NZ vs Australia economy

February 3rd, 2014 at 2:00 pm by David Farrar

News Ltd economics reporter Jessica Irvine writes:

Our sporting teams may be locked in bitter rivalry: Wallabies vs. All Blacks; Diamonds vs. Silver Ferns.

But in the battle for economic supremacy, New Zealand is set to reign supreme.

While the Australian dominated over the past two decades, the tables are turning.

survived the GFC with our two decade unbroken growth record intact, while New Zealand plunged into a year and a half long recession, before a deadly earthquake levelled its second biggest city of Christchurch in 2011.

But things have turned a corner for the New Zealand economy, says Saul Eslake, the chief economist at Bank of America Merrill Lynch.

“The situation has now changed. As we move into 2014 the New Zealand economy does so gathering momentum whereas the Australian economy is clearly limping and will continue to do so,” Eslake explains.

And the migration patterns are changing.

Could the flood of New Zealanders to our shores be about to reverse?

Better jobs prospects at home are already reducing migration flows to Australia, says Eslake.

“I think that is already evident in NZ’s own migration patterns, which show net emigration having fallen quite significantly.”

New Zealand’s economy expanded 3.5 per cent over the year to last September, outpacing growth in the Australian economy of just 2.3 per cent.

As a result, getting a job in Australia is getting harder while getting a job in New Zealand is getting easier.

New Zealand’s jobless rate dropped sharply from 7.2 per cent to 6.2 per cent, while Australia’s climbed from 5.4 per cent to 5.8 per cent.

Hopefully our rate will drop below 6%.

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34 Responses to “NZ vs Australia economy”

  1. F E Smith (3,275 comments) says:

    Good. Does this mean wages can go up and we can stop being a low wage society?

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  2. Nigel Kearney (747 comments) says:

    They are far ahead of us in purchasing power so we will need to outgrow them for a long time to get back to parity. Also, they no longer have a Labour government so it will get harder.

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  3. RRM (8,997 comments) says:

    You can be winning your class at the 24 hours of Le Mans and yet still be many, many laps behind the also-rans in the Big Boys’ classes!

    Australia has big industries – (or at least mini big industries.) We’re a niche dairy producer which is very nice but we’re nothing much else…?

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  4. SHG (321 comments) says:

    The Australian experience:

    1. China buys coal and iron ore, then
    2. China buys mining companies, then
    3. China buys mines

    Replace with “milk” and “farms” for NZ as appropriate

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  5. Lance (2,311 comments) says:

    Can we treat Australians as second class citizens now?

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  6. Psycho Milt (1,986 comments) says:

    Could the flood of New Zealanders to our shores be about to reverse?

    Given that our unemployment rate is still higher than Aus and our pay rates way the fuck lower, I’m picking the answer to this question is “No.”

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  7. Maggy Wassilieff (180 comments) says:

    The reason NZers are not flooding into Australia is because Oz doesn’t want us and has closed the door on many of the freebies NZers were getting. I’m too old now to be acceptable to them. One of my brother’s had the operation some years ago and is now a bona-fide Australian citizen. Most of his adult kids decided to follow him over and won’t be coming back any time soon, as far as I can see. Doesn’t seem to be any shortage of jobs in Oz if you’ve got a trade or a decent work ethic.

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  8. ross69 (3,645 comments) says:

    Good. Does this mean wages can go up and we can stop being a low wage society?

    Absolutely but first we’ll need a change of government. :)

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  9. Tautaioleua (266 comments) says:

    The mining industry was always a temporary arrangement. Australia’s trade & investment with the US and Japan suffered as both economies contracted, and China devalues her currency to get the upper hand on trade with them.

    Sadly, the Australians had everything working against them.

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  10. alloytoo (338 comments) says:

    @ Maggy

    I don’t think there’s a shortage of jobs in NZ if you’ve got a trade or a decent work ethic.

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  11. F E Smith (3,275 comments) says:

    Ross69,

    I mean private sector wages, public sector wages are high enough.

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  12. Chinarugby (80 comments) says:

    I understand that the Australian measure of unemplyment is a more ‘flexible’ one than is employed in NZ and that their true rate on unemployment is north of 6% – someone correct me if I am wrong.

    We had 2 sets of friends move to OZ in 2009 and 2010 – cos ‘it has to be better right?’ – they are IT project manager, Logisitcs manager, accountant and cafe worker. They moved to Brisbane and Melbourne repsectively

    IT project manager – moved back to AKL end of 2013 – was made redundant in Brisbane and spent 11 months out of work.
    Logistics manager – Brisbane – lost job with Boral in Jan 2013 – still looking for a job.
    Cafe worker – still working people need coffee :) – and is supporting the Logisitcs Manager!
    Accountant – Brisbane laid off April 2013 – moved back to AKL this summer.

