I’ve just been on holiday in Australia, the lucky country. Except it doesn’t feel lucky right now.
In fact, I’ve noticed for some time now, certainly since its Treasurer delivered its Budget on May 12, that Australia’s businesspeople, its wealthy cohort and its intelligentsia are seriously down on their localeconomy, and as a result, up on New Zealand.
Why is their mood so dim? There have been complaints over time about the likes of increased red tape and the imposition of complicated workplace reforms. And then there was a fat capital gains tax in the Budget which, it is argued by the small business sector and Opposition parties, will stifle the nation’s entrepreneurial spirit.
Now, there are rumours swilling of more taxes coming, such as a gas tax on big wealth resources, as the Aussie Labor Party seeks to hardwire redistribution into its DNA.
Some of this malaise will be politics and a traditional favouring of the Liberals, Nationals (and, in fact, these days, Pauline Hanson’s One Nation party) by the top end of town and high-net-worths over Labor. But the depression now amongst the business and political classes runs rather deeper than simply tribalism and can be seen by picking up any serious newspaper across the Ditch.
Long-time journalistic doyen Paul Kelly, in his nearly 800-page stonker of a new book, The Twilight of Exceptionalism, encapsulates the angst perfectly. He argues that Australia’s exceptional long-term economic and political success has faded – the glory days under the great leadership of Labor’s Hawke and Keating and then the Liberals’ Howard and Costello has well and truly come to an end in more recent times, so that unless the nation now seriously ups its game, Australia faces ongoing, long-term national decline. He’s critical of leadership in all the parties that have been in government lately – a plague on all their houses.
The numbers at a high level back this thesis up. Australia has averaged pretty strong growth from the 1980s, with only a couple of recessionary periods and a weaker 2020s so far. Today, its inflation is at the higher end of advanced economies (4%, accepting ours has just hit 4.1%), its unemployment has risen to 4.4% (although lower than our 5.3%) and annual growth, while currently around 2.5%, looks likely to be dipping. Indeed, Deloitte Access Economics predicts Australia is heading into its longest economic slough since the early 1990s, with growth slowing to 1.3% this financial year and remaining under 2% after that.
For all these reasons, Nicola Willis was probably right to launch a cheeky and opportunistic “Where the bloody hell are you?” campaign into Oz just a little while back.
Willis invited Australian business owners and investors to relocate over here, on the basis we have a very simple tax system without a capital gains tax.
“No capital gains tax, very simple tax system, broad base, low rate – we keep it simple, we allow you accelerated depreciation and deductibility on your capital investments. And you’ve got a Government that is very pro-growth, anti-red tape,” she said.
Certainly, our Finance Minister was in complete harmony with business sentiment around their nation and also with their more positive perception of us.
Turning to the New Zealand part of the equation from the Ocker viewpoint, what’s not to like if you’re moving yourself, your business or investing here? Buy a business in Te Awamutu or a Queenstown pad for $2 million and, given the weakness of our Kiwi Peso (its weakest relative rate in over a dozen years), you’ll save yourself around $340,000-$350,000 before you even start haggling. In other words, we are throwing in a new Porsche 911 Carrera with all the options as a bonus. You’re welcome.
Of course, it’s not all beer and skittles from the New Zealand perspective. If we just take the exchange rate, sure, its lowness is good for our exporters, but I’ve always worked on the simplistic basis that a really low dollar is more often than not a sign of relative weakness, not strength.
More generally, one swallow doth not a summer make and we’ve got a hell of a lot of catching up to do. While Australia’s real wages have gone backwards in the Covid period and beyond, ours also have, and by more. Indeed, we were last of the 37 countries in the OECD in its newly published data.
And again, according to the OECD, in 2024, net national income per capita was 30% higher in Australia than here, a wider gap than was true a few years before that (and before that, and before that). This isn’t just theoretical. As Dr Bryce Wilkinson of the New Zealand Initiative says, this 2024 figure represents a missing $20,000 per Kiwi each year or $100 billion a year, spread over five million of us.
It’s not surprising then that we are still seeing a heap of Kiwis leave for Australia. Stats NZ told us last week that for the year to December 2025, a net 28,500 moved across the Ditch, surely because over here we are poorer and over there, despite their doom and gloom, they are richer.
Some in Australia argue that it needs slower growth right now to get on top of inflation and its wider economic issues. Its Reserve Bank has raised interest rates more and earlier than ours has.
Of course, our own Reserve Bank now also seems to be in a lifting mood and you could say the arguments for this are the same here as over there. One thing is quite different though: their growth over basically all my lifetime has been much better. We are tightening on monetary settings and therefore constraining growth when many of us haven’t even felt a recovery yet.
Maybe the most accurate but entirely unsatisfying conclusion on all this is that the grass is greener on both sides of the Tasman. It all depends on where you are standing first.
Simon Bridges is the chief executive of the Auckland Business Chamber and was the leader of the National Party from 2018 to 2020. He has served as the Minister for Transport, Economic Development and Communications. He also worked as a senior Crown prosecutor in the Tauranga District and High Courts.
