Until the Pips Squeak

Article #479

Squeezing the lemon

During the December 1918 election campaign, Sir Eric Geddes promised to squeeze Germany until you could hear the pips squeak [1]. Germany never paid anything like the bill. Squeezing is easy to promise. The juice is another matter.

More than half a century later Denis Healey borrowed the image. In Lincoln in February 1974, as Labour's shadow chancellor, he promised to squeeze property speculators until the pips squeaked. The press turned that into squeezing the rich, and the line has stood for the rich in general ever since [2].

Labour had committed itself to a wealth tax. Healey spent five years as Chancellor trying to design one. Looking back in 1989, he admitted he could not draft one that would raise enough revenue to be worth the administrative cost and the political hassle [3].

In the meantime Britain ran out of money. On 28 September 1976 Healey was at Heathrow, bound for the IMF annual meetings, when sterling slid. He turned back to the Treasury and announced that Britain would seek a record $3.9 billion loan. The Letter of Intent, signed on 15 December, committed the government to deep cuts in public spending [4][5].

The squeezer had become the squeezed. Within three years of promising to squeeze the speculators, the Chancellor was negotiating terms with Britain's creditors. It is worth remembering as New Zealand heads to the polls on 7 November.

What is on the table

The Green Party proposes a 2.5% annual tax on net assets above $10 million, covering property, shares and bonds, with the family home exempt. Alongside it sits a 33% capital acquisitions tax on inheritances and gifts worth more than $1 million, paid by the person receiving, with family homes and family farms exempt [6].

The revenue would fund a $10,000 tax-free threshold and a 45% top rate above $160,000, which the Greens say would cut tax for 96% of New Zealanders [6].

They are not alone. Te Pāti Māori want a targeted wealth tax on the wealthiest 3%, at 1.5% on net assets above $2 million, 2% above $5 million and 2.5% above $10 million [7]. Opportunity proposes an annual land tax of 1.75% on urban land and 0.5% on rural land [8]. Same instinct, different coat. Across the left, the reach is for a levy on what you hold rather than what you receive.

And here is the irony. Opportunity is the kingmaker in the latest 1News Verian poll, on 8%, so its plan is not idle talk [9]. Yet Gareth Morgan, who founded the party now called Opportunity, argued on 10 October that “Wealth taxes kill entrepreneurship” and called the tax plans of Labour, the Greens and now Opportunity regressive for New Zealand [10]. The man who once campaigned to rid the country of cats now seems keen to see off his own creation.

Who could deliver it

Before anyone panics, a reality check. National, ACT and NZ First oppose wealth, inheritance and comprehensive capital gains taxes [11]. Labour has ruled out a wealth or inheritance tax. Its own centrepiece is a 28% tax on gains from the sale of investment and commercial property, excluding the family home, applying only to gains made after 1 July 2027 [12].

Under MMP, the Green package could only arrive as the price of a coalition, and then only in whatever form the negotiation produces. Election night tells you the direction. The coalition talks tell you the substance.

A valuation is not cash

There is a hard truth under all of this. A wealth tax is levied on a valuation. It is paid in cash.

Take an owner with $20 million of net assets, most of it a business built over two generations. Under the Green rules the first $10 million is free. The second $10 million attracts 2.5%. That is $250,000 a year, every year, due whether the business had a record year or a bad one. The business does not pay it. The owner does, from income already taxed, from borrowing, or from selling a slice of the thing that employs people.

A lower threshold bites harder. Take a family company worth $14 million, with the family home left out. The Greens tax the $4 million above their line, which is $100,000 a year. On Te Pāti Māori's published tiers, treating each band as a marginal rate, the same company faces about $245,000 a year. Their published summary leaves open whether the family home counts towards the $2 million base.

Then someone has to value it. Listed shares are easy. So, mostly, are an orchard or a commercial building in Hastings, because a valuer can work from recent sales. A private trading company is not. Nor is a minority shareholding in a family business or a partnership interest. Every annual valuation is an argument with Inland Revenue waiting to happen.

As the old line goes, you may call a cat a fish, but it can’t swim. You may call a valuation wealth, but it can’t pay the bill.

The Greens’ own costings assume 28.5% of the super-rich tax is never collected, lost to avoidance and minimisation, on advice from the Parliamentary Library informed by Treasury [13]. When the people designing a tax concede that more than a quarter leaks away before it starts, the rest of the brochure is a wish.

The proposed inheritance tax has the same flaw in a different coat. Because the person receiving pays, a son or daughter who inherits a $3 million share of a family business could face a bill in the hundreds of thousands of dollars. The asset does not come with that cash attached.

The scoreboard

The OECD found 12 member countries had a net wealth tax in 1990 and only four by 2017. Repeals were usually justified on efficiency and administrative grounds, and the taxes often failed to meet their redistributive goals [14].

Norway is the case study everyone reaches for. In 2022 a rise took its top combined rate to 1.1%. That year more than 30 billionaires and multimillionaires left, according to Dagens Næringsliv [15]. Capital has legs. Its owners have passports.

The Netherlands has just learned the same lesson the quick way. In February the lower house passed a law taxing the annual rise in value of shares, bonds and crypto at 36%, whether or not anything was sold. A petition gathered more than 61,000 signatures and coalition senators preferred a tax on sale. The cabinet has now proposed taxing shares and bonds only when they are sold, from 1 January 2028 [16]. Tax the cash, not the valuation.

Source: Regen-Fin

The grain of truth

The counter-case deserves a fair hearing.

New Zealand has no general capital gains tax and no inheritance tax [11]. A salary earner pays tax on every dollar from the first. A long-term property or share investor can see large gains taxed lightly or not at all. That is a genuine gap, and these parties are at least trying to fill it with a number rather than a slogan. The OECD itself accepts that where capital is lightly taxed, or inheritances are not taxed, a net wealth tax may play a substitution role [14].

The administration case is not all one way either. Research in Fiscal Studies puts the central cost of running a well-designed UK wealth tax at about 0.1% of taxable wealth for taxpayers and 0.05% for the tax authority [3]. That counts the cost of collecting the tax, not the cost to the owner of finding the cash.

But a wealth tax is the hardest tool for that job. A capital gains tax is levied when cash changes hands. Even Labour's narrower version bites only on sale. A wealth tax is levied when it does not. It taxes the paper, year after year, and leaves the owner to find the money.

Whose interest is being served

For families, the practical question is not who you vote for. It is whether your structure works under more than one government.

Who holds what. How it would be valued, and by whom. Where the cash would come from in a lean year. Whether the succession plan still works if a 33% tax falls on the next generation. Whether a trust settled decades ago still serves the people it was meant to.

Do not restructure in a panic for a policy that may never pass. But do know your position, your structures and your succession plan before election night hands the file to a coalition room. Those are planning questions, and they are better answered calmly before a policy lands than in a rush after it.

Healey learned the lesson over five years. The pips squeaked, but it was the Treasury that ran out of juice. Grow the pie first, then argue about the slice.

Position for your goals, not for a caucus vote. When the noise gets loud, seek 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. Langworth, R. (2014). Squeeze Germany until the pips squeak. Churchill Project, richardlangworth.com. On Sir Eric Geddes, First Lord of the Admiralty, and the 1918 election. The Cambridge speech of December 1918 is recorded at phrases.org.uk.

2. Healey, D. Speech at Lincoln, 18 February 1974, reported in The Times, 19 February 1974 (as quoted in Wikiquote: Denis Healey). Often misreported as “tax the rich until the pips squeak”. See also LabourList (October 2015), 10 of the best Denis Healey quotes.

3. Burgherr, D. (2021). The costs of administering a wealth tax. Fiscal Studies, 42(3-4), 677-697 (quoting Denis Healey, 1989). https://doi.org/10.1111/1475-5890.12276

4. Pickford, S. (9 December 2016). Britain’s big bailout, December 15, 1976. The World Today, Chatham House.

5. OMFIF (28 September 2016). When Britain went bust. https://www.omfif.org/2016/09/when-britain-went-bust/

6. 1News (21 June 2026). Greens propose wealth, inheritance taxes to fund income tax changes. https://www.1news.co.nz/2026/06/21/greens-propose-wealth-and-inheritance-taxes-to-fund-income-tax-changes/

7. 1News (26 August 2026). Te Pāti Māori launches new tax policy, says most would pay less. https://www.1news.co.nz/2026/08/26/te-pati-maori-launches-new-tax-policy-says-most-would-pay-less/ and Deloitte New Zealand (September 2026). Election tax policies, part three.

