regrets of the Dying review, National Center for Biotechnology Information (PMC), pmc.ncbi.nlm.nih.gov

  • "No Regrets" interview with Bronnie Ware, Mindful, mindful.org

  • Shortform book guide, The Top Five Regrets of the Dying, shortform.com

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When the Process Becomes the Cover

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Article #466

Two stories crossed my desk last month, half a world apart, joined by the same affliction: institutions so wedded to their own process that they lose sight of the people it should serve, and then reach for that process as a shield. The pattern is worth naming, because it is far more common than outright wrongdoing and far harder to spot. Nobody sets out to fail. They simply follow the steps, tick the boxes, and assume the machine will catch what they did not.

Our first story comes courtesy of former MP Rick Barker. Starbucks South Korea launched a promotion for “Tank Day” on 18 May, the anniversary of the 1980 Gwangju massacre, when the military rolled tanks over pro-democracy protesters and killed hundreds [1].

It did not land well.

The Korea CEO was sacked and weekly sales fell more than a quarter [2]. What makes the episode instructive is not that a mistake was made, but how it was made. Reports suggest the marketing team asked an AI tool for suggestions, the approving officials never opened the design file, and the legal review was skipped entirely [3]. Every gate that should have stopped it was either delegated or waved through. Not malice, but blindness – the particular blindness of people who trusted the process to do their looking for them.

In story two, we return to Hastings. Council consulted on an Annual Plan offering a 5.9 or 9.1 percent rates rise, and businesses across the district budgeted accordingly [4]. Then Quotable Value’s revaluation landed. Commercial and industrial land values had risen sharply while residential values fell close to 20 percent. Because rates are apportioned by property value, that swing shifted a far larger share of the burden onto commercial owners – not through any decision to target them, but as an automatic consequence of the arithmetic. One inner-city operator told the Herald his rates were jumping almost 30 percent, a rise he believed could end his business [4]. The certified figures arrived only two working days before submissions closed, creating an extremely limited window for the very people most affected to respond.

The official line was that Council did not have the numbers until early May. Under questioning, that account became more complicated. The mayor acknowledged she had received an indication that there could be a significant shift [5]. A councillor has since stated that officers held a pre-audit valuation report in February and March showing commercial values rising and residential values falling, yet ratepayers were given no warning [6]. The distinction matters. There is a difference between not having a certified, audited, signed-off figure and having no idea at all which way the wind was blowing.

That admission raises a fair question: whether earlier, plainer communication could have helped affected ratepayers prepare, even without the final numbers in hand. You do not need certified figures to the last decimal to tell a café owner a storm may be coming. Not knowing the final number is not the same as knowing nothing. A warning that a material shift was likely – caveated, provisional, honest about its uncertainty – would have cost the Council nothing and given businesses time to plan, to model their exposure, to organise a considered submission rather than a scramble.

Then, after a second round of consultation and 233 submissions seeking relief, Council retained the differentials in full and deferred the rating review to the 2027 Long Term Plan [7]. A pause on the Hastings CBD targeted rate was offered as the consolation; Havelock North businesses did not receive the same relief [7]. And the decision was posted immediately before a long weekend – a timing that, whatever the intention behind it, did little to foster the perception of an open and confident process. Institutions that are proud of a decision tend to announce it in daylight.

With amalgamation now looming [8], the deferral carries a further risk. A review pushed out to a future Long Term Plan may ultimately be inherited by an entity that never made the promise. A commitment made by one council to revisit its rating approach is only as durable as that council; restructure the furniture and the promise can quietly fall down the back of it.

There was, it turns out, an alternative on the table. A councillor had proposed a different differential before consultation opened, one that eased the commercial burden while nudging the rural villages toward parity. He and four colleagues voted against the status quo; ten voted to retain it. His alternative could not proceed, he says, because the modelling had not been completed [6]. Whatever the merits of his particular proposal, the sequence is telling: an option existed, and the process – not a debate on its substance – was the reason it went no further. When process appears to foreclose the consideration of alternatives rather than enable it, confidence in the process itself begins to suffer.

Let me be clear about what this is and is not. The rates were never the real issue. Revaluations happen; they are an independent statutory exercise the Council does not control, and this one at least spared many households the worst by loading the swing onto commercial property instead. The more significant issue is confidence in the process that surrounds the numbers: whether people were given timely information, whether options were genuinely explored, and whether the concerns of those affected received meaningful consideration before the die was cast.

Starbucks lost a quarter of its sales because nobody thought to examine the impact of what they were about to do. Hastings’ ratepayers risk losing something slower to rebuild: the confidence that important information will be shared with them while there is still time to act on it. Trust is the one asset a council cannot borrow against. It does not appear on any balance sheet, it cannot be levied, and once it is spent it cannot be refinanced.

As Hawke’s Bay considers significant structural change through possible amalgamation, the lesson extends well beyond one year’s rates. Public institutions do not earn trust because every decision they make is popular – that is an impossible standard and not a sensible one. They earn it when people feel informed, heard and treated fairly throughout the process, win or lose. Consultation, transparency and candour are not administrative box-ticking to be completed and filed; they are the foundation upon which public confidence actually rests. Once that confidence begins to erode, rebuilding it is far harder, and far more expensive, than preserving it in the first place. That is a lesson worth learning before the machinery of local government is rebuilt, not after.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

REFERENCES

  1. “Starbucks Apologizes After Ad Campaign Evokes Massacre,” Associated Press, May 2026; Branding in Asia, “Shinsegae Chairman Issues Apology Over Starbucks Korea ‘Tank Day’ Campaign,” May 2026.

  2. “Starbucks’ Korea sales plunge after Tank Day marketing backlash,” Reuters, May 2026; CEO Sohn Jeong-hyun dismissed per CNN.

  3. “Foreign Media Spotlight Starbucks Korea’s ‘Tank Day’ Backlash and Sales Plunge,” Seoul Economic Daily / Yonhap, 27 May 2026.

  4. “Hastings business says rate hike of almost 30% could end them, mayor ‘beyond livid’ with situation,” NZ Herald / Hawke’s Bay Today, June 2026.

  5. Public meeting convened by the Hastings and Havelock North Business Associations, 4 June 2026.

  6. Cr Steve Gibson, public statement on the 2026/27 Annual Plan decision, July 2026: pre-audit valuation report in February/March, 25–75 percent impact estimate, alternative rating differential proposal, and 10–5 vote to retain the existing differentials. Facebook.

  7. “Council adopts 2026/27 Annual Plan,” Hastings District Council, July 2026 (differentials retained; rating review deferred to the 2027 Long Term Plan; Hastings CBD targeted rate pause).

  8. “Majority of Hawke’s Bay submitters favour amalgamation into one council,” Hawke’s Bay Today, 14 July 2026.

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The Walls That Fall: What Hadrian Teaches Us about a Financial Plan

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Article #465

Hadrian's Wall has fascinated me since I was a kid. As you read this, I will have just finished cycling part of it with my family and a good friend who’s also a client.

It’s the kind of trip where you spend your evenings in a pub working out the next day's ride, and your days quietly humbled by what people built two thousand years ago. I've been reading up on the wall for months, as one does before such a trip. And - hazard of the job - the more I read, more I noticed a story that financial advisers, and the people who rely on them, should pay attention to.

The Wall, as it stood

Hadrian's Wall was begun in AD 122 under the emperor of the same name. It ran 73 miles coast to coast, from Wallsend on the River Tyne in the east to Bowness-on-Solway in the west. Around 15 feet high, originally 10 feet thick (later narrowed to 8 in places to speed construction), fronted by a wide ditch, with a fortlet known as a milecastle every Roman mile, and two observation turrets in between each one. It took the legions roughly six years to build, and it was manned in some form for nearly three centuries.

To put the scale of it in New Zealand terms: Picture a stone wall from Tauranga to Raglan. Every mile of it manned, every milecastle stocked, every turret garrisoned, around the clock. Then think about how hard it has proved in modern times to commit to a second Auckland Harbour crossing. Decades of debate, billions in costings, and we still haven't put a spade in the ground for what is essentially a few kilometres of road and tunnel.

The Romans put up that wall in six years and manned it for nearly three centuries. The quantum of capital, the legionary labour, the supply lines, the stone, the timber, the ongoing garrison: it boggles the mind. It was the state of the art. The frontier, literally and figuratively, of what was possible.

But, that’s not the part I found most instructive. This is.

The upgrade that didn't hold

When Hadrian died in AD 138, his successor Antoninus Pius made a different call.

He decided the wall wasn't enough, or wasn't far enough north, and he pushed the frontier deeper into what is now central Scotland. He ordered a new wall built between the Firth of Forth and the Clyde, on the orders of his governor Quintus Lollius Urbicus. The Antonine Wall, as we now call it, was 39 miles of turf on a stone base. It had 16 forts and a road called the Military Way running behind it. It was the next-generation solution. The bold reposition. The upgrade.

It was also abandoned within about a generation.

The legions pulled back to Hadrian's Wall. The Antonine Wall, the most ambitious frontier project of its day, became a curiosity in the Scottish landscape.

Two of the most expensive military engineering projects of the ancient world. Both built by the best engineers of their age. Both, in their way, overtaken by circumstance. We use neither Antionine nor Hadrian’s Wall in this modern age. We don’t need to.

The parallel

Reading about this, I couldn’t help but think of when I sit down with people who tell me their financial plan is bulletproof.

The plan is usually built around a single conviction. A favoured stock that has done well for the last decade. A fund the adviser recommended at a long lunch in 2019. A single asset class, often residential property, sometimes a concentrated equity portfolio. The numbers add up on a spreadsheet. The projections look tidy. The client signs off and feels secure.

It’s state of the art... for its day.

The trouble is that any day eventually ends. Markets shift, and they shift in ways that are obvious only in hindsight. Sectors that looked unassailable five years ago are nursing real wounds now.

The growing effectiveness of AI is reshaping how per-seat software businesses get valued, because if one person and an agent can do the work of nine, the per-seat model starts looking thin. GLP-1 drugs are reshaping assumptions about big pharma earnings. The post-Covid environment has changed everything from vaccination rates to office occupancy to commodity flows. Plenty of concentrated bets that looked clever in 2021 are no longer looking quite so clever in 2026.

