You heard what Peter Garrett had to say about Australians and New Zealanders going to Australia. Do you agree with what he's sort of saying about us there?
SIR RALPH NORRIS - Trans-Tasman Banker
Well, I think it's fair to say that we should know what the rules of engagement are. If you're going to go to Australia, you should do your preparation and make sure you understand exactly what the rules are. So I think he's right as far as that's concerned. Whether the rules are fair is another matter. I mean, not a lot of people realise, but on average, New Zealanders as a group are the highest average income earners in Australia. So they make a significant contribution in tax in their own right.
GREG But on the other side of the ledger, they come here, they get pretty much full rights right from the get-go if they're going to be employed here long-term. It just doesn't seem a fair, two-way street.
RALPH Yeah, there's no doubt about it that there's one set of rules in Australia and another set of rules here. And I think that obviously Minister Garrett was making the point that there should be, obviously, more dialogue between New Zealand and Australia on that matter.
GREG That said, it's not stopping us going there. 1000 a week was the latest, sort of, number we're hearing, especially from the smaller towns. Is that likely to change, first of all, as these rules become more widely known and also as the economy does slow a little bit with what's happening in China?
RALPH Well, certainly there's been no doubt that there's been a significant increase in the number of New Zealanders going to Australia over the last four or five years on the back of the global financial crisis, and that shouldn't be a surprise given that Australia has been the best performing economy in the Western world, and so therefore it has been a shining light. And New Zealand has performed ok, but obviously not as strongly as Australia. So obviously it has been a magnet for New Zealanders to go there. Whether that's going to remain the case is up for debate, because certainly there's no doubt that the Australian economy is a multi-speed economy. So you have a situation where Western Australia with the resources, riches, has been a very strong performer, and that's created a lot of wealth and a lot of jobs in Australia. But if you look at some of the other states, they haven't performed any better than New Zealand in the last three or four years. And particularly if you look at states like New South Wales and Queensland, Queensland at the moment is a significant under-performer.
GREG Let's look at why. In the GFC, it was the only Western country to not go into recession. It's not just size, obviously. Look at Europe, look at the United States. Why did it manage to do what no one else, including New Zealand, could do?
RALPH I think the reason for that was you've got a once in a generation spike in resources and commodity values, and so therefore Australia with its very strong resources sector was able to take advantage of that. So you saw prices peaking during the global financial crisis, which wasn't happening in any other area for any other country in the same way that it happened for Australia. So Australia got the benefit of that very strong surge in commodity prices that make the Australian economy a much strong economy through that process. So the strong linkages to China, to India and the supply of raw materials has been a significant benefit for them.
GREG Is that petering out a little bit? Were we, God forbid, to have another GFC in 18 months' time, would Australia be as robust as it was last time?
RALPH Um, I don't think so. I think that you have a situation also in Australia that there was a very significant kicker to the economy with the stimulus package that was put in place there. Obviously Australia has shot that bullet, and so therefore it's now in a situation where it wouldn't have that same degree of flexibility that it had in the first round of the global financial crisis. And also you're seeing a situation where commodity prices have come off their peak, so it's not as strong a position for them as it was then.
GREG Let's put the minerals and the mining aside. Let's put the population aside. We're never going to be able to compete on that front. What lessons can we or should we have learnt from the way Australia has conducted itself from the financial crisis on to now that we can apply to this country?
RALPH I think, again, you can't just put aside this whole issue of the resources. I think that's been a significant factor. I don't think there's any doubt that, um, New Zealand is in a relatively strong position going forward. I mean, we have a very strong food industry, very strong dairying industry, and I think that that is going to be a very strong card for New Zealand going into the future. But also we have the ability to also take advantage of extractive industries, you know, the resources sector in regard to oil and gas and minerals. But the situation is one where the country has to have an appetite for exploiting those particular opportunities.
GREG We're still not, though. Are we getting that wrong? Are we perhaps putting our image, our perception of ourselves as the clean, the green, too far ahead of what's literally in our backyard? Do we need to change that mindset?
RALPH I think we shouldn't damage our clean and green image. I think all of us want to make sure New Zealand has a very strong environmental protection approach to the whole of our economy and to the country in general. And so therefore I think we need to be able to make those decisions based around using high quality technology. And I don't think that you have a situation where there's a situation where to take advantage of those resources means that we have to destroy our environmental situation.
GREG You're now on the board of Auckland University. At your level or below, because your level was, frankly, stratospheric, are there the jobs, are there the opportunities to keep New Zealanders here and not head over to the Tasman?
RALPH Well, one of the problems you have with being on the edge of larger economies is that people will always migrate. Those who are your brightest and best usually are going to be attracted to the greatest opportunity, and we see that even internally in New Zealand. I mean, people move from Wanganui to Auckland or Hamilton to Auckland, from Invercargill to Christchurch or whatever it may be. So you see significant internal migration of people to take up opportunities. And the same things happens with, obviously, New Zealanders going to Australia. And it's interesting to note that over the last several years, there's been an increasing drift of the best and brightest Australians moving to bases like Singapore, London, UK, and that's because of the fact that we now have a globalised economy, and opportunities are international.
GREG So what you're saying, to an extent, it's inevitable that flow to, one degree or another, to continue to Australia. As for getting them back, let's look at the other side of the coin. Could we look at something like-? I mean, we're talking about corporates here, with the movies, the Warner Bros, we put in tax breaks, we put in incentives to get them back. Should we be looking at something like that to get our top echelon of New Zealanders back from Australia, back from the UK, even?
RALPH I think the situation does come down to opportunity, and, obviously, if we can grow the economy and grow it into, obviously, areas of new opportunity - and there's no doubt that movie industry is a classic example when you see people like James Cameron deciding that he wants to live in New Zealand. It shows that New Zealand does have some real basic intrinsic attraction as a place to live. And so therefore it's about the opportunity. And so certainly what's Sir Peter Jackson and Weta Studios have done is created an international capability which is second to none. And so therefore we need to make sure that we are taking advantage of new industries. And we've got great businesses that are being created. Companies like Xero with the Cloud based accounting software, and there are companies like Diligent. There are a lot of companies, small companies, that can grow to be much bigger companies, and as they do, they create opportunities for people to actually stay and get the advantage of those bigger jobs in New Zealand.
GREG So your message to, say, a university graduate who literally has the world at their feet would be what? Look to Australia? Or can things improve and cater to what they need here?
RALPH Well, I think there are a number of opportunities. You can join companies that are here in New Zealand that have international connections, and certainly what tends to happen is that people get opportunities in New Zealand, and then they get opportunities elsewhere. So if you look at the large consulting and accounting firms, you see that all the time. You see the same situation within the banks. A lot of Australian banks have a lot of New Zealanders working internationally for them now. So I think that the situation is one where we are going to see this fluidity, this mobility of labour. And I think that the important thing here is to build a stronger economy.
GREG We will leave it there. Absolute pleasure talking to you, Sir Ralph Norris. Thank you.