    Probably in no way any reflection of wider maliaise in some OZ states but thats what happened in our circle.

    Maggy – I lived on OZ a long time ago – and if the work ethic is now what it was then – goodness help OZ. Seems to me the extraordinary high wages mask some pretty average productivity outputs there still.

    SPC – the lastest company over there to have its subsidy begging bowl dismissed by the govt. has – according the SMH an unrealisitcally high average wage strucure which has, amoung other things, rendered the business a basket case – 3000 Melbourne jobs on the line.

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  13. bhudson (4,720 comments) says:

    @F E Smith,

    Good call – but don’t ask about purchasing parity else their inflationary house of cards will collapse.

    Given the reigns of financial control, Russel Norman would see our currency changed from the dollar to the ‘wheelbarrow’ in very short order…

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  14. greenjacket (348 comments) says:

    RRM: “We’re a niche dairy producer which is very nice but we’re nothing much else…?”

    The success of the dairy industry acts as an incubator for other industries – try looking at Gallagher Security or Scott Technology or other manufacturers to see how by having one world leading industry allows others to grow.

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  15. Dave Mann (1,127 comments) says:

    While the Australian economy dominated over the past two decades, the tables are turning

    What a lot of utter garbage. Where does this idiot woman get this rubbish from….. government handouts and the Chamber of Commerce’s pressers?

    The NZ economy is badly rooted, frankly. Ruined by overbearing government bureaucrats and a business culture of risk-aversion and the eco-fucks’ fear of doing anything productive. We are sitting on (literally) a goldmine of minerals and energy, but greenism forbids us from exploiting any of it and there’s a sick culture of anti progress which even hinders energy exploration off our coasts (which have been GIVEN to the indigenous people anyway, FFS). Even Fonterra has to fight continuous battles with third columnists who are trying to destroy the only truly productive base in our economy.

    New Zealand’s manufacturing base has been gutted and we have lost the skills, the plant and the willpower to do anything about it and our schools are only capable of producing school leavers who are semi-literate at best due to the dumbing down of our education system.

    I run two different small businesses (unrelated to each other) and both these businesses have been struggling to survive for the last year at least; almost all my clients are so pressed for income that I can’t see any real prospect of recovery. And yet these wankers continue to spout this ‘rock star economy’ bullshit! Where on earth do they get it from?

    New Zealand looks like paradise to the new arrival or the tourist…. but what they fail to see is that the whole infrastructure was built in a time when we had the work ethic and the drive to build a country out of literally nothing. That drive has now evaporated and our best people have left. What remains is a walking corpse which doesn’t know it has died yet.

    The only hope is that the wheel will turn full circle in a couple of decades. By that time NZ will be more or less Chinese, because they are the only people here to value hard work and education. They will deserve it too, if they can somehow get around the stifling government and cultural barriers and make a future here. Good luck to them.

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  16. Psycho Milt (1,986 comments) says:

    And yet these wankers continue to spout this ‘rock star economy’ bullshit! Where on earth do they get it from?

    Statistical smoke and mirrors. The Christchurch rebuild and high dairy prices mean things can be made to look pretty good if you pick the right numbers to publicise. Which nicely conceals the fact that we’re recovering only very slowly from some really bad years and most people aren’t better off, or are worse off.

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  17. Gulag1917 (425 comments) says:

    Kiwis are far more versatile employees. Australian low productivity+low quality workmanship+high wages will come back to haunt them. Get ready for the economic bubble to burst. House construction quality is pitiful Serious storm and you could have serious loss of life because of expensive though low quality housing.

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  18. igm (880 comments) says:

    ross69: You are definitely a public servant, no private sector company would employ you with your attitude.

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  19. big bruv (12,381 comments) says:

    Psycho

    Anybody who is not better off today than they were two years ago does not deserve to participate in the current economic boom.

    Those who have a shit work ethic, have done nothing to improve their value to their employer or make themselves a sought after asset for a prospective employer deserves nothing.

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  20. Kea (10,451 comments) says:

    big bruv, that is a bit idealistic and harsh. I suggest that if anybody is worse off, while having done the same job, there is a problem. Our economy is better than some others, but opportunity is limited and overall it is not flash. National have done a pretty good job, but they can not work miracles. Especially given the global economy at the time they took over after 9 years of communism under the Klarken Beast.

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  21. big bruv (12,381 comments) says:

    Kea.

    It might sound harsh. But think about it, if you are still doing the same thing you did four years ago and have not increased your output or made yourself invaluable to the boss then what right have you got to expect things to improve?

    Chances are that the business you work for is only now starting to make any money and probably carried more staff than they should through the worst of the recession.

