Sunday, April 5, 2015

Revenge of the Kiwis: the tide turns in New Zealand’s favour

Jennifer Zhu, a former Australian public servant, was writing briefing notes for incoming prime minister Tony Abbott when she hatched her own Pacific solution.

She leans forward so her story can be heard above the rhythmic grunts of the dragon boat teams gliding across New Zealand’s ­Wellington harbour at dusk. “I was in Canberra working on the briefings for the change of ­government [in 2013] when I realised how much the public service was going to be cut [under Abbott],” she says. Her Australian boyfriend, ­fellow public servant Iain McKenzie, 28, chimes in: “We could see that promotions were unlikely.”

“So I looked up a website,” continues Zhu, 27, who now works for ­Immigration New Zealand, “and there were lots of government jobs here. We thought, ‘Why not?’ ” After a year in Wellington, they haven’t looked back. “We both have good [public service] jobs and it’s a much more relaxed culture,” says Iain. “We’re not leaving anytime soon.”

More than 500km north, in the dairy capital of Hamilton, Australian Mark Neal sits under a large tree and listens to his wife Megan talk about leaving their family farm in Taree to move to New Zealand with their three young children. “This is a gem of a place,” says Megan. “Mark has a job he loves and I’ve just got part-time work [as a financial analyst] which was so hard to get in Australia, because there is no culture to support professional women who want to return to work less than full time.” She throws her hands in the air. “I feel like screaming to Tony Abbott and Joe Hockey, ‘Can’t you see that the [work- family] culture in Australia is broken!’ They could really learn some lessons from this place.”

Down south, in the Marlborough wine district on New Zealand’s South Island, Jim White strides in from the vineyards wearing shorts, boots and a ruddy-faced grin. “I’m just a glorified farmer,” he says in a broad Aussie twang. But this former University of Melbourne student, now viticulturist for the Cloudy Bay winery, is another refugee who has jumped the Tasman. “The wine industry here is more vibrant than in Australia,” he says, explaining why he brought his wife Nikki and their two young children to live in New Zealand. “When we got here we realised how many other Australians had come over. But we love it and I guess we are helping to reverse the tide.”

For more than 20 years, “the tide” has been a one-way wave that has defined and sometimes even threatened to swamp relations between Australians and New Zealanders. The relentless flow to Australia of some 40,000 Kiwis each year spawned a mythology of its own. They were dubbed Bondi Bludgers who either stole our jobs or sucked up our welfare. In 1986, ­Liberal MP Alexander Downer scurrilously claimed single New Zealand women were ­coming here to give birth just so they could get supporting parent’s benefits. Such was the ­concern, the Howard government in 2001 made Kiwis ineligible for most housing, healthcare and unemployment benefits. Comedian Vince Sorrenti reflected the mood of those times when he quipped on national tele­vision: “To all you New Zealanders, there are only 27 shoplifting days left to Christmas!”

From the Kiwi point of view, Australia was the land of milk and honey, a rich big brother who would help set you up for life. “For about 20 years, wages were roughly 30 per cent higher [in Australia], so you just got on a plane. Jobs were plentiful and you just made money,” says Colin James, one of New Zealand’s foremost political analysts. “It was just an assumption for so long that we in New Zealand were stuck with a net outflow of people so what has now ­happened has become quite a talking point.”

What has happened is that somewhere, somehow, perhaps in the dead of night when no one was looking, Australia and New Zealand have swapped sides. Cocky, confident Australia is now home to dysfunctional politics, yawning budget deficits, rising unemployment and an electorate unwilling to accept tough reforms.

By contrast, New Zealand Prime Minister John Key is running the most successful and ­stable centre-right government in the world. Whereas Abbott might not survive his first term as leader, Key, 53, is into his third term and has never been more popular. Key presides over a country that is no longer a dead-end backwater but one that enjoys plentiful jobs, strong economic growth and is on the cusp of a budget surplus. All this despite its second-largest city, Christchurch, being devastated by the earthquake of February 22, 2011, which left 185 people dead, the city centre in ruins and a $40 billion clean-up.

