Govt confirms it: Better wages in Australia

By Ian Llewellyn

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A government report has confirmed the wage gap between New Zealand and Australia has widened and it may be driving people across the Tasman.

The Economic Development Indicators 2007 report maps New Zealand's economic progress against other countries as well as the Australian states.

It showed wages were lower in New Zealand than anywhere in Australia.

In 2006, the average weekly earnings of full-time workers in Australia ranged from NZ$1025 in Tasmania to NZ$1248 in Western Australia.

In New Zealand, earning averaged NZ$906.

The data showed average salary and wages in New Zealand had always been below Australia, but the gap has widened since 1997.

Since then New Zealanders' real wages grew on average each year until 2006 by 1.1 per cent.

In contrast, Australian states' real wage growth ranged from 1.3 per cent (Western Australia) to 1.7 per cent Tasmania.

The report said New Zealand's GDP growth rate has been in the middle of the Australian states.

However, New Zealand's GDP per capita was lower than all the states, other than Tasmania.

It also said the difference in standards of living may be more pronounced than the figures implied as Australian states benefited from inter-state transfers.

The report said more New Zealanders than ever were living in Australia and "lower wages... may be one influence" on the outflow.

"This migration has accumulated to form a considerable New Zealand diaspora, which grew to an estimated 389,000 people in 2006, the equivalent of about 10 per cent of the New Zealand population," the report's authors said.

"However, net migration from New Zealand to Australia is not much different from migration from some Australian states to others."

Despite the flow of people across the Tasman, other measures on the overall quality of life showed New Zealanders were better off than most other countries in the OECD.

The study by Treasury, the Economic Development Ministry and Statistics was previously published in 2003 and 2005 in an attempt to measure economic performance.

The report's main finding was that New Zealand's strong employment growth has kept up its overall economic performance in comparison to other countries.

It shows that despite dropping two places to 22nd in the 30 country OECD ranking on GDP per capita, New Zealand GDP levels have improved slightly more than the OECD average.

Much of the growth is due to more people working and less unemployment, but this has masked the lack of improvement in labour productivity.

Economic Development Minister Pete Hodgson said the report showed the economy had been stronger for longer than at any point since the end of the World War 2.

"On most of the things that are important for growth the report says we are either keeping up with the OECD, or improving relative to them," Mr Hodgson said.

"It shows a relatively good level of entrepreneurial behaviour, improving skill levels, high rates of labour utilisation and a recent improvement in business investment."

The report said the areas New Zealand lagged behind in and needed to improve to raise income per person were:

* Savings rates and financial market development
* Innovation, including research and development
* Levels of trade and outward foreign direct investment
* Management skills and education
* Infrastructure
* Exchange rate stability and interest rate levels and stability
* The current account deficit.

Mr Hodgson said Government policies to influence these things - such as KiwiSaver and research tax breaks - would not yet show through in the statistics.


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