2013 Financial Literacy Summit

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Rau rangatira mā, e kui mā, e koro mā, kia ora, nga mihi o te ata ki a koutou.  Distinguished leaders, ladies and gentlemen, greetings and good morning. 

I specifically acknowledge: Diane Maxwell, the Retirement Commissioner: and David Kneebone the Executive Director from the Commission for Financial Literacy and Retirement Income – tēnā korua.

At the outset, I want to extend a special welcome to our guests – the manuhiri - from overseas.  Nau mai haere mai ki Tamaki Makaurau me Aotearoa – welcome to Auckland and New Zealand.  I trust you will have the opportunity to see more of our country before you head home.

Thank you for inviting me here today to give the opening address of the 2013 Financial Literacy Summit.  I am delighted to see such a large gathering of financial literacy and financial education supporters here today.  To my mind, and that’s why I’m here, financial literacy is a compelling requirement in today’s circumstances.  From the time a child is a glint in someone’s eye until the person is well and truly dust, being financially literate matters.  It is a whole of life affair.  And so, these biennial gatherings are a wonderful opportunity for those working in this area to meet, to learn of the latest research and activities and, if you’ll excuse the pun, to take stock on where we are at improving financial literacy. 

I am aware that financial education is relatively new in New Zealand, as well as around the world.  Although my financial knowledge and behaviours have not always been “best practice”, I remember leaving school in the early 1970s and being a little better prepared than my cohorts.  I was fortunate to have had some useful grounding through subjects like commercial practice and accounting.  But that was not, is not, the norm.  And as I have watched colleagues (and considered my own actions) I have often thought we New Zealanders need to improve our financial nous.

In many ways we are improving.  I want to acknowledge all of you here today for your efforts in leading the charge towards New Zealand’s collective goal of financially sorted Kiwis - thank you.

However, I think we need to set the bar high.  I take great interest in the financial wellbeing of all New Zealanders and none more so than the wellbeing of our young people.  They are our greatest taonga, our greatest treasure, and they represent the future of our nation.  They have to be better prepared than I was when I started my life journey.

The work that you do helps Kiwis navigate their way through a lifetime of financial choices, helps them make smart decisions, and helps them to have the confidence to ask questions and to seek clear answers.  The increased focus worldwide on evaluating programmes and strategies and driving towards sustainable behaviour change that can be demonstrated in clear, measurable progress, not just in what people know but in what they do is important.

This leads me into an area that will be a key focus for you all today – the launch of the 2013 Financial Knowledge and Behaviour Survey results.  You will hear far more detail from David Kneebone about this in the next session, but I have been asked to share with you a preview of two of the top line results – our progress and how we compare with others.

It is a New Zealand trait, living as we do in this geographically remote corner of the globe surrounded by ocean that we often want to know how we compare with other countries.  Whether it is in our sporting achievements, and medals at the Olympics, in business or cultural endeavours, or scientific discoveries, we are eager to measure our performance against others.  We are a fiercely competitive nation of 4.5 million people!

The 2013 Financial Knowledge and Behaviour Survey results address that tendency.  For the first time the 2013 survey provides insights about the eight OECD International Network on Financial Education questions, which were asked across 14 countries.  They give us an international yard stick against which to compare our performance, although as the authors note, we are not yet able to say how we are doing compared with our nearest neighbour, Australia.

Even so, I am delighted to announce that New Zealand’s knowledge score came out on top at 78 percent.  This is significantly higher than that of the other 13 countries.  It was well ahead of the next country, Hungary on 69 percent, while countries such as the United Kingdom, Germany and Ireland were lower again.  Indeed, New Zealanders scored well on six of the eight indicators the researchers used to test financial knowledge. 

The second top line result concerned New Zealanders’ overall financial knowledge.  The research found that New Zealanders’ financial knowledge overall in 2013 is consistent with the last survey in 2009, and remains statistically higher than when financial knowledge was first recorded in 2005. 

These heartening results reflect the ongoing and concerted work of the Commission for Financial Literacy and Retirement Income and the leadership and co-ordination it has given to New Zealand’s National Strategy for Financial Literacy.  I congratulate the Commission, the Retirement Commissioner and those working on the Strategy Advisory Group, which regularly report to the Minister of Finance, for their work in this area.

The results also reflect work that has been undertaken by a number of other organisations, promoting business and enterprise education in schools.  One of those initiatives is the Young Enterprise Trust, of which I am Patron.  Late last year I awarded the top prize at their big awards dinner in Wellington.  

I was simply in awe of the talent and enterprise on display from the 18 regional winners and the national winner, Caring & Co from Manurewa High School here in Auckland.  In taking their product to the market, the young entrepreneurs of Caring & Co showed a resourceful innovative streak, and also revealed a strong understanding of the key fundamentals of business – governance and management, a plan, budgeting, cash flow and the like.  These are understandings that are important in life as much as in managing our personal finances or managing an enterprise.

We’ve come a long way in a short time but there is still a lot of work to do.  There are many challenges in turning knowledge into action.  The results from the Financial Literacy Survey show that we are on the right track and, compared to some other nations, we’re doing reasonably well.  However, I am also conscious that the caveat of being on the right track is that if you’re not going fast enough, you’ll still get rundown by a following train!  The first of the baby boomers is now entering their retirement years and as we know that’s one pretty big train that is hurtling along the tracks!

So my message to everyone here is that I want to urge you to continue to drive deeper and harder towards our goal of financially sorted Kiwis.  The National Strategy for Financial Literacy, with its four key focus areas of developing quality, sharing what works, extending delivery and working together, is the key to that. 

The Maori proverb:  "Mau tena kiwai o te kete, maku tenei" which literally translates as "You at that handle, and me at this handle of the basket" underscores the importance of sharing responsibilities and working together to achieve a common goal.  No one organisation can achieve financially sorted Kiwis by itself.  The key to success will come from collaboration and co-operation, and weaving financial literacy into our lives, not only in education in our schools and universities, but also through investor information and public information initiatives, such as the Sorted campaign. 

To conclude, I’d like to leave you with one final comment.  I understand that Annamaria Lusardi, Professor of Economics and Accountancy at George Washington University has spoken at previous summits.  She recently made a telling comment that underlines the critical importance of financial literacy in the 21st Century.  She said that: “just as it was not possible to live in an industrialised society without print literacy – the ability to read and write - so it is not possible to live in today’s world without being financially literate.”

We need financial education to be appreciated, understood and valued at all levels of society and at all stages of our lives.  This applies to a school child managing your pocket money, a teenager with a part-time job, a university or polytechnic student juggling studying, working and a student loan, through to a family managing its mortgage and budget and to a retiree looking at moving into a retirement village.

Financial education is simply a basic life skill.  It’s vital to be able to make good financial decisions across all stages of our lives so that we are always financially prepared for life’s opportunities and setbacks.  Turning knowledge into action and ensuring we have a financially literate Aotearoa New Zealand has to be an enduring goal.

Thank you and can I wish you all the best for your discussions.  Kia ora huihui tātou katoa.