The wall that was bold and bulletproof becomes a museum piece, and very often the people standing inside it are the last to notice.

What the Romans got right and what they got wrong

The Romans weren't stupid. They were the best engineers of their age, and Hadrian's Wall is, in its own right, an extraordinary achievement. It didn't fail because the design was poor. It became irrelevant because the world around it changed: the politics of Rome, threats to the Empire, economics. The circumstances that called for the Wall no longer existed.

Walls, by their nature, do not change.

Plans, by their nature, should.

This is the thing I keep coming back to: A good financial plan isn't a wall. It's a garrison. It must be broadly spread, regularly reviewed, regularly rotated, grounded in the evidence rather than in one manager's conviction about the next big thing. The factors that drove returns in the last cycle are not the factors that will drive them in the next. Tax settings, the regulatory landscape your family, your goals – the world changes with time. A plan that doesn't change with them isn't a plan; it's a monument, and a fairly expensive one at that.

For savvy investors, the discipline isn't picking the right wall once. It's seeking wise counsel often enough that you notice when the frontier has shifted, and you can adjust before you find yourself defending ground that no longer matters.

This is also why we are an evidence-based firm. We don't try to pick the next winning stock or guess which active manager will sit in the top quartile in five years' time, because the academic record on that is settled and it isn't kind. Most active managers don't beat their benchmark over long periods. The few who do can't reliably be picked in advance. The path that has actually compounded for clients over the decades is something far less glamorous: broad diversification, disciplined exposure to the factors that drive long-term returns, low costs, and the patience to stay the course. We use Dimensional funds for that reason. The foundation is fifty years of academic research, not someone's conviction about the next big thing.

In practice, the work is unglamorous. It's an annual review with hard questions of last year's plan. It's rebalancing when a position has run further than the strategy intended. It's saying no to the new shiny thing because it doesn't fit the wider picture. It's sitting down again when life changes, because the plan needs to change with it. None of it makes a great story at a barbecue. All of it compounds quietly, and it is the whole point.

Fifty years in

So I've been out there this week, marking my 50th; watching the moors roll past and thinking about the Roman soldiers who walked that wall for 300 years and the ones who walked away from the Antonine Wall after thirty. And thinking, with gratitude, about the clients we've walked alongside over the years. The conversations that have moved plans forward, the times we've changed direction together, and the times we've held firm.

The world keeps moving. The job is to move with it, thoughtfully, with discipline, and with help.

Here's to the next fifty.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

  • We do not hold or advise on any private credit or private equity investments.

REFERENCES

  1. English Heritage, "History of Hadrian's Wall", english-heritage.org.uk

  2. Britannica, "Hadrian's Wall" and "Antonine Wall" entries, britannica.com

  3. Historic Environment Scotland, "Antonine Wall", historicenvironment.scot

  4. North East Museums (Segedunum Roman Fort), "The building and development of Hadrian's Wall", northeastmuseums.org.uk

  5. World History Encyclopedia, "Hadrian's Wall" and "Antonine Wall", worldhistory.org

  6. UNESCO World Heritage listings, Frontiers of the Roman Empire (Hadrian's Wall designated 1987; Antonine Wall designated 2008)

  7. Bede, Ecclesiastical History of the English People (8th century), early historical description of Hadrian's Wall as "eight feet in breadth, and twelve in height"

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Scotland the Brave - The Darien Scheme That Worked

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Feature Article

 

A Canny View reader asked an excellent question after last month's column: what was the alternative? What would have happened if the Darien project had been successful?

Whilst I don't hold myself out to be a historian, I do find alternative history enjoyable reading, with its endless what-ifs.

Last month's piece (If you missed it, read here) took up Scotland's catastrophic 1698 bet on a trading colony in Panama, the one that bankrupted the nation and led, within a decade, to its loss of sovereignty to England. The lesson, plainly, was about concentration risk: bet a fifth of your wealth on one thing, and you had better be ready for the day it doesn't work.

But what if it had worked? Indulge me a moment.

It is 1698. William Paterson's vision holds. Disease is mastered through better drainage and stricter quarantine. The Spanish, having sized up Caledonia's defences, choose negotiation over assault. The English, sensing they cannot beat the Scots to the Isthmus, partner instead of obstruct.

Within a decade, Caledonia is the trading hub of the Americas. Goods from Canton and Manila are landed on the Atlantic side, hauled across a few miles of jungle, and reloaded onto ships bound for Edinburgh and Amsterdam. The Company of Scotland pays a 40% dividend in 1710. It pays one again in 1715.

Scotland enters the 18th century rich. There is no bankruptcy. No loss of sovereignty. Edinburgh, not London, becomes northern Europe's financial centre. Adam Smith, born in 1723, writes The Wealth of Nations in a country that does not need to borrow England's economic theory; it has its own.

The story doesn't stop there. The Acts of Union, in our real history, were the price Scotland paid for the Darien bankruptcy. Take the bankruptcy away, and the union never happens. So when Queen Anne dies in 1714 and the English Parliament invites George of Hanover to take the throne, the Scottish Parliament is free to make its own choice, and reaffirms the Stuart line. James Francis Edward becomes James VIII of Scotland. His son Charles Edward never has to invade in 1745, because his father is already sitting in Edinburgh.

Which means no Battle of Culloden in 1746. No Disarming Act. No proscription of Highland dress, no systematic dismantling of clan structures. Which means no Highland Clearances. Which means the great Scottish diaspora of the 19th century, the one that founded Dunedin in 1848 and put Scottish names on half the farms in Hawke's Bay, never happens, or happens at a fraction of the scale.

A successful Darien does not just save Scotland's sovereignty. It rewrites the demographic map of New Zealand.

And by the late 19th century, when the world's powers turn their attention to cutting a canal through the Isthmus, the Scots have been there for two hundred years. They have the local knowledge, the capital, and the political will. The canal opens, somewhere between 1890 and 1905, under Scottish ownership. One of the world's great chokepoints, the gate between the Atlantic and the Pacific, is not American. It is Scottish.

Speaking for myself, I highly doubt either my maternal or paternal ancestors would have made the journey from Perthshire, Scotland.

Paterson gets a statue on Princes Street. And every Scot who didn't subscribe is haunted, for the rest of their life, by what they missed.

This is the harder lesson.

The bet that pays off gets remembered as vision. The same bet that fails gets remembered as folly. The two bets were identical.

Imagine two funds in 2020. Both concentrate. Both bet on a small basket of high-conviction names. Five years later, one is celebrated as a genius and the other is torn apart in print. The portfolios looked identical at the start. The strategies were the same. What differed was which way the dice landed.

This is survivorship bias, and it is the great mischief-maker of finance. We study Buffett, not the thousand value managers who concentrated and lost. We celebrate the founder who bet the company and won, not the ten who bet and quietly disappeared. The lesson taught is that conviction beats prudence. The lesson untaught is that survival beats both.

When concentration works, you don't learn the right thing. You learn that the rules don't apply to you, and you bet bigger next time. The next Darien is always larger than the last.

What does this mean for a Canny investor at the kitchen table?

It means diversification is not, as the fund manager class sometimes implies, a strategy for the meek. It is the structure that lets you stay in the game on the day the dice land wrong. And sooner or later, they will.

The business owner whose company is 80% of their wealth is not bold; they are exposed. The retiree leveraged into a single Hawke's Bay property is not bold; they are exposed. The investor who has refused to trim a winner that now dominates the portfolio is not bold; they have simply been right so far. That is all.

The Scots who didn't subscribe in 1698 missed a fortune in the world I just imagined. In the world we actually got, they kept theirs.

Across enough rolls of the dice, the second outcome is the one that matters. The first is the one you read about.

We always enjoy the dialogue with our Canny View followers, so please keep up the great feedback, and we'll do our best to accommodate.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

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Turning Fifty: The Inflection Point

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Article #464

I turned 50 on the second of July. That includes nearly 30 in the workforce, 26 years as a financial adviser, 20 as a husband and 18 as a father. Do the maths and I'm roughly two-thirds through my optimal earning window, if we call 65 the end of the innings. It’s made me stop and do the thing I always ask of clients: take an honest look at where I am now, and where the next 15 years are heading.

Most of us never think about the shape of our earning life, but it follows a pattern. The 20s are for learning a trade, finding your feet in a profession, perhaps marrying, often still paying off the student loan. The 30s bring children, a mortgage and the long grind of deepening a career. By the 40s the income finally lifts and a little pressure comes off. Then the 50s and 60s arrive, and many people start thinking about the golden years to come. Here’s the rub: a fit and healthy 65-year-old has not just finished their best earning years; for many, the earning stream has stopped altogether. The way we’re living these days, those earnings now need to carry us all the way through to our 90s. That’s three decades of withdrawals from a jar you stopped filling, so you need to put a lot of cookies in that jar to sustain yourself for 30 years.

For most of human existence, 50 was the end of the road. In 1900, life expectancy for men in New Zealand sat in the late fifties [1]. A man of 50 in those days really was winding down, because he was nearly done. The Victorians built their whole idea of a life stage around it - you worked until your body gave out, and the gap between the two was mercifully short. Today, a healthy 50-year-old can reasonably expect another 35 years or more, and an increasing number of us will see ninety [1]. We’ve held on to the old instinct that 50 is the beginning of the end, while living an entirely different reality. The body tells us we have arrived. The maths tells us we are barely halfway.

Source data: New Zealand cohort life tables: March 2025 update | Stats NZ

This is where I see good people stumble, though rarely through recklessness. The kids are nearly gone, the mortgage is finally in retreat, and “finally” becomes the word of the moment. Finally, we can do a few things for ourselves! The bucket list, the holidays, the trips deferred for 20 years while school fees and braces and first cars ate every spare dollar. It feels earned, and it feels good, because it is and it does. Behavioural research calls this ‘present bias’; a hard-wired habit of overweighting the reward we can have today against the one we must wait for [2]. But that freed-up cash flow is being enjoyed at the precise moment it should be doing its hardest work. The next 15 years from 50 are prime accumulation time, not the victory lap people imagine them to be.

