Bernard Hickey: Lost generation timebomb

A hole has quietly opened up in our population and economy. Photo / Thinkstock

A hole has quietly opened up in our population and economy. That hole should make home builders, shopkeepers, economists, politicians and elderly voters very nervous.

If it remains New Zealand's economy faces some ugly choices within the next 10 to 20 years.

Demography expert Professor Natalie Jackson from Waikato University identified this population gap at a symposium for chief financial officers this week in Auckland.

She showed how a significant proportion of those aged 15 to 19 in 2006 had left the country in the past four years.

Jackson displayed a bar chart showing how a chunk of the age group that should have flowed through unchanged from one era to the next has simply upped and left.

The signs are many more are leaving than is usual and they are returning at a much reduced rate than in the past.

The same bar chart showed only a small increase in the number of 25-29-year-olds when measured four years later as 30-34-year-olds. The next cohort up from 35-39 also shows a disturbing lack of returnees.

A generation of young New Zealanders appear to be voting with their feet.

Statistics on the proportion of New Zealand-born graduates are just as worrying. More than a quarter of our graduates now live overseas, almost 10 times the rate for Australian-born graduates.

Increasingly, these emigrees are not returning. Many have established careers and households overseas. Either the economics of higher wages overseas force them to stay, or local family ties are too strong to break. The high cost of housing in New Zealand's biggest cities is also a disincentive.

If this hole remains unfilled New Zealand faces a demographic crunch over the next 10 to 20 years as baby boomers retire.

So what could be done to fill in the hole?

First, family house prices in the big cities have to become more affordable.

Secondly, the Government should welcome back with open arms the partners picked up by New Zealanders in their travels, regardless of marital status. That way we get two for the price of one.

Thirdly, we must strive to boost the number of highly paid and interesting jobs in the big cities. This requires a fundamental shift in the productivity of our economy, which requires deep structural changes in our physical and economic infrastructure.