Even Government agrees we're poor cousins

By Paula Oliver

New Zealand is lagging behind every state of Australia except Tasmania in what a senior Cabinet Minister calls the "holy grail" of economic indicators - gross domestic product per person.

The performance - revealed in a new Government report - has contributed to a big difference in wages between the two countries, which in turn may have influenced New Zealanders to head across the Tasman to live.

The comparison of New Zealand's economic performance with Australia and each of its states is included in the Economic Development Indicators 2007 report released yesterday by the Treasury, Ministry of Economic Development and Statistics New Zealand.

The 120-page document paints a mixed overall picture of where New Zealand stands in the world.

New Zealand rates highly in quality of life indicators and its economy is growing at a faster rate than the average of Organisation for Economic Cooperation and Development (OECD) countries.

But the quality of the country's infrastructure is at or below the OECD average, and labour productivity - or output per hour worked - is in desperate need of improvement.

The report's comparison of New Zealand with Australia drew particular interest because it showed that the average weekly earnings of full-time workers in New Zealand were below those seen in every state of Australia.

Migration of New Zealanders to Australia had now reached a level where the equivalent of almost 10 per cent of New Zealand's population lived across the Tasman.

Economic Development Minister Pete Hodgson admitted the number of Kiwis leaving to live in Australia was "an issue".

"There is no doubt that New Zealand ... living alongside a country which is doing better than us does permanently influence our thinking," Mr Hodgson said.

"There is a measured movement of New Zealanders to Australia, including one of my sons." It is understood one of Mr Hodgson's sons works in a tourism job across the Tasman.

But Mr Hodgson argued that the wage gap had steadied and could even be closing, and he stressed the importance of New Zealand's close economic relationship with Australia.

"That's why Helen [Clark] shot across the Tasman on Sunday," he said (to meet the new Australian Prime Minister, Kevin Rudd).

"New Zealand needs to be the first person to meet the Australian Prime Minister."

The Australian comparison was seized upon by National Party finance spokesman Bill English, who noted the wage gap between the two countries had widened over time and argued it would widen further because of recent moves to further cut personal taxes in Australia.

Mr English also said Helen Clark had "no chance" of getting New Zealand into the top half of the OECD ladder within a decade, and the country in fact had dropped two places to 22 out of 30 countries recently.

Yesterday Mr Hodgson said it was "absolutely" still a worthwhile goal and the Government remained committed to it. He pointed to the need to lift labour productivity, so that GDP per person, which he called the "holy grail", would improve.


* In 2006 the average weekly earnings of full-time workers in Australia ranged between:

* NZ$1025 in Tasmania to NZ$1248 in Western Australia.

* New Zealand's averaged NZ$906.

* The wage gap has widened over time:

* In New Zealand, real wages grew on average 1.1 per cent each year from 1997 to 2006.

* Australian state real wage growth ranged from 1.3 per cent in Western Australia to 1.7 per cent in Tasmania.

* The equivalent of 9.7 per cent of the New Zealand's population were living in Australia in 2006. They made up 2.1 per cent of the Australian population.

Check out the Mercer worldwide quality of living survey here.

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