Most balance sheets tend to be the same at 50: top-heavy with lifestyle assets. The house, the cars, the bach with its rates, maintenance and insurance quietly eroding spare cash or savings each year. It has been the Kiwi dream for as long as I can remember, and there is nothing wrong with wanting that dream. But while the numbers look perfectly reasonable on the surface, the cash flow underneath is poor. The assets that produce real income and liquidity - the ones that will still pay you when your salary stops - are too small to move the needle in this scenario. You’re carrying a great deal of weight that does not work for you, and worse – it's costing you to hold it.

This is where knowing values is crucial. At 50, you need to be clear on what matters and what you must build over the next fifteen years – because every goal is built on cash flow, and cash flow comes from the assets you have accumulated. Get the values right and the rest follows in a straight line. Leave them vague and you’ll inevitably keep spending on what feels good now, instead of what carries you through your 70s, 80s and 90s. The order in which your returns arrive in the early retirement years can make or break a 30-year drawdown, and a poor first few years while you are drawing down does damage that a good average return never quite repairs [3].

It can feel uncomfortable to take such a frank look at your present and future, but it’s fairly straightforward. Do your lifestyle assets fit what you are trying to build? Are you protecting your peak earning stream as the engine that funds everything else? Is your cash flow working backwards, servicing debt on things that do not compound, or forwards, building assets that do?

The gap between what New Zealanders expect to retire on and what they have set aside remains stubbornly wide. It widens fastest for those who assume there is still plenty of time [4]. At 50, most people can still materially change their later years by engaging and making a few incremental course adjustments. These changes don’t have to be dramatic, but they do need to be early. A small correction to a flight path early in the journey lands you in a completely different place.

Often, the best co-pilot on such a journey is a professional financial advisor. And if you think professional advice is expensive, try using an amateur – see what it costs you. Unfortunately, the most expensive amateur you can ever hire is usually yourself; timing the market with optimism and a spreadsheet doesn’t tend to get the same results as methodical, proven strategies and a steady pair of hands at the wheel. Time in the market is the one advantage you cannot buy back later at any price [5].

This is the fiduciary truth of it, and it is the part I care about most after 26 years. Seeking wise counsel at 50 is not an admission of weakness. It’s the best way to understand your own position; we’re all the worst judges of our own blind spots, but an unbiased third party can see the whole scene with clarity.

A good adviser is not there to take the holidays away. They are there to make sure the holidays at 70 are still possible.

50 is the inflection point where you can still move the dial in a way you simply cannot at 65. The runway is shorter than it was, but you’ve got a good bit of tarmac left before earnings come to a stop. The question is not whether the time for preparation has passed (it hasn’t), but whether you will use what remains of it. A burden shared is a burden halved.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

  • We do not hold or advise on any private credit or private equity investments.

REFERENCES

  1. Stats NZ. (n.d.). Life expectancy. https://www.stats.govt.nz/information-releases/new-zealand-cohort-life-tables-march-2025-update/

  2. ScienceInsights. (n.d.). What is present bias? How it shapes your decisions. https://scienceinsights.org/what-is-present-bias-how-it-shapes-your-decisions/

  3. Sequence of returns risk: Why the order of returns matters in retirement. The Long Math. https://www.thelongmath.com/articles/investing-and-financial-literacy/sequence-of-returns-risk/

  4. Te Ara Ahunga Ora. (2022). Annual report 2022. https://assets.retirement.govt.nz/public/Uploads/Annual-Report/TAAO-RC-Annual-Report-2022.pdf

  5. Dai, W., & Dong, A. (2023, October 31). We found 30 timing strategies that “worked”—and 690 that didn't. Dimensional Fund Advisors. https://www.dimensional.com/sg-en/insights/we-found-30-timing-strategies-that-worked-and-690-that-didnt

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Private Assets: You're Not Joining the Club, You're Funding It

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Article # 463

Private. Special. Exclusive. Three words that do a lot of heavy lifting in finance. They frame private equity and private credit as access and privilege. Yet beneath the velvet-rope marketing sits a familiar set of trade-offs: high fees, illiquidity, and a lack of transparency. For decades that rope kept ordinary investors out. It was quietly removed, and nobody sent a memo.

Historically, these markets belonged to pension funds, endowments and family offices with eight figures to commit and twelve years to wait. Ordinary investors didn't get a seat at the table. They are now being offered one, through KiwiSaver growth funds, UK Long-Term Asset Funds dropped inside tax-advantaged ISAs, and the family trust portfolios they signed off on last year [1]. The FMA confirmed in April that most KiwiSaver providers expect to materially lift their private asset allocations over the next three years, aligning with global investment trends [2]. The industry calls it democratisation. Governments call it unlocking growth.

This week the trend turned local and concrete. Simplicity committed $30 million to a new Kiwi deep tech and health sciences venture fund, becoming a cornerstone investor [3]. The fund holds a small number of early-stage companies, including pre-revenue biotech automating cancer-cell therapy manufacturing. It is not fully funded on day one; it is a capital-call vehicle, drawn down over the life of the fund. The parent is US-headquartered, and the capital base includes migrant investors using it as a pathway to residency. None of that is hidden, and backing clever Kiwi innovation is a perfectly defensible thing to do. But it is a useful reminder of what this asset class is once you look inside the wrapper: a long-dated, illiquid, concentrated bet that you cannot easily value or exit.

About that 40-year outperformance

In January, Tony Robbins told millions of viewers on The Diary of a CEO that private equity has outperformed every stock market globally for 40 years, and that ordinary investors have been locked out [4]. He is right on the data. The data, however, deserves a closer look before you remortgage the bach.

First, it has been cherry-picked by survivorship. The funds that blew up quietly drop out of the long-run series, so what you are shown is the record of the survivors, a bit like judging parachutes by interviewing the people who landed. Second, much of the return is leverage, not skill; borrow heavily against a stable business and you amplify the good years, and the bad. Third, and least discussed, is the illiquidity premium. You are tying your money up for a decade or more in a speculative bet on a handful of companies you cannot sell when you want to. You would expect to be paid more for taking on more risk and less liquidity. That extra return is not evidence of genius; it is the rent on your patience. Strip out dead funds, borrowed money and locked-up capital, and the heroic outperformance narrows sharply, and that is before fees [5].

What Robbins is less keen to dwell on is that he co-owns CAZ Investments, which buys stakes in private equity management companies, and that he personally holds stakes in 95 PE firms; the firms themselves, not the funds [6]. He collects the "2 and 20" on each: two percent of assets every year, plus twenty percent of profits above a hurdle [4]. Draw your own conclusions about the shape of those incentives.

The cycle, and the cautionary tale

On the credit side, JPMorgan chief Jamie Dimon used his April shareholder letter to flag what the more enthusiastic salespeople tend to leave in the bag: the credit cycle still exists [7]. Lending standards loosened during the boom. Covenant-lite deals became common in private credit too [8]. When the cycle turns, losses will not stay gated.

In August 2024, the Government placed Du Val Group, an Auckland property developer, into statutory management. This is only the third time that lever has ever been pulled, following Equiticorp in 1989 and Allan Hubbard's vehicles in 2010 [9].

The Du Val Mortgage Fund had been marketed as wholesale-only at around 10% per annum, pitched as comparing favourably to bank term deposits. That label is not a marketing flourish but a regulatory category: an offer made only to wholesale investors is excluded from the disclosure regime built to protect ordinary investors, so there is no product disclosure statement and no entry on the public Disclose register [9]. Roughly 120 to 150 investors are now owed close to $306 million [9]. When investors tried to sue the FMA for failing to protect them, the High Court ruled in Lindeman Investments v FMA that the regulator owes no duty of care to individual wholesale investors [10]. The safety net does not stretch that far, and by design: the wholesale regime switches off most of the retail protections long before any loss is incurred.

Every newborn, a private asset owner

Fisher Funds has committed more than $1 billion of KiwiSaver money to private equity, the largest publicly announced commitment to date [11]. Most other major providers also carry exposure, and per the FMA report most plan to lift those allocations over the next three years [2]. On Sunday, Christopher Luxon announced that, if re-elected, KiwiSaver would become compulsory from 2028, every newborn would be auto-enrolled with a $1,500 Baby Boost defaulted into a high-growth fund, and the combined contribution rate would reach 12% by 2032 [12]. Every newborn New Zealander would begin their financial life with a private asset exposure they did not choose, in a vehicle they cannot exit until at least 2090.

Structure is not the same as transparency

None of this makes private assets an inherently bad asset class. The issue is the layering, the marketing, and the question of who benefits from the door opening now. Where the exposure is plainly structured, a named partnership backing identifiable businesses with disclosed allocations, the picture is more straightforward than where it runs through layered offshore fund-of-funds with opaque manager economics. But structure on paper is not the same as transparency in practice. Diligent managers have tried to look through some of the better-regarded local vehicles and come up short on what is actually held and how it is valued. If the people whose job is to see inside cannot, the ordinary member certainly cannot. We do not invest our own clients in this asset class, for precisely these reasons. It would be premature to suggest New Zealand has quietly cracked private assets when the same transparency, valuation and liquidity questions remain.

Here is what matters most, and what the marketing almost never spells out: understand whether your commitment is fully funded on day one or subject to future capital calls. Some private equity is paid up front, with no further obligation, clean and simple. Much of it is not. A commitment of thirty cents on the dollar today can trigger calls for the remaining seventy cents in the years ahead. Your disclosed allocation now will not reflect your actual exposure tomorrow; as the calls arrive, your percentage holding and your real risk are multiplied. A trustee who signs off on what looks like a modest five percent allocation can find the true commitment is several times that once the fund draws down. I have watched exactly this happen to a community trust, where a decision made by earlier trustees carried obligations that only became visible years later.

For trustees, this is not simply an investment preference; it is a governance question.

Under the Trusts Act 2019, trustees of family and charitable trusts inherit a look-through duty [13]. Few today can name the private asset exposures they are responsible for, let alone the unfunded commitments sitting behind them. Asking the question is the first part of discharging the duty.

Four questions for any provider, adviser, or co-trustee:

  1. What are the all-in fees across every layer?

  2. How are the underlying assets valued: how often, and by whom?

  3. Is the commitment fully funded, or subject to future capital calls?

  4. In whose interest is the allocation being recommended?

The answers should be plain and confident. If they aren't, that itself is a flag you shouldn't ignore.

Robbins is right that private equity has outperformed historically. Dimon is right that the credit cycle still exists. What is less often spoken about is who benefits from unlocking the door now, and why.