Even the Kiwi dollar, for so long the poor cousin to our own currency, is at virtual parity these days. “I’ve been here for 15 years and I’ve never seen this before,” mutters the woman at the Melbourne airport currency exchange as she hands me fewer $NZ than I gave her in $A. “They must be doing something right over there.”

GDP growth in New Zealand last year was 3.3 per cent compared with 2.8 per cent in ­Australia, while unemployment was 5.7 per cent in the December quarter compared with 6.1 per cent (now 6.3 per cent) here. Forget rugby; New ­Zealand is winning a bigger game. When Abbott visited New Zealand in February, he had to ­concede Key has led “a very successful, a really, really successful centre-right government. There are lessons for ­Australia in what you have done.” By contrast, the New Zealand press pack suppressed giggles when Key told an Australian journalist: “I think it’s a bit harsh to describe it [Australia] as one of the more unstable democracies in the Pacific.”

As a result of this trans-Tasman shift in ­fortunes, we are seeing something we have not seen for a generation. The tide of Kiwis coming to our shores has ebbed while the number of those going back home has flowed. This year the trans-Tasman migration is likely to be in New Zealand’s favour — something that has not been seen since Australia had “the recession it had to have” in the early 1990s.

Sociology professor Paul Spoonley from New Zealand’s Massey University says the net number of Kiwis moving to Australia has fallen from 33,652 in 2013 (53,067 Kiwis coming here and 19,425 returning) to 12,823 in 2014 (37,193 coming and 24,370 returning) to only 2024 in the year to January (28,515 coming, 26,491 returning). “This net loss to Australia in the 12 months to January 2015 is the smallest since 1992,” he says. “These are hugely significant figures.”

James says the trend has killed the so-called “brain drain” to Australia as a political issue. “For the past 35 years ­opposition parties in New Zealand have accused governments of sending Kiwis to Australia, but that sort of talk at a political level has now ­completely died.”

Sitting in his office in the “Beehive” ministerial building in Wellington, Prime Minister Key smiles and points out the window towards the Westpac Stadium, known locally as The Cake Tin. Before he was elected in 2008, Key made a campaign advertisement in the empty stadium pointing to the 34,500 chairs and saying that they represented the brain drain which New Zealand lost to Australia each year.

“If you look at that stadium down the road, The Cake Tin, that’s when we said, ‘Look around, this is the equivalent of how many go to Australia each year’ and now we will say you could have them in a telephone box,” he says. “What you’ve got is a combination of New ­Zealanders not going to Australia, New ­Zealanders returning from Australia and people coming from the rest of the world. I think it is because people are quite pragmatic — if the job opportunities are there, people will gravitate towards them.”

Key says Australia’s mining sector and growth in the big cities has slowed, making the country less attractive. “It is harder; I don’t think the opportunities are there in the same way, while on the other side of the equation there are lots of opportunities here in New Zealand and while they may make less money the cost of ­living is generally a lot lower.”

Mark Kenneally strides to the front gate of his house in Blenheim, the heart of the South Island’s Marlborough wine country, and declares himself “a proud Australian” and “an Adelaide Crows supporter”. He studied viti­culture in Adelaide but his plan to work in the wine ­industry in his native South Australia was soon derailed. “The opportunities were not there that year for university leavers in viticulture,” says Kenneally, 32, who graduated five years ago. “So I got on the net and saw there were opportunities in New Zealand and I got the first job I applied for. My wife Emma is a theatre nurse and so we googled the local hospital here and realised there were jobs there also. We needed to make a call about our future and we did.”

Mark and Emma moved to New Zealand with a two-year plan but now — five years on and with an 18-month-old-son, Jack, and another baby on the way — they call it home. “It has been great,” says Mark, now the vineyards manager and “vintrepreneur” with Matua Wines. “It is such a laid-back place, it feels just like Australia did when I was growing up, it’s really affordable, people are friendly and it’s a great climate.”

“There are definitely a lot more Australians coming out here lately,” says Peter Jackson, who along with his wife Nadine Worley were among the first wave of Australian winemakers who came to Marlborough a decade ago when the New Zealand wine industry was taking off. “There would be at least 50 Australians here now,” says Jackson as he sips coffee in a ­Blenheim cafe with Nadine. “Nope, I reckon more like 100,” she says.

