As Aussies see us

April 6, 2015

Cameron Stewart writes in The Australian on how, and why the trans-Tasman tide is flowing in New Zealand’s favour:

Jennifer Zhu, a former Australian public servant, was writing briefing notes for incoming prime minister Tony Abbott when she hatched her own Pacific solution.

She leans forward so her story can be heard above the rhythmic grunts of the dragon boat teams gliding across New Zealand’s ­Wellington harbour at dusk. “I was in Canberra working on the briefings for the change of ­government [in 2013] when I realised how much the public service was going to be cut [under Abbott],” she says. Her Australian boyfriend, ­fellow public servant Iain McKenzie, 28, chimes in: “We could see that promotions were unlikely.”

“So I looked up a website,” continues Zhu, 27, who now works for ­Immigration New ­Zealand, “and there were lots of government jobs here. We thought, ‘Why not?’ ” After a year in Wellington, they haven’t looked back. “We both have good [public service] jobs and it’s a much more relaxed culture,” says Iain. “We’re not leaving anytime soon.” . . .

Stewart gives other examples of Australians and ex-pat New Zealanders who have moved here to work in a variety of occupations including farming, viticulture, nursing and hospitality then looks at why the tide has turned.

What has happened is that somewhere, somehow, perhaps in the dead of night when no one was looking, Australia and New Zealand have swapped sides. Cocky, confident Australia is now home to dysfunctional politics, yawning budget deficits, rising unemployment and an electorate unwilling to accept tough reforms.

By contrast, New Zealand Prime Minister John Key is running the most successful and ­stable centre-right government in the world. Whereas Abbott might not survive his first term as leader, Key, 53, is into his third term and has never been more popular. Key presides over a country that is no longer a dead-end backwater but one that enjoys plentiful jobs, strong economic growth and is on the cusp of a budget surplus. All this despite its second-largest city, Christchurch, being devastated by the earthquake of February 22, 2011, which left 185 people dead, the city centre in ruins and a $40 billion clean-up.

Even the Kiwi dollar, for so long the poor cousin to our own currency, is at virtual parity these days. “I’ve been here for 15 years and I’ve never seen this before,” mutters the woman at the Melbourne airport currency exchange as she hands me fewer $NZ than I gave her in $A. “They must be doing something right over there.”

GDP growth in New Zealand last year was 3.3 per cent compared with 2.8 per cent in ­Australia, while unemployment was 5.7 per cent in the December quarter compared with 6.1 per cent (now 6.3 per cent) here. Forget rugby; New ­Zealand is winning a bigger game. When Abbott visited New Zealand in February, he had to ­concede Key has led “a very successful, a really, really successful centre-right government. There are lessons for ­Australia in what you have done.” By contrast, the New Zealand press pack suppressed giggles when Key told an Australian journalist: “I think it’s a bit harsh to describe it [Australia] as one of the more unstable democracies in the Pacific.”

As a result of this trans-Tasman shift in ­fortunes, we are seeing something we have not seen for a generation. The tide of Kiwis coming to our shores has ebbed while the number of those going back home has flowed. This year the trans-Tasman migration is likely to be in New Zealand’s favour — something that has not been seen since Australia had “the recession it had to have” in the early 1990s. . .

[Prime Minister John]Key says Australia’s mining sector and growth in the big cities has slowed, making the country less attractive. “It is harder; I don’t think the opportunities are there in the same way, while on the other side of the equation there are lots of opportunities here in New Zealand and while they may make less money the cost of ­living is generally a lot lower.” . . .

A friend who works in Australia says he earns more and a lot of things cost less there than they do here. But when he takes into account the higher tax rate and other compulsory costs he pays the difference isn’t nearly as big as it appears.

It is often said that Key runs New Zealand like a CEO rather than a politician and that there are clear parallels in style with another self‑ made millionaire-turned-politician, Malcolm Turnbull. “I know [Malcolm] well and I like him,” is all that Key will say of Turnbull, wary of wading into leadership speculation.

Key is a delegator rather than a dictator and makes a habit of consulting in person with ­several of his ministerial colleagues each ­morning. He holds informal meetings ahead of formal Cabinet sessions so that people can float ideas or shoot them down without undue embarrassment. “Most people realise we are not doing extreme things,” he says. “We try to explain what we are about.” He says he is “unashamedly pro-economic growth” but prefers the path of pragmatism over ideology. “My instincts are very much in the middle so I am not fighting internal demons,” he says. “I am not a secret right-winger who wants to do things.”

He does not accuse Abbott of being a secret right-winger but the truth is that compared with Abbott, Key is much more of a pragmatic centrist economically and is more liberal socially, having voted for gay marriage in 2012.

