Fran O'Sullivan: Tipping point in battle to retain Kiwis

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KPMG's report suggests that the economic incentives for New Zealand workers will continue to dispose them to shifting overseas. Photo / Greg Bowker
KPMG's report suggests that the economic incentives for New Zealand workers will continue to dispose them to shifting overseas. Photo / Greg Bowker

New Zealand has reached the tipping point where without a concerted effort it will be difficult to retain - let alone attract back - enough Kiwis, skilled and unskilled, to assure a thriving economic future.

John Key and Bill English gloss over the ongoing loss of critical economic mass that New Zealand's growing diaspora represents.

Politicians trot out old homilies about how Kiwis have always gone overseas for their "OEs".

Labour's leaders were just as guilty as National's leaders on this score.

They tell us gaps can be filled through immigration.

But there is a substantial economic cost to spending up hugely on educating and training young Kiwis for them to later leave New Zealand permanently without ever being significant contributors to the tax base.

Nearly 25 per cent of New Zealanders live outside their birth country.

This is a staggering figure and is unlikely to reverse unless Australia - which is still the destination of choice for the bulk of overseas-bound Kiwis - goes into a significant economic slide.

But despite figures showing the Kiwi diaspora is the world's highest on a proportionate basis, neither the Government nor business has made it a strategic priority to reverse the outflow.

Demographer Bernard Salt points to the "cultural deference" which persuades skilled New Zealanders, and also Australians, that it is "better over there than back here".

Salt says middle-aged baby boomers from New Zealand and Australia attach a social cache to their son or daughter living and working in Europe or the US.

But while the net outflow of talent is good news for the destination country through the direct and immediate contribution young skilled workers make to their tax base and social capital, this results in a net economic loss to the nation that provided the training.

As the KPMG demographer notes: "This is positive for the destination country: young taxpaying workers make a contribution for many years before requiring support by way of pensions and healthcare services. This arrangement was not entirely possible in the 20th century due to both cultural and political barriers to migration but it is very much possible in the 21st century."

KPMG's Global Skills Convergence Report suggests the economic incentives for New Zealand's unskilled workers - as well as skilled people - will continue to dispose them to shifting overseas.

It isolates a demographic fault line which will impact negatively on the supply of labour and talent during the 2010s as the growth in labour in the developed world slows as baby-boomers exit the workforce.

But there is precious little sign that New Zealand is strategically grappling with these trends.

Last week, Kea - which brands itself as New Zealand's Global Network - hosted the annual World Class NZ Awards. Some truly brilliant New Zealanders who have made it overseas were honoured.

Most of these Kiwis, such as Dr Peter Watson, the former National Security Council Director of Asian Affairs who did much to re-open doors in Washington for New Zealand, have put their shoulders to the wheel to assist this country.

This is inspiring.

But to get the much-needed mind switch there needs to be much more focus on the Kiwis who succeed in being "world class from New Zealand".

The Kea awards do always honour some of these people, but they tend to get less public attention.

Kea's developing strategy is to position itself as an effective marriage maker between skilled expats and New Zealand firms they could help globally, present opportunities to expats to come back to New Zealand and build futures here or invest in fledgling Kiwi firms.

Kea Global chief executive Sue Watson outlines that Kea has plans to treble its international footprint.

China will be a focus (Watson got some insights through joining Len Brown's mission).

Kea plans to set up a WOFE, wholly owned foreign enterprise, in China, increase its presence and use its network to help Kiwi firms get established there.

If well managed, Kea could work alongside NZTE to provide vital connections to help New Zealand succeed on the world stage.

Kea has considerable funding from the Government. Watson says it provides $1 million of Kea's current $1.8 million budget.

The Government's contribution will reduce to 30 per cent of Kea's total budget over the next four years.

This is a good thing. But it's worth noting if Kea simply hits up its 32,000 expat members with a $100 annual fee it would be net positive tomorrow.

Kea has undertaken research into the potential for New Zealand's diaspora to invest in "our productive economy". But many respondents see issues.

The real problem is that New Zealand has been eviscerated of the very people who could be providing top talent here.

While Kea's talented expats want to be part of the solution, their very absence from New Zealand makes them part of the problem.

It's not much sense Kea's expats decrying New Zealand's lack of managerial skills.

This is just another downer for those who stay.

Far better to come back and take a risk and start a company and provide the management yourself.

Outspoken Japanese telecoms entrepreneur Sachio Semmoto really hit the nail on the head when he told me that New Zealand needed to be more like Finland, with its focus on hi-tech innovations.

In Semmoto's view, New Zealand needed to be more independent and take less notice of the gap with Australia.

But Semmoto's critical insight is: "Your young people should want to build great companies from New Zealand - not go overseas."

To get this fundamental shift we need to celebrate the Kiwis who stay here and build futures for their families.

We must surely stand on the precipice of national failure as a first-world nation if the only true bright spot on our horizon right now is the kickstart the economy is projected to get through the Canterbury earthquake rebuild.

- NZ Herald

Fran O'Sullivan

A columnist for the NZ Herald

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

Read more by Fran O'Sullivan

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