INSIGHTS

AUSTRALIA TO BLAME FOR MIGRATION BOOM

Mark Lister, 28 February 2017

Migration continues to break records, bringing with it a whole lot of positives as well as a similarly long list of challenges.

In the last year we’ve seen net migration hit an all-time-high of 71,000 people. That’s even stronger than the previous two years, which were also record-breaking. In the previous fifteen years migration averaged just below 11,000, so you could say it’s running several times the norm.

For what it’s worth, I blame the Aussies. While those arriving from Europe and Asia are definitely contributing to the trend, we can lay a fair amount of the blame firmly at the feet of Australia.

Traditionally, a whole lot of Kiwis have headed over the ditch every year. Since the late 1970s we’ve lost almost 20,000 people each year to the lucky country, on average. In the lead up to the GFC when the mining boom was in full swing, it was closer to 40,000 a year at one point.

But that’s all changed during the past few years and with the grass no longer any greener, people are staying put.

In the year to January, we actually gained 1,264 people from across the ditch, the highest level since 1984. Nearly two-thirds of the migrant arrivals from Australia were New Zealand citizens, so there are clearly a few expats coming home as well.

Australia is a much bigger country and it’s always offered attractive job prospects, particularly for blue-collar workers. Wages are higher and workers in many industries experience better conditions.

If their economy was in better shape, and their political backdrop had not resembled a game of musical chairs in recent years, those traditional drawcards might be more alluring. However, New Zealand looks stronger than Australia on most measures today, so we are a victim of our own success to some degree.

This dynamic is reflected in sharemarket returns during recent years. While shares in New Zealand and the United States have long surpassed their pre-GFC highs, the Australian market is still more than 15 per cent below its 2007 peak.

Strong migration is certainly doing plenty of good for our economy. An increasing population boosts activity, and many businesses (both large and small) will be seeing benefits from an increasing pool of customers.

While migration is partly to blame for minimal wage growth, workers arguably benefit from greater job security as businesses are in a stronger position.

There’s no shortage of corresponding negative spin-offs though. The housing problems are well documented, while the infrastructure limitations that started in Auckland seem to be spreading to other parts of the country.

Closing the borders probably isn’t the answer, but managing the numbers coming in seems fairly obvious, at least until Australia gets its act together.

This article was published in The New Zealand Herald on 28 February 2017.