Migration To New Zealand Continues To Decline

More bad news for the NZ economy today with the release of the latest set of immigration figures.

Net migration has sunk to an 18 month low as more as more and more Kiwis leave for Australia.

This may be the first indication that the NZ government’s recent tinkering with the taxation system has done nothing to keep people in the country, raising the rate of GST to 15%  may have even hastened the exodus to Australia, which enjoys a 10% tax.

The latest set of figures is sure to be an embarrassment for the government, John Key pledged to help retain and attract back Kiwis to the country if he were elected. The recent unemployment figures (up to 6 % from 5.1% ) and economic growth (negative 1.65 %) were a disappointment too, though hardly unexpected.

The news broke this way:

“New Zealand’s net migration shrank to an 18-month low last month, suggesting the economic impetus provided by people choosing to live here may be abating.
A net 250 permanent and long-term migrants arrived last month, seasonally adjusted, the lowest since November 2008, according to Statistics New Zealand. Figures for April were revised down to 730 from 770.
Annual immigration slowed to 17,967 in the 12 months ended May 31, the fourth straight month that the annual number has declined, from 19,954 in the 12 months ended April 31.
“Net migration continues to moderate, and arguably at a slightly faster pace than we had expected,” said Philip Borkin, economist at Goldman Sachs JBWere. “Visitor arrivals growth is also looking soft relative to our forecasts, with weak arrivals from the UK and Europe, in particular, appearing to be the major drivers.”

Departures for Australia rose to 1,693 in May, from 1,241 in the same month last year, for an annual exodus of 15,200 across the Tasman…” source

Looks like our previous prediction that migration across the Tasman was about to soar has been proved right.

Read some of our previous blog posts:

• Trans Tasman migration to soar (May 2010)- “Australia’s recent budget announcement that employers’ pension contributions will be increased from 9 to 12% and corporate tax is to be cut  from 30 to 28% is set to spark off an increase in the already rising rate of migration of Kiwis across the Tasman Sea. Calls have already started for New Zealand to match the deal before it’s too late. New Zealand is soon to be burdened with changes in the taxation of investment property and there is a proposal to increase GST to 15%. (something that will cause hardship for a lot of people because GST is placed on food) A relatively strong dollar, reducing the purchasing power of migrants and visitors, is also putting further strain on businesses…”

• Kiwis leaving for Australia at 12 month high (April 2010) – “Trans Tasman migration has just hit a 12 month high, with Kiwis leaving in droves looking for a better life in Australia. See NZ  emigration growth continues to slow, trans Tasman departures at 12 month high…”

• Net migration falling, permanent departures up 7.2% (March 2010) – ” The ASB says that net migration has fallen from its peak and could slow by more than half to around 10,000 people a  year. It seems that employment growth and a more favorable outlook across the Tasman will continue to attract Kiwis out of New Zealand. These figures will have an impact on a housing market already feeling the burden of forthcoming changes in the taxation of investment property, a proposal to increase GST to 15%  and a relatively strong dollar reducing the purchasing power of migrants…”

Today's posts - click here

Net Migration Falling, Permanent Departures Up 7.2%.

 We came across this press release on Voxy.com. The ASB says that net migration has fallen from its peak and could slow by more than half to around 10,000 people a  year. It seems that employment growth and a more favorable outlook across the Tasman will continue to attract Kiwis out of New Zealand.

These figures will have an impact on a housing market already feeling the burden of forthcoming changes in taxation of investment property, a proposal to increase GST to 15%  and a relatively strong dollar reducing the purchasing power of migrants.

"Net migration continues at a firm pace, recording net 1,060 new migrants over February, although showing some sign of softening. The annual pace of inflow is now easing from its peak, recording 21,600 new migrants over the year to February, compared to 22,600 in January. The slowing pace of migration comes as permanent departures have started to recover, rising 7.2% in February. This pick up has been underpinned by a recovery in departures to Australia, a trend we expect to continue over 2010. The Australian economy has fared comparatively well through the global downturn, managing to avoid recession. Employment growth there over the past 6 months has been robust, in contrast to rising unemployment in NZ. The more favorable economic outlook will continue to draw New Zealanders across the Tasman: we expect the monthly pace of departures will recover from 5,250 per month currently to 6,500. The annual pace of net migration is likely to slow from 22,000 per year, to around 10,000 per year.

