Australia's struggling domestic economy represents a cloud on New Zealand's horizon, Prime Minister John Key said yesterday, despite record numbers of New Zealanders heading across the Tasman in search of a brighter future.
Ahead of the May 24 Budget Mr Key and his Government's management of the economy have come under increased fire from opposition parties.
Yesterday those attacks were fuelled by news that population growth had slowed to its lowest rate in more than a decade.
Population growth at 0.6 per cent was the lowest since March 2001, when it only increased by 0.5 per cent.
Statistics New Zealand put that down to a combination of fewer births, more deaths and more people leaving the country.
Australia was the most popular choice for those departing permanently, with a record 53,000 moving across the Tasman in the year to February.
Thousands attended an Oz Jobs Expo in Auckland over the weekend wanting to join the exodus, and many said it was because of poor employment opportunities and unaffordable housing here.
Labour leader David Shearer said the fact that thousands packed the expo was proof that New Zealanders saw better prospects for their future across the ditch.
"More than 6000 Kiwis were attracted by the light at the end of the tunnel, unfortunately they see it in Australia, not here," Mr Shearer said.
"This again highlights the Government's utter failure to grow the economy and create jobs."
His economic development spokesman, David Cunliffe, said a slump in retail sales reported yesterday was "an ominous warning that a double-dip recession could be on the cards".
But Mr Key yesterday dismissed Mr Cunliffe's warning, saying there was nothing he'd seen from either the Reserve Bank or Treasury that New Zealand was headed back into recession.
"The Budget documents will show that we're likely to experience what I'd describe as reasonably robust levels of growth in 2013-2014.
"Our big risks are Australia where unemployment is picked to go up ... their economy is definitely slowing and despite all of the things that are said about Australia, it's very much a two-speed economy.
"You've got substantial growth taking place in the mining sector and virtually every other part of the economy is weak."
Mr Key said the Australian housing market was down about 10 per cent and its tourism and manufacturing sectors were both struggling.
"So one of the problems for us of course is that while we are in an Australasian labour market - we compete in that regard - if Australia slows down or China slows down it has some impact."
Ahead of the Budget later this month, which Mr Key says will include tax "base broadening measures" - either a new tax or a tax increase, he yesterday defended his Government's 2010 "tax switch" against Green Party criticism it had cost $2 billion.By Lincoln Tan Email Lincoln, Adam Bennett Email Adam