Keith Woodford digs into NZ population data and makes some surprising discoveries

In a recent article I wrote how New Zealand’s resident population was increasing at a faster rate than either GDP or exports, with this contributing to a recent decline in per capita GDP. I suggested that New Zealand needed a population policy.  Here I dig deeper into the structure of our New Zealand population and present some surprising findings.

Quite simply, New Zealand has a bulge in its population with large numbers of people in the 30 to 40-year age bracket. The bulge is due to inward migration.

This bulge is evident in a Statistics NZ spreadsheet but it seems the story has not been told in words. When I ask AI for a response it gives me nothing insightful. That suggests that the conventional wisdom that AI relies upon has not kept up with the numbers.

The largest of the five-year age cohorts in 2024 was 30-34-year-olds, with this cohort numbering 408,960 persons, according to Statistics NZ estimates of people ‘normally resident’.

As to what ‘normally resident’ means, my ‘take’ from perusal of a 20-page official paper on the meaning of the term is that, in essence, this includes all people currently in New Zealand who have a visa for at least 12 months, plus an estimate of Kiwis who are short-term overseas.

Go back to the year 1994, when the most recent cohort of 30-34 year-olds were aged 0-4, these 0-4 year-olds totalled 296,860.  This tells us that this five-year cohort has increased over a 30-year period by 112,100 people.  This is not biologically possible except by net substantial immigration.

Ignoring deaths, which will have been relatively minor in this cohort, this means that the net inwards migrants in this cohort have exceeded those Kiwi-born people who have permanently departed New Zealand by more than 112,000, and that is just for this specific five-year cohort.

Put more simply, any notion that New Zealand might be becoming a nation of oldies because all the young folk are leaving is not correct. There are a lot more young-folk who have been coming here than have left.

Although the main population bulge is in those currently aged in their early and mid-thirties, the impact of recent immigration can be seen in all cohorts from birth through to about 50 years. For example, in 2024 the number of 6-year-olds was 1470 more than the number of 5-year-olds one year earlier.  That can only be because of infants arriving as within-family immigrants.

Similarly, the number of 50-year-olds in 2024 was 1360 more than the 49-year-olds one year earlier. Small increases occur for each one-year-cohort through to age 60.

In the short term, the inward migration inevitably increases economic consumption and hence GDP, although not necessarily GDP per capita. However, the big question is what will happen when the ‘bulge cohorts’ reach retirement age? 

It will be around 2050 that the 65-year-old cohort is likely to be around 80,000 people or even more, compared to 56,000 currently.  This 2050 cohort of 65-year-olds could be even larger depending on immigration in the next few years. The key point I make is that whatever the outcome is, it will be driven by net immigration.

In contrast, and unless there is both high ongoing net immigration and high birth rates, the proportion of working population will be in decline. Once again, this is a consequence of the big bulge in the current 30-to-39-year cohorts who by then are reaching retirement.

Before proceeding further, I want to emphasise that this article is not anti-immigration. Rather, this article is about the need to understand both what is happening and what will happen to the population in the absence of a population policy. It is that understanding that must underpin policy development.

In the absence of any net immigration, with emigrants matching immigrants, the New Zealand population would right now be increasing at about 20,000 people per year based on births of around 57,000 and deaths of around 37,000.

The overall trend in births is declining slightly, and deaths are increasing as the boomer generation born between 1946 and 1965 faces increasing mortality.  Therefore, in the absence of net immigration, the numbers tell us that the New Zealand population will continue to increase at a modest level for many years.

The specifics of the future population increase from births minus deaths is dependant on assumptions. Births per woman in the child-bearing age are decreasing but the number of women in the age-bearing cohorts has been increasing, once again due to immigration.

What we know is that New Zealand births have fluctuated up and down since the 1990s, with a maximum of 64,390 in 2010 and with most recent birth numbers, at around 57,000 per annum, being very similar to the 1990s.

What we can also say as a statement of fact is that New Zealand’s natural population increase is very different to what is occurring in East Asia and Europe, where populations are now decreasing. The New Zealand situation is also very different to Africa and parts of Western Asia where populations continue to increase very rapidly.  

This all means that New Zealand, along with a few other countries such as Australia and Canada which face similar demographics, has to find its own way which reflects its own specific situation.

In determining a specific population policy, a key issue has to be the categories of immigrants that will lead to increasing GDP per capita. To help answer that question I interrogated productivity data available at Stats NZ.

The productivity story is complex but some messages are very clear. For example, labour productivity in agriculture, forestry and fishing has increased by a factor of 265 percent since 1978, and by 54 percent since 2000. No other industry in the economy comes close to achieving similar gains.

Total factor productivity (labour and capital) has also been outstanding in agriculture, forestry and fishing. Transport, media and communications have been the other standouts, with the rest of the economy being dismal. 

Labour-input statistics from the same source tell their own story with the paid hours of labour in these primary industries having decreased 12 percent between 2000 and 2023. So, it is very clear that these primary industries that underpin exports have not been reliant on the increasing population. It has been all about new technologies and capital.

As to where all the increased availability of labour has ended up between 2000 and 2023, the answer is that it is almost everywhere else in the economy except primary industries and manufacturing, with manufacturing having had minimal movement since 2000. Construction (up 119 percent) together with financial and insurance services (up 52 percent), plus professional, scientific and technical services (up 113 percent) have been the big movers. These numbers provide plenty to think about. At the very least they illustrate how exports, relying on primary industries, have been declining as a proportion of the economy.

In this article it is not my intention to lay out the specific population policy that New Zealand should follow. However, it is my hope to generate discussion on that topic. My own ideas on specific policy can come later.

In debating and determining appropriate immigration policy we need to acknowledge that exports lie at the heart of economic growth. We also need to acknowledge the biological and environmental constraints on primary-industry export growth. We also need to acknowledge that immigration levels are fundamental to the long-term cost of superannuation.

*Keith Woodford was Professor of Farm Management and Agribusiness at Lincoln University for 15 years through to 2015. He is now Principal Consultant at AgriFood Systems Ltd. You can contact him directly here.