Australia’s welcome mat for Kiwis won’t spark a rush to the departure gate on its own, but we do need to make our own backyard more attractive, writes Pete McKenzie.
For a brief moment, there was celebration. A year after a sympathetic Labor government swept to power in Australia, New Zealand’s diplomats and politicians found success in their long campaign to secure a reliable path to citizenship for New Zealanders living across the Tasman.
Until the 1990s, New Zealanders arriving in Australia automatically received permanent-resident status and could access most healthcare and welfare services. But those entitlements were progressively weakened and in 2001, the John Howard government removed the safety net. The decision of current Prime Minister Anthony Albanese to reverse Howard’s changes means 380,000 New Zealanders in Australia now have a path to the security and stability they have lacked for decades.
His Kiwi counterpart, Chris Hipkins, could hardly contain his excitement at an Australian citizenship ceremony during a flying visit following the announcement, joking and laughing on stage with Albanese. Hipkins hailed the reforms as the biggest “in a generation” and said he expected they would “make an enormous difference” to relations between the two countries. His excitement was understandable: political reporter Henry Cooke, writing in the Australian edition of the Guardian, called it “a major win”. Joanne Cox, leader of campaign group Oz Kiwi, told Stuff she was “very happy” with the changes. New Zealand First leader Winston Peters, of all people, acknowledged it as a victory.
The significance of the achievement could be seen in the Australian government’s concern about electoral backlash: Albanese announced the decision on a Saturday morning before Hipkins arrived, in what seems to have been an attempt to minimise news coverage (Dan Tehan, the opposition Liberal Party’s immigration spokesperson, was quick to voice concern that the changes might increase pressure on Australian housing and welfare; Australia’s Daily Mail warned its readers to “prepare for a Kiwi invasion!”).
Then the mood in New Zealand turned. Act leader David Seymour denounced the news, saying Hipkins had been manipulated “like a didgeridoo”, while BusinessDesk managing editor Pattrick Smellie agreed we “might have been played here”. Their concern was that Australia’s decision was less an altruistic act of friendship and more a plot to steal New Zealand workers amid a global labour shortage. Auckland Chamber of Commerce chief executive (and former National Party leader) Simon Bridges told Stuff, “It clearly does have the potential to feed into our long-term ‘brain drain’.” Sunday Star-Times editor Tracy Watkins ended a column on the subject by asking, “Will the last one to leave please turn out the lights?”
The concern was jarring for two reasons. First, New Zealand’s media has spent two decades writing about the suffering caused by Australia’s changes to New Zealanders’ entitlements and about the Howard government’s suspect motivations in pursuing them. For much of the media to immediately begin expressing concern about the reversal of those changes smacked of hypocrisy.
Second, and more importantly, the criticism appears not to be accurate. New Zealand is losing people to Australia, but there’s a surprising degree of unanimity among top economists that the change to citizenship entitlements in Australia is unlikely to contribute significantly to that “brain drain”. Instead,they worry the focus on alleged Australian manipulation will lead us to overlook something much more important: the stagnant labour conditions and cost-of-living crisis that force many New Zealanders to look abroad for hope in the first place.
Exodus resumes
Brad Olsen doesn’t need to be told that there’s a brain drain of New Zealanders going to Australia: at 26, the chief executive of consultancy firm Infometrics is of an age where many of his friends are the ones who are moving. But he has a predilection for hard data, so he set out to quantify the problem. Drawing on figures from Stats NZ, he found that almost 17,900 people migrated from Australia to New Zealand in the year to September 2022. In that same period, just over 28,000 moved long-term from New Zealand to Australia, producing a net outflow of just over 10,000: the largest since 2014.
But even though we’re experiencing a small spike compared with the immediate past, as Olsen wrote in a recent Infometrics update, if we look back further, 10,000 is a pretty low number compared with the usual pattern of trans-Tasman migration. In the year to December 2008, after the Global Financial Crisis, the net outflow from New Zealand to Australia was almost 40,000. The net outflow in the year to June 2012, following the Christ- church earthquakes and Australian mining boom, was more than 43,700.
With that data in hand, Olsen wrote that although the levels of movement by his friends and other New Zealanders to Australia were significant, they’re “not nearly as intense as they’ve been over history”. And, he says, it’s doubtful whether Australia’s changes to citizenship entitlements will have much of an impact on movement across the Ditch. “I really don’t see there to now be a stronger pull than before to leave for Australia.”
He does accept that following the changes, “there might well be less need to come back to New Zealand”, since Kiwis in Australia will have greater support if they hit difficulties, but he thinks even that is probably offset by the family ties that bind New Zealanders to their homeland. “A reason that New Zealanders often come back home is to have kids or raise kids. Often, people have parents here to help out and provide a blanket of support.” The lifestyle here is another drawcard, he says.
