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Exodus to Australia swells under John Key's ruling National Party
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22 Nov, 2011

Prime Minister John Key made the trans-tasman exodus of New Zealanders a major election issue in 2008 but, as the Herald reported last week, far from dwindling, that flow has increased under his watch.

Mr Key's plan to plug the "brain drain" involved making New Zealand's economy more competitive with Australia's to give New Zealanders the jobs and wages here they might otherwise find across the Tasman.

While National can argue that its efforts have been hampered by the global financial crisis and the Christchurch earthquake, as well as that its tax cuts have given workers more cash in the hand, the raw data shows there has been little improvement to cheer about or to keep workers in New Zealand.

During the 2008 election campaign, Mr Key - then Leader of the Opposition - said the stream of New Zealanders leaving for Australia was "a vote of no confidence" in Labour's management of the economy.

However, after a couple of years of improvement under Mr Key, the floodgates opened again in the last year or so and now he has a worse record on this measure than Helen Clark and her government.

Under Labour, the annual average net permanent and long-term net loss to Australia was about 21,500, even with a figure of almost 34,000 in their last year in office.

Under Mr Key and National, it has been about 25,000 a year, with the average pushed up by another 34,000 net loss in the year to September.

The higher wages on offer in Australia remain one of the primary drivers, and official data shows there has been no progress in closing that particular gap. In fact, it has got wider.

The Quarterly Employment Survey's measure of average ordinary time hourly earnings in New Zealand was at $24.40 in the December 2008 quarter when Mr Key won the election; by the September quarter this year that had risen to $26.53.

That works out to an average annual wage of $46,332 in 2008, rising by 11 per cent to $51,485 this year.

In Australia, the average ordinary time weekly wage rose from A$1158 in November 2008 to A$1305 ($1721) in May this year.

That's equivalent to an annual average wage of A$60,216 in 2008, rising 12.6 per cent to A$67,860.

National argues that the wage gap has closed when considered on an after-tax basis thanks to its tax cuts.

It says after-tax wages have increased by 10 per cent in the past three years, even allowing for inflation.

Meanwhile, if jobs are paying better in Australia, they are also now easier to find there as well, with the unemployment rate across the Tasman consistently lower than in New Zealand since mid-2009.

When Mr Key and National came to power, unemployment was rising. In the first quarter of 2008, the rate was 3.8 per cent, but by the December quarter when Mr Key won the election, it had climbed to 4.7 per cent.

It kept rising until it hit a peak of 7 per cent in the December 2009 quarter and has remained within one percentage point since, slipping as low as 6.1 per cent early last year but sticking around the mid 6 per cent area, with the most recent number being a small rise to 6.6 per cent.

By contrast, Australia's unemployment rate was 4.6 per cent in December 2008 and rose as high as 5.9 per cent in June 2009. It dropped just below the 5 per cent mark for a few months in the past year but at present stands at 5.2 per cent.

On the broadest measure of economic progress, gross domestic product (GDP), Mr Key and his Government have little to celebrate.

Quarterly GDP in the three months to June is now 2.46 per cent higher than it was during the December 2008 quarter when Mr Key and National came to power.

However, that increase has not kept pace with population increases and, on a per capita basis, GDP has shrunk by 0.29 per cent over the same period.

In Australia over the same time, the overall GDP measure has risen by 4.79 per cent or 0.7 per cent on a per capita basis.

By Adam Bennett