It says much about Key’s political skills that he managed to usher in an increase in the GST in 2010, a debate that both sides of Australian politics are unwilling to have. Ironically, Key did this despite Howard, the architect of ­Australia’s GST, advising Key over a lunch in Auckland in 2010 that a rise was too risky. “I said to [Howard] ‘I am going to raise the GST and drop personal tax rates’ and he said, ‘Don’t do it’. He said, ‘You’ll have the obvious ­argument that the price of bread goes up and it will be felt more keenly by the poorer person and so you will lose that debate’.”

But in the end Key chose to pursue the reform and succeeded, with surprisingly little political bloodshed, in lifting the GST by 2.5 percentage points to 15 per cent while cutting personal and company tax. As a result, New Zealand’s top personal tax rate is now only 33 per cent compared with 45 in Australia, while the company tax rate is 28 per cent compared with 30 per cent here. Key has also been part-privatising state assets in power, coal and aviation, a path that causes political grief in Australia. Key’s reform record has been helped by ­having a first-rate finance minister, Bill English.

In welfare reform, Australia is looking to ­emulate the New Zealand system, which is ­saving billions in long-term payments. In 2011, Key adopted a new model of welfare that ­identifies groups at risk of long-term welfare and establishes special targeted programs for them. “We’ve done a lot in what is called the ‘investment approach’ to welfare reform and we have been genuinely investing money up front in people who would otherwise be long-term beneficiaries,” says Key. When social services minister Scott Morrison addressed Canberra’s National Press Club in February he spent most of his speech lauding the New Zealand model and promising to look at what Australia could adopt from it.

Part of Key’s popularity stems from what political analyst Colin James calls his macro- personality. “Key has a remarkable rapport with ­people across the political spectrum and that is unusual. Bob Hawke probably had that but ­certainly Rudd, Gillard and Abbott didn’t.” . .

Because Australians and New Zealanders are allowed to work in each other’s countries without restrictions, migration statistics are not definitive but they do suggest that far more Australians are now moving to New Zealand to live. While there will always be a flurry of movement because of family ties between the estimated 600,000 Kiwis in Australia and 60,000 Australians in New Zealand, the total number of ­people from ­Australia moving to New Zealand (including New Zealanders returning home) has soared in the past two years to February from 15,355 to 23,571.

Spoonley says the ­number of non-Kiwi ­citizens arriving from Australia to live in New Zealand has jumped by 50 per cent in the past two years, from 5234 in the 12 months to ­January 2013 to 7895 this year.

Job opportunities and quality of life have driven this trend. According to data comparison website Numbeo, apartment rents are on average 24 per cent lower in New Zealand than in Australia and apartment costs per square metre 36 per cent lower. The national median house price has stayed flat at $350,000, according to the Real Estate Institute NZ, and even in Auckland, where the market is hottest, the median price of a house — $675,000 — still ­compares favourably with Australian cities.

New Zealand also enjoys a reputation for better work-life balance, although OECD ­figures suggest New Zealanders only have ­marginally more leisure time than Australians. The downside is that salaries in New Zealand are also around 30 per cent lower on average, although this gap is said to be closing.

Even so, New Zealand is trying to make the most of its moment in the sun, having recently held job expos in Perth and Sydney and another in Melbourne later this month to spread the message that “New Zealand is one of the best performing economies in the world right now and the demand for skilled workers is high”. . .

The current contrasting fortunes of both countries could easily be reversed in years ahead, and the traditional flow of Kiwis to ­Australia could resume. Like Australia, New Zealand is heavily dependent on the health of the Chinese economy and its dairy industry, the country’s biggest export earner, suffered sharply lower prices last year.

In addition, the rebuilding of Christchurch is adding around 1.25 per cent to GDP growth each year but this will tail off as the city nears completion. Even so, a report last month by Moody’s Investor Services predicts continued strong economic growth for at least the next two years and for New Zealand’s budget to return to surplus — a word that Australians can only dream about.

Key concedes that New Zealand has better growth and employment than Australia right now but declines to brag. “We want a strong Australia,” he maintains. “A strong Australia is good for New Zealand. No relationship is more important to New Zealand … there is naturally a bit of rivalry but Aussies are looked at fondly here. Most people, I think, look at Aussies and go, ‘It really is the lucky country even if it has one too many creepy-crawlies and sharks’.”

