Instead of the equity in a house being their savings, they will be free to apply that income to the universe of savings vehicles. There is evidence in New Zealand that the very high home ownership rate has depressed savings rates from annual income, created a morbid dependency on debt-financing and engrained an expectation of house price inflation as the way to erode the load of the debt. Of course such an expectation can only be fulfilled if lenders are less rational than borrowers and happy to see the real, risk-adjusted value of their loans diminish. There is no reason that should be so – which supports the evidence that new Zealanders savings have actually been lessened via the money illusion of debt-leveraged speculation.

We will still encourage Kiwisaver as currently happens. The government can’t be expected to provide everyone with a comfortable retirement, especially as we live longer.

Applying savings instead to investment in business that creates jobs and incomes will – if other economies’ experience is to be accepted – result in a stronger ability to fund retirement.