As Australia’s productivity stalls, New Zealand leaps ahead

I’ve just looked back at one of my blogs from mid-2011, August 15 to be precise. It was shortly after the previous chairman of the Productivity Commission, Gary Banks, had released his report on productivity within the Australian retail sector.

Here’s the essence of what I wrote back then:

“The simplest distillation of the work completed by Mr Banks and his team is this: Should our political leaders, union leaders and business leaders not find a collaborative way to re-shape the way our shops are zoned, our retail staff are paid, and both are integrated into the online world, our cost of living will rise, creation of jobs in our huge retail industry will fall, and when the mining boom ends, we will have a recession not seen by this nation since the 1930s. The contents of his large (Productivity Commission) document are actually a big deal.”

Well, two-and-a-half years later, nothing’s changed and our mining boom is cooling very fast, retail sales are flat, and job creation is anaemic.

The trigger for me to look backwards this week was a newsletter I received from the Australian Chamber of Commerce’s CEO Peter Anderson. In it, he provided a list of further barriers to job creation in the Australian retail and distributive sectors.

Those barriers are:

• 5% increase to the carbon tax (July 1)
• Award wages up 2.6% (July 1)
• Award allowances up CPI or 2.6% (July 1)
• Superannuation levy paid by employers rising to 9.25% (July 1)
• Fourth increase in four years to weekend penalty rates for retailers (July 1)
• Unfair dismissal threshold and compensation going up (July 1)
• Superannuation now paid to workers above 70 (July 1)
• New consultation obligations whenever rosters or hours change
• New obligations to consider family-friendly rosters
• New parental leave obligations
• Increased powers to Fair Work Commission (union entry, workplace productivity)
• Penalty rate principles legislated
• New restrictions on recruiting overseas skilled workers under 457 visas
• Reverse onus of proof and increased sanctions on employers to prove employee legal status (June 1)
• Union officials right to occupy workplace lunch rooms (January 1)
• Employers to finance union travel and entry to remote workplaces (1 January)
• Right to sue employers for workplace bullying (1 January)

Sadly, this list is just the “new” barriers to growth which have been legislated in 2013. They just add to the increases in award rates, restrictions in weekend working, and increases in complexity in running retail and distribution businesses legislated in Australia since 2011.

So what? Well, next door to Australia is a small, very productive and lower cost country inhabited not by hobbits and elves, but by innovative business people and politicians.

New Zealand’s tax and labour laws are more flexible, and promote investment by individuals and companies alike. Their factories are now producing items more cheaply than in high-cost Australia – items previously produced in Australia. NZ warehouses can pick, pack and airfreight into the eastern seaboard of Australia faster and more cheaply than we can from within our own country.

As the mining boom cools, I wonder just how many Kiwis will leave Australia and re-join the growing business community in New Zealand which is expected to outperform, and outgrow Australia for the next three years. And I wonder whether this migration to NZ will include Australians who used to work in retailing and manufacturing in Australia.

CROSSMARK CEO Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores.