Australian Financial Review, 20 January 2007
By Mark Lawson
Australians willing to sacrifice lifestyle can get ahead by going overseas to work, writes Mark Lawson.
Saving money is hard, slow work at any time but the accumulation process can be accelerated by moving overseas for a few years, provided you do some research and are prepared for lifestyle sacrifices.
With a little effort, a skilled white-collar worker with several years of experience can pick up a decent job at 20 to 30 per cent more salary in destinations such as Hong Kong and Singapore, where income taxes are about 15 per cent.
Then there are the Channel Islands for lawyers with the right experience (tax is a flat 20 per cent) if you don't mind living in a small island community, and Dubai (no income tax and salaries paid in US dollars) if you don't mind the heat.
Salaries for lawyers experienced in trusts and finance in the Cayman Islands and Bermuda are also very good.
But before you start counting salary, you should take time to study costs. Children usually have to be sent to private schools; Western-style accommodation can cost a lot in Asian cities and be even more expensive in the island destinations. Lifestyle may also be more restricted.
However, those who are prepared to trade off lifestyle benefits for a few years, and can earn enough to offset the additional costs, may be able to get ahead.
Graham Hollebon, a director of Michael Page International who recently finished a five-year posting in Singapore for Michael Page, says that in Singapore he was saving money at three times the rate at which he now saves in Australia.
However, Hollebon also notes he has moved himself and his family back to Australia in part because of the easier climate.
The Weekend AFR spoke to Hollebon on a particularly fine day in Sydney.
"Look at the blue skies. This is real beach weather. A lot of people leave Australia for a few years to earn money but they all come back because of the lifestyle," he says.
Both official statistics and anecdotal evidence suggest Australians are increasingly looking for jobs overseas, although they may be as likely to move for the cultural experience or a step up in their career, as they are to save money.
Australian Bureau of Statistics figures show that the number of Australians departing long term (more than one year) has increased by 16.5 per cent over two years to reach 98,110 in 2005-06.
Spencer Wilcox, a director of HiFX Australia, which specialises in helping Australians with the financial problems of moving overseas for extended periods, says he has noticed a sharp increase in business in recent years.
He says the shifts have mainly been to London, the US and the Asian destinations of Japan, Hong Kong and Singapore.
Those moving to London seem to do so for "cultural" reasons and the access to Europe, rather than higher salaries.
But the moves to the US, Hong Kong and Singapore seem to be more about higher salaries, Wilcox says.
Moving to the US, where management skills are in high demand, has recently been made easier by the US-Australia free-trade agreement. As part of that agreement, the US agreed to an annual quota of 10,500 visas for Australian citizens who want to work in America. To gain one of these E-3 visas, as they are known, the applicant must have a job lined up in the US but there are few other restrictions. Despite the apparent ease in obtaining an E-3 visa, only a part of the quota was used last year.
For those looking at moving overseas, the main factors to take into account are tax, including any hidden extras, the cost of housing and the cost of schooling for any children.
That means hunting for websites to do some research or, better yet, talking to someone who has lived in the destination.
One destination where the costs are well known is Singapore. In that city, a Western-style three-bedroom flat can cost $S4000-$S6000 a month ($3280-$4900), and private school fees are $S10,000 to $S12,000 a year per child.
On the plus side, nannies and domestic help are cheap, for those who want to go down that route. A Filipino maid will cost $S700-$S800 a month, of which the maid herself gets only half. The rest is a levy imposed by the government.
Eating out to Western standards can be very expensive, but a bowl of noodles costs only a few dollars, for those who know where to go. Accommodation costs in Hong Kong seem to be much higher than in Singapore.
A website run by relocation consultants Proway lists a Western-standard three-bedroom apartment for $HK40,000 ($6560) a month in a section of Kowloon just across the strait from Hong Kong proper. The site also lists flats for just $HK14,000 a month but, to judge from the photographs on the site, the cheaper rent comes with a considerable lifestyle sacrifice. Executives moving to those locations will have to ensure their salary increase will keep them ahead of costs, and that they are aware of all the taxes.
Australians moving to the US, for example, may be impressed by the US federal income tax rates only to then find out, too late, that in the US, state and even city governments can impose income taxes.