Monday, 22 October 2007

New Zealanders far better off moving to Australia

I love this story, particularly as it comes during an Australian election in which the public is more focused on its own wellbeing than normal.
The average Kiwi family would be more than $5000 better off living in Australia, according to an expert economic calculator.
A couple with two children earning the median gross salary of $38,400 get tax credits and benefits which equal the take-home pay of $45,668 across the Tasman, compared to $40,027 in New Zealand.

The figures come from a mathematical model created by the New Zealand Institute of Economic Research (NZIER), which includes in its calculations the benefit of the Working For Families package in New Zealand, and Family Tax Benefits in Australia.

The online calculator then shows how much money Kiwis would earn in New Zealand dollars after tax here and in Australia, with adjustments for the differences in cost of living between the two countries.

The NZIER report said nearly 24,000 New Zealanders emigrated to Australia in 2006-07, up from 19,000 from the previous year, because of higher living standards in Australia.

These included a higher gross income in Australia, lower tax or more family tax credits, greater purchasing power and greater ease in attaining wealth.

National Party finance spokesman Bill English said the report confirmed the need for lower taxes in New Zealand, particularly for people on middle incomes.

"There's already an income gap with Australia which attracts New Zealanders over there.

"And it's going to grow if the next Australian government cuts taxes and we don't."

English said National remained committed to phased tax cuts, which he said were clearly affordable given the $8.7 billion surplus, but would not elaborate further.

Last week, Australian Prime Minister John Howard announced $40b of tax cuts in a bid to woo voters before the November elections.

Opinion polling shows he is unlikely to be returned to power, but the Australian tax relief plan has put the heat back on Finance Minister Michael Cullen to do the same here.

Yesterday, Cullen had little to say about tax cuts other than he would deal with the issue in next year's Budget.

"It doesn't matter how big you make them [tax cuts], you couldn't possibly make up the difference between net wages in Australia and New Zealand. Even if you had zero tax," Cullen said. "Then we'd have no health, no superannuation, no education and no police and so on."

He disputed that Australia was a better place to live, saying that quality of life indicators compared well with our neighbours, well above New Zealand's gross domestic product per capita rating and in the top half of the OECD.

The NZIER report said wasteful Government spending was more inflationary than personal income tax reductions. Slowing the exodus of Kiwi workers to Australia would require the wages of New Zealanders to grow faster than they had recent times, according to the NZIER report.

"This requires an environment that rewards productive activities, and that attracts and retains skilled workers in increasingly competitive and global labour markets."

Single dad 'has no life, but no real choice'

Hangi Lima, 26, is a security technician who lives in Glen Eden.

He is a single dad with two young children. Lima works 75 hours a week for an annual before-tax income of $46,000.

"People tell me all the time that I don't have a life," he said. "But I don't have a choice."

He said his friends and colleagues talked all the time about better wages and conditions in Australia, and he was "seriously considering" heading across the Tasman to Perth.

"I've had quite a few offers," said Lima. "They earn double what I earn over there - and they have better hours. Who knows what is over there?"

Lima said he thought he and his friends were "getting by pretty well" but the lure of Australia was strong.

"They just look at the extra earnings they could get out there."

The New Zealand Institute of Economic Research calculator works out Lima's net income in this country as $43,500.

However, if he followed through on thoughts about moving to Australia, the family would be better off - the calculator says Lima's net income would be $50,068.

If it wasn't for his family and the laid-back lifestyle in New Zealand, Lima would probably make the move across the ditch.

"Everyone is talking about it," he said.


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