By Bernard Hickey
A hole has just quietly opened up in our population and our economy.
It is a hole that should make home builders, shop keepers, economists, politicians and the elderly voters behind them very nervous.
It is a hole that could fill itself in or have to be filled artificially. But if this hole remains unfilled, New Zealand’s economy faces some ugly choices within the next 10 to 20 years.
Demography expert Professor Natalie Jackson from Waikato University identified this population hole at a symposium for Chief Financial Officers this week in Auckland.
She showed how a significant proportion of 15-19 year olds in 2006 have left the country in the last four years. Jackson displayed a bar chart showing how a chunk of the age group that should have flowed through unchanged from one era to the next has simply upped and left.
Many would say this is the normal process of young New Zealanders claiming their birth right to have an ‘Overseas Experience’ or OE in Australia, the UK, Europe, Asia or the United States. But it is something more than that.
The signs are many more are leaving than is usual and they are returning at a much reduced rate than in the past. The same bar chart showed only a small increase in the number of 25-29 year olds when measured four years later as 30-34 year olds. The next cohort up from 35-39 also shows a disturbing lack of returnees.
A whole generation of young New Zealanders appear to be voting with their feet.
Statistics on the proportion of New Zealand-born graduates are just as worrying. More than a quarter of New Zealand’s graduates live overseas now, which is almost 10 times the rate seen for Australian-born graduates.
Some optimists argue there’s not necessarily a problem.
They say that either the emigrees will return for New Zealand’s superior lifestyle when they are ready to have a family or we’ll be able to import fresh skilled migrants to fill the gap.
Increasingly, however, these emigrees are not returning. Many have established families and careers and households overseas and are reluctant to come back. Either the economics of higher wages overseas force them to stay, or local family ties are too strong to break. The high cost of housing in New Zealand’s biggest cities is also a disincentive, particularly now any property they are selling in Britain or America is worth much less because of housing price and currency slumps.
It is a particular issue for New Zealand’s young men. If they partner up with a British or Australian woman they are often convinced or choose to stay close to their partners’ families overseas when the key stage in the life cycle of having children comes around. The maternal grandmothers often exert a stronger pull than the paternal grandmothers.
If this hole remains unfilled then New Zealand faces a demographic crunch over the next 10-20 years as baby boomers retire and there is a lack of working age taxpayers to fund their national superannuation and public health care costs. The demographics of the retiring baby boom is bad enough already without this gap opening up in the generation who will have to pay.
Possible solutions
So what could be done to fill in the hole or ensure it fills back in naturally?
Firstly, family house prices in the big cities have to become more affordable to tempt back the family formers as they make that decision.
Secondly, the government should welcome back with open arms the partners picked up by New Zealanders in their travels, regardless of marital status. That way we get two for the price of one, so to speak.
Thirdly, we must strive to boost the number and income of high paid and interesting jobs in the big cities. This is the toughest task of all. It requires a fundamental shift in the productivity of our economy, which in turns requires deep structural changes in our physical and economic infrastructure.
Are we ready, willing and able to start filling the hole?
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