Short-term visitor arrivals fell 1.9% in January. Nonetheless, the current trend level in visitor arrivals remains firm. Australian visitor numbers remain steady, after strong growth over the second half of 2010. We expect Australian visitor arrivals to remain firm, as the lower NZD/AUD makes New Zealand a relatively cheap alternative for Australian holiday makers. Encouragingly, there also appears to be an improvement in Asian visitor arrivals over the past few months. The increased interest has been broad based, with a rise in Japanese, Korean and Chinese numbers. However, StatsNZ have noted extra caution should be applied to interpreting Chinese visitor arrivals, as the typical seasonal pattern has been disrupted by the change in timing of Chinese New Year.

Implications

We expect the pace of net migration to slow over 2010, and the recent pick up in departures to Australia confirm this trend is developing. The slower pace of net migration will remove some of the support to the housing market during the year.

The ongoing strength in visitor arrivals has been encouraging, particularly the recent increase in arrivals from Asia. Meanwhile, the lower NZD/AUD is helping NZ benefit from Australia's good fortune, increasing NZ's attractiveness as a holiday destination. We expect that strong arrivals from Australia will continue as we head into the ski season."

What these migration figures don't show are the age profiles of the people coming to and leaving New Zealand and that a brain drain is underway again.

In the opinion of one prominent economist in Singapore last week  New Zealand's brain drain should be plugged with opportunity. Yuwa Hedrick-Wong, MasterCard Worldwide economic adviser said:

"The exodus of the best and brightest to Australia is an Achilles heel for New Zealand business, and personal and business tax breaks may be part of the answer, according to a visiting economist.

MasterCard Worldwide economic adviser Yuwa Hedrick-Wong said the persistent trend of migration to Australia of more than 20,000 people a year "seriously constrains entrepreneurial potential" here.

Speaking in Wellington, Singapore-based Dr Hedrick-Wong said those leaving for Australia tended to be "younger and better educated" people typically with a greater risk-taking attitude.

"They want to conquer the world," he said, but they should be able to do that from New Zealand, rather than having to leave.

"This is a damaging drain on the intellectual and entrepreneurial gene pool of the country," he said.

New Zealand could only reach its true economic potential if it stopped the "haemorrhaging of talent", he said.

Despite economic reforms in the past two decades and being an easy country in which to do business, New Zealand was still losing talent, Dr Hedrick-Wong said.

New Zealand should consider personal and business tax breaks as personal incentives for people to stay, support for business incubators and encouraging greater investment in areas such as the services sectors to create more job opportunities.

"If you are successful in getting those people back, the economic benefit is just huge," he said..."

In June of last year Bernard Hickey was interviewed on TVNZ. He advised Generation X & Y to leave NZ as soon as possible because they are destined to live in two retirement islands and will have to visit their grandchildren overseas. Read our post about it here. He concluded by saying:

"Your only choice is to migrate as soon as the global economy starts recovering and the jobs become available again.
This will be the best revenge you can get. They (the baby boomers) will have to watch their grandchildren grow up by email and the occasional flying visit.
I'm not kidding. Leave ASAP."

It looks like they are!

See also: "New Zealand's Aging Population and the Great Kiwi Brain Drain" written in December 2008. At that time John Key said  

"One of the really worrying things is one in four people who have been to university have now left New Zealand and live overseas. That is the worst brain drain of any country in the developed world."

Today's posts - click here

Gen X and Y Advised To Leave New Zealand ASAP

TVNZ Breakfast show carried an interview recently with Interest.co.nz's Bernard Hickey in which he advised Generations X and Y to leave New Zealand because they are destined to live in two retirement islands and will have to visit their grandchildren overseas.

