The visit of Australian PM Julia Gillard to NZ has sparked a media discussion about the relationship between the two countries. I would offer the following:
The differences between Australian and NZ are real for several reasons:
1. Australia has benefited from high business investment and strong demand for its mineral & energy exports. It can confidently integrate with the global market.
2. NZ remains isolated and suffering a ‘brain drain’, mostly to Australia. Its food exports are only just about to recover, but it otherwise is on the back foot.
NZ is in some respects like South Australia, a small isolated population of Australia detached from the rest. Until NZ discovers oil, or its currency depreciates to a value-proposition, it will remain isolated, just as South Australia did before it discovered minerals (i.e. Olympic Dam). Interestingly, this discovery was made because of a $25mil govt-sponsored geophysics program. Might I suggest the NZ govt sponsor geophysical surveys over the offshore regions of NZ, in order to ignite oil & gas exploration. Oil for NZ would make it the richest country in the world, like the United Arab Emirates. John Key could be a god if the investment pays off. It’s a justifiable investment.
1. Australia has benefited from high business investment and strong demand for its mineral & energy exports. It can confidently integrate with the global market.
2. NZ remains isolated and suffering a ‘brain drain’, mostly to Australia. Its food exports are only just about to recover, but it otherwise is on the back foot.
NZ is in some respects like South Australia, a small isolated population of Australia detached from the rest. Until NZ discovers oil, or its currency depreciates to a value-proposition, it will remain isolated, just as South Australia did before it discovered minerals (i.e. Olympic Dam). Interestingly, this discovery was made because of a $25mil govt-sponsored geophysics program. Might I suggest the NZ govt sponsor geophysical surveys over the offshore regions of NZ, in order to ignite oil & gas exploration. Oil for NZ would make it the richest country in the world, like the United Arab Emirates. John Key could be a god if the investment pays off. It’s a justifiable investment.
The economic stagnation that has placed NZ on the back foot is not a new phenomenon; it has been the reality ever since commodity prices dropped in the 1960s, and the UK joined the EC in 1973. Ever since NZ terms of trade and currency have under-performed. People no longer wanted NZ wool or milk. The ascension of China and India will change that. Asian girls will want milk so they can be as voluptuous as their Western cousins. Yes, guys! That means more 'big tit-tees'. We have seen poorly implemented privatisation, and others just 'back peddling' which has created welfare rather than income generating opportunity. Worst still is that the country seems to be moving towards Australia. Australia is successful not because of its regulatory framework, but despite it. Australian leaders can take all the credit for the turn around in its terms of trade and investment, but the reality is that it has more to do with India's isolationism in the past, and China's repressive Cultural Revolution in the 1960-70s. Those policies have unleashed an avalanche of wage disparity needing a market.
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