Emigration linked to pay packets

Even if New Zealand cut its income tax to zero, Kiwis would still have bigger pay packets working the same jobs across the ditch, John Key said yesterday.

The leader of the opposition was in Timaru yesterday speaking at the New Zealand Chambers of Commerce national conference held at the Bay Hall.

"Every week 750 people leave New Zealand permanently for Australia.

"Roughly another 750 people leave New Zealand every week to live permanently elsewhere overseas.

"I don't think any economy can sustain that level of brain drain, and it is a safe assumption these people are doctors, nurses, teachers and other trained specialists."

Wage growth in Australia had been much stronger Mr Keys said, combined with five years of tax cuts and a much greater increase in productivity levels.

"The answer is not to give one big tax cut and tax cuts are not the only answer.

"Even if we cut income tax to zero, take home pay would still not be as high as Australia."

Mr Key had spoken to the dean of University of Otago's School of Medicine and he said of the 200 doctors which graduate annually, 100 immediately go overseas.

"He found it heart breaking the numbers that were leaving, even before they were registered."

Australia had changed the law so New Zealanders had to live there for two years before they could get the dole.

"These are people going over to work.

"Already one in seven Maori have left New Zealand and live in Australia."

Productivity growth in New Zealand is at an all time low, he said.

Records have been kept since 1988 with an average of 2.2 per cent increased growth in productivity. In the last year the private sector had a 0.5 per cent increase and the public sector had negative growth.

"Basically we are putting more money in and getting less out."

He pointed to America as an economy is serious slow down mode.

"Their housing market is on its way down, they are cutting their interest rates and the US dollar is on its way down.

"The only reason no economist is saying their economy is slowing down is because it is not known the counterbalancing effect of growing economies like China, India and Brazil will have to offset the decline of the US."

Mr Key also discussed contracting out services traditionally carried out by the Government, a suggestion met by applause from the audience.

"I do not believe it is up to the state to provide everything and there is an opportunity to work with the private sector."

- © Fairfax NZ News