Why are Kiwis flying the coop?

And can the government stem the flow?

Stats NZ has reported a record net migration loss of 52,500 New Zealand citizens in the year ended March 2024. That means for every migrant arrival of a New Zealand citizen there were three migrant departures.

It’s more than made up for, on the other hand, by new arrivals primarily from India, the Philippines and China. There was an overall net migration gain of 111,100 in the March 2024 year. Taken all together, migration has been adding the equivalent of an ethnically diverse city per annum, while losing talented young Kiwis whom taxpayers have paid to educate and train.

I spoke to BFM 89.9 Malaysian Business Station in Kuala Lumpur about this.

It’s easy to understand why Kiwis fly, as incomes in Australia may be a quarter higher or more – and it doesn’t rain so much there. Australia has a similar in-and-out migration pattern, but they’re the net beneficiary of cross-Tasman migration, as they gain skilled workers. And they deport some of the unwanted ones.

Underlying this is long-term low productivity growth in the New Zealand economy compared to other OECD countries, particularly Australia.

Australian firms are investing more in capital, and getting more out of workers as a result. When asked once about why NZ businesses don’t invest as much, economist Prof Tim Hazeldine replied candidly, “I think it’s because we don’t really want to”. Kiwi business-people apparently lack the drive and grunt of the Aussies.

There’s that old adage that, once a Kiwi entrepreneur has acquired the three B’s (boat, bach and BMW), they’ll choose lifestyle over growth – beach shorts over business attire. After all, there’s more to life than making money.

That’s the stereotype, but, if there’s any truth in it, it’s not clear what a government can do about that. If the PM were to admonish business owners to change their attitude, it’s unlikely to be well received. Given that their promise was nonetheless “to grow the economy”, what are Luxon & Co doing about it?

Regarding higher education and training, research and development and innovation, they’ve set up a couple of committees. Some worthy notables have been appointed, colourful reports will be produced, and good ideas, if they find any, will then die a natural death in downtown Wellington.

The other bright idea is the fast-track legislation that will allow a coterie of cabinet ministers to cut through the red tape and get some runs on the board. If I were a CEO looking to fast-track my project, I’d be wary, though. The risks arising from conflict-of-interests, judicial reviews and reputational damage could outweigh the benefits for one’s own enterprise. The way that the bill is being inundated with submissions is a warning, as public scrutiny of those involved will be intense. Mining industry leaders meeting over dinner with minister Shane Jones have already been outed by David Williams for Newsroom. And the bill is still only in the select-committee stage!

The other major plank that the government is adopting (or resuscitating from the Key years) is social investment. This will include another crack at “social bonds”, aka “social impact bonds”. These are partnership deals in which private investors finance social services and then receive return on their investments from the state if they achieve “agreed results”. The plan is to get better results than government agencies would. That may save the government some money in social services budget-lines, if it works, but the model failed back in 2016. Richard Prebble, writing for Wednesday’s Herald, still thinks they’re great, however. More research is needed, as always, and I may do the homework for you and report back.

For the time being, it’s obvious why young – or even middle-aged – Kiwis would think about going to Australia. There’ll be a small tax-cut in the Budget. But, aside from those crumbs, their unambitious employers and lacklustre government aren’t giving them reasons to stay.