NZIER's Shamubeel Eaqub says recruiting young immigrants could help address problems in the provinces where there are more old people than Japan

By Gareth Vaughan

Young immigrants could be used to help tackle the effects of an ageing population in New Zealand's provinces, but such immigration would need to be handled with care, says New Zealand Institute of Economic Research principal economist Shamubeel Eaqub.

In a Double Shot interview on his new book, Growing Apart, Regional Prosperity in New Zealand, Eaqub described immigration as a very sensitive topic that's difficult to talk about in New Zealand even though it's in the very fabric of our history.

"In part I think that's because we haven't had an honest debate about how much population we want. Do we want to be a small country or a big country? I don't think we have decided," Eaqub said.

"But nevertheless I look at examples of places like Southland, where they had this intense need for workers but they could not get it at home, and they relied on immigration. That has been a really positive outcome. But we also know that Southland is a very homogenous community and bringing in a lot of people who are different, who look different, who have different culture preferences and all those kinds of things, means there's a risk you create a rift within a community."

"So what we're saying is with immigration, it's not just about getting the people in, you've got to get them in, give them jobs, but also integrate (them) into the community where you can,"said Eaqub. "And it feels to me like immigration can be a good thing, but only if handled with a lot of care and done right."

More old people than Japan

Eaqub's book points to 23 New Zealand territorial authorities, (city and district councils), where the age dependency ratio, the number of people over 65 relative to working age people, is higher than Japan, the country with the oldest population in the world. There are significant healthcare, superannuation and rating issues entailed in this.

"The ageing one is really interesting. It can either be your comparative advantage like it is for places like Bay of Plenty. They're doing really well on the back of an ageing population. And there are other places like Gisborne, which is also ageing quite quickly, but because of its weak economy it's very difficult. In the last census we saw that in Gisborne the biggest area of growth was people living alone, the number of families actually going backwards, so this ageing story is becoming quite prominent, quite an important driver," said Eaqub.

"But as people age you've got fewer people who are entrepreneurs and workers, but it also means you have got a lot of people who are income poor but asset rich, which makes it very difficult again for local governments to increase rates and spend."

"There's so many examples right around New Zealand of these territorial authorities. And it's really about having the conversation about what is it that we want from these places. What does success look like, and how do we manage it without making undue demands of our citizens?

In the book Eaqub says; “We need to seriously consider reducing the impact of ageing with immigration by bringing young people to New Zealand.” And; "Handled with care immigration’s benefits should significantly outweigh any stress placed on social cohesion."

Poverty an 'uncomfortable truth' in NZ

He also makes the point that it's difficult to talk about poverty because it's an "uncomfortable truth" in New Zealand.

"New Zealand has poverty, particularly in child poverty which has life long consequences. So very much the message from me is 'have a read of the narrative' because it's about creating empathy for our regions that are not sharing in the opportunities of all of New Zealand. And I think we need to see a big shift in mindset to say that 'yes we're in it together and we need to have a change in mindset and policymaking to get a better outcome for all New Zealanders'," said Eaqub.

The book describes some regions as representing 'burning platforms requiring urgent attention. Eaqub highlights Northland, Gisborne, and Manawatu-Whanganui. In Manawatu-Whanganui he says 9,000, or 8%, of jobs were lost between 2006 and 2013. And in Gisborne he says employment grew by 1.5% over the 12 years to 2013 versus the national rate of 16%.

"When we looked at some of these regions it became very clear that they seemed to be stuck in this paradigm of weak growth, weak population and poverty. And the ones that really stand out are places like Northland, Gisborne, and Manawatu-Whanganui where economic opportunities just don't seem to be there for the people who are there," said Eaqub.

"This is not a criticism of the places themselves. It's a whole bunch of big forces that are really being quite caustic and destructive for these economies. It really backs up what we see in the deprivation indices, for example, by Otago (University) where we see these real pockets of poverty and deprivation across New Zealand. Really that's why we're saying, that current policy is not doing enough and that's the burning platform. And if we do change we can make a real difference in people's lives."

What to do with 'zombie towns'

He acknowledges some provinces are doing really well, but says others are stagnant or falling behind, and the focus needs to be on the places that are falling behind.

"Yes, we should absolutely celebrate the successes. But the failures or the weaknesses that we have in our economy, the places that are trapping people in poverty, if we can improve those, if we can change those, imagine the difference it makes even to one person's life."

Then there are what Eaqub describes as a handful of "zombie towns" where a strategy to wind them down is needed.

