How NZ comings and goings add up to grave loss

By Brian Gaynor

Investment

New Zealand is a great place to visit but less attractive to live in.

At least, that is the conclusion to be drawn from the latest migration and tourism statistics which show a strong rise in inbound tourist numbers but a further increase in the permanent and long-term net migration outflow.

The migration figures are an important economic indicator because there is a strong historical relationship between long-term migration and GDP growth.

For example, since 1969:

* The New Zealand economy has grown by an average 4.1 per cent a year in the eight years when the net migration gain exceeded 10,000.

* Economic growth has averaged only 0.7 per cent in the 11 years when the net migration loss has surpassed 10,000.

New Zealand has struggled to hold on to its best and brightest over the past three decades. The country has experienced a net migration loss in 15 of the past 30 years and a total migration deficit of 57,200 over the period.

In contrast, more than 50 consecutive years of net inward migration into Australia have contributed to the country's strong population growth. In 1997-98 net migration contributed 47 per cent of Australia's population growth while it added only 8 per cent to this country's population.

Since 1969 Australia's population has grown by 6.6 million or 54 per cent while New Zealand's population has risen only 1 million or 37 per cent. The higher population growth across the Tasman has been a contributing factor to the superior performance of the Australian economy.

Migration statistics released this week confirm that the net migration gains during the mid-1990s have been reversed through a combination of falling immigration and a rise in long-term departures. The permanent migration loss for the June 1999 year was 11,370 compared with a small gain of 450 in the June 1998 year.

Net migration inflow peaked at 29,800 in the year ended March 31, 1996.

The decline in permanent arrivals accounts for 58 per cent of the turnaround since then and a rise in the number of New Zealanders departing on a long-term basis is responsible for the remaining 42 per cent.

Long-term arrivals have declined from 80,300 to 56,300 in the past 3\DC years. The drop in immigration has been evenly spread although there has been a notable decline in permanent arrivals from Australia, Britain and Asia.

The number of residents leaving New Zealand on a long-term basis has risen from 50,500 to 67,600 over the same period and Australia is the preferred destination by a wide margin. More than 47 per cent of departing New Zealanders went to Australia in the June 1999 year. Our neighbour accounted for 56 per cent of the 17,200 increase in long-term departures since 1995-96.

In May and June 5200 departed for Australia on a permanent basis, an increase of 23 per cent over the same two months in 1998.

Figures produced by the Australian Bureau of Statistics also confirm that a huge number of New Zealanders have crossed the Tasman over the past 30 years.

In 1971 only 80,500 New Zealanders were living in Australia and they were clearly outnumbered by the British, Irish, Italians, Yugoslavs, Greeks, Germans and Dutch. In 1996 New Zealanders were the second largest foreign group in Australia - behind only Britain and Ireland - with 297,800 residents. In the same year there were only 54,700 Australians living in New Zealand.

The relationship between migration outflow and the performance of the New Zealand economy is a classic chicken and egg dilemma. It is difficult to know whether New Zealanders are leaving because the economy is stagnant or the economy is stagnant because they are leaving.

One suspects that they are departing because employment and income prospects are brighter in Australia. This exacerbates the situation on this side of the Tasman because a net migration loss has a negative impact on economic activity.

One way to solve the problem would be to have a more aggressive immigration programme. The difficulty with this is that the country has no regional development policy which promotes industry and employment outside the main centres.

Therefore migrants have concentrated in the main centres and put enormous pressure on their infrastructure.

Auckland bears the brunt of the strain. According to Statistics New Zealand, the region has 25 per cent of the country's population, yet 48 per cent of overseas-born people living in New Zealand are resident in the area. Auckland is home to 71 per cent of immigrants born in the Pacific Islands and more than 50 per cent of those born in Asia, the Middle East and North Africa.

More importantly, well over 50 per cent of recent long-term arrivals are based in Auckland while only 10 per cent are in Wellington and a further 10 per cent in Canterbury.

Immigration into Australia is much more widely dispersed.

The more aggressive immigration policy of the mid-1990s - arrivals peaked at 80,300 in the March 1996 year - has put enormous pressure on housing, schools and other infrastructure in the Auckland area.

From an economic perspective the chronic migration outflow to Australia has to be reversed and New Zealand needs to attract more immigrants.

But a more coordinated approach to regional development and immigration has to be adopted because the concentration of new arrivals in Auckland is not beneficial to the region or the economy as a whole.

The good news from this week's statistical release is that the tourist industry has plenty to smile about.

Short-term visitor arrivals for the month of June rose 9.3 per cent compared with June 1998. Arrivals for the year ended June were 1.539 million, an increase of 5.6 per cent on the June 1998 year but slightly below the highest June year total of 1.541 million in 1996-97.

In the latest 12-month period Australian visitor numbers rose 48,300 or 10.5 per cent, arrivals from Britain increased 8.1 per cent and visitor numbers from North America climbed 13,400 or 7.2 per cent.

The inbound tourism flow from Asia continues to improve. Visitors from China, Korea, Malaysia, Singapore, Taiwan and Thailand are all increasing but the Indonesian and Japanese markets remain relatively subdued.

Although there was a strong upturn in short-term visitors from Australia, we are still far more attracted to them than they are to us, particularly on a percentage of population basis. In the June year 507,700 visitors came from Australia to New Zealand while 620,100 crossed the Tasman in the opposite direction.

The outlook for the tourism industry is positive with the America's Cup and Sydney Olympics expected to focus attention on the region. Lower Australian and New Zealand dollars are also making the area particularly attractive from a cost competitiveness point of view.

Tourism-related companies listed on the New Zealand Stock Exchange include Air New Zealand, Auckland International Airport, CDL Hotels, Sky City and Tourism Holdings. Given the positive outlook for the sector investors should hold at least one of the tourism-related stocks.

Air New Zealand and Auckland International Airport are in a particularly favourable position. They are both able to take advantage of the improved tourism inflows and rising long-term migration from New Zealand to Australia.