Welcome to the new New Zealand

Distinguished Professor Paul Spoonley
Welcome to the new New Zealand

Distinguished Professor Paul Spoonley says there hasn’t been a strategic government population policy since the 1970s and, since that time, New Zealand has undergone dramatic demographic change with an ageing population, falling birth rates and rapidly increasing immigration.

As part of a series of forums on the implications of New Zealand’s latest population trends hosted by Massey University and Westpac, Professor Spoonley wrote about the new New Zealand about to emerge. Here is part 1 of his findings courtesy of Massey University and the New Zealand Herald.

 

New Zealand is in the middle of a demographic transformation that will profoundly change the way we live and work, as well as our sense of cultural identity. Our population is becoming dramatically more diverse, with more regional differences and a very different age profile.

There are already 600,000 New Zealanders over the age of 65 and this will double in size by 2031. Our fertility is destined to drop below replacement level in coming decades. And population growth and decline is playing out in very different ways in New Zealand’s cities and regions, which will have significant implications for service provision and economic vitality.

Since emerging from the shadow of the Global Financial Crisis a year ago, our immigration flows have changed significantly. The latest figures show that immigration to New Zealand has reached an historic high, with the two largest groups of arrivals coming from China and India, rather than the UK and Europe.

These trends are transforming our world. The implications are substantial, especially for labour supply, the allocation of resources and the provision of services in the increasingly diverse country that is 21st century New Zealand.

 

The arrival of superdiversity

At the height of the Global Financial Crisis 53,800 people left New Zealand for Australia in a single year, while those arriving dropped to just 83,000. But 103,000 permanent and long-term residents have come to our shores in the last 12 months – a figure we have never seen before.

This trend is putting New Zealand into new territory. It looks like we will start 2015 with a net immigration gain (the number of arrivals less departures) of 45,000 people for the year – another historic high.

And it’s not just the number of immigrants that’s changing. The composition of these flows signals a shift in the countries that we are exchanging goods and people with. Of the net immigration gain in 2013, 75% came from China, India and the UK (in that order) with another 20% arriving from the Philippines and Germany. This shift began after 2000 but has become more pronounced in the last four to five years.

The 2013 census confirmed that more than a quarter of New Zealanders were born in another country. The Auckland figure was 40% – or more than 500,000 people.

In coming years, the European/Pakeha population will decline as a percentage of the total population. Maori will continue to grow in size but remain about the same percentage, while Pasifika communities will become a slightly larger part of the New Zealand community.

But it is the Asian population that will grow the most. Already one-quarter of Aucklanders identify with an Asian ethnicity. These communities are growing three or four times faster than any other. By the mid-2020s, the Asian population of New Zealand will overtake the Maori population in size.

New Zealand’s past reflects its colonial connections with the UK, but the future offers very different possibilities. Immigration and trade now connects New Zealand to Asia in much more explicit ways and New Zealand is beginning to embrace its location in the Asia-Pacific region. With the exception of some high profile land sales to Chinese investors, this geo-political realignment has been positively viewed.

Since 2000, public opinion polls show that the attitudes of New Zealanders towards Asian immigration has trended positively. We know that contact is important in creating this view and more and more non-Asian New Zealanders now have contact with these new communities, especially in our education system. Social cohesion, or the lack of it, is not the issue it is in other countries – so far.

 

Auckland versus the rest

Auckland is expected to provide 60% of New Zealand’s population growth in the next two decades and many of the jobs will be created there. And the Auckland story provides a stark contrast with some other regions.

The number of people not in education, employment or training (NEETs) is lowest in Auckland, Canterbury and Otago, and highest in Northland, Hawke’s Bay, the East Coast and the Bay of Plenty. NEETs are most likely to involve Maori, young mothers and those who leave school without qualifications.

Auckland is also home to 60% of New Zealand’s immigrants and has a significant net migration gain – along with Canterbury and Otago – while all other regions experienced a net migration loss between 2006 and 2013.

These differences are reflected in the fact that Auckland has the highest annual average household income, and almost a third of households earn $100,000 or more. In a region like Hawke’s Bay, the average annual household income is $74,300 and only 15.7% earn more than $100,000.

By 2031, the country should reach five million, with two million of those residents living in Auckland. Christchurch will retain its position as the second largest city, and as a result of the rebuild it should become more ethnically diverse. But forecasting the city’s future population is more difficult because of the unusual nature of the disaster and what to expect.

 

Where are the jobs – or the workers?

A modern economy is driven by the growth of innovation and the service sector. Skilled, educated people – and immigrants – are associated with both, and co-location is important.

The distribution of skills and the nature of labour supply is changing significantly as our demography changes. These trends have substantial implications for business in New Zealand. Do our employers fully understand what this means for their future labour supply, client base or markets? And skills are at a premium –we discovered this in the 2000-2008 period and it is an issue we are encountering once again.

This is a challenge for many regions where the labour market is thin. There are a limited number of companies that employ more than a 100 people and there are limited options for skilled, highly qualified workers and limited local R&D activity. The lifestyle is attractive, but where are the jobs?  

In the “human capital century”, Auckland has a number of advantages that means it is likely to grow to be home to about 40% of the country’s population. Many other regions will see population decline, especially given constrained job markets and ageing populations.

This is not to say that they will not be important contributors to the national economy, especially as primary producers. But their challenge will be to attract immigrants, to retain workers and firms and to grow educational and employment options.

 

To be continued...

Come back next week for part 2 of Paul’s findings where he talks about declining birth rates and the ageing population.

Courtesy of Massey University and the New Zealand Herald

 

Paul Spoonley

Distinguished Professor Spoonley is one of New Zealand's leading academics and a Fellow of the Royal Society of New Zealand.

He has led numerous externally funded research programmes, written or edited 25 books, and is a regular commentator in the news media.

He was awarded the Royal Society of New Zealand Science and Technology medal in 2009 in recognition of his academic scholarship, leadership and public contribution to cultural understanding and in 2011, his contribution to Sociology was acknowledged with the Sociological Association of Aotearoa New Zealand's scholarship for exceptional service to New Zealand sociology.

In 2013, he was given the title of Distinguished Professor, Massey University's highest academic title.

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