8. Opportunity Party (May 2026). Tax Reset policy. https://cdn.opportunity.org.nz/documents/policy/Opportunity%20Policy%20-%20Tax%20Reset.pdf, and 1News (30 June 2026). Explainer: What are the Opportunity Party’s policies? https://www.1news.co.nz/2026/06/30/explainer-what-are-the-opportunity-partys-policies/

9. 1News (13 October 2026). Poll: Hipkins and Luxon now neck and neck, Opportunity on track for 10 MPs. https://www.1news.co.nz/2026/10/13/poll-hipkins-and-luxon-now-neck-and-neck-opportunity-on-track-for-10-mps/

10. Morgan, G. (10 October 2026). Opportunity’s tax plan joins Labour, Greens as regressive for NZ. Newsroom. https://newsroom.co.nz/2026/10/10/gareth-morgan-opportunitys-tax-plan-joins-labour-greens-as-regressive-for-nz/

11. KPMG New Zealand (August 2026). Election 2026 party tax policies tracker (updated to 6 August 2026), and Grant Thornton New Zealand (2026). Tax policy at the crossroads: growth, simplicity and redistribution in Election 2026.

12. Deloitte New Zealand (August 2026). Election tax policies, part two (Tax Alert), and interest.co.nz (June 2026). Labour finance spokesperson Barbara Edmonds says the only tax policy Labour will campaign on is its capital gains tax.

13. interest.co.nz (2026). Natalia Albert says finally the Green Party has mostly got its tax policy right (28.5% of the super-rich tax assumed uncollected, on Parliamentary Library advice informed by Treasury). https://www.interest.co.nz/public-policy/139129/natalia-albert-says-finally-green-party-has-mostly-got-its-tax-policy-right

14. OECD (2018). The Role and Design of Net Wealth Taxes in the OECD. OECD Tax Policy Studies No. 26. OECD Publishing, Paris.

15. IFC Review (April 2023). Europe’s super-rich abandoning Norway at record rate as wealth tax rises slightly (citing Dagens Næringsliv).

16. IMI Daily (16 September 2026). Netherlands retreats from 36% unrealized gains tax, will propose sale-based model instead; and DutchNews.nl (30 September 2026). The box 3 tax changes: what they are and what they mean for you.

What a Chilean coin knows about breaking up the supermarkets

Article #476

A friend and colleague in Chile was knocked off his bike by a delivery motorcycle, rupturing a hamstring. Four months off the bike. I wanted to post him honey from our hives, but quarantine rules will not let honey near a border, so he got possum and merino socks instead. Back came an intriguing coin.

One coin, two sides. Seven economists, the “Chicago Boys”, are featured, with one face honouring them as the architects of Chilean economic development. On the reverse sits Chile’s coat of arms and its national motto: Por la razón o la fuerza. By reason or by force. The coin tells the story of a country that tried both.

Nick with Rodrigo and the Chilean coin he kindly gifted him

From 1971 the Allende government nationalised copper, with Congress voting for it. It took the banks, and by late that year the state controlled seventeen of them holding around 90% of the country’s credit. Factories were requisitioned into public ownership. Wages rose and prices were held down. [1]

Then the shelves emptied. A black market grew. By January 1973 the government was rationing dozens of essentials, bread among them, and neighbourhood supply and price committees decided who got what. By December 1973, consumer prices were 508% higher than a year earlier. [2]

Now look at our ballot.

The Greens would force Foodstuffs and Woolworths to sell 120 stores and two distribution centres into public ownership as KiwiMart, at a cost of $2.8 billion. New Zealand First would buy the BNZ back from NAB and merge it with Kiwibank, at $7.5 billion upwards, with compulsory acquisition held in reserve. Labour would not take ownership but would set the price by banning excessive pricing on essentials. National, which normally resists this sort of thing, would split Pak’nSave from New World and Four Square if the Commerce Commission agreed that the separation would leave shoppers better off. [3]

Four parties, four instruments, one instinct. Peters calls it “taking back our country” rather than nationalisation, recalling the warning attributed to Emerson: “The louder he talked of his honour, the faster we counted our spoons.”

The grievance is real. The 2022 market study found the duopoly controlled about 90% of main grocery shopping, with excess profits the Commission then put at more than a million dollars a day. Four Australian-owned banks hold about 84% of lending. Nobody doing the weekly shop needs convincing that something is wrong. [4]

Source: Annual Grocery Report 2025/2026 - Commission analysis of sales revenue provided by industry participants and Statistics New Zealand data. RGR = Regulated Grocery Retailer

National’s proposal is the only one that changes market structure rather than ownership. It leaves every store in private hands and defers to the Commerce Commission. Willis is right that incremental reform has not delivered. ACT is against it. Foodstuffs points out that more than 500 owner-operated stores sit inside the two co-operatives. [5]

But all four reach for the till when the harder question is why nobody can build a shop.

Here is what that question looks like on the ground, twenty minutes from our Hastings office. In 2012, Foodstuffs North Island bought a site across the road from Pak’nSave Tamatea in Napier. It sold the site in 2015 with a covenant barring its use as a supermarket, one of a set running for up to 99 years. Woolworths had two stores in central Napier and none in the south of the city. The High Court found the covenant had been lodged to stop Woolworths, or anyone else, from developing a supermarket there. Justice Radich called the conduct deliberate and serious and, in August 2024, fined Foodstuffs $3.25 million, the largest penalty yet under section 28 of the Commerce Act. [6]

That is a Napier site that could have carried a third banner but did not. No act of nationalisation would have put one there. A rule did the damage, and a rule undid it. Grocery land covenants were banned in 2022 and are now unenforceable, but the Commission pursued the case anyway. [8]

Milton Friedman drew a distinction worth keeping in mind here. Being pro-free enterprise is not the same as being pro-business. Business corporations in general, he wrote, are not defenders of free enterprise but one of the chief sources of danger to it. Almost every owner wants open competition for everybody else and a little protection for himself. [7]

A covenant on a title is a moat dug by a company. A consent that takes years is a moat dug by a council. Both keep the third banner out, and the shopper pays for both. Defending property rights is not the same as defending the incumbent.

Yet four years on, there is still no third full-line chain in this country. Costco entered as a warehouse club, with its second site set to go up in Drury’s fast-tracked town centre. The Government now has a bill before the House creating a consenting express lane for new supermarkets. That is the admission. The binding constraint is not who holds the title. It is how long it takes to get a shop out of the ground. [8]

What changed Chile was not who held the shares but the conditions for competition: stable money, open entry, enforceable contracts and taxes that businesses could live with. From 1987 to 2015, the proportion of Chileans living below the national poverty line fell sharply, while income per person rose substantially. [9]

Scotsman Adam Smith made the same case centuries earlier: little else was needed to carry a state from the lowest barbarism to the highest degree of opulence but peace, easy taxes and a tolerable administration of justice. [10]

Source: Commerce Commission New Zealand

Herfindahl-Hirschman Index (HHI) takes the market shares of each firm in a market.

New Zealand’s grocery industry HHI for 2025 was 3,585 which indicates limited competitive pressure. Concentration in Auckland also remains high, with the HHI increasing to 2,635 in 2025, from 2,561 in 2024.

Click to view Annual Grocery Report

Smith’s other observation was our propensity to truck, barter and exchange. Nobody directed the socks or the coin, no price was named, and both of us came out ahead. The only authority involved was the biosecurity rule that stopped the honey, exactly the sort of plain, predictable rule Smith meant.

The honest part is what the coin leaves off. Chile’s reforms were imposed by a dictatorship, which stripped them of legitimacy. Growth continued after democracy returned in 1990: force set the policy, but reason made it stick. [9]

There is a cost in all of this that appears in none of the parties’ costings, and it lands on people who did not vote for any of it.

Every valuation rests on what a business will earn and the rate at which those earnings are discounted. Political risk goes into that rate. Lift it and the value falls, with no change in the till.

Neither Foodstuffs nor Woolworths New Zealand is listed here, and BNZ belongs to NAB, so no New Zealand portfolio moved directly on those announcements. The precedent is what moves. If a government can force an owner to sell a profitable business at a price set by the Crown, or legislate its structure apart, every regulated business in this country carries a little more risk than it did a month ago. Contact, Meridian, Genesis and Mercury are on that list, and New Zealand First has named them for a split of its own. So are the ports, airports and lines companies.

KiwiSaver held $138.8 billion at March 2026. Those companies sit inside it. The people who own them are not speculators. They are teachers, shearers and people in their sixties who have been contributing since 2007. [11]

Property rights are not an ideological flourish. They underpin every valuation of the shares held in your portfolio and KiwiSaver.

Fix the rules and competition follows. Buy the shops and the government owns the queue.

The Chileans put both options on their coat of arms and have tried each one: by reason or by force.

The vote will decide which of those we reach for. How you respond is still your choice and worth good 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. Espinosa, R. (2021). Salvador Allende’s development policy: lessons after 50 years. Economic Affairs; De Vylder, S. (1974). Allende’s Chile. Cambridge University Press.

2. Edwards, S. (2023). The Debauchery of Currency and Inflation: Chile, 1970–1973. NBER Working Paper 31890; Datosmacro.com. (1973). IPC de Chile 1973, reporting December 1973 CPI inflation of 508.0% year-on-year.

3. RNZ and 1News, 16 September 2026, National to pursue Pak’nSave and New World break up; NZ Herald, 3 September 2026, Greens promise to nationalise 120 supermarkets; RNZ and interest.co.nz, 17 May 2026, NZ First proposal to buy back BNZ and merge with Kiwibank; NBR, 16 September 2026, Labour price gouging policy.