Private. Special. Exclusive. Useful words for the fee machine; less useful for the person handing over their money. You are not joining the club; you are funding it.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

  • We do not hold or advise on any private credit or private equity investments.

REFERENCES

  1. Financial Conduct Authority (UK). Long-Term Asset Fund regime, FCA Handbook COLL 15. HM Treasury (2025). Inclusion of LTAFs in stocks and shares ISAs. gov.uk.

  2. Financial Markets Authority (2026, 15 April). Private assets in managed funds: Investment landscape and valuation practices. Accompanying media release: “FMA anticipates KiwiSaver providers will increase investment in private assets.” Source: FMA.

  3. Simplicity (2026, 24 June). “Simplicity backs ambitious Kiwi innovators with $30m investment.” Details: $30m cornerstone commitment to Bridgewest Venture Fund I (Deep Tech and Health Sciences Fund). Provider disclosure context: Booster, Milford, Generate, Pathfinder, ANZ Investments and others carry private asset allocations across growth and high-growth options.

  4. The Diary of a CEO with Steven Bartlett (2026, 15 January). “Tony Robbins: No One Is Ready For What’s Coming.” Details: transcript references Robbins’ stakes in 95 private equity firms, the firms, not the funds, receiving the “2 and 20” on each.

  5. Bain & Company (2025). Global Private Equity Report 2025. Details: fee conventions of 1–1.5% management plus 10–20% carry above a preferred return. Supporting context: MSCI, Chicago Booth Review and NBER research on buyout outperformance of roughly 3–5% per year over public market equivalents, with debate over the role of leverage, survivorship bias and the illiquidity premium.

  6. CAZ Investments. Firm overview and GP-stakes strategy. Robbins, T., Zook, C. and Mallouk, P. (2024). The Holy Grail of Investing. Simon & Schuster.

  7. JPMorgan Chase & Co. (2026). Annual Letter to Shareholders 2025. Author: Jamie Dimon. Released April 2026. Source: JPMorgan Chase & Co.

  8. Reserve Bank of New Zealand (2026, May). Financial Stability Report. Details: private credit market concerns. Source: Reserve Bank of New Zealand.

  9. Financial Markets Authority (2024, 21 August). “Du Val Group: statutory management ordered.” Source: FMA. Supporting coverage: BusinessDesk (2025, 4 August), “A year since raids, FMA yet to prosecute over Du Val collapse.”

  10. Lindeman Investments Limited v Financial Markets Authority [2025] NZHC. Judgment date: 11 July 2025. Summary source: Cooney Lees Morgan, “The FMA safety net has limits when it comes to wholesale investor groups.”

  11. NZ Herald, The Prosperity Project (2025, 4 August). “The rise of KiwiSaver investing in private equity and what it means for you.” Details: Fisher Funds committing more than $1 billion of KiwiSaver funds to private equity.

  12. New Zealand National Party (2026, 21 June). “National To Further Boost Kiwis’ Financial Security.” Details: press release, annual conference, Lower Hutt. Coverage: NZ Herald, RNZ, 1News, Newsroom and Scoop (21–22 June 2026). Estimated fiscal cost: $1.1 billion over four years.

  13. New Zealand Parliament (2019). Trusts Act 2019, ss 30–31.

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We Need to Talk About Envy

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When a newspaper tells you how to hate someone, it reveals more about itself than its target.

Article #462

“Envy was once considered to be one of the seven deadly sins before it became one of the most admired virtues under its new name, ‘social justice’.”

Thomas Sowell, The Quest for Cosmic Justice (1999) [1]

Last week the New Zealand Herald reported, plainly, that Elon Musk had become the world’s first trillionaire after shares in SpaceX leapt as much as 30% on debut, the largest initial public offering in history. [2,3] That is the news. What happened next is the story.

Canada’s Globe and Mail ran an opinion piece under the headline: ‘SpaceX IPO makes Elon Musk the first trillionaire. Here’s how to properly hate him.’ After a day of ridicule, the paper swapped it for the more respectable ‘Is that a bad look for capitalism?’ and tacked on a note conceding the original ‘did not meet The Globe’s editorial standard.’ [4] The mask slipped, then was hastily refitted. But we all saw the face beneath.

Closer to home, the chorus is familiar. Oxfam Aotearoa tells us four New Zealand billionaires hold more wealth than 1.8 million of their countrymen, and calls it ‘obscene.’ [5] Academics line up on talkback to lament inequality. Polls are cited showing most New Zealanders want the ultra-rich taxed more, and we are reminded that Musk alone is worth almost as much as every New Zealander combined [6,7]. The sentiment is always the same: someone has too much, and that is a problem to be corrected rather than a phenomenon to be understood.

Musk is not, in fact, the first trillionaire. Under Robert Mugabe, Zimbabwe's central bank printed a hundred-trillion-dollar note that on its first day was worth about US$30, and within weeks nothing at all; at the peak, prices doubled every day [8]. In that sense, many Zimbabweans became trillionaires on paper yet still could not buy a loaf of bread. That is the distinction worth dwelling on.

A trillion earned by building what people want is the opposite of a trillion conjured by a collapsing state: one is value created, the other value destroyed.

I want to make the unfashionable case. Not for Musk the man, he hardly needs my help, but for what the exception represents: the rare individual who turns the stuff of science fiction into things we use every day without a second thought, the smartphone in your pocket, the satellite that carries your call, the online payment that clears in seconds, the electric car at the lights, the cloud software that runs the small business down the road.

Consider the funnel. Many people have ideas. Fewer act on them. Fewer still build something that turns a profit. And a vanishingly small number, statistical outliers, take an idea and deliver it at scale. New Zealand has produced our own precious few: the Mowbray siblings, whose toy and consumer-goods firm Zuru, started in a shed in 2003, now tops the Rich List at an estimated $20 billion; Trade Me, Xero, Rocket Lab, the family-owned Gallagher Group, which grew from a Waikato farm shed and the world's first electric fence into a security firm operating in some 160 countries, and Fisher & Paykel Healthcare, built and headquartered here and exporting respiratory care to around 120 countries [9,10,11].

And the same pattern holds inside the companies we reduce too easily to a single famous name. Gwynne Shotwell joined SpaceX as its eleventh employee in 2002 and helped build it, as president, into the company that just floated; she now sits, according to Forbes, among the richest self-made women in the world, with a stake estimated at around US$2.5 billion [12]. The builders are plural, and the rewards often follow competence more than celebrity.

Here is the part the zero-sum brigade often misses: the same SpaceX listing that minted the world's first trillionaire also turned more than 4,400 current and former staff into millionaires, by the New York Times' reckoning – some 400 of them past the $100 million mark. The reach went a long way down the org chart. One was a welder who joined in 2015 on about US$28 an hour and took part of his pay in stock; his holding is now worth close to a million dollars [13]. The trillionaire headline and the newly wealthy welder came from the very same event. The pie did not get carved up. It got bigger.

The question for New Zealand is whether we are willing to learn from that. The NBR Rich List has swelled 23-fold in forty years to a record $129 billion, with Rocket Lab's Sir Peter Beck alone leaping from about $650 million to $11 billion in a single year as his company's shares soared [14]. And yet our productivity has barely moved in thirty years. We are very good at debating how to carve the pie, and strangely uninterested in baking a larger one.

None of this is new. Andrew Carnegie and John D. Rockefeller were the titans of their age, reviled in their time as robber barons, cartoonish villains of the popular press. The cartoonists drew them as bloated octopuses with the nation in their tentacles. Carnegie ground out his fortune in steel and, in his later years, gave most of it away, seeding free public libraries across the world, more than 2,500 of them, eighteen in New Zealand alone [15]. Rockefeller's money built the University of Chicago and funded the medical research that helped tame yellow fever and hookworm [16]. The resentment faded. The libraries, the universities, the cures remain. That is the part the wreckers never see: the wealth was temporary, but the institutions it built endured, and we are still drawing on them a century later.

Great fortunes gather, they crest, and in time they disperse through families, philanthropy, taxation and the simple passage of generations. Marriages fail and children inherit and quarrel; fortunes fracture along fault lines no one planned for. Jeff Bezos parted with roughly a quarter of his Amazon stake in a single divorce [17]. Wealth scatters faster than any succession plan can contain it. No one takes it with them. They are only ever the custodian of their wealth for the span of their life, and perhaps a generation or two beyond, if they are fortunate.

I make the same point to those who fret about foreigners buying New Zealand farms and businesses. A buyer cannot pack up a farm, or a company, and carry it home in a box to their country of origin. The land stays. The business stays. The jobs, the buildings and the economic activity all remain here, in New Zealand. The buyer is a custodian, nothing more. So too with the great fortunes: the enterprises outlast the individual, and we are the beneficiaries.

And here is what the envious rarely pause to weigh: the cost of building any of it. The outlier does not arrive at scale by working office hours. Musk's own biographers record the toll: Walter Isaacson, who shadowed him for years, documents a leader hands-on in redesigning rocket components and welding design to production, while Ashlee Vance describes the hundred-hour weeks and nights spent sleeping on factory floors [18,19]. He risked ruin, repeatedly; Tesla and SpaceX both came within weeks of collapse in 2008, and he poured in his own money to keep them breathing. For every founder who makes it, a great many do not: they mortgage the house, burn the savings, lose the marriage, and end up with nothing but the lesson. Most of us, honestly, would not want that life if it were handed to us, and that is no shame. But it ought to buy a little humility before we throw stones over the fence at grass we have decided, from a distance, must be greener.

Some will say the fortune was really built on government largesse: the contracts, the green credits [20]. But the credits were no handout. Every carmaker operated under the same zero-emission rules; the money came from rival manufacturers who lagged on electric cars, not from the taxpayer; and Tesla profited simply because it built cleaner cars faster than anyone else. The same scheme runs in Europe and China. That is not a subsidy. That is winning the game everyone was playing.

As for the calls to tax such people into their place, success is already taxed, and handsomely. That is how it works. But a culture that treats achievement as a crime to be punished rather than a feat to be studied will get less of it. The numbers bear it out: resentment is not a growth strategy.

There is a fiduciary truth in all of this, the same one I return to with clients. Tearing others down builds nothing. The job, mine, yours, the nation’s, is stewardship: to grow what we are given, to think in decades rather than headlines, and to leave more behind than we found. A country that celebrates its builders is a healthier place than one that polices its winners. Glass half full beats glass half empty, every time.

