Monday, February 08, 2010

Where Australia needs to catch up with NZ

It is unfortunate that the current Reserve Bank Governor is a naysayer while the ex is the ambitious one. Bollard may be praised for speaking his mind but should also now have a question mark over his suitability.

Anyway, Goff says.

I'm not fatalistic about New Zealand being unable to close the gap. But based on the evidence so far this Government is taking us in the opposite direction." New Zealand incomes were about one-third lower than those in Australia and unemployment was higher after years of being lower.

By the HLFS calculation, yes Australian unemployment is lower.

But based on benefit dependency it is not.

These figures are Sept 2009.

Let's compare (as best we can).

That's not straightforward because Australia uses a working age population definition of 15-64. Our statistics are 18-64. Australia includes people on a benefit under 18. Our quarterly statistics do not. So maybe if I just multiply our data by a population factor of 5.08 that will allow a rough comparison.

Sept 2009 - Around 560,000 people were claiming the unemployment benefit (Newstart) in Australia compared to 61,000 in NZ. Australia proportionately much higher.

Around 340,000 people were claiming DPB in Australia compared to 108,000 here. NZ much higher. (Part of the reason for this is Australia has rightly started moving these claimants onto the unemployment benefit.)

Around 750,000 people in Australia were claiming a disability pension while in NZ 141,000 people were on a sickness or invalid benefit. Australia slightly higher.

Looks like another 220,000 are on other benefits bringing the total to 1.870 million compared to a total in NZ of around 332,000 (incl 16-17 year-olds).

NZ's dependency rate is lower, or around 90 percent of Australian total.

So there we go. Benefit dependency is a huge cost on government and the economy and Australia needs to catch up with New Zealand's lower rate.


bez said...

It all depends on your population factor, where did you derive that from?

bez said...

Never mind, I've got it, you just took total populations.

Anonymous said...

Aus doesn't have to catch up anywhere.
NZ needs much higher unemployment to become more flexible and competitive, not lower.

And compared to mean wages, the Aussie dole is lower than the wildly generous Kiwi handouts

Anonymous said...

Right. So let's all move to NZ where 'welfare dependency' is lower.

Thank god Australians aren't as brain dead as kiwis, only a kiwi could have come up with something as retartded as this Lindsay.....

Shane Pleasance said...

Although raw proportion examples are illuminating, there are also issues of critical mass and sheer size. What proportion of NZ's 4.4 million people support the supported (if you know what I mean) and how sustainable is that, compared to Aus's supporting productive sharing the burden?

Anonymous said...

What proportion of NZ's 4.4 million people support the supported (if you know what I mean) and how sustainable is that, compared to Aus's supporting productive sharing the burden?

Something like 10%. In Aussie it's more like 75%

Anonymous said...

And the crucial point is that - compared to mean Aussie wages - Aussie's Dole, Family Assistance, etc are much lower than NZ's benefits compared to mean NZ wages.

Ideally, a first step of reform for NZ should be to eliminate all benefits - this can be done by an Order in Council - i.e basically in less than a week.

Then we need to terminate all spending on health and education, and get the corporate tax rate to ZERO.

And then we have to pay off the billions and billions of dollars Hellen borrowed every week, and that Key is still borrowing every month.

Once that's done, let's a have a proper taxfree threshold - say 100K, earn more than that, pay no nett tax!

Then let's put in a flat tax rate say 0.30 c in every dollar from the first dollar you earn, to pay for it all.