KEY POINTS:
"Since the election of a Labour-led government in late 1999, any widening in the wages gap [with Australia] has been stopped in its tracks. The latest available data show that in 2007, the wage gap was just 0.4 per cent wider than it had been when Labour first came into government." - Trevor Mallard
Those numbers are calculated using the average exchange rate for the past 17 years, which doesn't take into account the real changes in purchasing power between Australia and New Zealand that occurred during that time.
Nitpicking? Not at all. The difference is extremely significant. Mallard's calculations show that the Australia-New Zealand gross wage gap rose by 0.45 per cent during Labour's time in government.
The same figures, when adjusted using Purchasing Power Parity figures from the OECD (which takes into account the real buying power of our respective currencies), show that the average weekly Australian wage was 21.6 per cent higher than New Zealand's in 2000.
By last year that had risen to 25.9 per cent. It has risen 4.3 per cent during Labour's time in office - nearly 10 times what Mallard originally claimed.
That's hardly good news for National, either. The last time it was in government, the wage gap rose by 12.2 per cent - more than twice as fast as the gap rose under Labour. When taxes are taken into account, the gap has grown faster under Labour.
The reason is simple - tax cuts in Australia. The top tax rate in Australia is 45 per cent. The top tax bracket was $60,000 a decade ago. It's now $180,000. While the Government counters with its own Working for Families package, Australian family tax benefits are even more generous.
The bottom line is that wages in Australia are higher than New Zealand, the gap is growing, and that neither Government in the past 17 years has had success in catching up.
"People have recognised that that is factually correct, that taxes are higher in New Zealand on most incomes," says Dr Patrick Nolan, of the New Zealand Institute of Economic Research. "And they're getting higher - more people are paying higher taxes in New Zealand, whereas in Australia it's going a different way.
"When you've got a country like Australia, which has the attraction of bigger cities and better weather and beaches, you're already behind the 8-ball. So if you have higher taxes, it makes it harder to attract people," he says.
"My concern is that it's going to be a debate around who benefits and by how much, and we're going to get into a bidding war. It should be about what's the most economically sensible approach. We should design a tax system that encourages a strong economy and rewards people when they make decisions about working and looking after their family. When we have a strong system and a strong economy, people will stop migrating and we'll be able to attract people back."
"The balance of payments will worsen as a consequence of [the FTA with China], not improve, because the growth of their exports will be greater than the growth of ours - which are limited anyway - and one of the key, fundamental elements of an unsound economy is a serious balance of payments deficit." - Winston Peters
No. According to the National Interest Analysis conducted by the Ministry of Foreign Affairs, New Zealand exports to China are expected to be 20 to 39 per cent higher over the next 20 years as a result of the FTA with China. That's $US180m-$280m worth of additional income for New Zealand exporters each year.
On the other hand, Chinese exports to New Zealand are expected to be only 5 to 11 per cent higher during the same period. That's worth an additional $US40m-$70m each year. The maths is not hard. New Zealand exporters will benefit more than Chinese exporters from this deal, which will help improve the balance of trade in New Zealand's favour.
