Jun 06

Closing the gap. Can Australia catch up with New Zealand?

Sydney Opera House



Can Australia catch up with New Zealand? No, I have not got this round the wrong way!

There has been plenty of debate in New Zealand about "closing the gap with Australia". I want to pose the opposite question to stimulate deeper discussion in New Zealand. I hope that these fresh insights might stimulate discussion in other countries as well, such as Ireland and Canada. They both have far larger and more prosperous neighbours that are a magnet for the brightest and most ambitious.

Let's start by defining the problem:

  • New Zealand loses too many citizens to Australia.
  • This is at least in part driven by higher wages and more opportunities.
  • The gap between the two countries, measured in GDP per capita, is growing.

The calls for "closing the gap with Australia" are laudable, but some of the reasoning behind the ways to close the gap is questionable. New Zealand does need to increase the level of prosperity, as Professor Sir Paul Callaghan argues so eloquently. We should think carefully about what type of society we wish to live in and how best to become more prosperous.

One-off measures, such as mining in National Parks, have been dismissed, at least for the time being. Thus type of mining would cause irreparable damage to our cherished environment, but no lasting benefits. Trying to become "more like Australia" is futile. It was the veteran British Labour MP, Austin Mitchell, who dismissed Auckland as an "amateur Australia" some decades ago.

So why pose the question in the opposite way? I have to thank Steve Tighe of Chasing Sunrises, who was one of the keynote speakers at the Mindshop Australasian Conference in Sydney in May 2011. He was comparing the three main types of society: traditional, materialistic and post-materialistic. Most societies have components of all three, but which one is dominant? According to Tighe, the Scandinavian countries, Canada and New Zealand are more "post-materialistic" than Australia. Hence my question "can Australia close the gap with New Zealand?" Australia now has the biggest houses in the world, but at what price? If we look beyond GDP, and consider other factors such as obesity and mental health, a different picture emerges.

We need to challenge some of the assumptions, which can have a significant influence on the debate in New Zealand. Back to Professor Callaghan, who roundly dismisses the 2025 Task Report, chaired by Don Brash, as "fundamentally flawed, but beautiful prose". We also need to think more strategically to better define the problem and devise workable solutions. Let's start with a military analogy. Don't fight a bigger and better armed opponent head on. Use stealth to surprise your enemy and attack where there is a weak point. The English writer Peter Bells suggested the best time to attack France was at lunchtime!

One of the fundamentals of marketing strategy is differentiation. A small company can seldom compete directly with a far larger competitor. A bigger product range and marketing budget, coupled with lower product costs, make this a tough battle. This is "red ocean thinking" in the words of the authors of "Blue Ocean Strategy".

So what sort of society do we want and who do we want to keep and attract to New Zealand? Two of our biggest industries are dairy and tourism. Our fragile environment cannot sustain more dairy farms and there are two problems with tourism. Firstly we cannot double or triple tourist numbers without destroying one of the main reasons for coming there. Secondly, tourism is a low wage sector, generating only $80,000 per employees and we need increase the wealth created by each worker. Sir Paul Callaghan in "Reflections on Science" advocates that our future lies in the hi-tech sector, where employees generate over $250,000. He cites companies such as F&P Healthcare. Think "computer chips" instead of "potato chips". Read the TIN100 2010 Report for more information about the hi-tech sector. He also argues we should strive to be "a place where talent wants to live". I fully support his views and I "walk the talk", to coin a phrase. I have worked with a number of innovative hi-tech companies in New Zealand over the last 12 years. I also made a conscious choice to migrate from England nearly 30 years ago.

Let's look at "talent" more closely. How do we define talent and what might induce these talented people to choose to come here? Consider some of the differences between materialistic and post-materialistic societies outlined by Tighe. The former is about prestige, conspicuous consumption and striving for "bigger, better and faster". The latter is about sustainability, intellectual curiosity and celebrating diversity. We want more of the latter!

Scenario based planning often uses a single descriptor to encapsulate different futures. How about "utu" and "aroha"? These are two Maori words that are now part of New Zealand English.

"Utu" means revenge, "an eye for an eye", under this scenario we might see:

  • Emphasis on the individual
  • Even more prisons
  • Incentivise the rich with lower taxes
  • Incentivise the poor by cutting benefits
  • More roads and car parks in the centres of our cities.

"Aroha" means unconditional love, under this scenario we might see:

  • Emphasis on the Individual
  • More child care centres
  • A more equitable sharing of the tax burden
  • Help for the less privileged seen as a life-time investment, rather than a cost
  • More public transport and car parks at transport nodes.

In summary, we need to make New Zealand "a place where talent wants to live" and steer clear of aspiring to be an "amateur Australia". We must change our thinking to become more creative, flexible, accepting of diversity and daring to be different. Cities have a vital role to play, and the new Auckland super-city should lead the charge by becoming a super city.

I invite you to join me by commenting on this post and by spreading the message!

Simon Fawkes
Business to Markets Ltd