The Big Australians

One of the most fortunate things about being a New Zealander is that we are close to Australia and we have the right to live and work there. This is not just because Australia does many things very well, but simply because Australia is such a wonderful place.

Looking back, I can’t believe I only lived there for twelve months, given how much I enjoyed the experience. One day I shall kick myself, or possibly ask an Australian to do it for me since they will know how to make a good job of that too.

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Six methods of unconventional monetary policy

In a recent response to questions, The Reserve Bank of Australia has listed six options of unconventional monetary policy that is considered in an event of extreme policy implementation. Westpac economists have also talked about potential unconventional monetary policy tools applicable to the NZ case here – this is worth a read, but is a different list!

In this post I would like to outline the RBA’s options and hopefully make them easy to understand.

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Dole bludger army?

I see that some Australian TV show host said that New Zealand has the “dole bludger army” for support in the cricket.  Now something about intimate relationships with sheep or cows, or something about little country syndrome, or something about Lord of the Rings, would have been fine – banter is acceptable.  But his statement doesn’t make any sense, and feeds into a stereotype of New Zealanders in Australia that leads to real discrimination.

So why doesn’t the stereotype hold up?  Well for one, Kiwis can’t get the unemployment benefit in Australia – they could pre-2000 but then things changed.  Just check it here.  It is common to see Australian media (and people I run into) complaining both that Kiwi’s are “stealing their jobs” and “stealing their benefits”.  In truth Kiwis are heading over there, without a security net, to work hard to make something of themselves in a larger country – they can’t get the benefits, and the idea of a zero sum set of jobs is just straight incorrect.

Secondly, within both countries there are proportionately fewer people on the dole in New Zealand than in Australia.  New Zealand produces these numbers directly, but I couldn’t find matching Aussie data.  As a result, we can just look at the unemployment rates (given they use matching definitions of what constitutes unemployment):

UR

Sure unemployment went a bit higher recently, due to the deeper recession in NZ – but on average a lower proportion of NZers are unemployed than Aussies are.

And this has occurred with much higher employment rates (% of people over 15 in work) in NZ than in Aussie.

ER

So, out of the population, a larger proportion of NZers are actually working relative to those in Aussie.

So not only was it a stupid, racist, and bigoted call – the data doesn’t even support the TV hosts prejudices.

Note:  The term dole bludger is insulting and degrading in the first place – irrespective of the relative unemployment rate.  Even if NZers could get benefits, and the UR was higher in NZ, this type of attitude towards benefits is pretty dirty.

 

Productivity Commission on NZ vs Aussie productivity

Recently I’ve been talking a bundle about inequality in incomes, and fitting it within an idea of “equity”.  However, as we’ve chatted about, policy choices often involve conceptualising an equity vs efficiency trade-off.  A fundamental part of how we understand where we are in relation to this trade-off, especially with reference to “efficiency”, comes from thinking about productivity.

With this in mind, the Productivity Commission has been thinking about New Zealand’s productivity performance.  And given that along many characteristics New Zealand and Australia are similar they have decided that looking into the productivity gap between these countries helps us to understand this issue.  This led them to release a working paper titled “Investigating New Zealand-Australia productivity differences:  New comparisons at industry level” on their main site (links can be found here).

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Sumner praises Bill English

Straight from the Money Illusion, Scott Sumner discussing his recent trip to Australia:

I was particularly impressed with the talk given by the representative from the New Zealand government (Bill English) but will admit to knowing little about that place, other than that that their people live in Hobbit-style dwellings.

Whether you agree with the policies of the National party, or the specific things that Bill English has pushed through as Finance Minister, you have to admit that he has done an incredibly good job over the past five years – during an incredibly difficult time.

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Resource booms and income distribution

Via Vox Eu comes a piece looking at the distributional consequences of resource booms – using Australian data.  Their conclusion:

We need good time series data from developing countries to see whether the distributional impact is bigger there than what we find for Australia. Until then, the analysis here seems timely and relevant, not just for Australia, but for all resource-rich developing countries as the price volatility experienced by the former since the late 19th century was greater than that for the average commodity-exporting low-income country.

The distributional impact of commodity-price shocks in Australia (Canada and New Zealand) should yield important lessons for primary producers from the developmental south.

True – the idea that taxation should be more progressive the more dispersed income and wealth is is an old and widely accepted idea.  And this gives us another way to conceptualise it, with a relevant shock for the NZ and Australian context.  However, a couple of things to keep in mind when thinking about these issues are: Read more