So before we are told, yet again, how to properly hate someone for the sin of succeeding, it is worth asking the more useful question. Not how do we cut them down to size, but what will we leave standing when we are gone?

Winter never lasts; the snows always melt.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

REFERENCES

  1. Thomas Sowell, The Quest for Cosmic Justice (1999), source of the epigraph.

  2. New Zealand Herald, ‘Elon Musk becomes world’s first trillionaire as SpaceX shares jump’ (June 2026).

  3. RNZ, ‘SpaceX launches US$2 trillion market debut, the largest IPO in history’ (June 2026).

  4. The Globe and Mail, Chris Gay, ‘SpaceX IPO makes Elon Musk the first trillionaire. Here’s how to properly hate him’ (headline since amended with editor’s note, June 2026).

  5. Oxfam Aotearoa, statement on billionaire wealth concentration in New Zealand (2026).

  6. RNZ / Talbot Mills poll, ‘New Zealanders support more taxes on ultra-rich, new poll shows’ (Wellbeing Economy Alliance Aotearoa; 68% backed higher taxes on the ultra-rich, 2026).

  7. RNZ, ‘Elon Musk only marginally less wealthy than all New Zealanders combined’ (June 2026).

  8. Reserve Bank of Zimbabwe / BBC, the Z$100 trillion note, issued 16 January 2009, worth about US$30 on its first day; one of history’s worst hyperinflations, with prices doubling daily at the November 2008 peak.

  9. Zuru / NBR Rich List 2026, founded by Nick, Mat and Anna Mowbray in 2003; estimated at $20b, the top spot on the 2026 NBR Rich List.

  10. Gallagher Group, Hamilton-based, family-owned; from the world’s first electric fence (1938) to integrated security solutions in around 160 countries.

  11. Fisher & Paykel Healthcare, New Zealand-headquartered respiratory-care manufacturer; sells in around 120 countries, with roughly 1% of revenue from domestic sales (publicly listed; majority institutional ownership).

  12. Forbes, ‘America’s Richest Self-Made Women’ (2026 list), featuring SpaceX president Gwynne Shotwell.

  13. The New York Times, reporting via Hill.com analysis that SpaceX’s IPO would turn more than 4,400 employees into millionaires, including a welder hired in 2015 (June 2026).

  14. NBR Rich List 2026, 40th edition; total listed wealth a record $129b (up from $102.1b), a 23-fold rise in 40 years; Rocket Lab’s Sir Peter Beck up from ~$650m to ~$11b (reported via RNZ / NZ Herald / Scoop, June 2026).

  15. Carnegie Corporation of New York, historical record of Carnegie free public library endowments.

  16. Rockefeller Foundation / University of Chicago, record of Rockefeller’s ~$36m founding gift to the University of Chicago and Foundation-led campaigns against hookworm and yellow fever (first yellow-fever vaccine, 1935).

  17. Bezos / Scott divorce (2019), widely reported transfer of roughly a quarter of Jeff Bezos’ Amazon stake to MacKenzie Scott.

  18. Walter Isaacson, Elon Musk (2023), on Musk’s hands-on engineering role across his companies.

  19. Ashlee Vance, Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future (2015), on the 100-hour weeks and factory-floor work ethic.

  20. RNZ, ‘How much of Elon Musk’s wealth comes from government help? Virtually all of it’ (June 2026), cited here as the claim being answered; on ZEV regulatory credits, see the Union of Concerned Scientists and CNBC explainers (credits are traded between automakers, not paid by the taxpayer).

IMAGE CREDITS

  • John D. Rockefeller depicted in the political cartoon 'The Trust Giant's Point of View' by Horace Taylor in 'The Verdict, ' 1900

  • “Standard Oil Octopus” - Keppler, Udo J., 1872-1956, artist. Published September 1904

  • Carnegie Free Library, Thames - Coromandel Heritage Trust. Photograph by David Wilton.

  • Auckland City Libraries – Tāmaki Pātaka Kōrero, Sir George Grey Special Collections (AWNS-19080716-13-6)

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The Era of the Colossal IPO, and the Small Investor

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Article #461

In August 1602, the Dutch East India Company pinned up posters in Amsterdam announcing that any resident of the Low Countries could buy a share in their new venture. By month's end, 1143 investors had put in roughly 6.4 million guilders. One was a maid named Neeltgen Cornelis. She put in 100 guilders, around half a guilder a day in wages, more than half a year's earnings. The world's first IPO had its first ordinary shareholder.

Four centuries later the dance is the same, but the music is louder. Within 12 months we'll likely see the three largest technology listings in history, landing one after another.

SpaceX lists on the Nasdaq today under SPCX, in what is set to be the largest IPO in history. The company has raised USD 75 billion, pricing 555.6 million shares at USD 135 each, at a valuation approaching USD 2 trillion. For context, the previous record-holder, Saudi Aramco in 2019, raised USD 29.4 billion. Retail orders alone reportedly exceeded USD 100 billion. Elon Musk retains 85 percent of the voting control and stands on the verge of becoming the world's first trillionaire. Roughly 30 percent of the offer has been earmarked for retail through Robinhood, Schwab, Fidelity, E*Trade and SoFi, an unusually generous allocation designed to put ordinary investors at the front of the queue from day one.

The mechanics deserve a look. The raise implies a free float in the low single digits, perhaps three to four percent of the company. The retail offer is distributed through institutions including Goldman Sachs as lead, with Morgan Stanley, Bank of America, Citigroup and JPMorgan in support. Musk's 85 percent voting control comes through a dual-class structure that the New York and California state pension funds have publicly criticised as 'extreme'.

The numbers behind the headline are sobering. SpaceX posted a Q1 2026 net loss of USD 4.3 billion on revenue of USD 4.69 billion. The Connectivity unit (Starlink) made USD 1.19 billion, while the Space unit lost USD 619 million and the AI unit lost USD 2.5 billion.

Starlink is single-handedly carrying the company.

The S-1 also claims a USD 28.5 trillion total addressable market, and includes a vesting condition for 1 billion of Musk's performance shares that requires SpaceX to establish a permanent human colony on Mars with at least 1 million inhabitants. This is a remuneration trigger.

OpenAI is queueing up directly behind. The ChatGPT maker confidentially filed in late May at a USD 852 billion valuation, with Goldman Sachs and Morgan Stanley leading, targeting a September quarter listing. But there is a tell. The Wall Street Journal reports CFO Sarah Friar has told colleagues the company may need more time, while CEO Sam Altman has been eager to push ahead. The CFO, the person responsible for the numbers, is the one urging caution. OpenAI has reportedly missed multiple internal revenue and user targets, and its lead is now under threat from Anthropic, whose tools are being adopted across the workforce at pace. OpenAI is going public partly because it needs to, having committed more than USD 1.4 trillion to physical infrastructure. The phrase 'stolen a charity', used by Musk in the recently dismissed trial alleging OpenAI improperly converted from a nonprofit research lab, will hang over the prospectus regardless of the verdict. Anthropic is preparing its own listing.

Three deals, perhaps USD 200 billion of equity issuance, in a single year. As a fiduciary, not as a fan of rockets or large language models, my answer is the same as it would have been to a client asking about the South Sea Company in 1720. Probably not, and almost certainly not at the open.

The unromantic data

Jay Ritter at the University of Florida, known in finance circles as 'Mr IPO', has been cataloguing initial public offerings since 1980. US IPOs have, on average, trailed the broader market by roughly two percentage points a year over the three years after listing. Almost two thirds underperform.

Dimensional Fund Advisors found the same in a study of more than 6,000 US IPOs from 1991 to 2018. Dimensional's response is instructive. Their funds deliberately wait, sitting out the first year or so after a listing so that the early froth settles, the lock-ups expire, and at least one to two years of audited public-company financials accumulate before they buy. Dull, patient, and on the evidence, profitable.

Read Dimensional’s study HERE.

Two New Zealand parables

We do not have to travel to Starbase, Texas for the lesson. Two recent local listings sit at opposite ends of the IPO spectrum.

Napier Port listed in August 2019 at $2.60 a share, rose sharply on debut, touched $4.28 by year-end, and today trades in the low $3 range with a steady dividend stream. Not spectacular, but it is what a 150-year-old infrastructure business with predictable cargo volumes is supposed to look like. Decades of audited accounts. A board that knew what it owned. A business you can model on the back of an envelope.

My Food Bag tells the other story. It listed in March 2021 at $1.85, the largest New Zealand IPO by amount raised since 2014. The prospectus glittered. Retail investors, including many existing customers, were warmly invited. The shares fell on day one and kept falling. Today they trade around 29 cents, an 85 percent loss for anyone who bought at issue. A classic private equity exit, with the existing owners taking $51 million in repaid shareholder loans and a $7.1 million pre-listing dividend off the table on the way out. The question not asked loudly enough was the only one that mattered: who is selling, and why now?

The fiduciary filter

Three principles we keep returning to when a client asks about a hot IPO. First, wait for the audited financials. The Dimensional approach of holding off until at least two years of statutory accounts exist as a listed entity is not market timing, it is risk management. Pre-IPO numbers are produced under different incentives.

Second, read who is selling. Founders and venture funds with five-year-old positions do not list out of generosity. Lock-up provisions and use of proceeds tell you more than the forward revenue projection. Third, recognise the window. Ritter's research shows IPOs cluster in optimistic markets and underperform most when issued in those hot windows. Three trillion-dollar AI and aerospace deals queued up in a single year is the textbook definition.

And so, to Amsterdam

Neeltgen Cornelis did rather well. The VOC paid its first dividend in 1610, mostly in spices, and continued paying for the better part of two centuries. But she bought into a business with existing ships, warehouses, a 21-year charter and a recognisable revenue model.

She was not buying a million Martians.

The colossal IPOs of 2026 may yet reward their early shareholders handsomely. Some will. Most, on the historical evidence, will not. When the noise gets loud, seek advice and wise counsel.

Or, if you prefer the older formulation - ask the person who has read the prospectus three times and is still not buying.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

REFERENCES

  1. Bloomberg Evening Briefing Americas, 11 June 2026, 'The world's first almost-trillionaire'. SpaceX priced 555.6 million shares at USD 135 each, raising USD 75 billion. Retail orders reportedly exceeded USD 100 billion.