4. Commerce Commission (2022). Market study into the retail grocery sector: Final Report, 8 March 2022; Reserve Bank of New Zealand banking sector statistics, 2026.

5. RNZ and 1News, 16 September 2026, National to pursue Pak’nSave and New World break up. The independent analysis cited by Nicola Willis modelled grocery prices 3.5% lower after one year and 5% lower after six, with $12.6 billion of consumer benefit over twenty years. Foodstuffs and ACT responses reported the same day.

6. Commerce Commission v Foodstuffs North Island Ltd, High Court, Wellington, August 2024; Commerce Commission media release, 8 August 2024; Simpson Grierson, Competition and Consumer Law Update, August 2024.

7. Friedman, M. (1999). The Business Community’s Suicidal Impulse. Cato Policy Report, Vol. XXI No. 2, for the quoted sentence; the wider argument runs through Friedman, M. and Friedman, R. (1980). Free to Choose. Harcourt Brace Jovanovich.

8. Commerce (Grocery Sector Covenants) Amendment Act 2022; Commerce Commission v Foodstuffs North Island, $3.25 million penalty, 2024; RNZ and Beehive, 12 November 2025, second Costco store at Drury and the supermarket consenting express lane bill.

9. World Bank. Poverty headcount ratio at national poverty lines (% of population) – Chile, 1987–2015; World Bank. GDP per capita (constant 2015 US$) – Chile, 1987–2015; Edwards, S. (2023). The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism. Princeton University Press.

10. Stewart, D. (1793). Account of the Life and Writings of Adam Smith LL.D., quoting a paper by Smith of 1755; Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations, Book I, Chapter 2.

11. Plan For Life research, KiwiSaver funds under management at March 2026.

Into the Tenth Year: the Froth, the Fear and What I Got Wrong

Article #475

This week Canny View rolls into its tenth year under that masthead. I had been writing and being interviewed for a good while before the name went up in print, but the masthead has its own anniversary, and this is it. Ten years is also the period our industry uses to judge anything worth judging, so rather than mark the occasion with sentiment, let us mark it by looking at the decade just gone.

Rewind to 2016. John Key was Prime Minister and would resign within three months. The Official Cash Rate had just been cut to 2 percent, a record low at the time. Bitcoin was about US$600. KiwiSaver held roughly $35 billion. New Zealand, after a remarkable run, had been one of the best performing developed sharemarkets in the world over the preceding decade.

AI was a research topic, not an investment theme, and rockets were the business of governments. Had you suggested the most talked about launch company of the coming decade would be firing satellites into orbit from a paddock at Mahia, you would have been humoured and offered another drink.

The settled view then was that returns would be thin for years. It was wrong, as it usually is. The scoreboard since then is a useful reminder of how poorly certainty ages.

The scoreboard

Including dividends, a dollar invested in United States shares in September 2016 is worth roughly four times what it was. Morningstar puts the return of US equity funds at 13.3 percent a year over the decade to December 2025, the most profitable ten years in the category's history.

View fullsize

Source: Trading View

The NZX 50 almost doubled, reaching 13,757 at last close*. Respectable. But the market that led the developed world to 2016 spent the ten years after it well behind.

Then there is Rocket Lab. Launching from Mahia, listed on the Nasdaq, and worth around NZ$80 billion. One company, built here and launching from here, is worth two fifths of every company on our own sharemarket combined, while sitting outside it.

Leadership rotates without warning and never announces the handover. That is the whole argument for owning the world rather than the paddock you happen to live in.

View fullsize

Source: Stuff

What we lived through to get there

Four times your money looks serene on a chart, yet it was not serene to live through: the late 2018 slide, the 2020 crash that took a third off global markets in thirty-three days, the 2022 bear market when shares and bonds fell together, and this year’s crypto unwind and Middle East tension. Each one was a headline. Not one was a reason to dismantle a properly built portfolio.

View fullsize

Source: CRSP Market Deciles 1-10 Cap-Based Portfolio (total returns in USD). All US exchanges rebalanced quarterly.
Data provided by the Center for Research in Security Prices (CRSP), University of Chicago.

Edmund Burke wrote in 1790 that because half a dozen grasshoppers make the field ring with their importunate chink, while thousands of great cattle chew the cud in silence, we should not imagine that those who make the noise are the only inhabitants of the field.

Two hundred and thirty six years on, the grasshoppers have a podcast and a following. The cattle still say nothing.

The habit gap

Here is the finding that should stop every investor cold. Morningstar examined 23,000 American funds over the same ten years. The funds returned 9.9 percent a year; the average dollar invested in them earned 8.7 percent. That gap is not fees and not fund performance. It is timing: buying after the good news and selling after the bad. Across the decade, it cost investors about US$3.8 trillion.

The encouraging half is that the gap shrank wherever temptation was hardest to indulge. Investors in broadly diversified all-in-one funds captured almost all of their return; those in index funds gave up 0.1 of a percentage point. That is not evidence that advisers rescue people mid-panic. It is evidence that the gap was smallest where the structure had already removed the decision: broad diversification, rebalancing on a date rather than a feeling, and contributions that arrive whether or not you fancy investing.

Architecture, not heroics. Less doing, more owning.

Bitcoin, meme coins and the black dog

Bitcoin has been the decade's most spectacular chart, from about US$600 to a peak of US$126,209 in October 2025, and its clearest lesson in the gap between an asset's return and an investor's return. Crypto ETFs listed since January 2024 returned 8.5 percent a year to 30 June 2026, yet the average dollar in them lost 5.8 percent a year, a gap of more than fourteen points. Money arrived after Bitcoin had climbed and left after it had fallen. Beneath it sits the meme coin, priced on nothing but the hope that the next person is willing to pay more.

Chasing it has been like chasing a black dog in the night: money pouring after something you cannot quite see, arriving after the climb and leaving after the fall. Calling something digital gold does not make it gold.

Where I got it wrong, and where the design spared me

Very few of our macro calls have gone badly wrong across the decade, and that is not luck dressed as skill. Do not mistake us for a passive firm. We work very hard, but the work goes into engineering, not forecasting. The plan is engineered on evidence, tested and rebuilt, and everything flows from it.

Nor are the portfolios index trackers. They lean deliberately on the dimensions the research has borne out over decades: company size, relative price, and profitability, the work of Fama and French and what followed it. That is a design decision, made on evidence and held, rather than a view on next quarter. We are active in the design and the planning, not in the stock picking or the market timing. My job is to engineer, not to predict.

The errors that cost were process errors. Choosing who you build your business with is pivotal, and I have twice chosen badly: one supplier over-promised, one developer under-delivered. Neither cost much money, but both cost time, and time compounds into the money you never got around to making. The lesson is the old one: it is either up to standard or down to price.

Then two judgement calls, neither about markets.

I hoped our love affair with residential property would cool. It has not, despite the asset delivering one of its more sobering decades. The average New Zealand house is down 15 to 17 percent from its 2021 peak in dollar terms and 28 to 31 percent adjusted for inflation, twice as deep as the post-global financial crisis trough of 16 percent. Here is the part that stopped me: in real terms, Cotality has the average house worth about what it was in mid-2016. A full decade, and in purchasing power the family home has gone precisely nowhere. And still we treat one leveraged, undiversified, illiquid asset in one small corner of the world as a retirement plan.

View fullsize

Source: CoreLogic

The House Price Index (HPI) measures the movement in house prices throughout New Zealand, providing an indicator of capital growth. The data is compiled and published by CoreLogic. Data from 1990 is available in the key graph data file.

The second was not a market call at all. I assumed my father would age gracefully. He died at 76. Every retirement plan I build carries a longevity assumption, and I had quietly applied a generous one to my own family without examining it. I see the same blind spot in households: people can often recite every detail of the money: salaries, perks, KiwiSaver contributions, cover held through work, yet cannot say when they last had a check-up, or what their cholesterol, PSA, or calcium heart score might be. We measure what is easy to measure and quietly assume the rest will hold, but the plan assumes years you may not be given, so spend some of them while you can.

Beyond those, I have been fortunate to take counsel from some beautiful minds with big hearts, which is rather the point of this column.

What has not changed

A client without a documented plan is a client without a map: the journey is perhaps exciting, but the destination is unknown and chosen by no one. When the values are known, the decisions are easy. Clients who could tell me what the money was for held their nerve in March 2020; those who could only tell me what it was worth generally did not. We are in the goal achievement business, not the market beating business, and beating the market while missing your goals is a poor trade.

A fiduciary's job is not to keep you comfortable. It is to speak the unspoken truth and sit opposite you when the noise is loudest. Some of the most valuable advice of the past decade fitted into two words: do nothing.

Evidence favours patience. Like a freshly poured beer, you do not drink it while it is all head. Let the froth settle. The investors who did best over the decade were rarely the cleverest in the room. They were the ones who repeatedly did the dull thing when it felt wrong.