Key lists several high-profile Australians who have come to New Zealand to live, but his final one packs a punch. “The Australian High ­Commissioner [Michael Potts], who is just about to finish his time here, is not going back to Australia,” the PM reveals. “He is about to live down the road here in Wellington,” he says, pointing out the window. “His wife is a Kiwi so they have made the call they are going to live in New Zealand.”

Key cannot hide his grin. Now even the ­diplomats are defecting. It’s taken a generation, but the Bondi Bludgers are finally enjoying their revenge.

 

"A great read from The Australian on why so many Kiwis are coming home: http://nzyn.at/1FbFD4s"


Quote of the day

April 2, 2015

To their credit, National has already identified that one of the key barriers to progress and development in many parts of the country is the Resource Management Act (RMA). This is certainly the case in Northland, which is rich in natural resources but poor in economic activity and jobs. But ironically for the people of Northland, by electing Winston Peters they may well have blocked the RMA reforms that are required to improve access to such resources.

The RMA is one of those Acts of Parliament that most people have little contact with. They are the lucky ones.

It’s the property owners and business people with initiatives that come into contact with the Act. Most come to dislike it intensely because they encounter first hand the extortionate demands of ‘affected parties’, the manipulation by activists, the huge costs extracted by the RMA industry, and the barriers put up by consenting authorities.

As a result, consents will often take years to go through the process – council hearings, the Environment Court, the High Court, the Court of Appeal, the Supreme Court, all costing applicants such vast sums of money, that in the end many are forced to abandon their project altogether. . .

While there are no doubt a multitude of ideas about how best to move resource planning forward to benefit the country – including the use of council case managers as advocates to guide applicants through the regulatory process and gain the cooperation of government agencies – at the heart of this matter is a realisation that holding back progress is not in the country’s best interest. Yes, we must be careful to minimise the impact of development on the environment, but we must also recognise that New Zealand families need economic growth and jobs if they are to thrive and prosper.

The irony is that as a result of the Northland by-election, the fate of the RMA is now in the hands of Mr Peters. Does he truly care about the long-term well-being of Northlanders, or is he too going to deliver more show than substance for his constituents – some new bridges and a bit of tar seal, when what they really need are jobs.  – Dr Muriel Newman,


Every TV news report on the economy

April 1, 2015


Korea FTA worth million$

March 24, 2015

The signing of the Free Trade deal with Korea, singed by Trade Minister Tim Groser yesterday  has the potential to add millions of dollars in extra export earnings.

“Improving access to international markets through free trade agreements is a key component of the Government’s Business Growth Agenda. Supporting our exporters is crucial to creating new jobs and boosting incomes for New Zealanders,” says Mr Groser.

“This Agreement secures the long-term future of New Zealand exporters to Korea whose international competitors were benefiting from Korea’s other FTAs.

“It reduces barriers to trade and investment, provides greater certainty about the business environment and ensures our exporters remain competitive in each other’s market.”

On entry-into-force, tariffs on 48.3 percent or NZ$793.7 million of New Zealand’s current exports to Korea will be eliminated. The Agreement will progressively remove tariffs on 98 per cent of New Zealand’s exports to Korea.

“Particular success stories include the removal of wine tariffs of 15 percent on entry into force, and the removal of 45 percent tariffs on kiwifruit effectively five years after entry into force,” says Mr Groser.

“It will also make possible a new level of cooperation in areas like agriculture, the creative economy, the environment and education, and spur greater investment.”

The FTA will offer improved protections for New Zealand investors in the Korean market, and reinforce the attractiveness of New Zealand as a stable investment destination.

Prime Minister John Key and President Park Geun-hye of Korea witnessed the signing of the Agreement by Trade Ministers Tim Groser and Yoon Sang-jick in Seoul.

“The Agreement shows the strength of the relationship between New Zealand and Korea. It symbolises our countries’ commitment to economic openness and market integration in the Asia-Pacific region,” says Mr Key.

“Korea is one of New Zealand’s biggest and most important trading partners. This Agreement makes it easier for Koreans and Kiwis to do business with each other, and the removal of tariffs will benefit consumers in both countries.

“At the moment, New Zealand exports into Korea attract NZ$229 million a year in duties.  Tariff reductions in the first year of the FTA alone will save an estimated NZ$65 million.”

The Agreement now needs to be ratified by the New Zealand Parliament.

“We are keen for the Agreement to come into force this year,” says Mr Key.

“With a population of over 50 million and as the 13th largest economy in the world, Korea is an attractive market for New Zealand exporters.” . . .

Korea is New Zealand’s sixth largest export destination for goods and services and our eighth largest import source, with total two-way goods trade of NZ$4 billion.

Once ratified by parliament, the FTA will open the door to better business for Koreans and New Zealanders.