“When we first came here the exodus of Kiwis to Australia was in the news almost every day,” says Jackson. “It would show these Kiwis in their big houses on the Gold Coast talking about how rich they were getting. But you don’t see that stuff these days.”

Australian winemaker Anna Flowerday is shielding her eyes from the afternoon sun as she stands with her Kiwi husband Jason amid the lush vineyards of their small family winery, Te Whare Ra Wines. “I’m really not tempted to go back to Australia,” says the 40-year-old mother of two sets of twin girls, seven and 10. “To be honest, the current government there is not exactly making me homesick, it is too unstable.”

“In a business like ours, stability is really important,” says Jason, who moved to ­Marlborough with Anna a decade ago. “We are up to here in debt,” says Anna, holding her hands up to her neck, “so we need that confidence, that certainty, to keep investing and make the right decisions about the kids’ future.”

Ironically, John Key was mentored in politics by John Howard and Australia was his early template. Key recalls his first meeting in ­Canberra with the then prime minister in 2006 when Key was opposition leader. “He [Howard] said to me, “OK, do you want to know how to win elections, and do you drink tea? He said, ‘Here are some of the things you have to do’ and he knew more about some of the New Zealand electorates than I knew.”

Three election victories later, Key says ­Howard’s “list” of election-winning strategies still holds true. “My own personal view is that Howard is the best centre-right leader in my lifetime. It’s not just that he won four elections but I reckon his innate sense of understanding middle Australia, the Aussie battler, and to be on their side with a very clear sense of what it takes to make their life better is really strong.”

The greatest contrast between the way Key runs New Zealand and how the Abbott, Gillard and Rudd Governments have behaved is that Key does not tend to spring nasty surprises on his voters. He has avoided Australia’s recent political pattern of lavish announcements ­followed by ignominious retreats on issues like the mining tax, carbon tax, maternity leave scheme and Medicare co-payment.

“Key’s recipe for implementing reform is simple — his government spends at least as much time on carefully preparing policy changes as it spends on their implementation,” writes Oliver Hartwich, author of Quiet ­Achievers: the New Zealand Path to Reform, released in December by the Menzies Research Centre. “Patience, preparation and pragmatism are the defining characteristics of Key’s government style. ­Nothing ever hits the electorate by surprise. Changes in direction are flagged well in advance and legitimacy is sought through elections. It is a strategy that could be described as incremental radicalism.” Hartwich believes Abbott needs to model himself on Key to ‘rediscover the art of reform’.”

Key’s personal story is compelling and it says much about the way he runs the country. The son of an English immigrant father, he was raised by his single mother, an Austrian Jewish immigrant in a state-run housing commission flat in Christchurch. From his dirt-poor childhood he became a millionaire, rising through the ranks of financial institutions to become head of global foreign exchange trading for ­Merrill Lynch in London. It is estimated he was worth more than $NZ40 million by age 40.

It is often said that Key runs New Zealand like a CEO rather than a politician and that there are clear parallels in style with another self‑ made millionaire-turned-politician, Malcolm Turnbull. “I know [Malcolm] well and I like him,” is all that Key will say of Turnbull, wary of wading into leadership speculation.

Key is a delegator rather than a dictator and makes a habit of consulting in person with ­several of his ministerial colleagues each ­morning. He holds informal meetings ahead of formal Cabinet sessions so that people can float ideas or shoot them down without undue embarrassment. “Most people realise we are not doing extreme things,” he says. “We try to explain what we are about.” He says he is “unashamedly pro-economic growth” but prefers the path of pragmatism over ideology. “My instincts are very much in the middle so I am not fighting internal demons,” he says. “I am not a secret right-winger who wants to do things.”

He does not accuse Abbott of being a secret right-winger but the truth is that compared with Abbott, Key is much more of a pragmatic centrist economically and is more liberal socially, having voted for gay marriage in 2012.

It says much about Key’s political skills that he managed to usher in an increase in the GST in 2010, a debate that both sides of Australian politics are unwilling to have. Ironically, Key did this despite Howard, the architect of ­Australia’s GST, advising Key over a lunch in Auckland in 2010 that a rise was too risky. “I said to [Howard] ‘I am going to raise the GST and drop personal tax rates’ and he said, ‘Don’t do it’. He said, ‘You’ll have the obvious ­argument that the price of bread goes up and it will be felt more keenly by the poorer person and so you will lose that debate’.”

