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.