Bernard Hickey: Let's act now to avoid being the unlucky country

Photo / Dean Purcell

Opinion

The issue of closing the wages gap with Australia seems to have gone quiet since the 2025 Taskforce report was dismissed by Prime Minister John Key as too extreme.

In the previous year the exodus of New Zealand's best, brightest and hardest-working young people across the Tasman seemed to have slowed and turned around. This may have allowed some complacency to creep into the Government's thinking.

Since Don Brash's report was released with a dull thud, the Budget tax reform package has emerged and some may have hoped this would be enough to start closing the gap and slowing the flow of economic migrants to the lucky country.

Unfortunately for us and the Government, the lucky country has got even luckier in recent months and the pressures to emigrate even more intense.

Latest employment figures show slow wages growth and a rise in unemployment in New Zealand.

Meanwhile, Australia posted a record trade surplus for June. Its unemployment rate sits at 5.1 per cent versus New Zealand's on 6.8 per cent. Australia's wages are growing at an annual rate of 5.5 per cent while our wage growth is 1.6 per cent.

The gap between Australia's average weekly earnings and New Zealand's has blown out to NZ$643 from NZ$565 in the past two years. That translates into an annual gross wage gap of NZ$33,400, up from NZ$23,000.

At current wage growth and exchange rates, New Zealand wages will be half those in Australia within seven years.

This is already starting to show in our migration figures and flow through to weaker demand in the housing market.

In June alone, 2923 New Zealand residents left to live in Australia permanently, up from 2201 in June 2009. We're still not near the pre-2008 election exodus levels of June 2008 of 3797, but we're headed in that direction.

Why is the Government pursuing a policy of incremental and non-controversial economic changes when something more radical is needed?

The nation's economic future is flying out of Auckland, Wellington and Christchurch airports at a rate of almost 100 workers a day.

They are often educated or trained in the professions or skills. They will need to be working and paying taxes in New Zealand in 20 years' time if we are to have any hope of avoiding national bankruptcy when the baby boomers retire and start claiming universal pensions and using the universal health care system in droves.

Do we really want to end up a bankrupt nation of retirees, beneficiaries and farmers watching their grandkids growing up in Australia?

bernard.hickey@interest.co.nz