Australia’s recent budget announcement that employers’ pension contributions will be increased from 9 to 12% and corporate tax is to be cut from 30 to 28% is set to spark off an increase in the already rising rate of migration of Kiwis across the Tasman Sea. Calls have already started for New Zealand to match the deal before it’s too late.
New Zealand is soon to be burdened with changes in the taxation of investment property and there is a proposal to increase GST to 15%. (something that will cause hardship for a lot of people because GST is placed on food) A relatively strong dollar, reducing the purchasing power of migrants and visitors, is also putting further strain on businesses.
from a NZPA release on Guide2NZ
“An increase in compulsory employer contributions to superannuation in Australia may see more New Zealanders moving across the Tasman, commentators say.
Tax changes in Australia included a 40 percent tax on big miners’ profits, a rise in compulsory employer superannuation contributions to 12 percent from the current 9 percent by 2019, and a cut in the corporate tax rate from 30 to 28 percent.
New Zealand’s corporate tax rate is 30 percent and compulsory superannuation contributions stand at two percent.
Financial commentator Bernard Hickey said the change had “turbo charged” Australia’s superannuation scheme.
“Many New Zealanders who have worked [in Australia] have money in the superannuation scheme and they love it because it gives them some savings, whereas in New Zealand they probably don’t have savings,” he told the New Zealand Herald.
The increase would also spark debate about whether KiwiSaver should be compulsory, he said.
Mercer New Zealand chief executive Martin Lewington said New Zealand would fall further behind Australia’s workplace savings.
“The fact remains that New Zealand’s population is ageing as quickly as Australia’s, and in fact the potential cost per capita of funding an ageing population in New Zealand may be greater due to our Government-provided pension being available to all New Zealanders no matter what their income or savings base.”
Council of Trade Unions economist Bill Rosenberg said the Australian superannuation move would attract more New Zealand workers to Australia and boost funds for investment in its economy.
Rather than a knee-jerk “must match Australia” response, New Zealand needed to look deeper…more“
But they shouldn’t take too long looking, last one out please turn off the lights.
For background see: