The political theorist Hannah Arendt complained that what we mistakenly call politics is often merely the careers of ruthless and ambitious people who are proximate to power. Real politics – for her – is ordinary men and women taking action in their own lives. Since the major political story of the week is the Budget – a feeding frenzy of the ruthless, ambitious and powerful – and this column’s deadline is a day before it is released, it will loftily agree with Arendt and avert its gaze from Parliament. Surely, real politics is happening elsewhere: consider the arrival and departure lounges of the nation’s airports.
This, really, is where the long-term future of the country is being decided. New Zealanders are leaving the nation in record numbers – a deeply political act – and the government is replacing them with even larger numbers of migrants to keep the economy afloat.
There have been an average of 1400 permanent or long-term departures a week over the past year, even higher than our previous outward migration peak in 2011-12.
Customs doesn’t make us fill out departure cards any more so there’s no data on who is leaving, but historically, it’s been younger, educated members of the predominantly Pākehā middle class: professionals, managers and other knowledge workers – nurses, doctors, teachers, police. More than half of them are leaving for Australia, for brighter lights and better weather but also better wages and more affordable housing.
The angst about our brain drain goes back decades but the currents sweeping younger qualified workers across the Tasman have never been this strong. Australia currently enjoys moderate economic growth and its GDP per capita is already 30% higher than ours. Its Budget is in surplus and it has enjoyed a sustained housebuilding boom.
One of Jacinda Ardern’s diplomatic triumphs was negotiating a pathway for New Zealanders resident in Australia to apply for citizenship after four years and thus receive welfare benefits and disability payments. It was a huge win for fair play but it removed one of the final barriers disincentivising mass migration to the bigger, wealthier nation next door.
Success story
Why is Australia flourishing while we stagnate? Different political factions tell different stories about this. For the Left, Australia represents a utopian tax system. It has a capital gains tax, a tax-free threshold and a higher tax on high-income earners. It has a national bargaining system, just like the Fair Pay Agreements which Labour brought in a few seconds before it was voted out and the coalition government immediately scrapped.
On the Right, the big difference is mining. Australia isn’t afraid to turn its deserts into opencast pits, while we’re inexplicably averse, argues the Right, to clearfelling our rainforests or dredging our seabed. This is a central premise of the coalition’s fast-tracked mining approach. If we want to be as rich as Australia, we need to make the same tough trade-offs between environmentalism and prosperity, it argues.
Economists tell a slightly different story. Tax and mining? Sure – but the Australians also have compulsory super with large, mandatory employer contributions (11.5% from July 1, compared with the 3% employer rate in KiwiSaver).
During the past two decades, this has created a large financial sector and deeper capital markets. It has invested in research, technology and infrastructure. It used its Covid stimulus to build infrastructure and begin decarbonising its economy (it’s very unclear where most of our stimulus money went).
Australian governments generally do the things that orthodox economics tells them to do, and it’s made it very rich. Our habit of ignoring conventional economic wisdom and occasionally even doing the opposite has not worked out so well. Now, there’s a danger that Australia’s post-Covid boom juxtaposed with our bust has created a tipping point where the mass exodus of skilled workers deepens and prolongs our recession.
Demographic shift
To offset the loss of skilled workers, the government admitted a net 111,000 migrants in the year to March. Nearly half were from India, followed by the Philippines and China. Despite losing record numbers of citizens, we’re experiencing high population growth. At the current rate, New Zealand is looking at a population of six million by the end of the decade.
Large numbers of non-white migrants into a majority white country typically presage an ugly descent into anti-migrant politics. It’s often said around Wellington that New Zealand First plays a vital preventive role here, occupying the anti-migrant space in the political market while never actually reducing migration.
With demographic shifts of this magnitude – and the strains it will place on our already strained infrastructure – it will take all of Winston Peters’ skills to keep walking this tightrope, and whoever replaces him as leader of his party will almost certainly lose their balance.
Both Christopher Luxon and Chris Hipkins have recently given speeches contemplating the year 2040 – the bicentenary of the signing of the Treaty of Waitangi – and how wonderful the nation will be by then if only we keep their political party in power.
During the past 12 months, a net 55,000 New Zealanders have delivered their verdicts on the major parties and their ability to competently govern the nation and left. It will probably be higher next year.
All we can say of our politics in 2040 is that our demographics will look very different: marginally more Māori, many fewer Pākehā, many more Asian New Zealanders. They will make up a plurality of the middle class, where elections are decided.
Hopefully, when selecting which batch of ruthless, ambitious politicians to vote for, they’ll make better choices than we have in the past 20 years and won’t be driving their children to the airport when they graduate because they’re obviously better off somewhere else.
For Danyl McLauchlan’s Budget commentary, go here.