Economist Shamubeel Eaqub, of consultancy firm Sense Partners, agrees with Olsen’s assessment and dismisses the suggestions by some in the media and opposing politicians. “The commentary is not based on evidence, right? It’s just based on feels, and that really pisses me off.”
To prove his point, Eaqub has also compiled data and found that the number of New Zealanders in Australia increased at a relatively steady pace from just over 300,000 in the mid-1990s to about 600,000 in the early 2010s, a period that covers the Howard government’s changes to entitlements. The fact that the 2001 citizenship reforms did not prompt a significant slowdown in migration numbers shows there are other drivers at play, he says.
Instead, Eaqub points to economic factors. “In the 2000s, there was a very strong case for moving to Australia. It was very much the Lucky Country. It had a massive boom in mining, a massive boom in construction. There were additional things that were taking place, so we saw huge numbers of New Zealanders moving.”
Wages vs living costs
The disparity in economic opportunity between the trans-Tasman neighbours continues to this day. The average male New Zealander working in forestry and mining can increase his weekly earnings from $1305 to A$2896 (NZ$3122) just by hopping across the Ditch, data from Stats NZ and the Australian Bureau of Statistics shows. For a male in construction, the same move would see his weekly earnings rise from $1348 to A$1786 (NZ$1926). Across all industries, says Eaqub, moving to Australia results in an average wage increase of 21%.
This premium isn’t all eaten by increased living costs. According to data from the two nations’ Household Expenditure Surveys, in 2016, the average Australian family spent A$1425 (NZ$1536) per week, of which A$764 (NZ$823) was on necessary expenses like food, power, transport and housing, leaving A$661 (NZ$713) on things of their choosing. The average New Zealand family, in contrast, spent $1260.90 a week, of which $726.80 was on necessary expenses, meaning $534.10 is spent on things of their choosing. Overall, even accounting for a higher cost of living in Australia, those figures show that Australians were better able to use their increased wages on things that make them happy.
“It is [easier] to access a materially higher quality of life in Australia than is possible in New Zealand,” says Eaqub. “When you’ve got a bigger budget and your necessities are not taking up so much of your income, you can have a better life, right?”
Faced with this economic disparity, the risks of the Howard government’s changes to entitlements for New Zealanders took on much less salience in people’s decision-making. “Did it have a massive humanitarian impact on people living there? Of course,” says Eaqub. “Essentially, they became second-class citizens overnight. There’s a whole bunch of other, non-economic reasons that are fundamental in terms of why it was devastating for many New Zealanders. [But] this idea that somehow [the reforms] changed the economic dynamics for why you might move to Australia, that’s not true.”
And if the changes had little impact on New Zealanders’ appetite to move, as the data and Eaqub’s analysis appear to show, it’s unlikely the Albanese government’s reforms will have much of an impact, either. Nobody moves abroad expecting to fall on hard times: the idea that there would be less of a safety net would have been worrying but not debilitating for New Zealanders considering a move to Sydney or Melbourne or Kalgoorlie in the 2000s. Knowing that the safety net has been strung up once more will be reassuring but not determinative for those considering such a move now.
Housing costs
Eric Crampton, chief economist at the right-leaning New Zealand Initiative think tank, suspects it’s probably true that Australia is acting selfishly by making its citizenship reforms. “Australia has recognised it’s got a labour shortage, so they are very happy to have more Kiwis there working and to stop treating Kiwis terribly.”
There is a chance that it will lead to more New Zealanders leaving, says Crampton. “Australia deciding to not treat Kiwis like shit will make it more attractive for New Zealanders to go over there.”
But, he says, “from our perspective it really shouldn’t matter. It is the right policy and it would be stupid to object to it on those kinds of grounds. It’d be like an East German employer complaining that once they tore down the Berlin Wall, they couldn’t keep workers any more.”
That said, Crampton emphasises: “You have to respond to it, though. And the response should be fixing the things already broken that make life easier there and make it harder for us to keep people here.”
One of those things, as Eaqub points out, is wages. Crampton, by contrast, focuses on housing. “Australia has been enjoying an advantage over us on housing affordability, which is crazy,” he says. According to the 2023 Demographia International Housing Report, the median house price in Auckland is roughly 11 times greater than the median income, making housing there more unaffordable than in most Australian cities, with the sole exception of Sydney, where median prices are roughly 13 times greater than the median income.
“Brisbane’s got a better climate and the housing is more affordable than Auckland’s,” says Crampton. “If you’re attracted to big-city amenities and don’t want to move to a smaller centre like Christchurch, moving to Australia is awfully attractive.”
It’s that housing disparity that we ought to be most worried about in the context of people leaving New Zealand, he says.
Simultaneously, however, it’s also the disparity that should offer us the most hope. Whereas substantially improving wages across all sectors of society is a complicated endeavour that requires significant economic transformation, the solution to housing unaffordability is simple, he says: build more houses.
