Tens of thousands of New Zealanders are coming home. Photo / Mark Mitchell
Originally published by The Spinoff
As much of the world is brought to its knees by Covid-19, tens of thousands of New Zealanders are coming home. Alex Braae investigates what it could mean for the country.
At this stage, all we really have is raw numbers. We don't know exactly who the returning New Zealanders are, or what skills they're bringing back with them. We don't know how many of them intend to stay permanently, or go back overseas. We don't know exactly where they're going in New Zealand, or what they're doing there.
But we do know that New Zealanders are currently returning home in droves, at rates much faster than the Government anticipated. Documents proactively released by the Government show the expectation was for between 13,000 and 32,000 New Zealanders to come back between the outbreak of Covid-19 and October. But as of right now, the number already sits at about 33,000.
So who is the typical New Zealander who goes overseas and then comes back? There hasn't ever really been data collected on this. As Andrea Black, the policy director and economist for the Council of Trade Unions, puts it, "when it comes to New Zealanders coming back, there's never been any regulatory framework around them, so there's been no real need to collect data. I think that may change".
As she puts it, in the context of the labour market, returning New Zealanders have become something of a "new migrant" category. Because at the same time, the closure of the borders has put an effective lock on the borders. Normal patterns of immigration have stopped, including many of those who would otherwise have come into the country on the Regional Seasonal Employment (RSE) scheme, or those on working holiday visas – even if many of those who came into the country before lockdown remain here now.
It's also not clear where people are going when they come into the country, but Infometrics senior economist Brad Olsen says data released by Stats NZ has some clues. He notes that cellphone tracking data estimates that of the upper estimate of 144,000 people to arrive in the country this year (including all other visitors), a disproportionately high share are ending up in Auckland relative to the city's population. To a lesser degree, the same is also true in the Bay of Plenty and Marlborough regions.
Olsen speculates this means that many of these people are heading to places where there will be work. The latter two regions are both places where there was plenty of immediately available seasonal work.
"Certainly in Marlborough you've got wine and the vineyards, and for Bay of Plenty you've got kiwifruit and all the other fruit picking."
Another interesting data point picked up by Olsen comes from the Ministry of Social Development, which found that out of all people who had gone on the jobseeker benefit over the first lockdown (that is, by the end of April when the analysis occurred), the "returned to New Zealand" category accounted for 12 per cent of new applicants – up from 5 per cent over the equivalent period last year.
He also noted that anecdotally, there had been reports of people returning to New Zealand while still employed overseas. With everyone quickly learning how to do Zoom meetings over the first half of the year, the location of home that people work from has stopped mattering quite so much.
The effect of New Zealand citizens and permanent residents returning to the labour market in place of people on different visas could also have flow-on effects for a wider culture of labour standards. Simply put, says Black, migrants get routinely exploited because they don't have the same rights.
"They run the risk of taking conditions and wages that anyone who has access to the social welfare system as a backstop, or was always going to be able to be in New Zealand, wouldn't necessarily take. So I think that has to be good for labour standards, and I would hope good for wages and productivity generally."
She's hopeful that a lot of standards will be "tidied up" before the borders reopen.
Rather than moving for dramatic career changes, people who go overseas "broadly pick up where they left off", says Black. That has certainly been the experience of Novita, a speech language therapist in Sydney who returned to New Zealand in June with her partner Dan, a lawyer. She says she's been happy to be able to come back and get a job with the Ministry of Education.
Novita and Dan went over to Australia at the start of 2018, with plans to make some decent money before heading further afield. This year, they planned to move to the UK, but that plan was completely derailed by the pandemic. The way that New Zealand handled Covid-19 was a real lure for them to come home.
"I never felt that safe, just because things were pretty inconsistent [in Australia]," says Novita. "And just seeing people at home having a good time really made us want to come home." The interview was conducted before new cases of community transmission were discovered in New Zealand, but for several months, that was the picture of home were seeing.
Now the couple plans to stay in New Zealand permanently. And it's this group of people that could end up having the most profound impact on the country as a whole, because they'll bring with them a brain gain of skills and experience. Again, we don't know exactly what skills – they could be tradespeople, teachers, white-collar professionals, hospo workers and so on.
Some are also likely to bring back capital, which, because of the structure of the New Zealand economy, is likely to be directed in one major direction in particular – the housing market. Novita and Dan have been looking, though their deposit isn't quite enough at this stage, and they're not necessarily eligible for KiwiBuild or other grants. "We're just waiting to see if we could be, but as soon as we arrived we went to a few banks to see what we could do," said Novita.
It's speculative to put returning New Zealanders down as a contributing factor, but so far prices in the housing market have largely held up, despite a wider crunch in the economy. Brad Olsen says there are many moving parts in the market at the moment, including the increase in supply to long-term rentals through AirBnB properties coming back on to that market.
He also pointed to figures showing there was a higher rate of lending to first-home buyers, which is partially because of low interest rates. But in the area of property investment, it seems clear the market is becoming less attractive.
"People are just going, 'Do I really want to invest in a market where people are talking about a price drop of 5-10 per cent?' And that's going to hurt certain markets more than others. If you're a first-home buyer, it's unusual to buy an apartment in Auckland, you're more likely to be looking at a mid-range house in a suburban area, while an investor is more likely to buy an apartment."
He's also keen to point out that economists weren't predicting a crash in house prices as such quite so quickly, particularly with mortgage holidays and the wage subsidy pumping billions back into the economy. He also notes that those losing their jobs from Covid-19 are more likely to be renters rather than owners. Regardless, people coming back will need somewhere to live.
But above all, the impact of returning New Zealanders is unpredictable, because their circumstances will be unique. They might start families, they might start businesses, they might run for office. In a few years' time, we'll have a much better idea of the contribution made by the thousands of people coming home.
The S&P/NZX 50 Index closed down 0.10%, falling to 12,627.32.