The myth of the fatter Australian pay packet

The always impressive Brent Edwards on Radio New Zealand has this morning reported that the wage gap between Australia and New Zealand hasn't widened in the past nine years. (That link is to the Quicktime version of the story on Morning Report today. Not sure if it will work as we haven't tried an audio link before. If it doesn't, go here).

That reinforces what CTU economist Peter Conway said three weeks ago.

“The reality is that we have a significant wage gap with Australia. The gap grew by 50 percent in the 1990s and from 2000 to June 2007 it grew by less than 2 percent. Since then, wages in New Zealand have gone up faster than in Australia so it is likely that the gap has not expanded at all between 2000 and 2008.”

Australia has the benefit of a higher minimum wage and stronger unions, and any data anywhere in the world will tell you that those two things make for higher wages. Edwards mentioned at the end of his report that Cullen will be announcing another rise to the minimum age during the campaign.

One of the most disingenuous positions of the campaign so far is Sir Roger Douglas re-emerging from the wilderness saying he wants to rescue us from our sliding performance against Australia. There are many reasons for that gap—we didn't handle Britain's move into the EEC as well as we might have, Australia has the mineral wealth, it didn't almost go bankrupt under Muldoon in the early 80s... But two of the worst villains in the picture are Douglas and his fellow ACT supporter Ruth Richardson. New Zealand workers took a hammering in the 80s and 90s, compared to other countries—a 6.5% fall in their real hourly rate between 1980 and 2001 according to one Canadian report.

I've long been frustrated by the constant whining about how New Zealand pales in comparison to amazing Australia and I'm unimpressed by politicians—National and Act in particular—who try to prosper by making New Zealanders feel bad about themselves. That's not leadership. I did a story for the Listener back in 2005 chipping away at some of those 'life is always better over there' attitudes. And in July Metro associate editor Jan Corbett wrote this scathing piece about the supposed benefits of Strine life. So I hope Edwards' story today brings a little more balance to the trans-Tasman debate.

Comments (5)

by r0b on October 03, 2008
r0b

Nice post, thanks for the useful links.  It is frustrating how much misinformation is out there.  "Taxes are lower in Australia" - no they aren't.  "People are leaving for Australia in record numbers" - no they aren't.

I saw somewhere (can't find it again now) a good piece telling the stories of Kiwis who had left for Australia, and after a while come home again.  Life in Oz wasn't as paved with gold as they had been led to believe.  I think we need to hear more of their voices, so that those contemplating a move can hear both sides of the story.

by Craig Brown on October 03, 2008
Craig Brown

We still live in Godzone

I have a grumpy person at work who always grumbles about the downside. My colleagues avoid them unless they want to get depressed.  Unlike my colleagues at work though, I have noticed our press love to promote the people who tell bad stories, and give plenty of air time to the politicians that want to rave about bad OECD rankings and expolit a narrow measure or index to get some political gain over their opponents.

But why all this tall poppy syndrome from those leaders in our country who are supposed to be looking at the way forward. And why is their such a narrow view of what success really is? What we earn only makes up a small component of our quality of life and New Zealand.

On the positive side - Currently we are ranked 20th in the United Nations Human Development Index :

http://www.med.govt.nz/upload/53556/fig-1.1-large.jpg

And on the  Economist Intelligence Unit's quality of life index we are 14th :

http://www.med.govt.nz/upload/53556/fig-1.2-large.jpg

Above France, Japan, Germany, Belgium, Austria, The Netherlands, and United Kingdom.

We are ranked 9th on the OECD Environmental Performance Index.

Income and production we rank 22nd but I must be using out of date OECD numbers because the Politicians tell me we are 29th.

Let's appreciate the good things we have in life, and stop looking over the neighbours fence to try and match what they have. And stop relying on politicians to tell us where to live and if we are happy.

by Matt Ensor on October 05, 2008
Matt Ensor

In some ways it doesn't matter whether the metrics describing life in Australia beat New Zealand or not.  At the moment it's "Brand Australia" that is doing the job of luring talent away from NZ.  It's not so much the reality as the way life in Australia is being sold by word of mouth.  It's the "if every one [publically] says it's great then it must be."  Good brands are very hard to fight.

by Dean Papa on October 07, 2008
Dean Papa

Tim, I can assure you that the thought that Australia my offer a better lifestyle over New Zealand has in no way made me feel bad about myself. That you could even make such a claim would seem to reflect more on your own political leanings and/or state of mind. I took a look at the links you supplied. Your own piece from 2005 was familiar, however the ‘scathing’ piece by Jan Corbett was new to me. And I must say that it is a truly ghastly, cringeworthy piece of writing. Where to start? Well, apparently the fashion scene in Sydney was not up to the standard of trendy Auckland. New Zealanders in particular are singled out for ridicule in Australia. I had to laugh really. I suspect things didn’t go too well for Jan during her time in Australia. Apparently her services were not in such demand, there being no shortage of second rate hacks already over there. I guess that would explain why she comes across as so sad and embittered in her piece.

So why would you think it worth linking to such a turgid piece of writing? It overwhelms the reader with facts and figures, but in essence presents nothing new. There are of course the usual digs at Australia, which only serves to highlight New Zealand insecurity. Interestingly, despite Australia allegedly being a racist country, Maori seem to do very well over there. In fact they are over represented in the population of New Zealanders currently living in Australia. Given that fact it seems odd that I could not find a single mention of Maori in the piece.

What I did find particularly dubious about the piece was the presentation of a selection of bad news items from Australia, done with almost shameless glee I suspect. Given the very unfortunate nature of some of these stories I can only conclude that Corbett lacks any sense of self-respect. I’d feel just a tad dirty if I were to have done something similar. And Tim, please don’t attempt to accuse me of a rant, the Corbett piece is a rant, I’m merely telling it as it is.

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