Whatever you have built so far is the smaller half of the story. What matters is what is still in front of you, and whether it is engineered rather than merely hoped for.

* NZX 50 as at close on  Thursday, September 17 2026 = 13,756.59

---

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

---

Cheap Money has a Maturity Date

Article #474

In January 1672, Charles II stopped paying his creditors. 

The Stop of the Exchequer was announced as a temporary suspension. A delay, not a default. The distinction mattered a great deal to the Crown and not at all to the people who were owed the money. A borrower who cannot pay on the day they promised has defaulted, whatever the announcement calls it. 

The goldsmith bankers of Lombard Street, who had lent the Crown the money, were ruined. English government credit took a generation to recover. What eventually replaced it was something better than a king's promise: a funded national debt, the Bank of England in 1694, and a Parliament standing behind the borrowing rather than a monarch who could walk away from it. 

Over the century that followed, Britain outlasted Louis XIV and then Napoleon, both of whom governed larger and wealthier countries. Britain did not win because it was richer. It won because it could borrow more cheaply, for longer, and go on borrowing when its rivals could not. Creditworthiness turned out to be a weapon. 

The price of borrowing is not set by announcement. It is set at auction, by whoever turns up with capital and a choice about where to put it. Central banks can turn up too, and for a decade they did. But the auction reasserts itself the moment the official bid is withdrawn.

The OCR is not the whole story 

On 2 September the Reserve Bank lifted the Official Cash Rate to 2.75%, with annual inflation at 4.1% in the June quarter, driven largely by fuel prices flowing from the Middle East conflict [1]. 

The OCR sets the short end. It does not set the rate on a five-year term deposit, a two-year fixed mortgage, or a ten-year bond. Those price off wholesale rates, and wholesale rates are set in a global auction New Zealand does not run and cannot influence. 

A great many borrowers are turning up to that auction at once. 

Germany is funding a substantial military expansion by borrowing, with no corresponding retreat from its welfare state. Britain plans to expand its own. The bill for both goes to the same auction. The pattern repeats across the West, while the technology companies raise enormous sums to build artificial intelligence data centres. 

Nor is this only a Western habit, and China is the clearest case of a number that is not what it is announced to be. Beijing's headline deficit for 2026 is 4% of GDP. Once the CNY 4.4 trillion of local government special purpose bonds and the CNY 1.3 trillion of ultra-long special treasury bonds sitting outside that headline are counted, the consolidated deficit reaches a record 9.1% of GDP [2]. National debt is set to rise by close to CNY 14 trillion this year alone. 

The rate matters more than the level. Mark Williams, chief Asia economist at Capital Economics, calculates that China's total debt outside the financial sector has doubled as a share of GDP since 2010 and now tops 300%, putting its indebtedness, in his words, in a league of its own. The comparison most readers expect runs the other way. Broad American debt, public and private, has fallen as a share of GDP since 2010, to around 265% [3]. Nearly 40% of China's is owed by the public sector, local government financing vehicles included [3]. 

The numbers are not small. OECD central governments issued USD 17 trillion of bonds in 2025 and are projected to issue USD 18 trillion this year. Corporates added USD 6.8 trillion. All of it lands in a market where central banks, having spent a decade as the buyer of last resort, have stopped buying [4]. Local government sits in the same queue, one step removed, borrowing through agencies that price off the sovereign. 

Source: Global Debt Report 2026 | Click to view the full report

More bonds offered, not proportionately more buyers at the same price, so the yield must rise to attract the capital. German ten-year yields are at their highest since 2011, Japanese yields have crossed 3%, and British gilts are at their highest since the financial crisis [5]. 

The honest counter-argument 

It would be tidy to say that governments and technology companies are crowding everybody else out, and leave it there. It would also be a little too tidy. 

Corporate borrowing did reach a record in 2025, USD 13.7 trillion raised across bond and syndicated loan markets, passing the 2021 peak. Nine large technology companies accounted for USD 122 billion of it, around 45% of all bond issuance by technology firms worldwide and more than three times the annual average since 2000. Yet the OECD's own assessment is that this came to no more than 15% of investment grade issuance by non-financial firms in the United States, and was absorbed without market-wide friction [6]. Capital markets are deep, and the pool is not fixed in the way the word crowding suggests. 

There is also a competing explanation for the move in yields that has nothing to do with supply at all. The oil price shock has reignited inflation expectations, and investors demanding more compensation for inflation will lift yields whether or not another bond is ever issued. 

Both explanations are probably doing some of the work. That is usually how markets behave, and anyone offering a single clean cause is selling something. What is not in dispute is the direction of travel, or that a borrower refinancing in 2029 will pay whatever the market asks in 2029, regardless of which explanation was correct. 

There is a second detail in the OECD data worth sitting with. Issuers have been shortening their maturities. In 2025 the ratio of bonds issued at thirty years and beyond, compared with those issued at one to five years, was the lowest since at least 2008 [4]. Short borrowing is cheaper today. It also means the debt comes back around sooner, and more often. That is a decision to pay less now, in exchange for finding out later. 

Cheap money has a maturity date 

A higher yield is not felt today. It is felt at maturity. 

Nearly 80% of what OECD governments borrow this year is not new spending at all. It is refinancing debt that already exists [4]. Borrowers who locked in cheap fixed rates a few years ago keep them right up to the day the debt rolls off and must be refinanced at whatever the auction is charging then. It will bite hardest where the debt is largest and the maturities shortest. Heavily indebted institutions are not repriced gradually. They are repriced in instalments, on a timetable set years ago by people who are frequently no longer there. 

Source: Global Debt Report 2026 | Click to view the full report

New Zealand is not exempt. In March, Fitch revised New Zealand's outlook to negative while affirming the AA+ rating, forecasting general government debt at 56% of GDP by June 2027 and citing delayed fiscal consolidation [7]. Six days later the Local Government Funding Agency received the same revision, automatically, because as a government-related entity its rating is equalised with the Crown's [8]. LGFA provides most council borrowing in this country, Hastings included. 

Everyone drinks from the same pond.

Sovereigns, councils, banks, businesses, then the household. Different straws at different depths, the same water. Nobody in Taihape voted on the German defence budget. It is in the swap rate all the same, and the swap rate is in the mortgage at renewal. 

Milton Friedman's advice was to keep your eye on one thing only, how much government is spending, because that is the true tax. Thatcher put it less gently, that we have been ruled by men who live by the illusion that you can spend money you have not earned without eventually falling into the hands of your creditors. Whatever one makes of the politics, the arithmetic has not been repealed. The auction is where the bill arrives, and it arrives with interest. 

What this means for the investor 

For anyone with savings, this cuts both ways. 

After a decade of being told the coupon was a rounding error, it is worth having again. Income that had effectively disappeared from conservative portfolios has come back, and for retirees drawing on capital that is a meaningful improvement rather than a technical one. 

But a yield is not a gift. It is compensation, and the whole question is compensation for what. Credit quality, term, currency, and who stands behind the issuer. A bond paying more than the one beside it is priced that way for a reason, and the reason is rarely generosity. When someone offers a return well above the market for what they describe as much the same risk, one of those two claims is wrong, and it is not usually the return. 

Nor is the answer to reach for duration simply because longer bonds pay more today. Term is a risk, not a free lunch, and the investor who buys a long maturity to capture an extra sliver of yield has taken a view on the next decade of inflation whether they meant to or not. 

Bonds belong in a well-engineered portfolio. Not every bond belongs in yours. All bonds are equal, as Orwell might have put it, but some are more equal than others. 

Charles II discovered that credit, once lost, is not bought back. It is earned back, slowly, and usually by someone else's generation. The investor who reaches for yield without asking what it is paying for learns a smaller version of the same lesson. That question is easier to answer when the person answering it is bound by duty to put your interests before their own.

---

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. Reserve Bank of New Zealand (2 September 2026). OCR increased by 25 basis points to 2.75%. https://www.rbnz.govt.nz/news-and-events/news/2026/09/ocr-increased-by-25-basis-points-to-2-75 

2. China Power Project, Center for Strategic and International Studies (2026). Making Sense of China's Government Budget. https://chinapower.csis.org/making-sense-of-chinas-government-budget/ 

3. Fortune (11 May 2026). Forget US debt, China's total borrowing is in a league of its own. https://fortune.com/2026/05/11/us-debt-china-total-borrowing-public-private-gdp-ratio-lgfv/ 

4. OECD (2026). Global Debt Report 2026: The investor base for government and corporate bond markets. https://www.oecd.org/en/publications/global-debt-report-2026_e9d80efd-en/full-report/the-investor-base-for-government-and-corporate-bond-markets_e68b90b3.html 

5. CNBC (3 September 2026). Global bond yields rising: Treasuries, JGB, Bunds. https://www.cnbc.com/2026/09/03/global-bond-yields-rising-treasuries-jgb-bunds.html 

6. OECD (2026). Global Debt Report 2026: Corporate debt market outlook in a transforming world. https://www.oecd.org/en/publications/global-debt-report-2026_e9d80efd-en/full-report/corporate-debt-market-outlook-in-a-transforming-world_cf86a220.html 

7. Fitch Ratings (20 March 2026). Fitch revises outlook on New Zealand to negative; affirms at AA+. https://www.fitchratings.com/research/sovereigns/fitch-revises-outlook-on-new-zealand-to-negative-affirms-at-aa-20-03-2026 

8. New Zealand Local Government Funding Agency (26 March 2026). Credit Rating Outlook Revised to Negative by Fitch Ratings. NZX announcement. https://announcements.nzx.com/announcement/469979 

---

Don't Buy All You Can Borrow

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

---

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

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. 

