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The latest round of tax cuts in Australia will attract even more Kiwis across the ditch - and there's much less chance they will ever return, say economists.
Last week, Australian Treasurer Peter Costello announced AU$31.5 billion (NZ$35.7 billion) worth of tax cuts across the board, as well as childcare, spouse support and solar heating incentives. These moves make Australia a much more welcoming environment for cash-strapped Kiwis.
"The impression I do have from energetic, ambitious and younger professionals and others is that versus Australia, the New Zealand environment is not as good a place to be," Chapman Tripp tax partner Craig Elliffe said.
According to figures compiled by David Farrar of Kiwiblog, New Zealanders will pay far more tax than Australians, no matter what they earn.
People earning up to $30,000 pay more than double the tax in New Zealand than they do in Australia. A person on a salary of $50,000 would pay $1770 more tax here than there.
Jason Walker, director of Hays Recruitment, said he expected far fewer Kiwis would ever return from Australia, as the standard of living gap continued to increase.
"If it continually improves overseas, there's less incentive for them to come back."
Walker said the Australian Government was acutely aware of the downsides of the Australian lifestyle, mostly the drought and water shortages. And it's working hard to keep financial incentives for people to stay.
"So they're looking at making it a lot more attractive to young families to stay."
The biggest difference between the two countries is the Australian Government's willingness to work to attract and keep talent, said Walker.
"One of the positive things about the Australian Government is they tend to work with corporates on how to do that. But we don't tend to have that here in New Zealand.
"They've still got incredible skills shortages - they've got companies going out to agencies saying they'll pay them double just to find people. The Government has seen that happening, and they're trying to do whatever they can to make Australia a more attractive place to live."
And the gap could widen further still. Mark Goldsmith, a tax partner at Australian firm Gilbert and Tobin, said the Australian cuts were conservative, compared with the country's surplus. He said the Government could have gone further, and there may be more tax cuts after the election, as both major parties supported them.
"If the economy continues to chug along like it is and they continue to run surpluses, I think we will be in line for potentially more tax cuts."
Doctor has no choice but to head to Oz
Dr Andrew Montgomery has had enough of New Zealand - he's heading to Australia after years of trying to help the health system.
Despite earning $140,000 in New Zealand from his medical work and plant business, he's sick of our health sector and is heading for the better lifestyle in Australia. He's doing a month-long stint in Alice Springs and unless it's hell on Earth he's taking his family with him.
He said he could earn up to $8000 a week in Australia if he wanted - and that's before the latest round of tax cuts. "It was looking pretty before and now it's looking even prettier."
Montgomery is disillusioned after establishing a business in New Zealand. With his wife he built up a successful plant-growing business, employing 20 people. But he says the tax rigmarole has forced him to give up on his dream. He blames the Government's tax policies. "Doing business here is so frustrating - we are just going to wind the thing down. I want to be taxed less and choose what I want to spend my money on."
He's packing up his family of six with reluctance. He doesn't want to live in Australia but says he has little choice. "It's the last thing I want to do. If I won lotto tomorrow I wouldn't leave. But I'm compelled to do it solely so I can fund myself and my children," he says. And he reckons he's going to be the tip of the iceberg.
"Unless these people are paid more they are all going to piss off overseas."
