“Since the election of a Labour-led government in late 1999, any widening in the wages gap [with Australia] has been stopped in its tracks. The latest available data shows that in 2007, the wage gap was just 0.4 per cent wider than it had been when Labour first came into government.” - Trevor Mallard
Those numbers are calculated using the average exchange rate for the last 17 years, which doesn't take into account the real changes in purchasing power between Australia and New Zealand that occurred during that time. Nitpicking? Not at all. Though it looks like – and is – a dry technical detail, the difference which results is massive.
Mallard's calculations show that the Australia-New Zealand gross wage gap rose by 0.45% during Labour's time in government. The same figures, when adjusted using using Purchasing Power Parity figures from the OECD (which takes into account the real purchasing power of our respective currencies) show that the average weekly Australian wage was 21.6% higher than New Zealand's in 2000. By 2007, that had risen to 25.9%.
It's risen 4.3% during Labour's time in office – nearly 10 times what Mallard originally claimed.
That's hardly good news for National, either. The last time that they were in government, the wage gap rose by 12.2%. Year for year, that's more than twice as fast as the gap rose under Labour.
When taxes are taken into account, the gaps has grown faster under Labour. The reason is simple – tax cuts introduced in Australia. For example, the top tax rate in Australia is 45%, and the top tax bracket used to be $60,000 a decade ago. It's now at $180,000. While the government counters with its own Working for Families, in fact, the Australian family tax benefits are even more generous.
“Gross wages have moved apart and tax policies have amplified that growth,” says Dr Patrick Nolan from the NZ Institute of Economic Research.
The bottom line is that wages in Australia are higher than New Zealand, the gap is growing, and that neither government in the past 17 years has had success in catching up.
“People have come around and recognised that that is factually correct, that taxes are higher in NZ on most incomes,” says Nolan, “and they're getting higher – more and more people are paying higher taxes in New Zealand, whereas in Australia it's going a different way.”
“When you've got a country like Australia, which has got the attraction of bigger cities and better weather and beaches, you're already in a position where you're behind the 8-ball. So if you have higher taxes, it makes it harder to attract people. It's one of the few things we can actually compete on, and we just haven't been competing on it.
“My big concern is that it's going to be a debate around who benefits and by how much, and we're going to get into a bidding war, when it should be about what's the most economically sensible approach. What's important is that we design a tax system that encourages a strong economy and that rewards people when they make decisions about working and looking after their family, and when we have a strong system and a strong economy, then that's when people will stop migrating, when we'll be able to attract people back.”
“The balance of payments will worsen as a consequence of [the FTA with China], not improve, because the growth of their exports will be greater than the growth of ours – which are limited anyway – and one of the key, fundamental elements of an unsound economy is a serious balance of payments deficit.” - Winston Peters
No. According to the National Interest Analysis conducted by the Ministry of Foreign Affairs, New Zealand exports to China is expected to be 20-39% higher over the next 20 years as a result of the FTA with China. That's US$180-280m worth of additional income for New Zealand exporters each year. Chinese exports into New Zealand, on the other hand, is only expected to be 5-11% higher during the same period. That's worth an additional US$40-70m each year.
The maths is not hard. New Zealand exporters will benefit more than Chinese exporters from this deal, which will help improve the balance of trade in New Zealand's favour.