Prime Minister John Key is defending comments by Finance Minister Bill English that New Zealand's wage gap with Australia could be an advantage.
Speaking at a leadership forum at the weekend, Mr English said the fact New Zealand wages were 30 percent behind Australia's meant there was an advantage in luring jobs and capital.
Mr English defended the comments in an interview on TVNZ yesterday.
"Well, it's a way of competing, isn't it? I mean, if we want to grow this economy, we need the capital -- more capital per worker -- and we're competing for people as well," he said.
"... we need to get on with competing with Australia. So if you take an area like tourism, we are competing with Australia. We're trying to get Australians here instead of spending their tourist dollar in Australia."
Mr Key also defended the argument today, saying it had been taken out of context.
"He's simply making a point that at the moment we are seeing investment because of those wages," Mr Key said.
"It's not a new strategy, he's not arguing that's the right thing to do. He's just saying that leads to some investment at the moment, just like the very low exchange rate with Australia leads to some greater exports at the moment.
"But our aim over time is to eliminate those advantages because that means our economy's growing faster."
Labour leader Phil Goff said yesterday Mr English's speech showed the Government had no plan to address the worsening economic outlook.
"With the rising cost of living and more people worried about their job security, middle and low income earners are worse off," he said.
"There is growing pessimism about the economic outlook and recent surveys show business confidence dropping.
"The best Bill English can do is trumpet that New Zealand wages are 30 percent below Australia's giving us an 'advantage'. This from a Government which campaigned at the last election on closing the gap with Australia."