  2. Bloomberg Evening Briefing Americas, 20 May 2026, 'SpaceX Files Publicly for Nasdaq IPO Under Symbol SPCX'.

  3. The Economist, World in Brief, 21 May 2026, 'SpaceX reaches for the stars'.

  4. Morning Brew, 21 May 2026, 'SpaceX shows its finances and future in IPO filing'. SpaceX S-1 prospectus, 20 May 2026: Q1 2026 revenue USD 4.69 billion, net loss USD 4.3 billion; Musk 85 percent voting control; Mars 1 million inhabitants vesting condition; total addressable market claim USD 28.5 trillion; retail distribution via Robinhood, Schwab, Fidelity, E*Trade, SoFi.

  5. BusinessDesk (WSJ syndication), 21 May 2026, 'OpenAI is preparing to file for an IPO very soon'. CFO Sarah Friar reportedly told colleagues OpenAI may need more time; Anthropic growing faster on workforce tool adoption.

  6. CNBC and Wall Street Journal, 20 May 2026, 'OpenAI to confidentially file for IPO as soon as Friday', valuation USD 852 billion.

  7. Ritter, J.R., 'Initial Public Offerings: Underpricing', 1980 to 2025 dataset, University of Florida, Warrington College of Business.

  8. Black, S. and Green, K., 'IPOs: Profiles Are High. What About Returns?', Dimensional Fund Advisors, 2019, study of 6,000+ US IPOs 1991 to 2018.

  9. RNZ, 'Will your My Food Bag investment ever recover?', May 2025.

  10. NZX disclosures, Napier Port Holdings (NPH) and My Food Bag Group (MFB), historical share data.

  11. Worldsfirststockexchange.com, Dutch National Archives, VOC charter 20 March 1602, Article 10.

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No Taxation Without Representation: The CCO Accountability Gap

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Article #460

Last weekend we marked King's Birthday - the official birthday of a man none of us voted for, none of us can remove, and most of us will never meet. The monarchy survives on charm, inertia, and a constitutional bargain held for centuries: the King reigns on the condition he does not rule.

The same cannot be said of our Council-Controlled Organisations. In three weeks' time, that contrast becomes expensive.

Last October, New Zealanders voted in 42 simultaneous referendums on Māori wards. 24 councils voted to remove them and 18 to keep them. Nationally, more than 542,000 voters supported retaining Māori wards against around 468,000 who opposed them. Whatever your view, the principle was clear: how local democratic representation is structured is important enough for voters to decide directly.

Now apply the same lens to CCOs. These organisations sit at the intersection of three conditions that create a serious accountability vacuum:

  1. They run monopolies or near-monopolies - no competitor can offer cheaper water, public transport, or port services.

  2. Their boards are appointed, not elected. Voters do not choose the directors, and the councillors who appoint them do not manage them day-to-day.

  3. Directors are almost impossible to remove when ratepayers are unhappy. CCOs continue unchanged no matter who wins council elections. The democratic feedback loop never closes.

No market discipline. No democratic discipline. Ratepayers pay regardless.

Fuel price hikes annoy us because they flow into the cost of everything. But fuel still operates in a competitive market: you can switch brands, go electric, take the bus, or drive less. Water has no such substitute. You cannot switch providers, install a cheaper pipe, or easily opt out. If fuel prices trouble you, water should give you nightmares - because the entity setting the price answers to no one you can vote out.

If "no taxation without representation" means anything in 2026, any body with the power to compel payment must answer to those who pay. That principle is the foundation of legitimate government.

On 1 July, IAWAI - Flowing Waters Ltd takes over water and wastewater services across Hamilton City and Waikato District. Owned 50:50 by the two councils and in partnership with Waikato-Tainui, its board is appointed by a nine-member Forum: three Hamilton representatives, three Waikato District representatives, and three Waikato-Tainui representatives - all with equal voting rights. Ratepayers will be legally required to buy from an entity whose governance includes voices no voter ever elected.

The Auditor-General warned in 2022 of "a serious diminution in accountability to the public for a critical service". The structural problem remains.

This week, Local Government Minister Simon Watts announced an amendment to the Local Government Act 2002 to restrict voting at council committee meetings to elected councillors only. "Councillors are directly accountable to voters for their decisions," he said. "That's not democratic, so we're fixing it." A welcome principle - but the reform applies only to council committees. The new water CCOs going live in three weeks sit outside the Local Government Act, governed instead under Local Water Done Well. The Forums that select their boards - the very arrangements that breach Watts' own principle - will keep their voting rights intact.

If it is not democratic at council level, it cannot be democratic at the water entity level either.

This is not just a water issue. The same governance model applies to Auckland Transport, port companies, and other major CCOs.

In Wellington, Tiaki Wai - also launching on 1 July - has confirmed a $645,000 CEO salary (more than the Prime Minister) and doubled director fees to $60,000, while households face average bills of $2,418 this year, potentially rising to $6,831 by 2036. Mayor Andrew Little called the salaries "generous". The Commerce Commission is now scrutinising pricing - proof that the only meaningful check is regulatory, not democratic.

The model is heading to Hawke's Bay. From 1 July 2027, water services for Hastings, Napier, and Central Hawke's Bay will transfer to a new joint CCO.

Two practical reforms would close the gap.

First, CCO directors should be either directly elected by ratepayers or appointed exclusively from sitting councillors. Either option creates a direct line of sight from voter to board. The former is more democratic; the latter is cheaper and integrates CCO governance into existing council accountability.

Second, directorships should be term-limited to the electoral cycle. A change in council should automatically refresh CCO boards. At present, voters can throw out a council only to discover the bodies actually running their water, transport, and ports remain untouched.

Critics will object that elected or councillor-appointed directors would be parochial and unqualified. Perhaps. But the current system produces unaccountable parochialism dressed up as professional governance. The ability to vote them out is worth more than the illusion of expertise from people who answer to no one.

We tolerate an unelected sovereign because he sets no rates, signs no major contracts, and cannot raise the price of your shower. He is a constitutional ornament. Our CCO directors are not.

New Zealanders take representation seriously – so why is there exception for organisations that can send us bills we cannot refuse?

No taxation without representation. It is not a slogan. It is the bargain.

Watts has now agreed with the principle - for councils. In three weeks, water entities operating on the very arrangements he has just rejected go live in Wellington and the Waikato. Hawke's Bay follows a year later. Either the democratic principle applies everywhere, or it applies nowhere.

The King, at least, had the decency to stay out of it.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

SOURCES

  • Maori ward referendums (Oct 2025): RNZ; final national tally per Wikipedia (Keep 542,134 / Remove 467,923 / margin 74,211).

  • IAWAI - Flowing Waters Ltd (Hamilton/Waikato water CCO, operational 1 July 2026): Hamilton City Council governance page.

  • Local Water Done Well overview: Bell Gully briefing.

  • Auditor-General, "Submission on the Water Services Entities Bill" (8 August 2022): oag.parliament.nz.

  • Local Government Act amendment announcement (Hon Simon Watts, 2 June 2026): Stuff; press release reproduced at Mirage News, "Council Voting Limited To Elected Officials".

  • Tiaki Wai pay and pricing (April-May 2026): NZ Taxpayers' Union release; NZ Herald, "New Wellington water entity Tiaki Wai defends salary spend for top officials" (13 April 2026); NZ Herald, "Tiaki Wai opens books, warns of higher costs to households" (24 March 2026); RNZ, "Mounting confusion over new water bills looming for Wellington region residents" (22 May 2026).

  • Hawke's Bay joint water CCO (operational 1 July 2027): Napier City Council news release.

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Budget 2026: A better story, if you believe the assumptions

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Article #459

For decades I have written about the Budget from the outside. This year, I was fortunate enough to be there in person – in the lockup, with the Treasury’s forecasts and supplementary documents in front of me before the Minister rose to speak. There is value in having the source material itself, rather than seeing headlines that come after. What follows is my read.

The Budget Economic and Fiscal Update released on 28 May tells a more reassuring story than the Half Year Update did back in December.¹ Deficits narrow earlier. The cyclically adjusted OBEGALx, the operating-balance measure favoured by Finance Minister Nicola Willis as it strips ACC’s volatile revenue and expenses out of the historical OBEGAL, returns to surplus in 2028/29; a full year sooner than previously forecast.² Tax revenue holds up better than feared. And on the Treasury’s fiscal-balance measure, which tracks the actual cash impact of government on the economy, policy keeps supporting demand through 2026/27 before tightening from 2027/28 onwards.³

On the surface it is a better-than-expected set of numbers. As always, the trouble is what sits underneath them.

The forecasts assume real GDP growth lifts from 1.2% this year to a peak of 3.2% by 2028. This would be a sharp acceleration after three years of contraction or near-zero growth.⁴ They assume unemployment peaks at 5.5% and then drifts back down to 4.3%, and that net migration recovers towards its long-run average having run at barely a quarter of that recently. Each assumption is plausible on its own. The sticking point is that the recovery needs most of them to arrive together, and roughly on schedule.

Inflation is the assumption that should give readers the most pause. In these forecasts, it takes a less-than-linear, lurching path: CPI surges to 4.0% this year, driven in part by higher fuel prices flowing from offshore conflict, before the forecast has it dropping abruptly to 1.6% in 2027, then settling around 2%.⁵ That near-halving in twelve months is a heroic call. It looks more heroic still when you separate out domestic, non-tradeable inflation, the prices generated here at home, in services, rates and rents – which Stats NZ measured at 3.5% in the year to March, with electricity up 12.5% and council rates up 8.8%.⁵

Ask any local who has just opened a new rates letter, renewed an insurance policy, or braced for yet another ramp-up in winter power prices. The cost-of-living squeeze people are actually feeling is not the tidy headline figure the forecast leans on. And a great deal does rest on that figure, because inflation feeds wage expectations, interest costs and the tax take all at once. If domestic prices prove stickier than assumed, the path back to surplus gets harder.

The forecasts also assume the Government will deliver on ambitious savings tracks at Health New Zealand, Kāinga Ora and the Ministry of Social Development – all organisations that have run material operating deficits.⁶ Every line of the recovery requires for something to land more or less perfectly. The Treasury’s own statement of specific fiscal risks runs to dozens of substantial items; a catalogue of expensive surprises waiting to happen.⁶

Meanwhile, the wave of cost coming our way is neither theoretical nor distant. It is here now.

