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NZ presents some of the most alluring property in the Western World; particularly given the greater easy of residency, the low cost of property, and the liveability of the country. In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

New Zealand Property Report 2010 - Download the table of contents or buy this 180-page report at our online store for just $US19.95.


Wednesday, January 6, 2010

NZ relativism needs to end

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New Zealand is lagging the world in terms of economic prosperity. Being an Australian living in NZ, I am surprised at the extent to which NZ is clinging to the prospects of catching up to Australia. Notwithstanding the importance of the Closer Economic Relationship (CER) and the proximity of the countries, and their similarities, it seems a bit myopic to focus on this one particularly small country, particularly from the point of view of public policy formulation.
In NZ constant comparisons are made with Australia - the latest one being the fact that national income per capita in NZ trails Australia by 34%. Whilst I can understand the appeal of Australia from the perspective of being a 'close market', I would suggest it might be a little too close in some respects. i.e. NZ is like Australia a producer of low value commodities. Why enter a competitive market for the same products where you might differentiate yourself overseas. Certainly I can understand the attraction of exports to Australia for NZ Small-Medium Sized Businesses (SMEs). They need to keep costs down and familiarity makes sense.
I am more concerned with NZ public policy makers trying to emulate the Australian 'success' because its not what it seems. Australia is enjoying a lot of economic prosperity simply because it has huge, world-class resources of minerals, which NZ does not. Australia is experiencing huge capital inflows by Chinese, European and US companies to finance mining projects, which will generate sizeable revenues for 50+ years.
Australia is making use of its competitive advantage. These large resources are close to the coast, Australia is close to Asia, and it already has established infrastructure to service these mines, including deepwater ports and rail linkages. There is the possibility NZ will find some large gas fields in future, but at the moment that is a 'pipe dream', and anyway Australian projects will likely seize the lions share of gas developments in the next few years because of resource security issues in NZ.
The right strategy for NZ is not to copy Australia because we can see there are some important differences between the two countries. NZ needs to get clever at developing its intellectual capital. Hopefully it will entice some of its expats to return home to develop businesses, or use those links to make connections in foreign cities. The reliance on low-value farm products has to end. Just $5 billion of NZ's $38 billion of exports comes from more sophisticated technological goods. NZ needs a Nokia-type enterprise. That is where the future of NZ lies, and here is one company making a great impression in accounting (business) services. The company is Xero , and its listed on the NZ Stock Exchange. It offers online accounting services to companies around the world. This is exactly the area which makes sense for NZ. I wanted to recommend this company because there are too few great stocks in NZ, and this is one which could make a great impression. I like Windflow Technologies as well, however this one has more leverage because of internet scalability.

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'Buying NZ Property – Download the free sample readings!

NZ presents some of the most alluring property in the Western World; particularly given the greater easy of residency, the low cost of property, and the liveability of the country. In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

New Zealand Property Report 2010 - Download the table of contents or buy this 180-page report at our online store for just $US19.95.


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