View fullsize

Source: ourworldindata.org/grapher/labor-productivity-per-hour  

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. 

---

When the Process Becomes the Cover

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.

---

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

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.

---

We Need to Talk About Envy

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)

The Era of the Colossal IPO, and the Small Investor

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.

https://www.statista.com/chart/36315/largest-ipos-of-all-time/

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.

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

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.

Death and Taxes

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

The GDP Trap: Why Technology Sceptics Keep Getting It Wrong

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.

Air New Zealand: The Worst of Both Worlds

Article #452

Fifty percent government-owned, operating like a budget carrier, charging premium prices, Air New Zealand occupies the most uncomfortable position in aviation. It’s neither fish nor fowl: not quite private, not quite public, delivering neither the efficiency of true competition nor the service standards of genuine public ownership.¹

Welcome to the warm embrace of collectivism. It’s getting warmer, and not in a good way.

The Flightless National Carrier

The symbolism writes itself. Air New Zealand, like the kiwi, has become a flightless bird, grounded by contradictions, unable to soar because it refuses to commit. Government ownership was supposed to protect the national interest. Instead, it has created an airline that enjoys privileges without facing consequences: government contracts, preferential treatment, implicit bailout guarantees, all without the full discipline of the market or the scrutiny of complete public accountability.¹

When things go wrong, taxpayers are on the hook. When things go right, shareholders collect the dividends.

New Zealanders know this intimately: the airline received NZ$2.3 billion in Crown support during COVID-19.² The structural trap was set long before the current crisis.

The World is on Fire. Air NZ has a Newsletter.

On 8 April 2026, CEO Nikhil Ravishankar sent customers a carefully worded email. “Kia ora Nick,” it began warmly. He wanted to update customers on jet fuel prices. Fuel had surged from around US$85–90 a barrel to above US$200, effectively doubling Air New Zealand’s daily fuel bill from NZ$4 million to NZ$8.5 million. Schedule cuts for May and June were confirmed. More were promised to be “deliberate and carefully considered.”³

Warm. Reassuring. Human, even, which is ironic, given what you encounter when you actually try to contact the airline.

This crisis is not Air New Zealand’s alone. Iran’s effective closure of the Strait of Hormuz, through which over 20% of global seaborne jet fuel normally flows, has sent shockwaves through the entire industry.⁴ More than 14,000 flights globally have been cancelled since late February 2026.⁵

Ryanair’s Michael O’Leary has predicted summer cancellations of 5–10% across Europe.⁶ United Airlines’ CEO Scott Kirby has warned his carrier’s fuel bill could double to US$20 billion.⁷ Lufthansa’s CEO has assigned teams to contingency planning.⁸ SAS has cancelled over 1,000 flights in April alone.⁹ Energy analysts at Kpler warn that even if the Strait reopened tomorrow, prices would not fall quickly: production has been taken offline, and the market hangover could last well into 2027.¹⁰

The difference between Air New Zealand and those carriers is structural. Most are pure private enterprises; they face consequences. Air New Zealand faces a shareholder with a printing press.

The Numbers are Brutal

Forsyth Barr’s March 2026 report is stark: Air New Zealand could book a net loss of $226 million in FY2026, and $148 million in FY2027 if fuel costs remain elevated.¹¹ Macquarie analysts warn that capacity cuts will fall primarily on domestic and Tasman routes.¹² The share price has reflected the outlook, trading near its 52-week low at $0.48, down sharply from $0.64.¹³

The airline has already trimmed near-term capacity by 5%, with more reductions almost certain.

Watch for the Capital Raise

Here is what the CEO’s warm email does not say: if losses of this magnitude materialise over two financial years, Air New Zealand will need to raise capital. When it does, the New Zealand government, as 50.1% shareholder, faces an unavoidable choice. Participate, and write another substantial cheque from the public purse to protect its stake. Or decline, dilute, and begin the slow retreat from an ownership position it has held for decades.

Either outcome implicates taxpayers. Either outcome exposes the central absurdity of the current arrangement. Budget 2026… hold your breath.

Chatbots and Contempt

Try contacting Air New Zealand’s customer service, and you will discover the true face of modern collectivist enterprise: woeful service, declining standards, and a corporate structure that treats human interaction as an inconvenience to be automated away.

You are more likely to engage with a chatbot than a human, and the human, when you eventually find one, operates like a chatbot anyway—scripted, bounded, unable to resolve anything of substance. The airline’s answer to its service failures is not better people or better training, but better systems for apologising for the absence of both.

The Hospital Pass

That’s what recommending Air New Zealand has become, and nowhere is the gap between price and product more vivid than in business class, where Air New Zealand’s structural contradictions are most expensive to observe firsthand.

The airline’s new Business Premier cabin, rolling out across its Boeing 787 fleet through 2026, retains a herringbone configuration. Passengers sit angled toward the aisle rather than toward the window, the opposite of the reverse herringbone suites now standard on Qatar Airways, Singapore Airlines and Cathay Pacific.¹⁴ Standard Business Premier seats come equipped with a sliding privacy screen. Not a door: a screen.

A door costs extra. Specifically, NZ$820 (approximately US$487) extra on long-haul.¹⁵ There are four of them on the entire retrofitted aircraft.¹⁶ Aviation analysts reviewing the product have described the standard offering as “fairly underwhelming” compared to what the competition offers.¹⁷

You’d book Qantas if you could, but with Emirates disrupted by Iranian airspace closures, rerouting flights away from Gulf hubs, alternatives from New Zealand are thinner than they have been in years.¹⁸

Choose

New Zealand deserves better than this muddled middle ground. Our national carrier should be either a source of genuine pride (fully public, properly accountable, serving citizens) or a true competitor, privately owned and driven to excel.

Full public ownership means genuine accountability: real service obligations, routes chosen for public benefit, consequences for failure. Full privatisation means real competition, no bailouts, market discipline for a product that currently charges a premium for the privilege of facing a stranger across a narrow aisle.

What we have instead is the comfortable middle ground that serves nobody.

Make a choice. Commit to something. Because right now, our national carrier charges like Singapore Airlines, seats you in a layout from 2005, asks NZ$820 extra for a door, deploys a chatbot when you complain, and may shortly be asking the government for more money.

That’s not the warm embrace of collectivism. That’s the slow squeeze.

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

$3 at the Pump — Crisis, Panic, or a Lesson We Refused to Learn?

Article #449

The average price of unleaded 91 jumped 14 NZD cents over a single weekend — and suddenly, commentators are reaching for the kind of language we last heard during COVID. Back then, we fought over toilet paper. Today, the panic commodity is petrol.

Let us first take a breath and assess.

The cause: Iran’s effective closure of the Strait of Hormuz (which handles about a quarter of the world’s seaborne oil trade). This of course follows retaliatory strikes after a US and Israeli attack on Iran in late February. [1]

The effect: Global oil prices have surged past US $100 per barrel, with Brent and WTI hitting around US$110 to US$114 at the height of the crisis. That pain is not contained to the petrol forecourt. It is flowing into every corner of our economy simultaneously, because energy is embedded in the cost of producing virtually everything. [1]

The most visible casualty so far is Air New Zealand, another unfortunately familiar occurrence. Our majority state-owned carrier has cancelled approximately 1,100 flights through early May, impacting around 44,000 passengers. In USD, jet fuel spiked from around $85 per barrel before the conflict to between $150 and $200, with the refinery crack spread (the margin between crude oil and refined jet fuel) blowing out from $22 to as high as $115 per barrel. That’s a structural blow to an airline already recording losses, and it has suspended its full-year earnings guidance entirely because the numbers no longer make sense. [2–5]

Finance Minister Nicola Willis has cited New Zealand's 50 days of fuel supply as a form of reassurance, but the public must read the fine print carefully. That figure includes fuel still sitting on tankers at sea, in transit from the very region in crisis. The fuel physically on New Zealand soil is closer to 28–33 days, depending on the product. [6]

More concerning still, that onshore storage is heavily concentrated around the former Marsden Point site in the north. That means regional centres and the entire South Island operate effectively on just-in-time supply and sit at the end of an extra coastal-shipping leg that adds its own layer of vulnerability. If supply were completely cut off today, New Zealand could sustain itself for roughly a month. [6,7]

That is not 50 days — and it should reframe the conversation entirely.

Muldoon-era carless days, last deployed between July 1979 and May 1980, are being discussed as a last resort. The mere fact we’re having this conversation in 2026 should give everyone pause. [8]

This is where a Canny View requires plain speaking.