"We've got small towns around New Zealand that have got large infrastructure, but declining populations and ageing populations and very little income and employment opportunities. What is the strategy for that? I'm not sure we have a strategy to wind down places. I think we do (need one). I think we need to be serious that in some places it might be better to merge or move people to somewhere else, or give them an option to live without some of the very expensive infrastructure and services that we have become used to," Eaqub said.

He declined to name any "zombie towns", suggesting if he did he'd never be able to visit them again.

The importance of mobility

The book, which Eaqub hopes will be a starting point for a robust discussion, includes what he terms two key messages, three recommendations and five following steps. The key messages are enable mobility, and accept some places can’t continue in their current make-up.

In terms of enabling mobility, he says education outcomes need to be much better in some smaller regions.

"We need to make sure that people who are not able to get jobs in those places have the ability and the wherewithal to move to places where there are jobs. It can be very difficult. You can't go from, say, Northland to Auckland without some significant financial cost in terms of transport and housing costs so being aware of that and enabling people to engage in that is really, really important."

Eaqub argues regional disparities need to be tackled at both a national and local level.

"I think it's a job for everyone. In some ways the community is too apathetic. Civil engagement at local government is very, very low, less than 50% turnout in the last election. Local governments can have a very big influence in generating the conversation and discussion with central government, departments and politicians, we're not doing enough of that."

"Central government already spends huge amounts of money on welfare, education, health, justice, but quite often they're done at a very national level as you should for a country of 4.5 million people. But when we look at the weaknesses in certain geographies, it suggests to me that we need more focus in certain places. Maybe we need to spend more effort on education and welfare in places like Northland where we are not seeing the same kinds of outcomes we are seeing in places like Auckland or Wellington," said Eaqub.

'No easy answers'

Eaqub said every time he has looked at regional issues over the past few years an "underbelly of weakness and lack of opportunity" in parts of New Zealand showed up. This was the impetus behind writing the book.

"Sometimes the national debate, the national conversation, misses some of the nuances that are happening in the small places that don't have a national voice. So the idea for this book was really to give a voice for some of that lack of opportunity, especially for young people. But also to describe why some of these tensions are pushing some of these regional economies into fairly weak positions and what can we do."

"I don't give any easy answers because I don't think there are any. It's a very complex situation. I've tried to tell the story in the book with some empathy because I think we need to be able to really do something. Because it feels like there are people in parts of New Zealand that are getting trapped in poverty and that's not right. That's not what New Zealand is about," Eaqub said.

---------------------------------------------------------

The book Growing Apart can be purchased on-line here. It is $14.99 delivered.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

18 Comments

I personally do not think NZ is a country with social mobility positioned at lower end of OECD countries.
 
Nothing in NZ will continuously trap a person in poverty unless that is what  that person choose to be.

....the only problem is that the young want to bring in their old mum and dad.  Go take a visit to your local hospital, have a chat to the medical staff....just mention eldery sick migrants...and youll soon get an earful.  And when i say sick...i mean real sick...60 -70 yrs of third world living and all the issues that come with it.  

However the % of those? On top of that so called 1st world living can be as bad or worse.
regards

A obvious question to pose would be, how come these regions which produce so much end up being so poor on all the indicators. I was over in Gisborne ten days ago and the volume and end value of the production in the region is massive, but there's very little encouragement for further processing, add to that the fact that all energy and financial services are provided by leaches from outside the region and really their only only option is to get sucked dry. 
Nice place though and really enjoyed a few days off. The food and accommodation where just brilliant. Especially the USSco Bistro (I think that's its name) the thought of that meal should keep me going through calving.

Yes, have been to Gisborne myself not so long ago. Nice place and nice people. My feeling was inequality in the town itself is not as great as alot of more wealthy parts of NZ.

There you go again kimy .. showing your ignorance .. typical foreign import .. bird and fauna expert not so long ago .. said .. 90% of all nz native bird species have been decimated .. gone .. kaput ..

"And it feels to me like immigration can be a good thing, but only if handled with a lot of care and done right."
Hot air. Replace "immigration" with anything else and it is obviously still correct. I dare say, that if the producer of these commonplaces would not be a migrant himself ... nobody would care to listen to this nonsense. 
Eaqub is a brilliant example of how things in NZ immigration are not handled with care and not done right. There are enough creators of hot air in NZ; the country does not need any more of that ilk.
Get in engineers, scientists, techies, provide them with infrastructure and hope for the best. But FOR GODS SAKE, no more "principal economists".

