Editorial: Bold moves vital to stop Tasman drift

More Kiwis are joining the Tasman drift. Photo / Getty Images

New Zealand's losses are higher among low-skilled and semi-skilled workers chasing jobs and better wages. During the 2008 election campaign, John Key made capital out of the number of New Zealanders emigrating to Australia.

It was, said the National Party leader, "a vote of no confidence" in the Labour-led Government. Now, three years later, he has good reason to regret his stridency. In his time as Prime Minister, the country's net loss of people to Australia has averaged almost 25,000 a year - a higher net loss than the average under any previous government. Mr Key's strategy to curb this outflow has clearly failed. It is time for a bolder approach.

When it came to power, National's recipe to stem the exodus focused on tax cuts, an economic package to encourage growth and investment, and incentives for professionals in critical areas to stay in New Zealand.

Tax cuts were never going to be sufficient, if only because lower taxation is not one of Australia's attractions. Soon, also, global financial woes prodded the New Zealand economy into the doldrums. The upshot was lower growth and higher unemployment than across the Tasman. If one part of the Government's package could be said to have worked, it was the retention of doctors, nurses, teachers and suchlike. The latest figures show New Zealand's losses are higher among low-skilled and semi-skilled workers chasing jobs and better wages.

That offers scant consolation, however. Much more needs to be done to reverse a long-term worsening trend. The Government was handed one prescription by the Act leader, Don Brash. Charged with coming up with a plan to achieve pay parity with Australia by 2025, his taskforce prescribed keeping tax rates as low as possible, minimal regulation, the sale of state assets, widespread cuts to social services, and increasing the superannuation entitlement age. The Government described this as too radical, but said it would consider plucking some "nuggets" from it.

However, all that could be said to have come from the taskforce report is the partial float of some state assets. Even that is being advanced in a diluted form that Dr Brash would doubtless say promises strictly limited benefits.

The Government, having rejected the taskforce's plan, had the obligation to come up with a coherent and compelling alternative. It has not. All that has eventuated is tinkering around the edges in areas such as labour and planning laws. This cautious approach, as Dr Brash concluded, "ain't going to do it".

The Government's inaction is the more unfortunate in that there is mounting evidence people accept steps once considered radical will have to be taken if the gap with Australia is to be reduced.

The global turmoil has made people particularly debt averse and more willing to contemplate measures that encourage saving and productive investment.

The reception accorded the Labour Party's promotion of a tax on capital gains and compulsory KiwiSaver, for example, suggests these are no longer poisonous politically. Nor, either, should be the lifting of the superannuation eligibility age.

There is, of course, only so much that a government can do to stop young people, in particular, from leaving for Australia.

The job opportunities presented by a far larger and more diversified economy will always be an attraction for a mobile population. If Mr Key did not recognise that in 2008, he knows it now.

There can be no quick-fixes, only a formula of sustained growth sufficiently strong to entice people to stay here and help close the transtasman gap. Mr Key also knows now that more courageous economic initiatives will be required to achieve that.