This article may be of interest to any migrants considering New Zealand as a 'good place to raise children'

Readers may also wish to look at some other blog posts "would you like a future with that? the burgerization of McZealand" and "McJobs government sentences kiwi kids to a dead end future" They touch-on cuts in polytechnic education and government's plans to recuit 7,000 new staff for international fast food giant McDonald's, neither of which will do much to improve the low wage economy or career prospects for young people.

Our regular readers may also remember Luthien's post "New Zealand's ageing population and the great Kiwi brain drain". Since the 1970s New Zealand has experienced one of the sharpest drops in the OECD in the number of young people within the working population - the fourth largest fall behind Korea, Canada and The Netherlands.

Hickey's comments were published in his blog and in the NZ Herald:

"Generations X (30-45) and Y (15-30) need to wake up and see the massive inter-generational theft happening before their eyes. Baby-boomers need to be shocked into knowing they are being shortsighted and will end up living in two retirement islands and having to visit their grandchildren overseas. Bernard Hickey writes Gen X and Y a letter. They can imagine it is a long email or text message.

Dear Generations X and Y

Did you realize the baby boomers running the country have just decided to make you poorer for decades to come so they can retire early with all the assets and high incomes?

Did you realise your taxes are going to rise and you won't be able to afford your own home? Did you know the baby-boomers are refusing to save their own money now for their retirements so they can live off your hard work?

"you're wasting your time trying to build a family and life in New Zealand"

Did you know you will be slaving away paying high taxes in your 40s and 50s to pay for their pensions and health care? Did you know you're wasting your time trying to build a family and life in New Zealand? Did you realise you have huge student loans while they received free tertiary education?

Do you realise they voted themselves Working for Families so they could have children and afford to pay the high mortgage costs of their borrowing to buy property? Do you know this cannot be afforded in the next 20-30 years?

You didn't? Let me explain.

There were two big decisions in last month's budget that guaranteed this intergenerational transfer of wealth, but they are not the only factor.

Prime Minister John Key and Finance Minister chose to abandon contributions to the New Zealand Superannuation Fund (the Cullen Fund) for the foreseeable future. Yet they also guaranteed their fellow baby-boomers (they were both born in 1961) they would keep their pensions at 66 per cent of the average wage and could still retire at the age of 65. John Key has even promised to resign if he breaks this promise.

"X and Y will never be able to afford to buy a house"

There is another unwritten rule that no baby-boomer politician will break and that will guarantee many in generations X and Y will never be able to afford to buy a house. John Key again ruled out this month that his government would ever introduce a capital gains or land tax. Any change to the massive tax break in favour of residential property investment would immediately reduce the wealth of baby boomers who were able to buy cheaply in the 1990s and early 2000s. They will never give this up voluntarily and they will continue to vote for politicians who support that view.

So the two budget decisions, the unwritten rule on capital gains/land taxes and the decade of slow growth forecast by Treasury will combine to cement in a massive transfer of wealth. There are other forces at work here. Our banks are congenitally conservative about lending. They will lend up to 100 per cent against the value of land and buildings, but are reluctant to lend to back the business ideas and entrepreneurial vigour of Generations X and Y.

The dream of baby boomers is to keep buying rental properties and renting them out to generations X and Y. They can even afford to make losses on them because they can claim the tax losses against their personal incomes and make their money back with capital gains. That baby boomer dream was looking wobbly earlier this year when prices fell 10 per cent from their peak. A smidgen of light appeared for Generations X and Y. But it seems those hopes are now dashed because the banks are back lending to the baby boomers, who are even more convinced now that property is their only hope because of the collapse of finance companies and the stock market.

"Steadily rising taxes over the next 30 years"

Now you can look forward to steadily rising taxes over the next 30 years, particularly from 2020 onwards, to pay for the increased costs of an expensive universal pay-as-you-go pension scheme and much higher universal 'free' health care costs. You will pay as they go into the retirement homes.

