TRANS TASMAN DRIFT

Another Perspective on the Trans Tasman Drift (for Immediate Media Release)

Throughout the election campaign itself and over recent times, much has been made of the Trans Tasman drift or ‘brain drain’. Human capital leader, Barry T Knight who recently returned to New Zealand after more than three years in Australia, offers both personal and professional perspectives on this much talked about phenomena.

Based in Perth, where he lead a large human capital consulting firm in Western Australia and as an integral part of the Australian Management Team of a large NASDQ listed organisation, Barry recently made the following comments and observations. “Having now lived in Australia on two separate occasions and with a 28-year involvement in the human capital business in both countries, I have come to the conclusion that there are some emerging trends that no one has really spoken about or taken into account,” says Barry.

“Several diverse factors combine to further demonstrate the increasing gap between the country of choice in which to live and work. Firstly, one of the major shifts that has occurred in Australia, is the development of a ‘culture of confidence and pride’,” he says. “The enthusiasm and patriotism is evident right around Australia and is proudly and openly demonstrated everywhere. The sheer exuberance and passion that goes into Australia Day celebrations is a case in point. This is a tremendous example of just how Australia has, in my view, made the transition from being and thinking small, in terms of it’s population and impact on the world, to embracing and becoming a part of the world. Furthermore,” Barry continues, “enterprise and wealth creation is openly acknowledged, welcomed and encouraged in Australia. Doing well in business or in life is applauded, while having a go and failing is not such a bad thing, provided you give it a ‘fair dinkum” shot!’

Looking at New Zealand’s ‘culture of confidence and pride’ or lack of it in direct comparison, Barry says. “It seems we have further developed ‘a culture of increased dependence’ with a huge focus on internal issues and challenges, with increasing government control and bureaucratic dominance. The fostering and encouragement of the view that ‘average is okay, that no-one fails,’ in schools and the education system is totally at odds with the culture in Australia,” he maintains.

“I believe we need to push forward by pursuing and encouraging a theme of excellence, accepting that being average is not okay and everyone can do better,” he says. “Being the best we can be, personally, in education, in business and as a nation, is what we should all be striving for, in what is becoming a dynamically competitive and absolutely ruthless world. The Australians have embraced that philosophy as a nation in my opinion.”

Barry acknowledges that everyone can’t be outstanding or attain a high performance level. “By recognising, understanding and utilising every individual’s capabilities and competence to best advantage, and helping them to maximis e their potential, should be a priority,” he says. “Certainly the benefits of doing so would flow through the whole of society. However, it very much appears that for many, the small country syndrome and thinking we occupy ‘minnow status’ in the scheme of things still prevails. This is in spite of the best efforts of many outstanding, innovative and robust companies and individuals who are footing it with the best in the world – despite the restrictions, limitations and challenges, real or imagined, of operating in and out of the New Zealand environment,” he adds.

Of the differences in salaries, wages and remuneration packages between the two countries, Barry has some interesting points to make. “Some recent examples comparing Australian and New Zealand positions and remuneration packages in a number of industry sectors were published in the National Business Review on October 7th. What no one seems to have picked up on however, is that whilst at first glance Australia may have a higher taxation regime, changes in that structure from July 1st 2006, plus some other current and long standing key elements do actually make a huge difference. For example, what the politicians overlook, and many people don’t take into account or indeed realise is, that in Australia,” he says. “Even with their current higher tax rates, an individual, whether they be self-employed, or on salary or wages, can in fact arrange their tax affairs in a much more flexible and favourable manner than is the case in this country.”

Superannuation is another point of difference between the two countries. “This is another very important factor,” Barry explains. Everybody, regardless of who they are or where they work, is required to invest a minimum of 9% of their gross annual income into a superannuation fund of their choice. Many people chose to contribute significantly more, the option is entirely theirs. However, and this is the really significant point,” he elaborates. “That compulsory 9% or the chosen percentage of superannuation is actually deducted from gross income prior to tax being paid. Therefore an individual being paid $100,000 PA gross and choosing to pay 10% superannuation is only taxed on the $90,000 amount. What an incentive to save,” he adds.

“In addition,” Barry continues, “there are many other deductible items and salary sacrifice options available such as the various insurances, vehicle leasing arrangements and business related expenses. Another example aimed at encouraging immigration to Australia is that new arrivals can enjoy the benefit of rent relief during their resettling process, via a tax break for up to 12 months from the date of their arrival. All of these initiatives obviously not only encourage people to take responsibility for their own affairs but also underpin the thinking that ‘wealth creation’ is a very good thing.”

On the career front, Barry Knight believes it is a reality that New Zealand must face the fact that from an international career perspective, and as a result of globalisation and regionalisation, New Zealand has effectively become a ‘vocational backwater’. “That is a cold hard fact for those who really want to succeed in international business or corporate careers,” Barry says. “This shift began many years ago when head offices progressively exited Dunedin and Christchurch and more recently Wellington and Auckland. Decisions for major New Zealand businesses are now largely being driven out of Australia, South East Asia, Europe, UK and the US. New Zealand therefore, instead of being a stand alone or regional centre has in fact become a branch
centre,” he says.

“In my experience, New Zealand talent is highly regarded offshore, not only in Australia but everywhere around the world. Within large corporates anywhere around the globe you will find a kiwi somewhere amongst the executive or management team. So,” he continues, “with the changing demographics now very rapidly impacting the dynamics of the workforce, New Zealand and New Zealand companies need to start planning now in terms of what needs to be done to develop “attraction, retention and employer of choice strategies.”

Barry Knight maintains that those companies and organisations who don’t take progressive action now will face an increasingly difficult future as the ‘war for talent’ gathers momentum. “If we think we have skill shortages now,” he says, “the reality is we haven’t even touched the tip of the iceberg. Global competition for talent at all levels has only just begun.”

Barry T Knight