Bernard is an economics columnist for the NZ Herald

Bernard Hickey: Regions may need help to stay alive

Waikato University demographer Natalie Jackson. Photo / NZ Herald
Waikato University demographer Natalie Jackson. Photo / NZ Herald

It was delivered delicately, but it felt like a kick in the guts to the leaders of regional New Zealand.

Waikato University demographer Natalie Jackson's presentation about ageing to Local Government New Zealand's annual conference in Hamilton this week was a sobering look into the future that mayors, councillors and planners perhaps weren't expecting.

You could almost hear the sharp intakes of breath as it dawned on them they would be battling to collect rates and pay for services for an ageing and often declining base of ratepayers for the length of their natural lives and beyond.

Jackson detailed what ageing would do to the communities in the decades to come, including how many provincial towns and cities would become "top heavy" with pensioners, few working-age people and even fewer children.

She described how an ageing population and internal and external migration would mean almost every Territorial Local Authority (TLAs) outside of Auckland and Christchurch would see their populations age dramatically.

"Populations are ageing and that is bringing us towards the end of the age of growth. You may not need to deal with it today but you must put it on the agenda," she said.

Already, more than a third of New Zealand's TLAs have experienced population declines since 1996. Jackson explained how outside Auckland, all of the population growth that will come over the next 20 years will come from age groups over 65. That also means that these regions will see the size of their younger populations fall.

The implications of the skewed nature of the population changes in New Zealand are profound and not just for councils that will have to plan to collect the same or more rates from a smaller number of working-age people.

For residents of these shrinking towns and cities, the ageing of the population means it will be much harder to sell their houses for anything like they price they paid, or expect to receive.

Jackson gave the example of the skewed population of Buller where by 2031 the bulk of the people will be in the "decumulation" age groups over 65. By then that cohort will be downsizing to free their retirement savings embedded in their houses and moving into retirement homes, while a smaller group of "accumulators" from 25-64 will be buying those homes. "Who will buy those houses?" she asked.

Later in the conference, Otorohonga Mayor Dale Williams asked Prime Minister John Key about what the Government could do to soften the blow of regional contraction, including relocating government departments to the regions, as has been done in Canada. Key said the Government was thinking about regional development, but downplayed the prospects of relocating departments.

The debate has yet to really start. It needs to, and fast, because as Jackson said to a room full of concerned mayors: "We're all closer to the walking frame than the pram."

- Herald on Sunday

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Bernard is an economics columnist for the NZ Herald

Bernard Hickey is the publisher of Hive News, a Wellington-based political and economic subscription news email service. He also writes for and appears regularly on Radio New Zealand, Radio Live, TVNZ and TV3. He has been a financial journalist for 25 years, having worked for Reuters, the Financial Times Group and Fairfax Media.

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