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Key paints grim picture of NZ's foreign debt

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Fuseworks Media
Fuseworks Media
John Key
John Key

By Peter Wilson of NZPA

Wellington, Aug 17 NZPA - New Zealand's foreign debt is one of the worst in the world and people have to save more, Prime Minister John Key says.

The Government is going to have to decide whether to bring in compulsory superannuation to help turn that around, and it is going to appoint a panel of experts to look at all the issues around retirement income.

Mr Key said yesterday nothing was being ruled in or out, but he was clear about one thing -- something has to be done.

"Our foreign debt is running at around 90 percent of GDP -- that puts us up there with countries like Greece, Ireland and Iceland," he said.

"The difference between them and us is that their debt is dominated by government borrowing, ours is dominated by the private sector."

Mr Key said if nothing was done to improve New Zealand's "very poor" savings rate the country would become more and more in debt to foreign lenders.

"The global crisis showed...that if you rely very heavily on foreign borrowings, as New Zealand is doing, eventually it catches up with you," he said.

"New Zealand's net debt to the world -- government, households and businesses -- has jumped from about $100 billion in 2000 to almost $180b today and is forecast to be about $250b by 2014."

Mr Key insisted the Government was nowhere near making a decision on compulsory superannuation but he gave a strong hint it could happen.

"If we identify and are convinced New Zealand has a vulnerability because of its high foreign debt, and also that New Zealanders aren't as well prepared for their retirement as we might like them to be, then we need to consider our response," he said.

In 1997 a referendum was held on compulsory superannuation and it was rejected by 92 percent of voters.

Mr Key said yesterday he thought public opinion had changed since then.

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