Energy is not a lifestyle choice. It is the oxygen of economic activity. Every business—whether moving freight, running a dairy farm, manufacturing product, or providing professional services—consumes energy somewhere in its cost structure. When that cost surges sharply and suddenly, the business faces exactly three options:

1. Pass the increase to the customer.

2. Absorb it through productivity gains and efficiency.

3. Close their doors.

There is no fourth option. This is precisely why energy price shocks are so broadly inflationary. They don’t strike one sector. They strike all sectors at once.

For shareholders and business owners, the message is clear. A viable business must pay its bills, pay its staff, and generate sufficient return to keep capital engaged. When a major uncontrollable cost input (like energy) doubles overnight, that margin compresses fast.

The businesses weathering this shock best are those that made deliberate investments in energy resilience during the quieter years. Fleet operators who transitioned to hybrid or electric vehicles, alongside conventional petrol and diesel workhorses, are finding their total fuel bill meaningfully lower today. Those with suitable rooftops or landholdings who installed solar are generating their own daytime electricity, reducing grid dependency when traditional energy costs are most volatile.

Neither investment requires ideological conviction, only the basic financial discipline of stress-testing a cost structure and acting before the stress arrives.

Resilience is built in calm weather, not in a storm.

Now to the harder conversation — one that goes well beyond oil.

New Zealand's coal reserves exceed 15 billion tonnes, spread across Waikato, Taranaki, the West Coast, Otago and Southland. Our West Coast bituminous coal is internationally prized for its exceptionally low sulphur, low ash, and low phosphorus content — a premium quality product valued by the global steel industry. Yet Genesis Energy's Huntly Power Station sources most of its coal from Indonesia, with imports surging 311% in 2024 as domestic gas supply fell faster than expected. [9–11]

We export quality. We import what we need to keep the lights on. It’s a paradox, not a viable strategy.

The same logic applies offshore. Geological surveys estimate a 90% probability that New Zealand holds undiscovered oil reserves of at least 1.9 billion barrels, with a 50%  probability that the figure reaches 6.5 billion barrels. We are not a Saudi Arabia. But we are far from a barren rock. [12]

Which brings us to the captain's calls demanding accountability — plural, because there were more than one.

In 2018, then-Prime Minister Jacinda Ardern unilaterally banned all new offshore oil and gas exploration permits—no parliamentary vote, no Select Committee process, no national conversation. One announcement. Then, under the same Ardern government, New Zealand's only oil refinery at Marsden Point was closed and permanently decommissioned in 2022. The owner has since confirmed there is no prospect of restarting it; it would take billions of dollars and years of work to rebuild what took decades to establish. Associate Energy Minister Shane Jones described the closure as having fatally wounded New Zealand's fuel security. It’s difficult to argue otherwise this week. [13,14]

An uncomfortable but instructive parallel comes to mind. During Stalin's forced collectivisation in Ukraine in the early 1930s, a nation sitting atop some of the world's most productive agricultural land experienced a devastating famine while grain continued to be exported across its borders. The resources existed, and the policy choices negated them.

New Zealand is not Ukraine, and this is not the Holodomor, but the underlying dynamic—voluntarily denying access to domestic resources while importing vulnerability from abroad—is a pattern worth acknowledging.

A nation surrounded by grain, starving. A nation surrounded by hydrocarbons, panicking at the pump.

Muldoon would be baffled. His Think Big programme in the early 1980s was explicitly designed to convert New Zealand's own natural gas into synthetic fuels, fertiliser and methanol, and reduce oil import dependency following the 1973 energy shock. Think Big was expensive and its outcomes were mixed. But the underlying instinct — that a small, geographically isolated nation at the bottom of the world needs to take energy sovereignty seriously — wasn’t wrong. [15]

Domestic production does not fully insulate a small open economy from global prices. But it reduces the foreign exchange drain of pure import dependency, supports local employment, generates royalties and tax revenue for the Crown, and critically – reduces exposure to the shipping disruptions and geopolitical shocks we are living through right now. In times of crisis, a country with some domestic production and refining capacity is materially more resilient than one with neither.

The toilet paper panic of 2020 passed, and we learned almost nothing from it. Let us use this one differently: we need to have the serious, unsentimental conversation about energy sovereignty that we should have started long before Ardern's captain's call made it more urgent than it ever needed to be. We’ve missed the boat on energy resilience, and the storm has arrived; all we can do now is fortify ourselves to better weather the next one.

---

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, Petrol prices expected to hit at least $3 a litre in some places, March 2026

2. Flight Global, Fuel price volatility prompts Air New Zealand to suspend earnings guidance, March 2026

3. Global Banking & Finance Review, Air New Zealand cut flights, fuel price surge wreaks havoc, March 2026

4. AeroTime, Air NZ to cut 1,100 flights amid soaring fuel prices, March 2026

5. NZX Announcement, Air New Zealand suspends FY2026 guidance, March 2026

6. RNZ, How much fuel does NZ have — and what happens if we run out?, March 2026

7. Infonews, NZ Fuel Situation — South Island Vulnerabilities, March 2026

8. NZ Herald, Carless days are no solution to an oil shock (Liam Dann), March 2026

9. Wikipedia, Coal in New Zealand, citing USGS and MBIE data

10. USGS Fact Sheet 2004-3089, New Zealand Coal Resources

11. Ministry of Business, Innovation & Employment, Energy in New Zealand 2025 — Coal

12. New Zealand Parliament, The Next Oil Shock?, citing Institute of Geological and Nuclear Sciences 2009

13. NZ Herald, First look: Inside Northland's Marsden Point oil refinery post-shutdown, November 2024

14. NZ Herald, Inquiry into reopening New Zealand's only oil refinery, March 2024

15. Wikipedia, Think Big, New Zealand Third National Government economic strategy

Iran, Oil, and Your Retirement Savings: Separating the Signal from the Noise

Article # 447

The New Zealand media has had a busy week connecting the US and Israeli strikes on Iran to your wallet. Some of it is legitimate. Some of it is noise dressed up as financial guidance. Knowing which is which - now that’s useful.

Let's start with what’s real.

The Strait of Hormuz: A known pressure point

The Strait of Hormuz is a roughly 33km-wide chokepoint between the Persian Gulf and the Gulf of Oman. Around 20% of the world's daily oil supply and a similar share of global liquefied natural gas trade passes through it every single day, mostly bound for China, India, Japan, and South Korea.¹

This waterway has been a pressure point for decades. Iran mined it during the Iran-Iraq War in the 1980s, prompting direct US military intervention in what became known as the Tanker War (during which more than 500 vessels were damaged or destroyed).² In December 2011, Iran threatened closure in response to Western sanctions, triggering the deployment of a US-British-French naval flotilla. In 2019, tanker seizures and attacks on shipping spiked tensions again. In June 2025, Israel's strikes on Iranian nuclear facilities prompted Iran's parliament to pass a motion recommending closure, though that did not materialise into a full blockade.³

The point is this: the Strait of Hormuz has been a geopolitical instrument for Iran for more than 40 years. Successive US administrations, allies, and global energy markets have navigated those threats repeatedly. Every episode generated alarming coverage. Yet every episode passed. That does not make the current situation trivial, but it does provide context that breathless headlines rarely bother to include.

New Zealand's real exposure

Importantly, New Zealand has direct and specific economic exposure to this conflict.

According to the Meat Industry Association (MIA), nearly all of New Zealand's red meat exports to the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE) travel through the Strait of Hormuz. In 2025, that trade was valued at $298 million, including $166 million in chilled exports, which are the most time-sensitive.⁴

Supply chain firm Kotahi, which handles freight on behalf of Fonterra and Silver Fern Farms, has confirmed that all major shipping lines have suspended services through the strait, with some 4,000 containers of New Zealand export cargo currently in transit.⁴

Fuel prices are also a legitimate concern. New Zealand no longer imports crude directly from the Middle East, but petrol is priced in a global market. Brent crude spiked more than 8% when trading opened after the weekend strikes.⁵ Analysts at JPMorgan and Citigroup have warned that sustained disruption could embed a significant geopolitical premium for weeks.

The New Zealand Ministry of Foreign Affairs and Trade has noted that rising fuel costs do not just show up at the pump. They pervade the economy through transport, logistics, and consumer prices – and may force the Reserve Bank to respond with always-dreaded interest rate adjustments.⁶

One lesser-discussed exposure: approximately one-third of the world's fertiliser trade also passes through the Strait of Hormuz, meaning prolonged disruption could eventually flow through to agricultural input costs. This is directly relevant to a primary-export economy like New Zealand's. ⁷

So yes, there are real and specific things worth monitoring here. Beyond fearmongering, we must consider geography and economic forces decades in the making.

Now for the noise...

Here’s where some of the coverage starts to serve the headline more than the reader.

At 7:56 am on Monday, 2 March, before Wall Street had even opened for the day, 1News published a piece headlined "Iran attack sparks warning for KiwiSaver, fuel, inflation."