You could try to overturn the baby boomer bias in our political system by voting them out, but you'll fail because there are too many of them and you don't vote much.

Your only choice is to migrate as soon as the global economy starts recovering and the jobs become available again.

This will be the best revenge you can get. They will have to watch their grandchildren grow up by email and the occasional flying visit.

I'm not kidding. Leave ASAP."

For today's posts see: latest posts

New Zealand's Aging Population and the Great Kiwi Brain Drain

According to data recently released by Statistics New Zealand the number of families is predicted to rise to 1.44 million by 2031, an increase of 269,000 (23 percent) from an estimated 1.17 million families at 30 June 2006.

However, the majority of those families will be' empty nesters', i.e. couples aged 50 and over.

In a report issued in October of last year Statistics NZ projected that the number people aged 65 years and older will exceed 1 million by the late 2020s, which is double the 2006 figure. By that time the numbers of over 65s will be greater than the number of under 15 year olds.

Since the mid 1970s New Zealand has experienced one of the sharpest drops in the OECD in the number of young people within the working population - the fourth largest fall behind Korea, Canada and The Netherlands.

And because aging populations affect ethnic groups in groups in different ways the ethnic composition of the country is expected to change. By the early 2020s the Maori, Pacifica and Asian share of the youth population are projected to rise whilst the numbers of European youth will fall by 10%.

Net migration from New Zealand to Australia is now at a 30 year high, and 1 in 4 New Zealand graduates work abroad.

Prime Minister John Key has acknowledged that the country's Brain Drain is the worst in the developed world. He said:

"the numbers have to be slowed down, especially because young people are fleeing to Australia. He says the worst departure figures since records began are a reflection of our low wage problem."


To address these problems National has proposed a raft of new measures:

"1. Retaining Kiwis & Attracting More Home
Ensure tax, regulatory, and infrastructure policies make returning home attractive for highly skilled expat Kiwis. Require Immigration NZ to initiate a one-stop-shop approach to servicing the needs of returning New Zealanders.
2. Meeting Our Skills Needs
Streamline employer accreditation:
• Streamline proceedures for qualifying employers to be “recognised“ or “accredited” to recruit internationally.
• Make employment performance count more towards the granting of residence.
• Require employers who recruit offshore to provide a bond. Boost monitoring and remove accreditation/recognition from employers if policies are breached.
Better meet demand for seasonal skills:
• Retain the RSE Scheme for Pacific Nations. Make it easier to hire seasonal workers outside the scheme where it is not meeting employer’s needs.
• Introduce temporary work visas for legal visitors who have a guaranteed offer of seasonal work.
Access higher-level skills by introducing a Silver Fern Visa for people with recognised tertiary qualifications.
This visa will enable holders to:
• Undertake temporary work while seeking highlypaid permanent employment.
• Obtain a 24-month work visa once they have gained permanent employment.
• Apply for permanent residence (once on the 24- month work visa) through the Work-to-Residence or Skilled Migrant provisions.
3. Business and Retired Immigrants
• Set realistic requirements for Business Migrants in capital, language skills, and investment proposals.
Focus on job creation and export earnings.
• Establish a Retirement Visa for high net-worth immigrants who indemnify New Zealand from all health, welfare, and superannuation costs.
4. A World-Class Immigration Service
• Review Immigration NZ to ensure there are clear lines of accountability. Ensure fairness and transparency in its processes.
• Explore the establishment of a stand-alone Department of Immigration and Citizenship with no increase in bureaucrats.
• Strengthen settlement services by establishing a robust evaluation process to ensure effectiveness."

It's worrying to see a new Retirement Visa listed there as it will do nothing to address the problem NZ has with its ageing population, it will encourage more people to see New Zealand as a retirement haven.

Neither is there any mention of how National intends to deal with NZ's 'low wage problem.' (The cause of the brain drain according to Key) That is something that is going to be harder to get to grips with as the country's recession deepens.