Following hard on the heels of the UN report which showed that New Zealand has been treading water, another report has been released which highlights the growing wage gap between Australian and New Zealand workers. Unhelpfully, the NZPA report quoted today by the Fairfax Group reminds readers that the latest report "was released in the wake of recent statistics that showed more than 40,000 New Zealanders permanently departed to Australia in the year ended September 2007. Also the OECD estimates that 24.2 percent of New Zealanders with a tertiary education are living overseas, compared with just 2.5 percent of Australians in the same category."
Some quotes:
"Phil Rennie, from the New Zealand Policy Unit of Australia's Centre for Independent Studies (CIS), cites lower tax rates in Australia, higher labour productivity and better investment opportunities for the growing gap.
His report, titled "Why is Australia so much richer than New Zealand?", explores why Australia's per capita GDP of $48,000 is 32 percent higher than its trans-Tasman neighbour's of $36,400.
"This difference is remarkable given that the two countries enjoyed the same level of income for most of the 20th century," Rennie wrote.
"From the 1970s onwards, both countries were hit by economic shocks, recession, bad policy and painful reforms, yet Australia has pulled through this period in much better shape than New Zealand."
The report examines the impact of size, distance and natural resources, but is sceptical on their impact.
Rennie said the resource boom's impact on Australian growth was often "overrated", with exports making up 21 percent of its GDP compared with 29 percent for New Zealand.
The big difference was labour productivity, the report found.
Australian workers produce one-third more wealth for every hour worked, largely because they have more capital (machinery and technology) to work with.
The report questioned the argument that New Zealand's low level of saving was the culprit, forcing firms to borrow money at higher interest rates overseas.
But perhaps the biggest contrast between the nations was the level of tax and spending.
OECD figures from 2005 cited in the report, revealed Australians paid 31 percent of GDP in tax, compared with 38 percent in New Zealand.
"New Zealand is now the highest-taxed English-speaking nation in the OECD," Rennie said.
"Clearly this level of taxation will have an impact on economic growth, because it transfers money away from the entrepreneurial sector and makes investing, employing and working less rewarding."
"Once the next phase of Australian tax cuts is implemented by the new Labor government, a New Zealand worker on $46,000 (the average wage) will be paying twice as much income tax as he or she would be on the equivalent salary in Australia."