Readers were told to brace for volatility, expect red ink in their KiwiSaver, and anticipate a flight to safer assets.⁸ By the time New Zealand investors had read that article over their morning coffee, absorbed the alarm, and perhaps reached for their phones to switch funds... Wall Street had opened, dipped 1.2%, and was already recovering. The S&P 500 closed that Monday virtually unchanged, finishing the session up just 0.04%.⁹

The warning had outrun the facts by an entire trading day.

Alarming coverage is produced in real time, often ahead of the facts. By the time reality arrives, in this case, a market that largely shrugged off the initial shock and bought the dip, most people have already absorbed the panic as truth and may have acted on it.

Advising the average investor to urgently check their KiwiSaver balance and consider switching funds is, for most people, bad advice dressed up as financial concern. This applies equally to any well-constructed investment portfolio underpinned by a comprehensive financial plan.

The latest data from the Retirement Commission puts the average KiwiSaver balance at $37,079 and the average member age at approximately 44.¹⁰ That means the typical New Zealand investor has roughly 20 to 25 years of accumulation ahead before they reach 65. Long-term KiwiSaver growth funds have historically returned between 7% and 9% annually.¹¹ Across that kind of horizon, even a meaningful short-term market dip is a rounding error in the final outcome.

The pattern markets have seen repeatedly, last June's brief Israel-Iran exchange being a useful recent reference point, is as follows:

1. Equity markets sell off sharply on geopolitical shock.

2. They recover once it becomes clear the worst-case scenario has not materialised.

3. Investors who switched to conservative funds during that episode locked in losses they then missed recovering as markets rebounded.

The same logic applies whether you hold KiwiSaver,  managed funds, or a direct share portfolio.

A comprehensive financial plan is engineered to withstand volatility. Abandoning it because of a week of alarming headlines is not a financial decision; it is an emotional one.

Four genuine reasons to review your investments

The right time to review your asset allocation or contribution settings is when your circumstances change — not when the news cycle does.

1. Has your income shifted significantly?

2. Are you approaching 65 and still in an aggressive growth fund that no longer reflects your timeline?

3. Has your risk tolerance genuinely changed — not because of a week of coverage, but because of a considered, honest look at your financial position and goals?

4. Are there changes to your broader financial plan that warrant a portfolio rebalance? These are all valid triggers for a conversation with your financial adviser.

But if your goals, your timeline, your income, and your broader financial picture are the same today as they were a fortnight ago, and for most people they are, the rational position is to stay the course.

A well-built investment portfolio is designed to absorb decades of global volatility. Many such portfolios have weathered the Global Financial Crisis, the COVID-19 crash, the 2022 rate shock, and last June's regional conflict. Each of those episodes generated similar headlines. Each time, disciplined investors who stayed the course came out ahead of those who did not.

When others are running from the fire

Warren Buffett has made a career of running towards financial fires, not away from them. Writing in the depths of the Global Financial Crisis, his philosophy spoke to financial discipline over the furore of the day: "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."¹²

The irony of a market downturn? Precisely when assets go on sale is when most investors want nothing to do with them; it’s when they are expensive and rising that everyone wants in. Buffett's instruction has always been the opposite: be fearful when others are greedy, and greedy when others are fearful. That’s not a comfortable stance when headlines are blaring an alarm. But discomfort and bad decision-making are not the same thing.

This is where a structured, disciplined rebalancing strategy earns its keep.

When equities fall, and fixed income or defensive assets hold their ground, a rebalancing framework triggers a deliberate, rules-based response: trim what has held up, add to what has fallen. Not because of a hunch. Not because of a headline. Because the plan said so before any of this happened.

That’s the discipline Buffett is describing. Not panic, not paralysis — but a pre-committed process that removes emotion from the equation and replaces it with structure. The investors who do best through periods like this are not the ones who predicted the conflict or called the bottom. They’re the ones who had a plan, stuck to it, and let systematic rebalancing do what it was designed to do.

Discipline pays off

The media's job is to make you read the next paragraph. Your financial plan's job is to compound quietly over decades. These two objectives are not aligned – and it’s worth remembering that when the very same article explaining why oil prices are rising pivots abruptly to urging you to check your KiwiSaver.

There is genuine news here worth following closely: shipping disruptions, petrol prices, fertiliser costs, red meat export disruptions, and what unfolds in the Strait of Hormuz over the coming weeks are all legitimately important to New Zealand households and businesses. Read those stories. Understand the exposure.

But when the coverage drifts into urging reactive investment decisions based on today's headlines, that is where you put the phone down, flick on the kettle, and make yourself a brew instead of making rash investment decisions.

Your future self will thank you.

---

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

• Article no. 447

---

References

[1] US Energy Information Administration. (2024). Strait of Hormuz — World's Most Important Oil Chokepoint. https://www.eia.gov/international/analysis/special-topics/World_Oil_Transit_Chokepoints

[2] Ratner, M., Lawson, A., & Brock, J. (2025). Iran Conflict and the Strait of Hormuz: Oil and Gas Market Impacts. Congressional Research Service. https://www.congress.gov/crs-product/R45281

[3] Times of Israel. (2026, March 1). Strait of Hormuz: Key Oil Route in Middle of Iran Crisis. https://www.timesofisrael.com/strait-of-hormuz-key-oil-route-in-middle-of-iran-crisis/

[4] Meat Industry Association NZ / Kotahi NZ. (2026, March 1). Statements on Strait of Hormuz shipping disruption. Reported in NZ Herald. https://www.nzherald.co.nz/business/us-iran-conflict-threatens-nz-red-meat-exports-via-strait-of-hormuz

[5] Franck, T., & Imbert, F. (2026, February 28). Markets Brace for Impact After US Strikes Iran. CNBC. https://www.cnbc.com/2026/02/28/markets-brace-for-impact-following-us-military-strikes-against-iran.html

[6] New Zealand Ministry of Foreign Affairs and Trade. (2025, July). NZ Economy Not Immune to Conflict in the Middle East. https://www.mfat.govt.nz/en/trade/mfat-market-reports/nz-economy-not-immune-to-conflict-in-the-middle-east-july-2025

[7] Stojanovic, U., & Bradshaw, T. (2026, March 1). Strait of Hormuz: If the Iran Conflict Shuts the World's Most Important Oil Chokepoint, Global Economic Chaos Could Follow. The Conversation. https://theconversation.com/strait-of-hormuz-if-the-iran-conflict-shuts-worlds-most-important-oil-chokepoint-global-economic-chaos-could-follow-277199

[8] Edmunds, S. (2026, March 2). Iran Attack Sparks Warning for KiwiSaver, Fuel, Inflation. RNZ / 1News. Published 7:56am. https://www.1news.co.nz/2026/03/02/iran-attack-sparks-warning-for-kiwisaver-fuel-inflation/

[9] CNBC Markets Desk. (2026, March 2). Stock Market Today: S&P 500 Ends Monday Just Above the Flatline, Rebounding from Sharp Declines. CNBC. https://www.cnbc.com/2026/03/01/stock-market-today-live-update.html

[10] Reyers, M. (2025, March). KiwiSaver Member Data — December 2024. Te Ara Ahunga Ora Retirement Commission / Melville Jessup Weaver. Reported in: Edmunds, S. What Average KiwiSavers' Balances Are at Your Age. RNZ News. https://www.rnz.co.nz/news/business/545015/what-average-kiwisavers-balances-are-at-your-age

[11] MoneyHub NZ. (2024). Average KiwiSaver Balance by Age. https://www.moneyhub.co.nz/average-kiwisaver-balance-by-age.html

[12] Buffett, W. (2008). Berkshire Hathaway Inc. Chairman's Letter to Shareholders. Berkshire Hathaway. https://www.berkshirehathaway.com/letters/2008ltr.pdf

28 Investment Principles That Actually Work When Markets Don't Cooperate

Article # 442

I've watched families navigate decades of volatility: crashes, recoveries, euphoria, panic. The ones who preserve wealth across generations don't have secret information or perfect timing. They follow simple rules, consistently.

February has 28 days. To ring it in, here are 28 guiding principles that have stood the test of time regardless of market activity.

1.       The market rewards patience, not prediction.

Most noise isn't information. The constant stream of commentary, analysis, and breaking news creates the illusion that staying informed means staying ahead. It doesn't. The market moves on fundamentals that reveal themselves slowly, not on headlines that change hourly.

2.       Focus on what you can control: Costs, discipline, diversification, behaviour.

You cannot control returns. You cannot control when recessions arrive or when bull markets end. But you can control how much you pay in fees, how consistently you invest, how broadly you spread your risk, and how you respond when fear or greed takes hold.

3.       You don't need to beat the market. You just need to capture it.

The obsession with outperformance drives investors towards complexity, higher costs, and ultimately, disappointment. Capturing market returns through low-cost, diversified portfolios has built more wealth over time than the pursuit of alpha ever has.

