Higher incomes in Australia draw New Zealanders across the Tasman. Many of those who remain here struggle with a high cost of living relative to their income.

The income gap with Australia is large. In 2024, Australians earned about 30 percent more income per person than New Zealanders, according to an OECD measure. That gap comes to $20,000 per person.

The cost-of-living problem is more serious than many realise. Its extent has been hidden from households by heavy government borrowing. That borrowing is pain delayed.

My new report, NZ Unbound: Freeing up growth and fixing the books, identifies two problems and asks what is holding the country back.

The deep problem for New Zealand is low incomes due to low output per hour. On one widely used international database, the average Australian produces in 39 minutes what takes the average New Zealander 60 minutes. (The gap may be smaller, as the database's estimate of hours worked in New Zealand looks too high.)

The second problem is the accumulated public debt burden from years of excessive spending. Between 2018 and 2024, central government operating spending rose from 27.3 percent to 33.0 percent of gross domestic product (GDP). Tax revenue rose by only 1.5 percent of GDP.

That turned forecast government operating surpluses which would have reduced borrowing to deficits that increased it.

Borrowing to pay for day-to-day spending is a tax bill deferred. The more people who emigrate, the heavier the public debt burden for those who stay.

The report ends with several suggestions for bringing greater discipline to government spending and regulations.

One is a fiscal council reporting directly to Parliament on problems with poor-quality spending and possible remedies. Another is firmer rules determining a prudent level for the public debt.

Big spending programmes and rules should face regular fresh reviews, and people should be compensated when a rule takes away their property rights. Ministers should also be able to direct their agencies and get timely information from them.

New Zealand has turned around economic problems like its current ones before. The report documents big gains in income per person that followed the decisive reforms of the 1980s and 1990s.

Credible action is needed to give young New Zealanders stronger reasons to stay.

To learn more about Bryce's research, read the full research report, watch the webinar and read about it in our latest NZ Herald column.