Region to benefit from rising investment tide
A “rising tide” of investment through KiwiSaver will be “a game-changer” for Tairawhiti's manufacturing and IT sectors, says the head of KiwiSaver scheme Simplicity.
New Zealanders have over $70 billion in KiwiSaver accounts, with estimates it could be $200 billion by 2030.
Simplicity managing director and co-founder Sam Stubbs says that money is going to fund future factories and infrastructure.
“This is going to be game-changing.”
Simplicity is a not-for-profit KiwiSaver scheme looking after over $3 billion.
Mr Stubbs was in Gisborne to speak about investing at Taiki E! — Tairawhiti Impact House.
“A lot of the Tairawhiti area has businesses that are quite capital hungry,” he said.
“You're talking about the port, wood processing facilities and fishing. All of these things require buildings and physical assets. That requires money and that money is exactly what KiwiSaver provides.
“What you have in Tairawhiti is incredible natural resources but not enough added value.”
Processing wood and other manufacturing required substantial upfront investments with a long-term view on returns — something KiwiSaver funds were dead keen on, he said.
“It won't happen in one transaction or one amazing moment. Instead it will be like a rising tide.”
Tech was another area in which Tairawhiti could expect to see a boost.
“Gisborne is probably better positioned to benefit from the IT revolution than anywhere else because the great thing about the speed of light is it removes distance.
“You're going to get a whole lot of people who are commuting more. Covid will help with this because they can run their business from here.”
Simplicity is investing $100 million into The Icehouse business incubator, which focuses on high-growth New Zealand companies before they are listed on the stock exchange.
“KiwiSavers are huge investors in tech already and they will increasingly be where the money comes from to build the factories, buy the new fishing boats and all those sorts of things.”
Combined with the work-from-anywhere bonus, he says this region will have the people to power those tech businesses.
“In a labour-constrained economy, Gisborne's likely to have more young, trainable talent.”
A handful of local coders and entrepreneurs were at Taiki E!, the start-up fostering group, to hear Mr Stubbs.
“In here there are full-stack web developers (people who can develop both client and server software),” he said.
“Five years ago, you would be laughing if you thought that anyone in Gisborne was a full-stack web developer.”
Mr Stubbs grew up in an impoverished west Auckland but says he was lucky enough to be gifted two teachers for parents.
Before Simplicity he was the chief executive of Tower Investments, managing director of Hanover Group and spent 10 years working for Goldman Sachs in London and Hong Kong.
Growing the broader economy is only one half of investing, he says. Those returns need to make the individual wealthier too.
“Our story is probably more valid in this part of the country than anywhere else because there are a huge number of people who don't have enough money in Gisborne.”
Census data from 2018 shows Gisborne has the second-lowest median income in New Zealand at $25,900; only Northland is lower.
“So the stuff we can do is probably more impactful here than anywhere else.”
Simplicity was made a default KiwiSaver scheme in May, meaning more Kiwis have their money with the not-for-profit if they do not actively choose a scheme.
A new area where Simplicity is looking to put its billions is in partnership with iwi.
“The interesting thing about iwi is we have the same 100-year view as they do. In fact, theirs is even longer. Theirs is a forever view.
“The land matters a lot to them for obvious reasons, and they don't want to sell it, and I get that. I wouldn't want to if I were in their position.
“But the problem is iwi all over the country have a lot of land but don't have a lot to capitalise it and use it productively and generate jobs.
“I think there's a beautiful long-term story there.
“Iwi have the land. We have the money.
“We don't need to own the land. We can lease the land to put housing on and the same for factories and anything else you want. So I think in the long term, there is a really good story there.
“But it does need dialogue. What is important for us is to do the first deal to show that we're for real.
“Could that be in Gisborne? The answer is I have no idea, but I do know we need to start the journey.”