4.       The simplest portfolio is often the smartest.

Complexity rarely adds value. It adds cost, confusion, and opportunity for error. A straightforward allocation across global equities and bonds, rebalanced systematically, has outperformed the vast majority of elaborate strategies.

5.       Volatility is the price of admission.

Don't demand returns without accepting the ride. Equities deliver premium returns over time, because of fluctuations in the short term. If you cannot stomach the volatility, you don't deserve the returns.

6.       Time in the market matters more than timing the market. Always.

Missing just the 10 best days over a 20-year period can cut your returns nearly in half. Funnily enough, the best days often follow the worst ones – so it’s hard to capture them after getting cold feet on the downswing. Staying invested through the chaos is what separates wealth-builders from market-timers.

7.       Diversification is a dark horse.

Its power is revealed over decades, not days. When one asset class stumbles, another steadies the ship. The benefit isn't dramatic in any one year, but over a lifetime of investing, it's the difference between weathering storms and being swept away by them.

8.       Your plan should be built on evidence, not emotion.

Especially when emotions run high. When markets crash, fear whispers that this time is different and worse than any before. When markets soar, greed tells you that you're missing out. Evidence and decades of market history tell a different story – a much more trustworthy one.

9.       Chasing performance is a tax on impatience.

Last year's winners become this year's laggards with predictable regularity. By the time a fund or strategy appears on a "best performer" list, the opportunity has usually passed. Avoid getting swept up in the furore.

10.  The market has already priced in what everyone knows.

You don't need to outguess it. If information is public, it's already reflected in prices. Your edge as an investor isn't superior information, it's superior behaviour.

11.  A disciplined strategy beats a brilliant prediction. Every time.

Predictions fail. Discipline endures. The investor who follows a consistent plan through all market conditions will outperform the ‘strategist’ who tries to predict turning points.

12.  Your behaviour matters more than your products.

Panic is more expensive than fees: selling in a downturn locks in losses, while buying at market peaks locks in mediocre returns. Managing your behaviour by staying calm, and staying invested, matters far more than optimising your expense ratio by a few measley basis points.

13.  You don't need the perfect moment.

The moment you start is perfect enough. Markets climb over time. Waiting for a correction before investing often means waiting forever. Start now. Adjust as you go.

14.  Rebalancing is the quiet hero of long-term returns.

It forces buy-low, sell-high. When equities surge, rebalancing trims them back. When they crash, rebalancing buys more. It's counter-intuitive, uncomfortable… and extraordinarily effective over time.

15.  The best portfolios feel boring.

Boredom is not a bug, it's a feature. If your portfolio keeps you up at night with excitement, you’re probably taking on unnecessary risk. Wealth is built slowly, quietly, and without drama.

16.  Markets recover more often than they collapse.

History is your friend. Every bear market in history has eventually given way to a new bull market. Crashes feel permanent in the moment. They never are – as the adage goes, “this too shall pass.”

17.  Ignore headlines.

They're written to sell attention, not build wealth. Financial media thrives on urgency and alarm. Your portfolio should thrive on patience and perspective.

18.  Compounding works best when you don't interrupt it.

Let time do the heavy lifting. Albert Einstein allegedly called compound interest the eighth wonder of the world. But, it only works if you leave it alone – every time you exit the market, you reset the clock.

19.  Costs compound too.

Costs compound just like returns. Pay for advice that adds value, not for products that don't. The difference between value and waste always reveals itself in the fullness of time.

20.  Bad days don't destroy portfolios. Bad decisions do.

Markets fall. That's normal, and things will swing back the other way. Selling during the fall, abandoning your plan, or fleeing to cash – those are the decisions that inflict permanent damage.

21.  Not every risk deserves a reward.

Factor premiums do. Stocks are riskier than bonds, so they should deliver higher returns. Small-cap and value stocks have historically outperformed over long periods. These are risks worth taking. Concentrated bets on individual stocks or sectors? Not so much.

22.  Your portfolio should be built around you, not around the news cycle.

Your goals, your time horizon, and your risk tolerance should dictate your allocation. Not the latest economic forecast or geopolitical crisis.

23.  You don't need to predict the future.

…But you do need a strategy that survives it. Robust portfolios aren't built on forecasts. They're built on diversification, discipline, and the recognition that uncertainty is permanent.

24.  Stay invested, stay diversified, stay disciplined.

The rest is commentary. If you do these three things consistently, you will be fine. Better than fine, in fact. You'll be wealthier than the vast majority of investors who spend their lives chasing the next opportunity.

25.  Wealth isn't created in moments of excitement.

It's created in years of consistency. The investors who succeed aren't the ones who make brilliant trades or perfectly time the market. They're the ones who show up, year after year, regardless of conditions. Consistency compounds.

26.  Your worst investing day feels catastrophic. Your best investing decade feels inevitable.

Perspective matters. In the moment, a 20% drawdown feels like the end. Twenty years later, it's a footnote. Keep the long view. Stay the course.

27.  Successful investors are more patient than ‘smart’.

Intelligence helps, but temperament wins out every time. The ability to sit still, to do nothing when everyone else is panicking or euphoric, is worth more than any financial qualification.

28.  Markets don't care about your timeline. Build a plan that doesn't care about the markets.

You might need money in five years for a house deposit or in thirty years for retirement. The market will do what it does regardless. Structure your portfolio around your needs, not market predictions, and you'll sleep better through every cycle.

Remember: Markets will always be chaotic. Your response doesn't have to be.

Follow the rules (and seek professional advice)

These principles work. But they work best when you have someone in your corner who isn't conflicted by commissions, product sales, or institutional agendas.

Seek independent, impartial advice that puts you first and foremost. You are the sun, not the moon: your financial plan should orbit around you, your goals, your circumstances. Not around what someone else needs to sell.

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

• Article no. 442

---

Reflecting on 2025: A Final Canny View for the Year

As we close the books on another eventful year, I want to share some final reflections before I put away my pen and keyboard for a well-earned break.

The Year That Was

2025 has been a masterclass in the unpredictable nature of markets.

We began the year with President Trump's inauguration and the subsequent tariff theatre that sent shockwaves through global markets in March and April. Despite a sharp -19% drawdown that tested even the most seasoned investors' resolve, global equity markets have delivered another year of above-average returns.

It's a powerful reminder that short-term turbulence is simply the price we pay for long-term prosperity.

The Dog in the Kennel

While many global markets have been out having fun (celebrating AI breakthroughs, peace deals, and strong returns) our New Zealand market has been in the kennel, watching the party from afar. It's been a challenging period for local investors who've seen the disparity between domestic and international performance grow increasingly stark.

Yet – every dog has its day. Recent economic data suggests our dog might be stirring. The balance of trade is looking favourable, and commodity markets for our protein exports remain strong.

These are the foundations that future returns are built upon. Markets move in cycles, and what seems forgotten can suddenly become fashionable again. The New Zealand market won't stay in the kennel forever. Patient investors who maintain diversified portfolios will be positioned to benefit when our local market eventually has its turn in the sun.

Three Lessons Worth Keeping

First, overvalued markets can still grow. The commentators warning about stretched valuations at the start of the year weren't wrong about the numbers; they were just wrong about what those numbers meant for forward returns. Valuation tells us little about timing, and waiting for the "perfect" entry point often means missing out entirely.

Second, knowing what will happen doesn't tell you how markets will react. The tariff announcements in April proved this brilliantly. Everyone knew they were coming, yet the market's bottom came not when clarity arrived, but when uncertainty was at its absolute peak. This is why we plan rather than predict.

Third, long-term planning beats short-term prediction every time. We're living through an AI revolution that will reshape everything, yet we cannot know exactly how or when. The solution isn't better predictions, it's better preparation. A solid financial plan with appropriate asset allocation, a margin of safety, and the discipline to stay invested remains your best defence against an unknowable future.

The Permanent Condition

Uncertainty isn't new, it's the permanent condition of investing. The headlines change, the crises evolve, but the fundamental truth remains: we cannot predict, but we can prepare.

Those who stayed invested through April's anxiety have been rewarded. Those who will stay invested through next year's inevitable turbulence will likely say the same thing in December 2026.

A Time for Gratitude

As I reflect on another year of writing, research, and market commentary, I'm grateful for the readers who engage thoughtfully with these ideas. Whether you're a long-time follower or stumbled across this column recently, thank you for your time and attention.

My aim has always been to cut through the noise and shine a light on the principles that actually matter when it comes to building and protecting wealth. If these weekly reflections have helped you think more clearly about your financial future, make smarter decisions with your capital, or simply feel more confident staying the course during turbulent times, then the effort has been worthwhile.

Safe Travels!

To those of you travelling nationally or abroad over the holiday period, safe travels. To those staying home, enjoy the slower pace and time with loved ones. Whatever your plans, I hope you find moments of rest and renewal.

As for me, I'll be stepping away from the keyboard for two weeks to recharge. Our first article of 2026 will land on 10 January as we look forward to the year ahead. Until then, this will be my last dispatch for 2025.

Whatever 2026 has in store, we'll navigate it together.

See you in the new year.

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

• Article no. 438

---