Tuesday, March 21, 2006

Simon Collins: To stay or go to Australia - it's all down to money

If you were single and were suddenly made redundant, would you stay in New Zealand?

That's the question that electrician Grahame Boyd faced when the former Ford steel-alloy wheel plant in Wiri, now owned by Ion, said last year that it would close next month.

The answer was easy. He took a job as an electrician on the construction site for the new Blackwater coal mine 200km west of Rockhampton - and doubled what he earned at Ion.

"I looked at my opportunities in Australia and New Zealand at my age, 54, and even though there was a trade shortage in New Zealand I got this. Once you're over 50 you are consigned to the scrapheap [in NZ]," he says.

"In Australia I didn't get that feeling at all. I was told that age equals experience and that's exactly what Australian industry was looking for."

The explanation for the broader Kiwi exodus to Australia is just as simple. It's the money. Not everyone can double their pay like Mr Boyd, but on average Australia's real income per person is 32 per cent higher than ours.

As the ratio of New Zealand to Australian incomes slid from 104 per cent in 1966 down to a low of 73 per cent in 1999, before recovering slightly to 76 per cent, so transtasman migration switched from a slight net inflow in the early 1960s to outflows in all but five of the past 38 years.

At first migration swung wildly from small inflows when Australian economic growth faltered to net outflows of about 30,000 a year in 1978-79 and in 1988-89, when oil shocks and policy-induced recessions in New Zealand coincided with stronger growth in Australia.

That pattern has changed since 1991, the last year when economic output dropped in Australia. New Zealand's output has grown faster than Australia's in nine of the 14 years since then - yet our net migration to Australia has steadily widened, apart from a blip caused by the fear of terrorism after the Bali bombing in 2002.

This time, says Auckland University economist Sholeh Maani, we may be settling into a long-term outflow to our larger neighbour.

"If both economies are growing, it's more of a pull factor if economically the returns to our work are higher over there," she says. "I think it will be long-term if salaries and earnings for the same education level continue to be higher in Australia."

Of course money is never the sole factor in migration. Young people may leave to escape from their parents and see the world; the middle-aged may flee from broken marriages; the elderly may follow their children - and the sun.

Wellington economist Arthur Grimes says New Zealanders now behave almost as if this country was just another state of Australia.

"It's not too surprising that people go to the Big Smoke, just as they go from Te Kuiti to Auckland," he says.

New Zealand's incomes per head are lower than seven of the eight Australian states and territories, but are slightly higher than Tasmania's and only just below South Australia's.

In the decade to 2004, New Zealand lost an average of 0.4 per cent of its population each year to Australian states. In the same period, Tasmania also lost a net 0.4 per cent of its people each year to other states, New South Wales lost 0.3 per cent a year and South Australia 0.2 per cent.

The only winners were booming Queensland, which gained 0.7 per cent of its population each year from other states, and Western Australia, which gained less than 0.1 per cent a year.

In 2001, 35 per cent of NZ-born people in Australia were in Queensland, followed by 30 per cent in New South Wales.

The director of Waikato University's Population Studies Centre, Professor Jacques Poot, says cheap air fares have made it much easier to cross the Tasman.

"It needs less of an incentive to move than it used to, because they can always change their minds, and the cost of keeping up with friends and relatives is less."

A masters student at Waikato, Lynda Sanderson, has tracked 80,074 transtasman travellers who said they were leaving NZ permanently between 1999 and 2002. She found that 33 per cent had left Australia by last June, and 87 per cent of those had come back.

Dr Maani believes the Government's promise last July to scrap interest on student loans for those who stay in New Zealand may reduce the incentive to leave.

There is some evidence that the exodus may indeed be slowing. The net loss to Australia widened by 4354 from 15,547 in the year to last January to 19,901 in the year to July, but by only a further 1538 people to 21,439 in the year to this January.

On the other hand, the kiwi dollar's 7.4 per cent drop against the Australian dollar so far this year has made Australian wages more attractive, and the Reserve Bank forecasts that NZ growth will drop to only 2 per cent a year for the next three years, compared with 3.3 per cent in Australia.


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