Editorial: Pointless tail chasing

OPINION: Lofty goals are always laudable, but sometimes they can be too unrealistic. Prime Minister John Key has spoken much about wanting to "close the gap" with Australia by 2025 but it appears less and less achievable.

Only last month, while setting out his Government's plan for the coming year, Mr Key said: "I want to close the wage gap with Australia. We haven't yet kept the promise I made to New Zealanders in 2008 that we would increase New Zealanders' incomes to those of Australia."

And the National-led Government is unlikely to do that any time soon. According to OECD data our wages already lag around 30 per cent behind those of our Australian cousins when adjusted for cost of living. But in the past 12 months Australian wages have climbed faster.

Statistics New Zealand says between December 2008 and December 2009, the average New Zealand wage increased 2.86 per cent after being adjusted for inflation, up from $891 a week to $934 a week. In Australia, from November 2008 to November 2009, the average wage went up 3.6 per cent from $1159 a week to $1226. Moreover, a recent survey by accounting firm Grant Thornton of 250 Australian and 180 New Zealand businesses found 78 per cent of Australian firms intended to increase wages in line with inflation or higher, compared with only 55 per cent of New Zealand companies. It doesn't make for pretty reading and will have some people packing their suitcases.

Mr Key and Finance Minister Bill English want to start readdressing the balance with the tax changes already foreshadowed and expected to be announced in May's Budget.

They want less income tax, a hike in GST, less money piled into property development, more saving and to encourage investment in our export sector which has been stagnating. The Government is also keen on mimicking Australia's exploitation of its mineral and oil deposits – the main source of its growth – by opening up tracts of land in the DOC estate to mining. In many ways it's the quick fix and ignores our longer term problems.Overall, though, Mr Key and Mr English are trying to walk the middle ground – they both use the word "moderate" with gay abandon while describing the planned changes. The question remains, however, whether their tinkering will achieve the great leap forward sought by 2025 – it looks a mission impossible.

The Government is borrowing $240 million weekly to meet the bills, our net debt is $9.7 billion higher than a year ago and is forecast to treble to $65 billion by 2014 as the budget deficits persist for another six years.

Australia is in a better position – it has a larger population, far greater mineral wealth (and minerals that can be got at without digging up national parks) and a Sugar Daddy in the guise of China. The only way we can catch them by 2025 is if something terrible goes wrong – and we don't want that to happen. We need a strong Australia.

- © Fairfax NZ News