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Does ditch-jumping pay? 11 May 2006 Edition
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If you're like most professionals, you've probably contemplated the benefits of leaving NZ for distant shores where you can earn a snot-load more money for your efforts.

Indeed, many of Aardvark's readers are ex-pats, most it would seem, are doing "very nicely thank you" in their newfound homes overseas.

The three key destinations appear to be The UK, the USA and Australia -- all offering a measure of fiscal reward that is higher than that which can be found here in NZ.

In the wake of the Australian budget delivered this week, I strongly suspect that even more Kiwi ICT workers will be eyeing the ditch as an alternative place to earn a living.

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The forward-thinking Australian government seem to have taken some very real steps towards hiking incentives for those prepared to work harder and smarter in the 21st century.

Wide-ranging tax cuts and changes to depreciation rates on new computer equipment are just two of the measures now in place.

Even the state governments are getting in on the act, with Queensland looking hard at how they can ramp up certain parts of the software industry in their own part of the country.

Those Aussies who work hard will now be rewarded across the board by allowing them to keep more of their own money -- quite a different situation to that which Kiwis now face.

In the wake of the Aussie budget, several mainstream media outlets have done the math and deduced that, even taking things such as the Medicare Levy and other additional taxes into account, the average Aussie now pays less tax than the average Kiwi.

But it's not just the *amount* of tax that's the issue, it's the way the tax system works which seems to be more mature in Australia.

Here in Godzone we work on the belief that the government is a lot smarter than the people who elect it. Instead of letting people keep enough of their own money to pay for a roof over their heads, food on their tables and clothes for themselves and their kids -- the NZ government takes a whopping lump of cash from each and every person then gives a small amount of it back to those *it* feels deserve it.

The result is crazy messed-up schemes such as "Working for Families" where someone with five kids, a $120K per year job and a house in Remuera can end up paying *less* tax than a blue-collar worker and his wife earning $70K between them and living in South Auckland.

In essence, the Australian government seems to be treating its citizens as intelligent, sensible folks who can be trusted with their own money. Here in NZ we're effectively being told that we're far too stupid to take care of ourselves so, almost regardless of our income, we need to hand over a huge amount of our earnings so the government can spend it for us.

The Australians even believe that those who earn the least are bright enough to manage it themselves and allow them to keep *all* of the first $6,000 they earn each year. By comparison, the Kiwi government still wants its 19.5% of *every* penny that comes into your hands.

Why bother to take money from those on a peppercorn income only to hand it back again after wasting god-knows how much of it in bureaucratic overhead? Only the NZ government knows for sure but chances are it's all about *control* and fostering a culture of dependency.

Quite frankly, I suspect that most intelligent Kiwis find that a very patronising attitude and as much of a reason for considering a move overseas as the actual tax rates themselves.

But this whole "we know better than you" attitude on the part of the NZ government even extends into the area of fostering hi-tech industries here. Instead of providing tax incentives on R&D in the way that many other countries do, our government still hangs on to the process of taking hard-earned money from one company and then (by way of technology grants) giving it to companies *it* thinks are onto a good idea. Once again -- it's a "we're smarter than you" contempt towards those earning the nation's wealth -- not good!

Let's change the focus for a moment from the amount of tax paid to the amount of money left after you've paid your tax...

If you're a professional working here in NZ, you're probably earning quite a bit less than you'd get if you jumped the ditch. If you then take out a lower percentage of tax, the amount left in the hands of ditch-jumpers at the end of the week is clearly going to be a snot-load more than their peers back here.

True, some aspects of the cost of living are higher - but one only has to compare property and petrol prices to see that we're catching up very fast -- without an accompanying adjustment in after-tax incomes.

Maybe the deciding factor will soon become NZ's increasingly lousy weather. While (apart from the occasional cyclone) Australia seems to bask under a succession of large high-pressure systems bringing fine, warm weather, global warming seems to have turned most of NZ into a windy, wet sometimes unseasonably cold place -- more like Britain than an island nation in the South Pacific.

Indeed, if (as we're told) there's a skills shortage here in NZ, how on earth are we now going to attract smart, experienced, professional people to our little socialist state when Australia seems to be more willing to reward and treat these folks like grown-ups than our government ever will?

But these are just my opinions and yours are possibly different. If they are, jump into the forums and share them with the rest of us. I'd also like to hear from those who are already working outside NZ and whether they think the move was worth it -- both from income and quality of life perspectives.

Should the rest of us jump the ditch too?

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