Nick Stewart says New Zealand-born people were the fourth-largest migrant group in Australia as of 2021, making up 2.2 per cent of the population at the time. Photo / Warren Buckland
Nick Stewart says New Zealand-born people were the fourth-largest migrant group in Australia as of 2021, making up 2.2 per cent of the population at the time. Photo / Warren Buckland
Opinion by Nick Stewart
There’s a well-known jibe from former Prime Minister Sir Robert Muldoon in which he stated that New Zealanders moving to Australia would “raise the IQ in both countries.”
Unfortunately, we can’t say the same now. We’re looking at a brain drain.
Moving to the ‘lucky country’ has long been appealingfor New Zealanders in search of warmer climates and higher pay. New Zealand-born people were the fourth-largest migrant group in Australia as of 2021, making up 2.2. per cent of the population at the time.
Now it’s even easier for New Zealanders to get set up for the long term there, with citizenship available for those who have been in Australia for four years or more.
The benefits of jumping the ditch could previously be tempered by the drawbacks – yes, you’ll likely have higher pay, but if you lost your job through sickness, injury or otherwise, you wouldn’t qualify for any benefits.
You might enjoy a more temperate locale, but you couldn’t impact the political climate because you couldn’t vote. Non-citizens also couldn’t work for the Government long-term, or join the Defence Force – no matter how much of their life they had spent in Oz.
Citizenship after four years is a massive pivot from Australia’s previous stance and may tempt Kiwis to put down roots in foreign soil now that the old barriers are lifting. According to PM Chris Hipkins, it’s a “blimmen’ good day” to be a Kiwi in Australia.
It’s a strange day when the leader of a country applauds the enhanced policy and easier opportunity for the permanent foreign citizenship of some of its people.
Attracting and retaining talent has always been an issue in NZ. For many years, Governments have longed for Kiwis to return home and balance, if not reverse the brain drain. We currently have a labour shortage (or crisis, in some sectors) and no real way to incentivise retaining our own people, let alone drawing in overseas workers.
Nick Stewart.
Canada and Australia have been incredibly successful in capturing talented migrant workers in the post-Covid world. They’re making moves to clear roadblocks for potential migrants and starting advertising drives to entice those not satisfied with their current situation – Western Australia is running recruitment drives for all kinds of essential roles, from cops to schoolteachers, with ads targeting New Zealand and the UK.
With such tempting prospects and an easy route to becoming Australian citizens, our brain drain will accelerate and Kiwis won’t come home unless it’s for a visit. What do we have to offer them? Lower pay and high living costs?
According to a comparison of average salaries in an earlier Herald article:
Nurses can earn around $24,000 more;
Primary teachers can earn around $32,000 more;
Doctors/specialists can earn a whopping $65,000 more.
The job listed with the least increase was courier driver, with around a $3,000 pay rise indicated.
Historically, investment capital moved quickly. Now, so does human capital, and the data is telling; we have a lower GPD by one-third, lower productivity since the 1970s, a lower standard of living, a higher tax burden on most thresholds, more expensive housing vs income and a higher cost of living vs income.
If we don’t work on our offerings for our own talent and for overseas talent, we will secure a status as Australia’s poorer sibling.
Another area worth consideration is – as always – tax. You may have seen the headlines recently around the amount of tax paid by the wealthier members of our society.
Two reports were released to illustrate this… but they compared the actual income of middle-income earners in NZ to the hypothetical, unrealised capital gains of wealthy Kiwis.
As David Farrar noted in his recent piece, it also ignores the impact of inflation on assets.
It’s not hard data, and may herald that the Government is trying to implement a capital gains tax – despite their previous claims to the contrary.
Taxing unrealised gains would likely be a world first. While we like to be ahead of the curve in little old God’s Own, we probably don’t want to be known for jumping the gun on hypothetical earnings.
How does this tie into the brain drain? Well, Aussies are also doing better than us in this area for middle-income earners. Under $150,000, you pay less tax – the first $18,000 is tax-free, and the top rate only applies to those earning over $180,000 per year. Our system starts taxing as soon as you start earning. Admittedly, we do have a better tax situation currently for those earning over $150,000 – our top tax rate is 39 per cent, whereas Australia’s is 45 per cent.
So currently, we would be more appealing to high earners, like doctors or other specialists. This may not hold for long if we start a capital gains tax.
For potential Tasman-hoppers: if you’re moving for lifestyle or location, do your research and honestly assess whether you will ultimately be better off. What’s the trade-off? How much will your move cost, and will you earn enough to replenish your savings when you’re there?
Employers concerned about this potential shift should also think about how they can add value outside of salaries if they cannot match their Australian counterparts. Additional leave, professional development, flexible hours and an improved office culture can be appealing to employees – not just the pay packet itself.
No matter which way you go, having a plan suited to your unique goals and situation is key. If you’re not sure where to begin when getting your financial house in order, having a chat to a trusted fiduciary is always a good place to start.
Nick Stewart (Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha) is a financial adviser and CEO at Stewart Group, a Hawke’s Bay-based CEFEX and BCorp-certified financial planning and advisery firm. Stewart Group provides personal fiduciary services, wealth management, risk insurance and KiwiSaver scheme solutions. Article no. 303.
The information provided, and/or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from an authorised financial adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961, or visit our website: www.stewartgroup.co.nz.
