A few weeks ago my colleague Andrew Whiteford wrote here about New Zealand’s success in attracting migrants with skills appropriate to our labour market.  Yet at the same time there is a massive outflow of New Zealanders overseas, in particular to Australia.  In the year to July 2008 80,872 people left New Zealand on a long-term or permanent basis.  Of these, 45,731 were heading to Australia.  This equates to 125 per day – just shy of a fully loaded Boeing 737-300 everyday (133 passengers). 

The net consequence is that, although our migration policy has been successful at attracting many skilled people to come and live here, most of this effort is simply to replace those who are departing.  As a result there has been a considerable amount of churn in the people living in New Zealand in recent years, and this is particularly the case in Auckland.  Between 2001 and 2006, 65,421 people came from overseas to live in Auckland City.  But over the same period 65,265 Aucklanders left to live overseas.  The net increase to the city’s population from overseas migration was just 156.

Migrants bring with them many desirable attributes.  They can have skills that complement and supplement those available from the existing population.  Interacting with people from different cultures enriches our understanding of the rest of the world, and migrants bring an outsider’s perspective that can both reaffirm what is good about living in New Zealand and also question what may not be so good – both being things that we might take for granted.  But migrants also come with disadvantages.  It takes time for new arrivals to build up contacts and networks.  It also takes time for people to learn about how our system and society works.  There can also be cultural differences and misunderstandings that might make it more difficult to get things done. 

On the other side of the equation, having New Zealanders living overseas is also useful in terms of building up contacts around the world and, should they return, bringing back experiences of the rest of the world.  On an individual basis we are usually pleased that people we know are experiencing success overseas.  But from a national perspective New Zealanders leaving to live overseas also represents a lost opportunity for New Zealand.  We have contributed to their upbringing, their health, and their education, but other countries will receive the lion’s share of the benefits of this investment. 

Although much effort has gone into devising systems for attracting useful people to come live here in New Zealand, it is less clear that there has been a coherent approach towards ensuring that New Zealanders remain happy living here.  This reflects the greater complexity involved in encouraging New Zealanders to continue living here.  It is reasonably simple to change inward migration numbers – a few rule changes can have a startling impact on immigration flows.  For example, the promotion of the English language criteria in the 1990s was probably a major factor behind the decline in residency approvals from almost 60,000 in 1996 to under 30,000 in 1998.  But when it comes to the retention of New Zealand residents, the whole suite of economic, social and environmental policies come into play. 

Being an economist, I consider that fostering economic performance is of primary concern.  Job security, reasonable wages, and positive prospects for the future reduce levels of dissatisfaction and the incentives to consider living elsewhere.  A well-performing economy also means that the nation has more resources available to address social and environmental issues. 

Economic prosperity can come simply from good luck, eg high world prices for the commodities that we produce.  This helps but is perhaps not sufficient to maintain satisfaction.  The good luck may not last and the majority of people need to think that they will get their share of such windfalls.  Opportunity is as important as current outcomes.  This is where policy becomes important.  If people believe that the distribution of wealth reflects luck, ingrained privilege, or government discretion, the environment will not be one that is conducive to hard work and risk taking. 

A holistic approach is required.  For example, the government has been very generous in providing interest-free loans to tertiary students.  But it was also this government that raised the top tax rate, thus reducing the lifetime earning potential of our brightest and most able.  Likewise spending more on tertiary students, most of whom, let’s face it, already have good lifetime prospects, limits funding to address more important social issues such as the prevention of child maltreatment and early childhood education programmes.

Ultimately outward migration flows are a barometer of perceptions of government management.  The steady growth in departures suggests a growing disillusion with the current government.  It potentially also suggests a lack of confidence that the alternative will make much difference.