A new report says shrinking income disparities, higher taxes, and higher house price-to-income ratios are making Australia less attractive to Kiwi workers. Photo / 123rf
A new report says shrinking income disparities, higher taxes, and higher house price-to-income ratios are making Australia less attractive to Kiwi workers. Photo / 123rf
The long-held belief that Australia offers better financial opportunities for New Zealanders in the construction and infrastructure sectors may no longer hold true, according to a new report.
Waihanga Ara Rau (the Construction and Infrastructure Workforce Development Council) commissioned regulatory specialists Allen + Clarke to explore individuals’ decisions regarding workingin Australia compared with New Zealand.
The report, Is the Grass Really Greener?, combined quantitative analysis and interviews with returning workers to compare income levels, housing affordability, and living costs between the two countries.
According to its findings, shrinking income disparities, higher taxes, and higher house price-to-income ratios are making Australia less attractive to Kiwi workers.
Philip Aldridge, chief executive of Waihanga Ara Rau, said the findings provide valuable, up-to-date insights for Kiwi workers weighing up a move across the Tasman.
“There’s no denying New Zealand’s current lack of work, but it’s temporary. Within 12 to 15 months, major projects will be kicking off, interest rates will drop, and demand for skilled workers will surge,” he said.
“Australia may look appealing now, but short-term gains should be weighed against New Zealand’s pipeline of work, forecast to be worth $240 billion over the next three years alone.”
The research found Australia was most attractive to New Zealand workers who do not have children, were relatively young and in the early stages of their career.
“These individuals are likely to be comfortable working in ways that enable them to increase their incomes to higher levels than they could in New Zealand by taking advantage of overtime and penalty rates that are more consistently available in Australia,” the report said.
“Higher income, earned in this fashion, comes at a cost to work-life balance, the impact of which is less likely to be an issue for individuals without children.”
On the flip side, New Zealand workers who remained in Australia were likely to find it became progressively less attractive as individuals had children, progressed through their career, and accumulated wealth.
The report said New Zealand offered strong incentives for those looking to settle down long-term, including improving housing affordability and a better work-life balance.
“Recent changes in the relative house price to income ratios of each country have made purchasing a house in New Zealand more affordable compared to Australia, providing a further incentive for individuals to return after a period of accumulating wealth in Australia,” the report said.
“Higher average income tax rates in Australia mean that as individuals’ earning potential increases, they pay proportionately more tax in Australia than they would in New Zealand.”
Improving housing affordability and a better work-life balance made New Zealand attractive to those looking to settle down long-term. Photo / Warren Buckland
Key findings: Housing affordability
The report presented data from the Organisation for Economic Co-operation and Development (OECD) on the annual house price-to-income ratio from 2003 to 2023.
It said while purchasing a house in New Zealand began to become less affordable than in Australia from about 2017, since 2021, the house price to income ratio in New Zealand has been dropping significantly.
As of Q3 last year, purchasing a house in New Zealand had likely become more affordable (when assessed by price-to-income ratio) than in Australia, the report said.
Key findings: Rent
The analysis showed renting in New Zealand is likely to be more expensive than in New South Wales and Victoria.
Between December 2018 and December 2023, the median rent in New Zealand increased by A$153 ($169) – higher than that of Sydney (A$150), NSW (excluding Syndey) (A$130), non-metro Victoria (A$120), and Melbourne A$110.
However, the disparity may be mitigated for individuals in New Zealand who can rent outside Wellington or Auckland, the report said.
New Zealand also had the second-highest median rent of the five, only behind Sydney.
Key findings: Income
While construction workers and heavy machinery operators still earn more in Australia, these higher earnings likely come at the cost of longer hours and weekend work, the report said.
Electricians and telecoms workers in Victoria and New South Wales also no longer earn significantly more than their New Zealand counterparts, and in some cases, may take home less after tax.
OECD data showed the average income tax rate at 100% of the average wage from 2014 to 2023 is less in New Zealand than in Australia.
That difference appeared to be reducing slightly over time, the report said.
New Zealand has also consistently had a lower gender wage gap than Australia between 2005 and 2023, OECD data shows.
As of 2023, New Zealand’s gender wage gap was less than half of Australia’s, and decreasing further, while Australia’s gender wage gap had increased from 2022 to 2023.
Malcolm Fleming, chief executive of New Zealand Certified Builders, said the findings are an opportunity for employers to address retention challenges.
“This research is a practical tool for employers to have real, informed discussions with their staff about the reality of moving to Australia. Many workers are still making decisions based on outdated information, and this data gives employers the opportunity to present the facts clearly,” Fleming said.
“It’s about showing workers that the grass isn’t always greener in Australia and helping them make decisions with the full picture in mind.”
Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sports. He reports on topics including retail, small business, the workplace and macroeconomics.