But in the end Key chose to pursue the reform and succeeded, with surprisingly little political bloodshed, in lifting the GST by 2.5 percentage points to 15 per cent while cutting personal and company tax. As a result, New Zealand’s top personal tax rate is now only 33 per cent compared with 45 in Australia, while the company tax rate is 28 per cent compared with 30 per cent here. Key has also been part-privatising state assets in power, coal and aviation, a path that causes political grief in Australia. Key’s reform record has been helped by ­having a first-rate finance minister, Bill English.

In welfare reform, Australia is looking to ­emulate the New Zealand system, which is saving billions in long-term payments. In 2011, Key adopted a new model of welfare that ­identifies groups at risk of long-term welfare and establishes special targeted programs for them. “We’ve done a lot in what is called the ‘investment approach’ to welfare reform and we have been genuinely investing money up front in people who would otherwise be long-term beneficiaries,” says Key. When social services minister Scott Morrison addressed Canberra’s National Press Club in February he spent most of his speech lauding the New Zealand model and promising to look at what Australia could adopt from it.

Part of Key’s popularity stems from what political analyst Colin James calls his macro- personality. “Key has a remarkable rapport with ­people across the political spectrum and that is unusual. Bob Hawke probably had that but ­certainly Rudd, Gillard and Abbott didn’t.”

Because Australians and New Zealanders are allowed to work in each other’s countries without restrictions, migration statistics are not definitive but they do suggest that far more Australians are now moving to New Zealand to live. While there will always be a flurry of movement because of family ties between the estimated 600,000 Kiwis in Australia and 60,000 Australians in New Zealand, the total number of ­people from ­Australia moving to New Zealand (including New Zealanders returning home) has soared in the past two years to February from 15,355 to 23,571.

Spoonley says the ­number of non-Kiwi ­citizens arriving from Australia to live in New Zealand has jumped by 50 per cent in the past two years, from 5234 in the 12 months to ­January 2013 to 7895 this year.

Job opportunities and quality of life have driven this trend. According to data comparison website Numbeo, apartment rents are on average 24 per cent lower in New Zealand than in Australia and apartment costs per square metre 36 per cent lower. The national median house price has stayed flat at $350,000, according to the Real Estate Institute NZ, and even in Auckland, where the market is hottest, the median price of a house — $675,000 — still ­compares favourably with Australian cities.

New Zealand also enjoys a reputation for better work-life balance, although OECD ­figures suggest New Zealanders only have ­marginally more leisure time than Australians. The downside is that salaries in New Zealand are also around 30 per cent lower on average, although this gap is said to be closing.

Even so, New Zealand is trying to make the most of its moment in the sun, having recently held job expos in Perth and Sydney and another in Melbourne later this month to spread the message that “New Zealand is one of the best performing economies in the world right now and the demand for skilled workers is high”.

“I didn’t think my wife would be in the mood for a trans-Tasman move,” says Mark Neal as he munches a sandwich in his front yard in Hamilton. He and Megan are reflecting on their decision to move from his family’s Taree dairy farm to Hamilton last year. “But the whole dairy industry in Australia has been static for 15 years whereas dairy production in New Zealand has doubled in that time.” Neal, 37, a dairy farmer and agricultural economist, was offered a plum research role with New ­Zealand’s dairy industry body Dairy NZ and decided to grab the opportunity and move across with Megan and their three children aged two, four and six.

“I’m really enjoying the job, Megan has also got herself a good job [at Dairy NZ] and the kids are happy at school,” Mark says. “Kids have an amazing life here, they are barefoot all day at school and they are encouraged to climb trees and do things we once did as kids but which schools in Australia won’t allow. If you shake a tree in their school, eight kids will drop out of it.”

Inside the headquarters of Dairy NZ, on the outskirts of Hamilton, employees walk down corridors with fake grass on the walls and murals of cows everywhere. It is a tongue-in-cheek salute to NZ’s most valuable export industry which supplies a third of the global dairy trade and has been a key driver of economic growth.

