NZ closes the gap with Aussie

Written By: - Date published: 9:30 am, January 15th, 2010 - 20 comments
Categories: national/act government, unemployment - Tags: ,

Well, I didn’t think it could done but it has been. National has been promising to close the gap with Australia, and damned if it hasn’t happened already. The Nats’ target was 2025, it didn’t even take a year. In fact, we’re now above Australia and accelerating away while they fall.

Unfortunately, it’s the wrong gap.

(sources OECD, ABS)
For the previous nine years, New Zealand had consistently lower unemployment than Australia. We overtook them in June last year, and we’re still rising even as Australian unemployment falls.

Unemployment was always going to rise during the recession, of course. But it was not, and is not, beyond the government’s power to limit the increase.

The Rudd Government in Australia implemented a $42 billion green jobs package In February last year and immediately the rise in unemployment eased, so much so that it has now dropped from a peak of just 5.8% down to 5.5% in December.

The Key Government, in rather stark contrast, came up with…. a $50 million cycleway … only $3 million of which is so far allocated… to a project that was being built anyway.

And, so, with this magnificent neglect from the top, unemployment has climbed remorselessly upward bringing higher benefit costs, higher crime, and higher deficits from lower tax revenue.

Hmmm, maybe we should be copying the Aussies after all.

On February 2nd, we’ll learn whether National has successfully slept, grinned, dithered, and holidayed its way through a doubling in unemployment in its first year.

20 comments on “NZ closes the gap with Aussie”

  1. Clarke 1

    Marty, I think you’ve got the wrong end of the stick – this isn’t high unemployment, this is “labour market flexibility”, in which case it’s a desired outcome of National government policy rather than an invidious social ill that needs to be treated.

  2. Peter Bilson 2

    Looks like it reached parity under Labour in Q2 2008.
    Maybe we need mines to increase our employment level & o’seas funds.

    • lprent 2.1

      Mines don’t employ many people, most of whom have quite specialized skills (that we don’t have here). They do however employ a lot of capital.

      So if you want an industry that does little for the NZ economy, pick one that requires that you import a lot of expats and capital, dig a hole in the ground, and where the capital, profits, and workers leave at the end of the project. Of course the hole remains and usually costs a bundle to fix later.

      The only nett gain to NZ is in lawyers fees. It is a fools game being pushed by a fool.

      Tourism is almost the exact opposite. It gives large benefits to both employment and capital retention, including being sustainable – but Brownlee is unable to understand this. I can’t see any economic benefits from increased mining in NZ for NZ over the medium to long term. I can see considerable costs to NZ especially if it reduces our tourism.

      Looks like you are as thick as Brownlee is…

    • snoozer 2.2

      No Peter, follow the sources that Marty has provided, or look with your eyes:

      In Q2 2008, NZ unemployment was 3.9%, Aust unemployment was 4.2%.

      And the point isn’t to criticise the fact that unemployment rose, it’s the fact that unemployment has been allowed to continue to rise well above what happened in Australia.

    • Tigger 2.3

      Peter – yes, by all means let’s blame Labour for this…since they haven’t been in power for the past fourteen months. But no, it’s Helen’s fault clearly.

    • Macro 2.4

      Just a few little problems with mining Peter – one of which is that NZ actually doesn’t make Billions from it. It’s the companies who do the mining who make the money – if any is to be made – the govt get 10% in royalties. So no we wont increase our overseas funds with mining.
      Makes you wonder why we bother really.
      Oh yeah! Browlee’s mates tell him its a great idea!

  3. Zaphod Beeblebrox 3

    Wow this happened despite the success of the jobs’ summit. Obviously their cycleway is better than ours.

  4. gitmo 4

    What happened 2000-01 in Australia to cause the spike ?

    Moderation ?

  5. burt 5

    Well if the failed policies of the 90’s was top blame for all bad things in 1999-2008 then the failed policies of 1999-2008 are shown in their fully ugliness on this graph.

    The second point that is worth noting is; How can it be possible that Dr Cullen was right when he said Labour left the economy in good shape compared to the rest of the world when we have had a much harder hit than Aussie?

    • lprent 5.1

      burt – you’re just outright weird sometimes.

      Do you think that falling unemployment is a bad thing? Because from Q1 2000 to Q1 2008 that is what is displaying. You’d prefer to pay unemployment benefits rather than getting people into work and paying taxes instead?

    • burt 5.2

      I never though of falling unemployment as a failed policy of the 90’s – but I guess a fully employed workforce ain’t gonna vote for more welfare so it must have been bad by Labour standards.

      Actually lprent – you highlight a very valid point; the failed policies of the 90’s were just the bad things eh because Labour policy instantly trumped National policy on the good stuff and only the bad stuff was National’s fault. Just like today eh, the rising unemployment has nothing to do with Labour causing a recession in NZ before the rest of the world… it’s the National govt elected sometime after the turning point caused by Labour that made it real bad.

      • Macro 5.2.1

        “I never though of falling unemployment as a failed policy of the 90’s”
        burt there wasn’t any falling unemployment in the 90’s! Unemployment remained pretty static at around 6 to 8 percent for the decade, and we consistently over that period lost parity with Australia on pay. Don’t rewrite history to suit you ideology.
        And don’t give us the rubbish that it was Nats 90’s policy that flowed into the new century that lead to the drop in unemployment rates. That is just hogwash.

      • burt 5.2.2


        No socialist prerequisite for convincing people that socialism is good re-write of history required.

  6. Jared 6

    Marty, do you really think we can afford a stimulus package even a tenth of the size of Australia’s? And don’t spout a “we can’t afford not to”. Australia and NZ’s labour markets are far different, and its not simply an exponential increase or decrease factor in scale. We were hit hard by the recession, but to say it is the fault of National is simply unfair. We cannot afford a stimulus package the size of Australias or the US for that matter.

  7. Macro 7

    There is a difference between nothing and something.
    The NActMP govt have decided to do nothing. Oops sorry they decided to make their “stimulus package” a tax break for the rich – which as we all know went straight into the bank to pay of Mortgages or in Savings. Which of course is highly stimulatory.
    Now had Bill not been so generous to those who don’t need it, he might have been able to throw a few dollars in the direction of projects that were really stimulatory. – but his self interested mates made him chose otherwise.

    • burt 7.1

      Oops sorry they decided to make their “stimulus package’ a tax break for the rich

      So the fact we still have one of the lowest “wealth tax” thresholds of any OECD country is still beyond your grasp. Tell us again how we should increase wages in NZ and tell us again how with low wealth thresholds that is so beneficial to the workers rather than just the govt revenue for redistribution and buying elections with bribes.

      • Pascal's bookie 7.1.1


        If we had a tax free zone up to 15K, and a 25% rate for every dollar over that, we would have an even lower “wealth tax threshold”.

        It’s just sophistry burt. “Wealth tax threshold”. pffft.

  8. tsmithfield 8

    I wouldn’t get to confident in Australia just yet. They have been experiencing a boom due to China’s stockpiling of commodities. Well, all good things have to come to an end. China has just started reigning in its booming economy, so don’t expect that the gravy train will go on forever.

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