Defence capability needs roughly $6 billion in new funding over the next two Budgets just to deliver the existing plan. The Health Infrastructure Plan identifies more than $20 billion over the next decade. The school property pipeline signals a significant uplift. Treaty relativity payments and pay equity settlements remain live cross-portfolio risks.⁶

Nowhere is the pressure clearer New Zealand Superannuation. NZ Super payments are forecast to climb from $24.7 billion in 2025/26 to $31.2 billion by 2029/30, an average increase of about $1.6 billion every year. This is the single largest driver of core Crown expense growth, with roughly half of that uplift simply more people turning 65.⁹ Against that backdrop, the decision to recommence contributions to the Super Fund is genuinely welcome – but light on detail for what is, on any honest reading, the largest looming fiscal pressure of the next two decades.

That’s the sobering side. There is a more encouraging side too, and parts of it land particularly well for our Hawke’s Bay region.

The tax package is sensibly targeted rather than flashy. Lifting the Foreign Investment Fund de minimis threshold from $50,000 to $100,000 of shareholdings is a solid, practical move. Combined with allowing the revenue account method for unlisted shares held by any New Zealand resident, it removes a barrier to migration for skilled people and cuts compliance costs for ordinary investors – who should never have been tangled in rules built for complex international structures.⁷ The accompanying changes to charities and not-for-profit settings, including a $100,000 annual cap on individuals’ rebate claims, tidy up a system that had drifted from its purpose.⁷

But, not everything in the package is so easily defended. One such outlier is the Emerging Managers’ Programme, a scheme backing first-time and emerging fund managers who invest in startup companies, with the aim of helping those funds build capacity, scale and a track record.⁸ No, you’re not reading that wrong: the Crown is effectively backing unproven managers who are backing unproven companies, stacking emerging-manager risk on top of early-stage venture risk. The mind boggles slightly.

There is somewhat of a rationale behind it – New Zealand’s venture ecosystem is thin, exits like Xero and Rocket Lab show what is possible, and the next generation of managers has to come from somewhere. But it sits oddly in a Budget otherwise sold on discipline and rebuilding buffers, and it will be worth watching closely how the guardrails are drawn.

Closer to home, the Budget delivers tangible benefits to Hawke’s Bay. Cash-strapped, debt-laden councils such as Hastings stand to benefit from changes giving them a share of consents value, a scaling mechanism that better matches revenue to the growth that creates the work. Funds have been earmarked for design and enabling works at Hawke’s Bay Hospital, alongside the wider Regional Hospital Redevelopment Programme.⁶ There’s also a $400 million reserve fund for state highway resilience projects aimed at keeping critical routes open during severe weather – something Hawke’s Bay residents understand the importance of more than most. Cyclone Gabrielle is not yet three and a half years behind us, and the Treasury itself rates comparable events as reasonably possible, at least once every four years, within the forecast period.⁶

The bottom line? This is a Budget Update that asks New Zealanders to take a fair amount on faith: that growth returns on cue, that inflation halves to target while domestic prices still bite, that savings targets are met, and that the events outside the Government’s control stay kind to us. The genuine wins for investors, charities, regional councils, hospital patients and motorists on vulnerable routes, deserve acknowledgement.

The risks deserve to be taken just as seriously.

The Treasury has done its job. It has shown us the figures and, in the supplementary information, told us plainly what could go wrong. The question is whether the rest of us are reading both halves of the document, so there aren’t surprises down the road if certain elements don’t stick the landing.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

REFERENCES

[1] The Treasury (2026). Half Year Economic and Fiscal Update 2025. Wellington: New Zealand Government, 16 December 2025.

[2] The Treasury (2026). Budget Economic and Fiscal Update 2026: Supplementary Information: Underlying Fiscal Performance (Cyclically-adjusted and Structural Balance Indicators), B.3, pp. 47–49. Wellington: New Zealand Government, 28 May 2026.

[3] The Treasury (2026). Budget Economic and Fiscal Update 2026: Supplementary Information: Fiscal Stance (Fiscal Balance and Total Fiscal Impulse Indicators), B.3, pp. 42–46.

[4] The Treasury (2026). Budget Economic and Fiscal Update 2026. Wellington: New Zealand Government, 28 May 2026; see also ‘Budget 2026: 10 things you need to know’, NZ Herald, 28 May 2026.

[5] The Treasury (2026). Budget Economic and Fiscal Update 2026: Supplementary Information: Detailed Economic Forecast Information, Table 2 (CPI) and Table 6 (Labour Market Indicators), B.3, pp. 33, 37; non-tradeable inflation of 3.5% from Stats NZ (2026), Consumers Price Index: March 2026 quarter, 21 April 2026.

[6] The Treasury (2026). Budget Economic and Fiscal Update 2026: Supplementary Information: Unchanged Specific Fiscal Risks and Contingent Liabilities, B.3, pp. 6–30.

[7] The Treasury (2026). Budget Economic and Fiscal Update 2026 — Supplementary Information: Tax Policy Changes, B.3, pp. 39–40; and Inland Revenue / The Treasury (2026), 2026 Tax Expenditure Statement, 28 May 2026.

[8] The Treasury (2026). Summary of Initiatives in Budget 2026, B.19, p. 9: Emerging Managers’ Programme. Wellington: New Zealand Government, 28 May 2026.

[9] The Treasury (2026). Budget Economic and Fiscal Update 2026, Fiscal Outlook — drivers of New Zealand Superannuation expense growth. Wellington: New Zealand Government, 28 May 2026.

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Death and Taxes

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Article #458

This Thursday, Nicola Willis will deliver Budget 2026. The headlines will be familiar: tight control of spending, focus on health, education, defence and law and order, a return to surplus.[1] To her credit, the Finance Minister has shown discipline.

On Tuesday, in her pre-Budget speech to Business North Harbour, she announced 8,700 public service job cuts over the next three years, $2.4 billion in savings, the merger of agencies, and AI as “a basic expectation” across government systems.[2] The public service had grown from roughly 48,000 in 2017 to over 63,000 by the end of 2024, a 33 percent expansion in six years against largely flat productivity growth. Trimming it back toward 1 percent of population is overdue.

The harder question is timing. The coalition has been in office for two and a half years. The electoral mandate was fresh in late 2023. Decisions of this magnitude, with this kind of political cost, are easier early in a term and almost impossible to deliver in election year without the optics looking opportunistic. The reforms should have been made then.

That delay matters because the bond market is a fickle lover when a country is carrying heavy debt and producing little productivity growth. Fitch has placed New Zealand’s AA+ rating on negative outlook, citing rising challenges in reducing debt after years of delayed fiscal consolidation; debt to GDP is projected to reach 56 percent by 2027.[3] The 10-year government bond yield is sitting near 4.7 percent. Every basis point on that yield translates into real money in interest costs. Markets are watching, and they are no longer giving New Zealand the benefit of the doubt.

This is the fiscal context in which the campaign begins.

Budget Day on the 28th is not really the main event. It is the starting gun for the election campaign that ends on 7 November. And the backdrop against which that campaign will be fought is grim.

The NZX 50 touched fresh lows this week. The Gross Index, which includes reinvested dividends, has delivered a total return of around 3 percent over the past five years.[4] That is less than 1 percent per year in nominal terms. Strip out dividends, and the price-only index is in negative territory. Once you factor in cumulative inflation of around 20 percent, New Zealand investors have gone backwards by close to 17 percent in real purchasing power. No other major Western bourse can claim that distinction. The S&P 500 has roughly doubled. The ASX 200 is up around a third. The FTSE, long the laggard of major markets, has still delivered around 30 percent. Even the Nikkei, dormant for two decades, has delivered roughly 70 percent.

This matters because when the stock market is not creating wealth, politicians look for ways to redistribute existing wealth. That is the genuine political logic of the moment, and it is amplified by the mechanics of MMP. Labour cannot govern alone. To form a government, it will need the Greens and almost certainly Te Pāti Māori. Whatever Labour campaigns on, the coalition partners will demand more.

Labour has confirmed it will campaign on a capital gains tax targeted at residential and commercial property, with revenue ringfenced for free GP visits.[5] The Greens have gone further, proposing a 2.5 percent annual wealth tax on net assets above $2 million, and a 33 percent inheritance tax on lifetime gifts and estates above a $1 million threshold.[6] Te Pāti Māori has signalled wealth taxes as a coalition bottom line.[7] Fitch has reportedly been briefed on tax measures beyond what Labour has publicly disclosed.[8]

The Greens’ inheritance tax proposal is the one to pay closest attention to. It is, in everything but name, the return of estate duty. And it is worth remembering, on the eve of a Budget that opens an election year, why New Zealand abandoned that tax in 1992.

Estate duty was sold as a tool of equity. In practice, it became a destroyer of family legacies. By the early 1970s, rates had climbed as high as 40 percent, with thresholds catching far more than just the wealthy.[9] For families whose wealth was tied up in illiquid assets, the death of a patriarch or matriarch triggered financial catastrophe.

The Hawke’s Bay orcharding sector provides stark examples. Local orchardists who had spent decades developing pipfruit operations found their estates assessed at development values rather than agricultural income values. Families faced duty bills exceeding several years of profit. The choice was bleak: sell blocks to developers, or take on crippling loans.[10] Many spent thirty years or more servicing that debt, an entire generation lost to a single tax assessment. A block of land that had taken a grandfather forty years to develop into productive orchard could be lost to an unexpected death and an Inland Revenue assessment within eighteen months.

The Waikato dairy sector tells the same story. Multi-generational farms were forced to sell down herds and land to meet duty bills. The remaining operations often lacked the scale needed to remain viable, and some families saw their children leave farming altogether.[11] It was not incompetence that ended these legacies. It was a tax code that demanded immediate liquidity from operations that simply do not generate it.

Rural service businesses, the stock and station agents, transport firms, processing contractors, faced the same pressure. Many took on outside investors to meet duty bills, and those investors eventually engineered buyouts. The consolidation of New Zealand’s agricultural service sector during the 1980s owed much to estate duty’s destabilising effect.[12]

Defenders argued at the time, and will argue again, that proper planning could avoid these outcomes. Two things are worth saying about that. First, the planning itself was a deadweight cost. Families spent thousands on lawyers and accountants navigating frequently changing rules rather than reinvesting in their enterprises.[13] Second, deaths do not arrive on schedule.

