Grant Thornton has released a survey showing 78% of Australian companies expect to increase salaries in line or more than inflation, while only 55% of New Zealand companies expect to do the same. Grant Thornton said this could make it even harder for New Zealand employers to recruit skilled staff. Grant Thornton partner Peter Sherwin said the latest survey should act as a warning to those who thought the exodus to Australia had ended. "We are already in danger of losing many of our top talent to Australia, and this will only increase as the wage gap between the two countries gets wider," Sherwin said. "Clearly this is yet more evidence identifying the growing urgency for the Government to create the right environment for businesses in New Zealand to perform and retain our talent. Reducing the top personal income tax rate would help," he said. In Australia 23% of companies intend increasing wages more than inflation and 19% expect no increase. In New Zealand, which is in line with the global average, 12% expect to increase wages more than inflation and 41% to hold wages at present levels. "Just in the last few weeks we have seen two sharply contrasting pictures. On one hand we have over 2,000 people trying to get jobs at an Auckland supermarket, while on the other there is a growing shortage of medical graduates as they head to Australia and beyond where remuneration packages are 30% plus higher than in New Zealand," Sherwin said. "While it is great that our unskilled and semi-skilled unemployed are getting job opportunities such as in Auckland, it is the highly skilled that will take the country forward, and it is these people that have the greatest financial carrots dangled in front of them. The last thing New Zealand wants now is to have our recovery stalled by a shortage of talent." My view
The government appears to have slipped back into a state of complacency about the loss of skilled New Zealand educated staff to Australia in the wake of the slowdown in the exodus last year. The underlying problem has not been fixed and the sound of sucking (our talent across the Tasman) will resume as the Australian economy kicks off again. The government's moves on tax reform suggest the top income tax rate will only be cut from 38 cents to 35 cents at best, which is nowhere near enough to change either the incentives to work here or the incentives to invest here in anything but property. Your view?