It makes the eggs in other trading baskets than China more valuable, will give better returns for our exporters and more choice and lower prices for consumers in both countries.


Quote of the day

March 24, 2015

Real people live in places like the West Coast. At the moment we are doing it hard. We know that prices will recover, but we have to ask if there will be an opportunity to benefit. We want to be more than a picture post card on an Auckland coffee table. We want a reasonable future alongside a responsible mining industry that knows that it must look after the environment that we actually live in every day. We want a fair go. New Zealand prides itself on a concept of fairness. Sadly that seems to have gone out the window where mining is proposed.Paul Wylie, chief executive Buller District Council in the foreword to From Red Tape to Green Gold

 


Quote of the day

March 18, 2015

In self-proclaimed intellectual circles, it has long been fashionable to belittle the idea of economic growth. “GDP is not the same as happiness”, some critics of growth will explain. Others will warn that excessive growth could destroy the environment and leave our planet uninhabitable. Others still will warn that the finite nature of our resources does not allow continuous growth in any case.

This kind of critique has become a pastime of the chattering classes. It is now part of polite conversation in the better suburbs of developed world cities. To question the value of growth at dinner parties in air-conditioned or heated houses while sipping French champagne and eating Italian prosciutto presumably adds a sense of intellectual gravitas to one’s physical well-being. These people probably do not even realise the self-contradiction in condemning economic growth while enjoying its blessings.  . .

Economic growth is no silver bullet to all the world’s problems. But it comes close. There is overwhelming evidence that the unprecedented economic expansion humanity has experienced roughly over the past three centuries has been a great force for good. It has made our lives better in ways that would have been unimaginable to previous generations.

This should also be the response to the aforementioned critics of growth. At which stage in history do they believe we should have proclaimed the end of economic development? Certainly not in Plato’s time (4th century BC) since that would have prevented the invention of the canal lock (3rd century BC) and paper (2nd century BC). Development should not have stopped at the time the Gospels were written either since otherwise we would not even have invented the wheelbarrow (2nd century AD).

To move to more modern times, had economic development stopped when Ernst F. Schumacher suggested it should (Small is Beautiful was published in 1973), we would have never seen CD-ROMs, the Internet or the first vaccine for meningitis. And even if we had only stopped to grow and develop when Pope Francis told us to in November 2013, we would have never seen the first human clinical trials in the United States for a wearable artificial kidney – or the new iPhone 6.

Economic growth is the driver behind all of these developments because at its core, economic growth is not mainly about the production of more but about the discovery of better (though often it is both). Economic growth helps us to find new and improved ways of combining resources. The outcomes could be a new medicine, a faster way of travelling, a healthier way of eating or a better way of learning. . . Dr Oliver Hartwich

This is an extract from the New Zealand Initiative’s report The Case for Economic Growth by Eric Crampton and Jenesa Jeram.

 


Surplus for 7 months

March 11, 2015

The government books are showing a surplus:

The operating balance before gains and losses (OBEGAL) for the seven months to January was a surplus of $77 million, driven by higher than expected tax revenue and lower than expected operating expenses, Finance Minister Bill English says.

“This is the first time the Government’s books have shown a part-year surplus since 2009. Although it is too early to say whether we will have a surplus for the full 2014/15 year, this result demonstrates the strides we have made in improving the Government’s finances,” Mr English says.

The OBEGAL outturn was $712 million better than the $635 million deficit forecast by the Treasury in the Half-Year Update (HYEFU) in December, but was still $120 million below Treasury’s Budget 2014 forecast, undertaken at the start of the fiscal year.

Corporate tax was $158 million, or 3.2 per cent above the HYEFU forecast and source deductions were $146 million, or 1.0 per cent above forecast.

“Although corporate tax and source deductions were both ahead of forecast for the seven months to January, these latest figures underscore the difficulty in forecasting the difference between two large numbers,” Mr English says.

“We won’t know until the final accounts are published in October whether we will achieve a surplus for the whole year. The variance of both tax and expenditure from forecasts reinforces that message.”

Core Crown expenses for the first half of the financial year were $249 million lower than forecast at HYEFU.

“The Government is continuing to responsibly manage its finances. Core Crown expenditure for 2014/15 is forecast to be $4.1 billion lower than forecasts made when we first set the surplus target back in 2011,” Mr English says.

This is on-track to an annual surplus.

Whether or not that is reached this financial year or next it is a significant achievement and good reflection on the government’s careful management.

It has turned around the decade of deficits forecast in Labour’s last year in government and has been achieved in spite of the financial turmoil and natural disasters the government had to face.


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