Thursday 1 November 2012

Gawihir 777

Another for the "I can't believe you people haven't emigrated to New Zealand" file.

Here in New Zealand, we don't have to bother going through any kind of security for domestic flights that can't reach international destinations. And when we do go through security, it's the standard metal-detector kind with friendly security personnel and, again, the whole not-being-molested thing.

Seriously: The last time I caught a flight here, I parked the car 30 minutes before the flight, walked over to the terminal, walked up to the gate, waived my phone at the kiosk (it's an electronic boarding pass), and hopped on board. If you have to check luggage, add 15-20 minutes.

Here's the latest Air New Zealand in-flight safety briefing. I love how the whole country turns Middle Earth whenever a new LOTR movie comes out.


HT: @IAMJohnLai


  1. I know I know :-) Been lobbying my wife to move to NZ ever since I came from from spending several weeks there last year. Now if she could just find that professorship position in adult stem cells and/or estrogen receptors (cancer)... we would be set :-)

  2. Where'd you get that definition from?

    B1900Ds tend to be at gates that don't require going through security, and *maybe* Dash 8s (can't recall), but ATRs and jets have always required going through security for me.

    None of the turboprops have the range to get to Australia (2200 km) with passengers on board. The jets all do, but they don't put anywhere near enough fuel in them on domestic flights to divert them mid-flight. Carting around 15 tonnes of fuel you don't need costs far too much in extra fuel burn.

  3. I had assumed that it was the physical capability of the plane. A plane that could reach a foreign country with enough fuel can always have more fuel loaded onto it, or a terrorist might expect that they could demand that more fuel be loaded onto it. Small planes, not so much. Checking.

  4. There are a few problems here in support for research of that sort. If she'd be bringing grants with her and had a decent research record, I'd expect she might be able to work something out with Auckland. But I have no connections to that area that might let me ask whether they're hiring.

  5. You know what is the situation with grants even in US... not good, even if you have PhD from University of Chicago and post-doc from Harvard in something as hot as cancer research and adult stem cells. I am sure pharma companies want her bad, but she wants to stay in academia for a bit. You can always go to $$$ pharma, but they won't let you back into academia after.

    For myself, I would have to figure out how to translate my 15 years being GM/business operations executive in technology companies to NZ business scene. I know two entrepreneurs from NZ, but both moved to US after college.

  6. Who pays whom in this situation, given there are costs on both sides? I'd guess the film company pays the airline.

  7. It's based on the layout of the airport. Most big airports funnel all domestic passengers through metal detectors by default. Some of the smaller airports only have screening on some gates, for example Queenstown Airport has security on all gates except Gate 1 (generally takes jets flying to Christchurch).

  8. Why you haven’t moved to New Zealand (and why I haven’t moved back)…..

    New Zealand is, in very many ways, a fabulous place to live. Unfortunately, moving to New Zealand tends to be a financially unattractive proposition.

    A reasonable rule of thumb is that nominal salaries in New Zealand are roughly equivalent to the US. If you have a US$100K job in the US, the equivalent job in New Zealand will pay roughly NZ$100K*.

    At today’s exchange at a New Zealand dollar is 82.7 US cents. So there's a 17% pay cut right off the bat.

    However, this is only the beginning. The New Zealand government is going to take a very large bite out that income. The marginal federal income tax rate for an individual earning US$100K is 28%. In New Zealand people with NZ$100K incomes
    face a marginal rate of 33%, which kicks in at NZ$70K. The US federal income tax scheme also features a 33% rate, but you it is only paid by individuals with incomes greater than US$171,650.

    One of the interesting consequences of social democracy is that the definition of who is rich enough to pay penalty tax rates tends to grow very broad.

    The income tax burden is actually even higher than these numbers imply. The US tax code is riddled with credits, allowances, deductions and exemptions which mean that the effective marginal rate tends to be less than the published rate. By contrast, New Zealand’s tax code is a masterpiece of simplicity. When they say 33%, it pretty much means they’re going to take 33 cents from every dollar.

    Heavy income taxes are not the only issue. New Zealand also enjoys a European style Value Added Tax with the somewhat alarming rate of 15%. Not only is this rate higher than any sales tax you are likely to find in the US, it applies, due again to New Zealand’s admirably simple tax code, to pretty much everything except real estate and financial products.

    The New Zealand government also has great enthusiasm for Pigouvian taxes. Alcohol, cigarettes and gas are all heavily taxed. Americans tend to freak out when gas is above US$4 a gallon. In New Zealand it is currently around NZ$2 per liter (~NZ$8 per gallon), largely due to taxes.