Starting in the mid-2000s, we began to experience a severe housing supply crisis. Among the various drivers were tight bank lending restrictions on developers and home buyers, the GFC, and a preference by some developers for greenfields development that led to urban sprawl without a big rise in the number of new houses. Among the most significant drivers were the introduction of artificial limits by councils on the supply of housing through measures like restrictive zoning decisions or overprotective “character” designations that prevent demolishing small and often decrepit homes. Change is slowly coming. The government’s 2020 National Policy Statement on Urban Development requires cities to allow more houses in more places. In our biggest city, the 2016 Auckland Unitary Plan enabled more density throughout the city.
Crampton argues we should expand those efforts and start making new ones, such as removing urban boundaries that limit the amount of greenfield land available for development. Other economists, including Eaqub, advocate for the government to intervene in the market by investing in the construction of affordable or public housing, which often fall by the wayside.
Whatever tools we use, by expanding housing availability and affordability, Crampton believes we could change the calculations of people considering leaving much more dramatically than by focusing on wages alone. Eaqub says New Zealand has to remember that the question of migration comes down to our own “fundamental economic policies. There are no easy quick wins that will affect only the bilateral thing.”
Global war for talent
As we struggle with basic economic issues, however, the flow of people out of New Zealand is still having an impact. For example, since August, about 5000 nurses working here have registered to work in Australia. That’s a significant 8% of our nursing workforce. Kerri Nuku, kaiwhakahaere (joint leader) of the NZ Nurses Organisation, told the Guardian that losing that many nurses would be “huge – not only in size, but also in skill and experience”, raising questions about the viability of the healthcare sector. The government has taken steps in recent months to try to compete, including a pay rise of up to 15% for community nurses. But it’s unclear whether that will be enough to stave off departures when nurses can more than double their pay in Australia.
This is not just a New Zealand problem, says Eaqub. “Labour markets are becoming tighter and tighter, shortages are going to worsen, demographics mean that the world is going to experience this shrinking of working-age people,” he says. “The global war for talent is going to heat up quite a lot.”
One potential solution is to shift our focus from losses to Australia and emphasise potential gains from international migration, says Eaqub. New Zealand already has strong flows of qualified people coming in from countries such as the Philippines or India, with a net increase of roughly 2500 people from those two countries in the year to June 2022.
Attracting qualified professionals from those countries and others is crucial to supporting our strained healthcare sector, Eaqub and Crampton agree. Happily, New Zealand is well placed to do so.
“Do we have a strong position in that global war for talent? The answer is yes,” says Eaqub, “because New Zealand is an attractive place to live. The pool of people who would like to get a better way of life is billions and billions. The number of countries who are willing to accept people and give them that opportunity in a legal and safe way? Tiny. There’s an almost insatiable appetite for people to make a better life for themselves.”
Political divide
Immigration policy has long been a political football in New Zealand. When we abandoned our policy of favouring migrants from Anglosphere countries like Australia and the UK in the 1990s, there was a backlash. But since then, governments have continued to turn the immigration taps on and off according to economic circumstance and skills shortages, often with unforeseen consequences such as house-price inflation.
Then-immigration minister Stuart Nash said in May 2021: “When our borders fully open again, we can’t afford to simply turn on the tap. The pressure we have seen on housing and infrastructure in recent years means we need to get ahead of population growth.”
Eaqub says Nash’s position is representative of a wider scepticism towards immigration by the current government. “Our immigration policy is very political. It’s very much couched in this political, emotional, reactionary environment. Generally, Labour doesn’t like immigrants, National does.”
Crampton agrees, and points to aged care as an example. “It seems like Wellington officialdom has the view, and Labour picked up that view, that New Zealand aged-care facilities were relying on cheap Filipino nurses. You’d hear this kind of [racist] language around town – it was pretty gross.”
To cope with the urgent demands on crucial sectors such as health, Eaqub and Crampton say New Zealand needs to get over that xenophobia and push itself harder as a prime destination for migration, regardless of where people are coming from. Even in the short term, that will require reducing eligibility and paperwork barriers to migration, making it easier for people to transfer qualifications from their countries to ours, and continuing to invest in salaries and living standards to make New Zealand an even more attractive place to be.
To put things another way: in the weeks following the announcement of the changes to Australia’s citizenship rules, we have been obsessed with people escaping from New Zealand abroad. That obsession leads us to strange outcomes: a tendency to characterise the decision to leave as an act of betrayal or to see positive changes as dark manoeuvrings. That obsession obscures a crucial question: what is it about New Zealand that is driving those people away? The answer is not difficult: low wages, expensive and inferior housing, and other living costs that continue to grow.
Rather than focusing our frustration outwards towards Australia, solving the problem will require us to look within.
“If you think about the reasons why people take a job, it’s survival, career progression, personal development, fulfilment, right? But we’re failing on the first two. There’s a lot of catching up to do,” says Eaqub. “These are not specific to Australia. It’s about us, not about them.”
Pete McKenzie is a freelance journalist who was named reporter of the year at this year’s Voyager Media Awards.