Why are Australians Richer than Us?

Commentary, Role of Government, Owen McShane

Australian GDP per capita is now A$47,181. That’s about 40% higher than New Zealand’s
A$33,682, at present market exchange rates. Even Tasmanians, their “Clean and Green” poor
cousins, at only $35,253, are richer than New Zealanders. Western Australians, are the richest
at $58,688, which makes them about 75% better off than New Zealanders.

Why are Australians so much better off?

We are fed many excuses – but most don’t stack up.

However, there is much to learn from the marked difference in the way our two countries
responded to recent reports on housing affordability. For ten years, private analysts in
America, Canada, the UK, Ireland, Australia and New Zealand, have been blaming
unaffordable housing on over-regulated land supply. Last month, CHRANZ, one of our own
government agencies, finally released a report which clearly laid the blame for Auckland’s
inflated land prices on its Regional Growth Strategy, the Metropolitan Urban Limit (MUL),
and widespread excessive compliance costs for consents.

The first of three annual Demographia surveys, which showed Australian and New Zealand
housing markets to be among the most unaffordable in the world, was first published in
January 2005.

The major Australian newspapers immediately featured front-page stories outlining the
severity of the problem and demanding action to release land supplies, and continue to do so.
The Urban Development Institute of Australia, the Property Council of Australia and its
Residential Development Council, the Housing Industry Association, and the Institute of
Public Affairs all acknowledged the problem and promoted increased land supply.

The Federal and State Governments soon prepared bills forcing councils to release large areas
of land for residential development. They are still squabbling about the specific cures, but
have all recognized the problem and the cause.

New Zealand responded by shoving its head firmly into the sand. The early Demographia
findings were given no major media space or air-time at all. The third survey, published
earlier this year, generated more attention because many commentators were making the
connection between inflated land prices, high interest rates, the high dollar and its impact on
our exporters.

NZ property organizations have remained remarkably quiet.

View Full PDF Version (4 pages)