    Even after paying all those taxes, what money you have left isn’t going to stretch very far. Stuff is just more expensive. The cost of all those taxes is built into the price of everything, as is the cost of shipping in pretty much all manufactured products from overseas. There is also a small market effect. The miniscule size of the New Zealand economy tends to limit the number of suppliers of any given good or service. This in turn limits price competition between suppliers.

    Overall, New Zealand offers an amazing lifestyle. However anyone moving there should expect to have much less purchasing power than they would in the US.

    * There are two important caveats to this rule. (1) There are a lot of $100K jobs in the US for which there simply aren’t equivalent opportunities in New Zealand. (2) This rule doesn’t apply for medical professionals. Socialized medicine makes for much lower medical salaries.

  9. Fly out for one of the big NetHuis to get a feel for the place.

  10. Christchurch varies - some gates you don't bother with security, others you do.

  11. That is a ridiculously interesting question. The benefits on both sides are large, so you could expect a no-pay equilibrium. But if one side benefits by a lot more than the other, then there could still be payment. Would be a fun micro honours exam question to set it up.

  12. A couple notes of minor disagreement:
    1. Income tax rates are high in part because education comes out of income tax rather than out of property tax. Consequently there are no state income taxes, no local income taxes, and local rates are pretty low (I pay about $2.2k/yr).
    2. Income tax also covers about as much health insurance as most people need. We pay $120/month top-up for private catastrophic coverage for the whole family. What you get for the money is less than you'd get in the states, but it's SO much cheaper.

    Otherwise, definitely agree that you're poorer by moving here. But liberty is worth something.

  13. Try the Malaghan institute, associate with Vic in Wellington

  14. Going to check it out. I have "evil plans" to get my company to do buch of business with NZ/OZ and learn about the biz scene that way.
    I also found couple of Kiwis running their startups in Boston right in the building I am in (we have 400 startups in 14 floors)

  15. When I was in the entertainment industry, we did deals like that. We called it co-promotion. Each side contributed to covering the costs and also split up the ad placement costs. Likely AirNZ took major portion of these costs.

  16. Not going to get into an argument with economists here :-) But, you end up paying one way or another. Here is how it looks where I live:

    Taxes: just Federal taxes are 28%-33% for most knowledge workers. Employee also pays 7.6% Social Security and Medicare tax (self-employed pay double). My state tax is 5.3%. Then cars also have annual excise tax based on how new they are (on tops of initial sales tax you pay). My state sales tax is 6.25%. If I owned (I chose to rent) a usual 2-bed/2-bath condo in where I live, I would be paying about $6000USD in realestate taxes (~1% of assessed value).
    What is important for me, since I work in startups and get equity - capital gains tax. This year I got a nice stock grant from my startup. We will unlikely to sell for a long time, but I already had to pay taxes on the shares that my be worth zero. Any stock trades I have made, depending on how long I have held it, 15%-35%.

    Health insurance - depends on how profitable the company is and how tough it is to get certain type of employees, but single employee costs ~$500USD per month and family ~$1500USD. Some companies cover 50%, so cover 75%. Very few will pick up full 100%. Co-pays per visit range $35USD to $100USD. GP you have to wait about 1-2 months to get to see, unless it is emergency. Specialists: 2-3 months.
    And that is in Boston - Meca of medical universities, hospitals, and health science companies.

    Child care: I realize I live in an expensive city, but daycare for my daughter will be $24K per year. If I wanted a nanny for her - $46K with all taxes figured in.

    Petrol - it is only 20%-33% of the cost operating a car, yet we focus so much on it. Yes, your gas may be $8USD/gal (we are sitting solid at $4+ here and it is unlikely to get cheaper), but we pay atrocious car insurance rates. Granted my two cars aren't cheap, still, I am paying $1500USD for middle of the way coverage, and that is only because I have stellar driving record (knock on wood). Plenty of my friend pay 3X 4X that after just 2 or 3 tickets. Our roads are also so beat up, due to no maintenance, that every couple of years you will be spending $2K+ to replace your suspension and blown out tire or two.

    VAT - I lived in Chicago - a lot of products got taxed above 15%. New York is not far. Where I live, sales tax is 6.25%.

    Alcohol - I make my own beers and distilling is legal in NZ :-) Last three beers I have made were above 18% ABV. Cider I am making right now is likely to hit 10%.

    But, that all said, if you want purely to make good money, that is what US is for. In my case, you start burning out from the pace. When you get to see your child with her eyes open for an hour each day, you start thinking what that money is really giving you...

  17. I got the official guidelines: any plane with maximium certificated passenger seating capacity of more than 90 seats has to be screened unless the Director of the Civil Aviation Authority of NZ determines that such screening is unnecessary in a particular case - this holds for domestic travel; all international travel has to be screened. So all the Turbo-Props in the AirNZ fleet are below the 90-seat threshold.