Valuable economic lessons from New Zealand for us Aussies 14



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Australia has always felt like the superior to New Zealand – they’re like our little brother. We’re bigger, tougher and richer than them, right? Actually, in recent years, New Zealand has been going from strength to strength and we’ve be left in the dust. So what are they doing so right that we could take notes from? We’ve taken a look into it and Aussies, there’s a lot of work to be done to catch up now.

The NZ dollar is almost on parity with our own, showing us that our economy is miles behind theirs. According to HSBC economist Paul Bloxham, the New Zealand economy is outperforming every other OECD economy.

“That’s why we’ve been describing New Zealand as a rock star,” Mr Bloxham told News Corp. “It was the fastest growing of the 34 OECD economies in the last year.

“And, we think that situation’s going to continue this year as well”.

Our economy, on the other hand, is reaching the end of its high – the mining boom.

But how do they have a budget surplus while we have large deficits and raised taxes upon us? Canberra’s budget deficit is more than 3 per cent of GDP where as NZ continues to pile up surpluses… their budget deficit is just 1.3 per cent of GDP.

Another way NZ is getting a leg up on us is by having just one government and not eight. The state system has been the source of much debate and contention over the years. Former Prime Minister Bob Hawke has wanted to abolish the state system since the 70s and in 2013, Hoopla reports Mr Hawke said,

“We have a set of governments that represent the meanderings of the British explorers over the face of the continent 200 years ago.

“They drew lines on a map and then said that is how Australia is going to be governed. If you were drawing up a system of government today, in ideal terms, what we have got now is the last thing you would have”.

With that said, it seems to work for New Zealand, although they do have less people. Nevertheless, state government bureaucracy has massive implications on infrastructure, defence and general government expenditure, which is no doubt the source of a hefty amount of debt.

Now, on to the unemployment rate. We had good news last month when the unemployment rate shocked everyone and dropped to 6.1 per cent, however when compared with NZ, we pale in comparison. They’re unemployment rate is steadily falling, and is now at 5.6 per cent.

We also have vast difference in our tax systems, mainly due to NZ’s higher GST rate of 15 per cent. This presents a strong case for raising the goods and services tax and cutting personal income tax, pointing out that research consistently shows that relying more on indirect taxes, rather than income taxes, can support higher growth and living standards – they’re living proof.

NZ once again is going from strength to strength, this time in trade. Since 2011, New Zealand’s trade has increased by 7 per cent, whereas Australia has declined by 20 per cent.

And last but definitely not least: politics. Need we point out how disastrous our politics have been in the last 5 years? It’s put us on the global stage for the wrong reasons, after we saw the Rudd-Gillard spectacle, followed by often ridiculed Tony Abbott, although some might say he has been less criticised in recent months. However we aren’t anywhere near close to trusting him for the remainder of this term, let alone another two. But in the land of the long white cloud, they’re loving their PM, John Key, as he settles into his third term.

With that all said, us Aussies and Kiwis do share problems that neither of us have solved (yet). There’s the excessive household debt, the dangerous balance of payments deficit, and our near economic addiction to China.

So tell us: Do you think we should take tips from NZ about our economy? Or should we just keep on the way we are? What other economies could we learn from?

Starts at 60 Writers

The Starts at 60 writers team seek out interesting topics and write them especially for you.

  1. Well it seems silly too me for a start NZ is so small the cost of roads rail ect ect would be a spit in the bucket we are such a big country too service. How can you compare them. We got states because of the sheer size of our country. we have to move goods over long distance. We have massive climate changes and conditions in one State let alone over our whole country. Like comparing chalk and cheese.

  2. Get rid of the states for a start .thats the problem with Australia it is not a nation it is acollecgion of states .
    Meet an ausie overseas and ask where they are from they say Melbourne or Queensland or New south wales .they never say Australia.
    the states should be done away with an have uniform laws across the whole country.

    1 REPLY
    • Of course if you meet another Aussie you will name the state you come from …they already know you are an Aussie from your accent. To people from other countries you say Australia because they do not even know the geographies

  3. The once aptly described unelected swill of the Australian Senate is an issue the Kiwi’s don’t have to deal with, let alone the States!

  4. all their unemployed moved to Australia that helped a lot

    2 REPLY
    • Been here 25 + years, never been unemployed, own my own house and investments, paid for the privilege of living here and love it.
      2 brothers now here both working, no other benefits for them.
      My son works in a factory and doesn’t complain.
      You just need to sit in Centrelink for a day and monitor the accents and skin colour to see where all your hard earned tax dollars go.

  5. If New Zealand is a “rock star” economy then those who have worse performing economies must be in a very poor state! Just this morning we have reports about the increasing wealth disparity in New Zealand and resulting hardship! When one hears overseas comment about how good New Zealand is doing one has to suppose that this comment is particularly uninformed as to the real “on the ground” New Zealand economy where housing costs are soaring way past the ability of lower income people to pay! The dairy returns that have underpinned some of the stats recently are about to go underground ….. it’s the proverbial bull folks!

  6. We havent had a surplus since before the national government was elected in 2008, get it right, all this talk of a rockstar economy… look at the hotel room, theres been a rockstar in it alright!!!
    7 deficits in a row and thats whilst selling assets left right and centre much to the chagrin of respectable kiwis

  7. I think you need to do some more research. As far as the unemployment stats go in Nz if you get 1 hours work a week you are employed for the purposes of stats. The real unemployment figures are rising. One of the papers just wrote another article on the rise of families living in their vans, working families make up much of NZs poorest and the stupid zero hours contracts don’t help. Our child poverty is something to be ashamed of too. This so called ‘Rock Star economy’ is a big con.

  8. The New Zealand so called rock star economy is all smoke and mirrors. NZ’s overseas debt has gone from $9B [under Labour-who had 7 years of Govt. surplus] to Nationals [John Key] constantly increasing debt of $65.6B [as of today] a massive 37.6% of GDP. This is why NZ and Ireland [who’s bubble already burst-in part thanks to Banker John Key]etc are in deep stook! Listen to this to find out a little more of JK!

  9. Too much government is Australia’s biggest economic problem. The state governments cost an incredible amount of money for things that are mostly duplicated in Federal government. We should abolish the state government and local government should be stepped up to put the state case across to Canberra.

  10. Oz is going to hell in a handbasket! We need to STOP relying on minerals(and that ugly woman in WA who owns most of them). PLUS, get rid of at least one level of government….but of course the pollies and their parties will NEVER suggest this! WE, old folks, need to boot them all out AND stop their HUGE pensions from bankrupting us all! OUR so-called reprsesentatives are in FOR THEMSELVES ONLY and could care less about the voter/taxpayers! Those smug D=&kh%4ds Abbott and Hockey and that German should be tossed…NOW!!! Don`t wait for an election…they will try to buy off all the stupid greedy voters just before then with MORE LIES!

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