Grass is always browner

Interest rates have risen in both economies and unemployment is rising. It’s been a steeper curve of rate rises here and unemployment is expected to peak at 5.5 per cent compared to 4.5 per cent in Australia.

Inflation is falling in both countries. It is about halfway back to target from the 2022 peaks with Australia 4.1 per cent as of the end of 2023 and New Zealand at 4 per cent.

The upshot is that the cyclical economic differences aren’t that big. They’ve certainly been wider.

But structurally Australia is a much stronger and wealthier economy. Why?

Yes, they have access to enormous mineral wealth. But to blame the difference on that alone is a cop-out.

New Zealand is also blessed with outsize natural resources relative to its population.

The scale of our agriculture, horticulture and forestry, the size of our fisheries and the capacity for 0tourism are huge on a per capita basis.

But per person, we have lower productivity and lower rates of savings and investment.

Our productivity dilemma is complicated and much debated.

Some focus on high levels of regulation and red tape. They may have a point with regard to some of our international peers.

But my experience of Australia, and Australians I talk to, is that there is no shortage of regulation and redtap across Federal, State and local government.

For me, there are two key things Australia has, which we don’t. Compulsory superannuation savings and a capital gains tax have made a huge difference across decades of economic growth.

As a child . . . I remember a cartoon by Peter Bromhead depicting a queue of leavers at the airport and a sign on the wall that said: ‘Would the last one to leave please turn off the lights’. It worried me then. It’s worrying me again now.

These policies have turbocharged Australia’s financial sector while ours has languished.

Australians own their banks — in fact, they own ours. Most of the dividends on profits their big corporations make stay in the country. In New Zealand, most of the profits drain out.

Australia’s Superannuation fund is worth $3.7 trillion. That puts our efforts with KiwiSaver (about $100 billion) in perspective.

Of course, we did once have a compulsory super scheme in place. A man called Robert Muldoon killed it in 1975.

If you have questions about how the economy works, send them to liam.dann@nzherald.co. nz and he’ll try to answer them in his weekly column — Inside Economics