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Vision and pragmatism aim for new capital markets taskforce
A new taskforce charged with developing plans for strengthening New Zealand's capital markets is in step with similar moves in key international economies.
The Government yesterday announced the establishment of an industry-led taskforce to produce a blueprint and action plan to develop New Zealand's capital markets. The Capital Market Development Taskforce will look at the current state of our capital markets, the international context, future risks and opportunities and changes needed to deliver the best possible financial system for New Zealand.
Within a timeframe of about a year, it is expected to come up with a plan that combines vision with practical solutions.
In the last month a similar approach has been announced in both the UK and Australia, at its heart the belief in the importance of robust capital markets to a country's economic performance. The new Mayor of London, Boris Johnson, has announced that he has asked senior city executives to work with the City of London Corporation to examine how London can sustain its position as the world's leading financial centre.
In New Zealand, the taskforce will be chaired by investment banker Rob Cameron and will comprise a group of private sector members - Adrian Orr, Cathy Quinn, Franceska Banga, Gareth Morgan, Jonathan Ling, Mark Weldon, Nigel Williams, Rob McLeod and Scott St John - who will be supported by key officials from the Ministry of Economic Development, Treasury, the Reserve Bank and the Inland Revenue Department. The taskforce will have about a year to develop and prepare its blueprint and action plan and will report to a group of senior Ministers including the Ministers of Finance and Economic Development.
A key operating feature will be to foster open dialogue and well-informed robust debate based on high quality analysis and to this end the taskforce is charged with regularly seeking input from experts in other sectors in order to develop an action plan that will have initiatives of relevance to both the private and public sectors.
Taskforce objectives
The taskforce's main objectives are to develop and launch a blueprint and action plan to improve New Zealand's financial system for the benefit of the New Zealand economy and its business. This means the taskforce will review the country's financial system to:
- identify key constraints and key opportunities for development;
- identify and debate options to improve performance; and
- develop a blueprint and action plan for future development.
In announcing the taskforce, the Government noted that thriving capital markets are increasingly recognised as essential for New Zealand's economic growth. This is because greater depth and breadth in New Zealand's financial system will help firms raise funds in New Zealand and allow the country to capture more of the gains for business growth. In turn, better developed local capital markets will also deliver other benefits, including encouraging firms to locate to this country.
The Government also noted that it was important to build consensus around the importance of capital markets to New Zealand's future growth and that expert advice was needed to provide well-informed and robust views. As a result, the Government expectation is for a blueprint and action plan that is both visionary and pragmatic.
Taskforce scope
The terms of reference allow the taskforce to identify the areas it considers key to improving New Zealand's capital markets. Participants from the Ministry of Economic Development, the Treasury, the Reserve Bank and the IRD will ensure that relevant data and information held by government agencies is made available.
The taskforce will identify specific areas of research and then seek to produce possible visions for New Zealand's capital markets from which it will look to choose the one that is most favourable.
While the taskforce is likely to explore a wide range of policy areas, including in areas of the economy such as tax and immigration, it will be kept informed about relevant issues being undertaken by government agencies or advisory bodies. Taskforce recommendations for policy changes will need to go through the appropriate processes.
Why the taskforce?
A taskforce was first proposed at the November 2007 Investment Forum which saw a group drawn from the business and finance sectors, academics and senior staff from public sector bodies, debate how best to improve the investment environment for New Zealand firms. The one-day November 2007 forum considered, as a central discussion paper, a report entitled 'Improving the Investment Environment for New Zealand Firms'. A key recurring theme from the forum was the willingness of the private sector to engage with government to advance the interests of "NZ Inc".
While many forum participants agreed that, although New Zealand's capital markets had improved over recent years, noting the impact on savings through the introduction of KiwiSaver and the PIE regime, more work was required to strengthen and deepen our capital markets. Also stressed was the importance of developing an agreed vision of New Zealand's financial system.
Next steps
By setting the taskforce the objective of developing a blueprint and action plan to develop New Zealand's capital markets and, in doing so, to work closely with public sector agencies, the Government's stated objective is to allow it to respond quickly to the taskforce's recommendations.
When the blueprint is finalised, the Government expects to be in a position to outline some actions it will take in response to the recommendations. Recommendations which cross into some policy areas elsewhere in the economy will require further work through the usual policy processes.
The Government also noted that it is also expected that the action plan will include initiatives that the private sector will commit to implementing.
More information about the taskforce is available at www.med.govt.nz/cmdtaskforce