What does prudence look like in practice? It looks like reviewing trust structures that may have been set up two decades ago under different rules. It looks like understanding which assets sit where, who owns what, and what the liquidity profile of an estate actually is on any given day. It looks like considering whether life insurance has a role to play in funding potential tax liabilities. It looks like beginning the conversations between generations that families instinctively defer.

The lesson from estate duty is not that all tax is bad. It is that taxes on illiquid family assets transfer productive wealth from those who built it to whoever has the ready cash to buy at distress prices. That is not redistribution. It is destruction. And it is being proposed at a moment when fewer families have the financial cushion to weather it, against a stock market that has produced no real wealth for half a decade.

Thursday’s Budget will not settle this debate. It opens it. Families with farm, orchard, or business assets ought to be reviewing their structures now, seeking wise counsel from advisers who understand both the tax architecture and the fiduciary weight of decisions made under pressure. None of this argues for selling out of New Zealand equities at the lows: capitulation at the bottom is the parallel mistake, the same wealth destruction by another route. The answer is diversification and counsel, not retreat. The families who recovered from estate duty were almost always those who took advice early. The ones who lost everything were those who waited until the tax was already in force.

History rhymes. It does not, thankfully, repeat. But only if we are paying attention.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

REFERENCES

[1] The Treasury, Budget 2026, 28 May 2026, treasury.govt.nz/publications/budgets/budget-2026

[2] NZ Herald, Nicola Willis’ public service cuts to save $2.4b, 8700 jobs to go, 19 May 2026; 1News, Thousands of public service jobs to go, major Govt shake-up announced, 19 May 2026

[3] Fitch Ratings, New Zealand AA+ outlook revised to negative, March 2026; Trading Economics, New Zealand 10-Year Government Bond Yield

[4] S&P/NZX 50 Gross Index, 5-year return data to 20 May 2026, NZX and Yahoo Finance

[5] NZ Herald, Labour’s capital gains tax: Chris Hipkins celebrates ‘progressive’ policy, 28 October 2025

[6] Become Wealth, Wealth Tax NZ: What It Means and Who Would Pay, April 2026; Green Party Alternative Budget 2025

[7] RNZ, Te Pāti Māori proposes suite of changes in new tax policies

[8] Scoop News, Fitch Report Exposes Labour’s Secret Tax Agenda, 29 April 2026

[9] Inland Revenue Department, Annual Report 1975 (Wellington: Government Printer, 1976), 23-25

[10] P.J. Skellerup, “Estate Duty and the New Zealand Horticultural Sector,” NZ Journal of Agricultural Economics 3, no. 2 (1979): 45-52

[11] Ministry of Agriculture and Fisheries, Agricultural Statistics 1980 (Wellington: Government Printer, 1981), 67-89

[12] R.M. Sandrey and S.R. Reynolds, “Structural Change in New Zealand Agriculture 1972-1987,” Review of Marketing and Agricultural Economics 58, no. 1 (1990): 15-28

[13] NZ Law Society, Submission on Estate and Gift Duties Amendment Bill (Wellington: NZLS, 1983), 8-12

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The GDP Trap: Why Technology Sceptics Keep Getting It Wrong

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Article #457 - A Canny View on Capital, Productivity and the AI Moment

I was in Wellington last month, watching my son play rugby. Between the lineouts, the bagpipes, and the cheering crowds, I found myself deep in conversation with some of the opposing team's parents (as you do). One of them, it turned out, reads this column. She'd been listening to a podcast during the week and wanted to pick my brain on something that had been bothering her: the idea that technology, the internet, and now AI doesn't move the needle on GDP. Was I convinced? Did I think AI would go the same way?

I told her I'd think about it properly and write it up. So here we are.

The argument is that the internet failed to shift GDP. Productivity growth stayed stubbornly flat through the digital revolution, and AI will likely disappoint in the same way.

Tidy. Plausible. But - wrong.

Start with the measure itself. GDP is the bluntest instrument in the economist's toolkit. It counts what gets transacted, not what gets created. It captures the volume of economic activity, but not the quality of the decisions that drive it. It has no mechanism for measuring time saved, stress reduced, options expanded or freedom gained. Judging technological progress through GDP alone guarantees you miss the point entirely.

Economist Robert Solow noticed this as far back as 1987, when he observed that the computer age appeared everywhere except in the productivity statistics – a phenomenon that became known as the Solow Productivity Paradox.¹ History eventually proved him right, just on a longer lag than the critics expected. Technology hadn’t failed. GDP was simply a poor timekeeper.

Technology is an enabler, not a product

Take the motor vehicle. The combustion engine restructured how people moved, how goods flowed, and how entire societies organised themselves. The GDP figures didn't move immediately in response to this technological feat. Infrastructure had to be built. Habits had to change. Supply chains had to be reimagined, and entirely new industries – fuel, insurance, hospitality, suburban housing – had to emerge. But once those conditions were in place, the uplift was extraordinary. We produced and shipped volumes of goods that would have been incomprehensible to the previous generation. The technology compressed time, distance and cost simultaneously, and returned something more valuable than efficiency: freedom. Freedom of movement, of choice, of attention. We enjoy freedoms our grandparents couldn't have imagined, and GDP only partially accounts for why.² The full value of what technology returns to human life has always been larger than what the national accounts can see.

The internet followed the same pattern: in its infancy, productivity statistics disappointed. Critics pointed to flat lines - exactly the lines we hear cited about AI today. Sceptics declared the revolution oversold. Then, suddenly, everything changed.

Amazon didn't just create a retail channel. It rewrote the rules of commerce, warehousing, logistics and consumer expectation. Google didn't just organise information, it fundamentally altered how knowledge was accessed and shared. The internet became the incubation platform for industries that couldn't previously exist: the gig economy, streaming, fintech, e-commerce, social media, and the vast ecosystem of software-as-a-service that now underpins nearly every business on the planet.³

GDP followed. It always does, eventually - the error is expecting it to lead.

Which brings us to AI, and the real question…

Transformation, or novelty?

The evidence points firmly to the former. AI is not an application. It is infrastructure. Just as the internet built a platform beneath entire industries, AI is now embedding itself beneath every workflow, every decision, every process across every sector simultaneously. Its speed of adoption is faster than any previous general-purpose technology, reaching 100 million users in months rather than the decades it took electricity or the telephone to achieve comparable penetration. The McKinsey Global Institute estimates AI could add between $13 and $22 trillion to the global economy annually by 2030, with generative AI alone contributing $2.6 to $4.4 trillion across industries each year.⁴

Businesses dismissing it as a "nice to have" remind me of Spencer Johnson's parable, “Who Moved My Cheese?”⁵ It describes how those who refuse to adapt are left behind not through any single dramatic moment, but through the slow, steady movement of the world around them. The cheese has moved. It is moving right now. Yet, some are still debating whether it will move at all.

For those of us who allocate capital on behalf of clients, this is not an abstract debate. It is a practical and urgent one, and it cuts to the heart of how we should think about investment discipline in a period of structural change.

History will likely repeat… eventually.

The data clearly tells us that active managers – those who believe they can outthink the market, pick winners and time the turns – have a consistently poor record of doing so. The SPIVA Scorecard, published by S&P Dow Jones Indices, shows that over a 15-year period, nearly 90% of active fund managers underperform their benchmark index.⁶

Across global markets, including Australia and New Zealand, the findings are consistent. The crystal ball is no clearer in professional hands than in the layman's. The complexity of markets, the speed of information and the weight of costs conspire to make consistent outperformance not merely difficult but statistically improbable.

A robust, evidence-based framework protects clients from the most persistent and costly mistakes in investing: reacting to noise, chasing narratives, and confusing confidence with competence.

Understanding AI and its long-term implications is not about picking technology stocks or timing a wave – that’s where you can get into trouble, à la NFTs and other failed hype stocks.

It is instead about recognising when the world is changing structurally, and ensuring that clients are positioned to participate in the full arc of that change over time – through diversified, low-cost and disciplined portfolios. The opportunity is not in predicting which companies win, but in making sure clients are in the game when the GDP finally catches up – because eventually, it will.

The woman I spoke with in Wellington already sensed this. She wasn't asking whether AI was real. She was asking whether the people managing her money understood it well enough to make sound decisions on her behalf – which is exactly the right question to be asking.

Technology enables. Capital follows. The data has never told us otherwise. The sceptics may be right on timing, but history suggests they are wrong on direction.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

  • Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

  • The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

REFERENCES

  1. Solow, R. (1987). We'd better watch out. New York Times Book Review. The observation, "you can see the computer age everywhere but in the productivity statistics", gave rise to what economists termed the Solow Productivity Paradox.

  2. Crafts, N. (2004). Steam as a General Purpose Technology: A Growth Accounting Perspective. Economic Journal. Documents the long lag between transformative technology adoption and measurable economic uplift, a pattern repeated across industrial revolutions.

  3. Brynjolfsson, E. & McAfee, A. (2014). The Second Machine Age. W.W. Norton & Company. Argues that digital technology's economic impact was systematically underestimated because GDP fails to capture consumer surplus and free digital goods.

  4. McKinsey Global Institute (2023). The Economic Potential of Generative AI. McKinsey & Company. Estimates generative AI could add $2.6 to $4.4 trillion annually across industries, with broader AI contributing $13–$22 trillion by 2030.

  5. Johnson, S. (1998). Who Moved the Cheese? G.P. Putnam's Sons. A business parable on adaptability and the cost of resisting inevitable change.

  6. S&P Dow Jones Indices (2026). SPIVA U.S. Scorecard, Year-End 2025. Over a 15-year horizon, 90% of large-cap active managers underperformed the S&P 500. Consistent findings are reported across global markets including Australia and New Zealand.

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Still Living in the Cave: Why Some Investors Refuse to See the Evidence

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Over 2,400 years ago, the Greek philosopher Plato introduced The Allegory of the Cave in his work The Republic. It told a story of prisoners chained inside a cave, staring at shadows on a wall, convinced that what they could see was all there was to know.

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