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EDITIONS
Wednesday, 24 July, 2002, 09:12 GMT 10:12 UK
New Zealand voters fear brain drain
New Zealand
Beautiful scenery but low wages for the country's skilled workers

New Zealanders go to the polls on Saturday to elect a new government.

Centre-stage in the campaign so far - the health system, education, law and order and defence.

But there is another issue creeping up the agenda - welfare relations with Australia. New Zealand wants Australia to review the policy of restricting access to welfare payments once its citizens cross the Tasman Sea.

In the late 1990s, thirty thousand people a year were leaving New Zealand to live in Australia. Put in a national context, that is equal to 1% of the entire population emigrating annually.

Faced with a potential $600m welfare bill, Australia introduced two measures.

Shoppers in Wellington
Australia has made it tougher for New Zealanders to emigrate there
Incoming New Zealanders were barred from receiving state benefits for two years.

Then the Liberal government of Australian Prime Minister John Howard announced New Zealanders would no longer get automatic permanent residency.

Instead, they would have to apply and be tested against standard criteria like all other nationalities.

High achievers leave

With the General Election looming, New Zealand ministers now want Australia to look again at its welfare restrictions.

Since New Zealand's sharp economic decline in the mid 80s the country has managed to export not only its unemployment problem but also many of its skilled workers.

The lure of higher benefits in Australia may have been capped, but the same can't be said for higher wages overseas.

The result: New Zealand's highest achievers still leave - attracted by the high wages - but options for the greater workforce shrink as they lose easy access to the dominant Australian economy.

How much for wool?

The incumbent Labour Government of Prime Minister Helen Clark is certainly well favoured to win a second term.

How best to stimulate the New Zealand economy though, is much harder to predict.

The Reserve Bank is looking for the economy to grow by 3% this year, dropping back to 2% in 2004. That's well short of the magic 4% annual growth needed to reverse New Zealand's decline in the OECD income rankings.

Cow in New Zealand
New Zealand's economic focus continues to be agriculture
In this election, management of the economy has barely registered with the voters.

But New Zealand's continued focus on commodities and agriculture, to the exclusion of manufacturing and tertiary industry may be storing up trouble for the future.

In 1950, a ton of wool would buy a new car.

The decline in global commodity prices now means that same ton could barely replace the front suspension.

The result of New Zealand's General Election will be announced early on Sunday morning.

See also:

23 Jul 02 | Asia-Pacific
11 Jun 02 | Asia-Pacific
27 Mar 02 | Country profiles
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