Sitting in the courtyard at lunchtime are two of Australia’s PhDs that got away. Callum ­Eastwood, 38, and Cameron Ludeman, 30, are Kiwis who did PhDs in dairy technology at the University of Melbourne, both with the ­intention of staying in Australia to work. In the decade from 2004 they say there were so many fellow Kiwis studying agriculture at the university that they dubbed their department “Little NZ”. Now they say almost all of these Kiwis have returned to New Zealand with PhDs to their name rather than stay in ­Australia. “I was looking for an opportunity [in Australia] at that time,” says Cameron. “But then I heard about a job going at Dairy NZ and chose to go home. New Zealand was looking much better at that time, things were much rosier.”

Both men say that they were lured home by opportunity and lifestyle. They took a pay cut of around 15 per cent but considered it a worthwhile trade-off.

Tears are streaming down Kimberly Kidd’s face as she sits on a leather couch in her cafe in the small town of Thames at the foot of the Coromandel Peninsula in New Zealand’s North Island. “At first I was so homesick for Melbourne, I just missed everything and everyone,” she says as she and her Australian friend Lauren Haynes open a third bottle of wine.

Kidd, now 31, met her Kiwi husband and chef Rusty, 34, in ­Melbourne in 2005. Rusty wanted to open a cafe but thought the competition in Melbourne would be too tough, so he took Kimberly and their son Jacob back to his home town of Thames. “It was so hit and miss with restaurants and cafes in Australia that we figured we would try it here instead,” she says.

They moved across in 2011 and he got a job as a chef while she looked after Jacob. But by 2013 she was going stir-crazy in the small town of 8000 people and wanted to go home to ­Melbourne. So they hatched a compromise. They would open a cafe in Thames, call it Cafe Melbourne, and try to reproduce the same ­Melbourne cafe culture in rural New Zealand. “I wanted something that reminded me of the good coffee, the food and the service of Melbourne,” she says. “I wanted to feel more at home.”

A blackboard on the wall nearby has ­Kimberly’s favourite hometown streets scribbled across it: “Acland St, Chapel St, Bridge Rd, Lygon St.” On the afternoon I visit the cafe is packed, defying the predictions of some ­townsfolk in Thames that New Zealanders would never eat in a place that reminded them of Australia. “This could have gone so badly for us,” says Kimberly. “It was a big risk, but it’s been awesome.” She wipes away her tears. “And I’m not homesick anymore.”

The trend continues from the small end of town to the big. CEO of the ANZ’s New ­Zealand operations, Australian David Hisco, and his Australian wife Deborah now plan to retire in Auckland. “We really think this is where we will finish up,” says Hisco, who has worked in the country for five years. “The ­people are so friendly, the lifestyle is better and more balanced and people here place a premium on family.”

The current contrasting fortunes of both countries could easily be reversed in years ahead, and the traditional flow of Kiwis to ­Australia could resume. Like Australia, New Zealand is heavily dependent on the health of the Chinese economy and its dairy industry, the country’s biggest export earner, suffered sharply lower prices last year.

In addition, the rebuilding of Christchurch is adding around 1.25 per cent to GDP growth each year but this will tail off as the city nears completion. Even so, a report last month by Moody’s Investor Services predicts continued strong economic growth for at least the next two years and for New Zealand’s budget to return to surplus — a word that Australians can only dream about.

Key concedes that New Zealand has better growth and employment than Australia right now but declines to brag. “We want a strong Australia,” he maintains. “A strong Australia is good for New Zealand. No relationship is more important to New Zealand … there is naturally a bit of rivalry but Aussies are looked at fondly here. Most people, I think, look at Aussies and go, ‘It really is the lucky country even if it has one too many creepy-crawlies and sharks’.”

Key lists several high-profile Australians who have come to New Zealand to live, but his final one packs a punch. “The Australian High ­Commissioner [Michael Potts], who is just about to finish his time here, is not going back to Australia,” the PM reveals. “He is about to live down the road here in Wellington,” he says, pointing out the window. “His wife is a Kiwi so they have made the call they are going to live in New Zealand.”

Key cannot hide his grin. Now even the ­diplomats are defecting. It’s taken a generation, but the Bondi Bludgers are finally enjoying their revenge.

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