    Just because things are looking up does not mean that clock watchers or time servers deserve a thing.

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  22. slijmbal (1,134 comments) says:

    This is not rocket science.

    OZ actually uses its natural resources, which has generated loads of income over a long period of time to the extent that they had governments who b******d their economy with debt and welfare largesse. They got lazy and greedy. They will suffer for several years while this works its way through the economy and I hope they retreat back to their lower tax regime and better income regime they had until relatively recently (OZ has historically taxed less of their GDP than NZ).

    The figures for NZ look probably better than they are as Labour forced us in to recession early and a bounce back always looks good. Bill English has been quietly making NZ less government/welfare profligate. Don’t get me wrong we are doing better but until we actually exploit our oil and mineral resources we will struggle to compete with OZ on a long term basis.

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  23. Yoza (1,353 comments) says:

    Gulag1917 (379 comments) says:
    February 3rd, 2014 at 4:55 pm

    Kiwis are far more versatile employees. Australian low productivity+low quality workmanship+high wages will come back to haunt them…

    Not according to a recent paper published by the New Zealand Productivity Commission:

    Average labour productivity in New Zealand has been losing ground to Australia since the 1970s, and is now almost a third lower than in our trans-Tasman neighbour” said Paul Conway, Director of Economics & Research at the Commission. “This is important because differences in labour productivity – average output per hour worked – have a big impact on cross-country differences in living standards.”

    The report also looked at the amount of capital (eg machinery, computers and other assets) available per hour worked and skill levels to estimate multi-factor productivity (how efficiently labour and capital are used). Across the 24 industries analysed, multi-factor productivity levels in New Zealand are about 22% lower than in Australia, a smaller gap than found for labour productivity but still a very significant difference.

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  24. Gulag1917 (425 comments) says:

    Australia has far greater draconian legislation and more levels of bureaucracy which will stifle growth in the future.

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  25. Bogusnews (425 comments) says:

    They never should have gotten rid of John Howard. The voters just got tired of him after 9 years however and voted a total disaster of a Rudd in.

    Very similar over here. We got tired of National, voted in Labour, which ended up being one of the most costly mistakes of a generation.

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  26. srylands (302 comments) says:

    “Not according to a recent paper published by the New Zealand Productivity Commission”

    Yoza you are spot on. BUT I suspect that the views of the NZPC are anathema to you. You can’t just cherry pick to make a point.

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  27. OneTrack (1,977 comments) says:

    “Very similar over here. We got tired of National, voted in Labour, which ended up being one of the most costly mistakes of a generation.”

    And it’s 50:50 we are going to do it again.

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  28. SPC (4,675 comments) says:

    New Zealanders will remain attracted by the higher wage per housing cost available across the Tasman.

    The ability to get a job will determine the numbers who continue to cross. Those losing jobs in Oz will have to return, like it or not.

    Numbers (of those married) returning for well-paid jobs in construction in CH will be constrained by the lack of housing for their families.

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  29. ross69 (3,645 comments) says:

    ross69: You are definitely a public servant, no private sector company would employ you with your attitude.

    You obviously missed an earlier post of mine where I said I was self-employed. :)

    BTW I have a great attitude!

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  30. wikiriwhis business (3,302 comments) says:

    The jobless numbers only look so good because their is a fourth tier of society created of unemployed who
    have been dropped from the system and are not allowed to be enrolled in WINZ and fallen off the radar.

    I just heard a qualified nurse describe how she was rejecte from 100 job interviews. Appalling.

    That’s why I reject every call on this elitist blog for people to look for a job.

    I’ll have no surprise WINZ case workers will all be looking for jobs in the future.

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  31. wikiriwhis business (3,302 comments) says:

    “Australia has far greater draconian legislation and more levels of bureaucracy which will stifle growth in the future.”

    We’re catching up. No doubt the entire OECD

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  32. Ben Dover (526 comments) says:

    There is the Big Sheep Farm Australia – except sheep no good cos the wild dogs is outta control
    and the
    “Little Sheep Farm” Nuu Zealand

    Australian and New Zealand Economics is now a race to see
    which left right or centre right retard
    can sell their island and all their strategic assets and materials to the commies first

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  33. Ben Dover (526 comments) says:

    NO you are wrong

    We have now invaded Australia

    We are coming back when we please – when we feel like it

    and we are taking over Australia on behalf of NZ

    Not the NZ or AUS gvts can have any say in this

    and if they do not GET OUT OF OUT WAY

    we will with hold our TAXES

    Go talk C R A P about welfare and the unemployment rate

    This is the Lucky Country and they are lucky we are here to run it for them

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  34. Ben Dover (526 comments) says:

    If you operate in one and not the other of these economies because they are really one

    you are a backward thinking – seriously

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