Shamubeel : the good folks of Parnassus are onto you .... " zombie town " my arse !!!!
 
.... return at your own peril , my friend ( signed on behalf of the PLO : Parnassus Liberation Organisation ) ...

Zombie towns? Here are a few - Mangakino, Kaingaroa Village, Murupara and, possibly, Turangi. Any other suggestions?

If growing unemployment is part of the qaulification for a Zombie town you could also include Huntly,Ngaruawahia,Te Kuiti and Taumarunui.
I often thought that when i got close to retiring i would purchase a small block of land with a house on it possibly in Gisborne,West Coast,Glen Massey or somewhere similar.The problem as i see it now is that once you own the land,it's going to be very hard to sell because nobody wants to go there.
I

... if you're gonna retire there , Mr gold , why would the possibility of reselling it enter the equation ?
 
Pick a spot you love so much that you'd stay there until they take you out , boots on , in the old pine box ...

Congradulations Eaqub.  I have spent a week debating with people over the existence of God and whether people can have the souls of Dragons and vampires.... yet you win the prize for the dumbest idea yet.

Import immigrants into areas that are shrinking...without actually addressing and fixing why those places are shrinking in the first place.

You *must* be an economist, no one else could be that daft or shortsighted.

Did you even consider for a moment, that if you found and addressed the reason why such shrinkage was happening, that the youth drain would reverse itself...and that if you can't fix it, pouring -more- people into is just going to make issues worse.

Watch National provincial electorate  seats fall. 
However, under MMP the MPs expelled by the voters pop back up under the Party List. 

Great, kiwis dying off and replaced by 3rd Worlders - the new ethnic cleansing.

No doubt Eaqub is thinking of the millions in his native Bangladesh who would love to come to NZ and turn it into another third world country. Just what we need, another foreigner telling us how we should solve our problems. 
 

if they such great people and make great community...why do they seek to come here?

Yes, I agree that the provinces are on the back burner as far as the economy is concerned in some areas. They are generally not behind the black ball when it comes to rush hour, crime, special interest groups and such in a general sense, though some of the immigrants coming to this country to save us from ourselves are setting up shop in many regions. The price of fuel is going to be more expensive in the regions simply because it costs more to get it there, as with a lot of other essentials to life. Has anyone thought of reducing the cost of living in the regions, here we have an exorbitant costs imposed by various forms of government, I note not one single political party has approached this subject. In fact the opposition apart from the consevatives has openly promoted stacking more expese onto the taxpayer. In my opinion therein lies the problem, less tax out of our pay packets, must equate to more  money in the pockets of the consumer, some of whom live in the regions.  

The idea that young migrants will fix the demographgic problem has been debunked by (for example) the Australian productivity Commision. The migrants themselves age but also it doesn't help unless you fix the underlying economic conditions (low demand?).
 
The*Independant* (?)  NZIER periodically calls for a larger population.
A larger population is required by the people servicing sector (the construction industry has grown by 10,000 firms since 2002).
According to Julie Fry's independant paper 14-10:

Changing Policy Expectations:
At that time, it was considered that skills-focused inward migration could: improve growth
by bringing in better quality human capital and addressing skills shortages; improve
international connections and boost trade; help mitigate the effects of population ageing;
and have beneficial effects on fiscal balance. As well as “replacing” departing
New Zealanders and providing particular help with staffing public services (for example,
medical professionals), it was believed that migration flows could be managed so as to
avoid possible detrimental effects (such as congestion or poorer economic prospects) for
existing New Zealanders.
Since then, New Zealand has had substantial gross and net immigration, which has been
relatively skill-focused by international standards. However, New Zealand’s economic
performance has not been transformed. Growth in GDP per capita has been relatively
lacklustre, with no progress in closing income gaps with the rest of the advanced world,
and productivity performance has been poor. It may be that initial expectations about the
potential positive net benefits of immigration were too high.
Based on a large body of new research evidence and practical experience, the consensus
among policymakers now is that other factors are more important for per capita growth
23
and productivity than migration and population growth. CGE modelling exercises for
Australia and New Zealand have been influential in reshaping expectations.
....
It goes on to say that evidence for large negative of positive effects of immigration is not symetric: we have had 20 years of high population growth which hasn't done us much good.
......
Melbourne has been described as a sucking vampire squid taking resources from the rest of Australia to subsidise growth; how about Auckland?
Common sense suggests that it may not be possible for every place , every region to be an economic star. Maybe we just need to readjust our thinking?