Ministers also often talk of the local market’s “thinness” and the need to encourage not only more savings, but more local vehicles for New Zealanders to save in.

However Finance Minister Michael Cullen repeated that the changes are not designed with that in mind: rather the changes are aimed at removing incentives to invest directly offshore.

As expected, the grey list countries will be abolished, meaning investments in all but one of those countries will now be subject to the capital gains tax which applies to other offshore investments.

The one exception – as Good Returns reported last month – will be Australia.

Offsetting that is the abolition of capital gains tax on local active managed funds.

The government estimates it will lose about $113 million a year in tax revenue because of the changes.

That figure though is not based on any behavioural changes because of the tax reforms. Officials say it is too difficult to estimate the extent to which New Zealanders currently investing directly in the grey list countries will change their investments.

In other words, that figure is probably on the low side.

Over time a gradual tilting of investments toward the local - and Australian – market is expected but no figures have been put around this.

Australian investments are not expected to be excessively favoured because – like New Zealand – that country has a high dividend culture and that will face a 30% tax in most cases, and the absence of a franking credit recognition regime across the Tasman means New Zealanders don’t get a credit for that tax paid.