Wednesday, May 29, 2024

Bruce Cotterill: New Zealand will have six million people – we need to take action to be ready

Statistics NZ announced last week that our population has now reached 5.339 million people.

For decades we said that we needed our population to be over five million. Population was cited as a solution to our economic growth and financial freedom.

A few years back, we made it through the five million population barrier. And guess what: Despite talking about it for years, we weren’t ready.

We’re not very good at aspiration in this country, but getting our population to five million was something that people, including prime ministers, talked about.

But we didn’t plan for it.

Admittedly, it happened quickly. In 2014 the total was 4.24 million. So we’ve grown by over one million people in just 10 years. That’s 25 per cent growth. It would be difficult for any country to cope with

And it’s not slowing down. The latest statistics tell us that we’ve had net migration of 111,100 in the year to March 2024. If we continue at a similar level, and assuming our current running rate of 20,000 more births than deaths each year, we’ll have six million people living here in 2029, just five years away.

Again, we’re not ready.

We don’t have enough houses. Our roads and motorways are clogged, even on a Saturday morning. We have more people than we can cope with, and yet we don’t have enough workers in critically important roles.

It can take a month to get an appointment with a doctor. Appointments with specialists are months in the making. Despite a decade of warnings, hospital waiting lists are worse than ever. Accident and emergency departments are over-flowing.

And despite hundreds of millions of dollars spent over the last 30 years, we still don’t have decent, fit for purpose, public transport systems.

One of the reasons is that our little country that was once the envy of the world has stopped backing itself. It’s easy to blame the red tape, and we have too much of that. However, from government to councils to corporates, our people, even those in responsible roles, won’t make decisions without reference to a consultant’s report. And we can’t trim a tree or dig a hole beside the road without 400m of orange cones in each direction notifying us of the “danger”. We spend millions of dollars planning a bridge or a railway line, but then choose not to build it. We have become risk-averse to the point of procrastination and ultimately gridlock.

At the risk of generalising, the generations that grew up with hard-working parents whose way of life forced tough decisions and resilience in their children has been replaced by a generation that shows no such capacity to cope. Taking responsibility for making decisions is a critical skill. Our welfare system, once the envy of the world for our ability to look after those who needed it, was replaced by a welfare system that looks after those who want it. We have talked about change for 30 years and yet we show no ability to cope with it.

Sooner or later the dam will burst. When the system can’t take it anymore. That time will come with six million people.

It would be easy to say we need to fix things. But the challenge is that we now have major constraints, the largest of which is financial. The last Government increased government spending by more than 80 per cent, and employed an additional 18,000 public servants. Those decisions cost a lot, and we don’t have much to show for it. As is now well-known, we borrowed an additional $100 billion to pay for it all.

You may have noticed that the word “billion” rolls off tongues nowadays like the word “million” once did. But we need to think about what a billion means. As previously mentioned in this column, a billion seconds ago it was September 1992. A billion minutes ago it was the year 122AD. A billion is a lot. A billion dollars is huge.

And so consider that one government agency alone, Kāinga Ora, is dealing with debt of $23b. This week saw the arrival of the long-awaited report into the housing authority by Sir Bill English. For one government department alone, in a country of 5.3 million people, to have debt of $23b, is unthinkable. If they had built the houses we need, that debt might be manageable. But they haven’t, and it isn’t.

If we generously assume it should cost $600,000 to build a Kāinga Ora home, then $23b should give us 38,000 homes. That would solve a lot of problems. But we don’t have them because although we spent the money, we didn’t build the houses.

It’s just one example of a government department that has failed the taxpayer. There are plenty of others.

In the meantime we read more and more stories about Kiwis leaving their troubled country. According to Statistics NZ, a net 52,500 Kiwis left the country in the year to March. More than half of them are moving to Australia, where they are finding a better pay packet and better attitudes.

On the flip side we have more people moving here than we are losing. Net migration of non-New Zealand citizens for the same period topped 163,600. And so, the population continues to grow, despite an infrastructure that is simply not coping with the numbers we already have.

It’s fortunate that as our own people depart, we have more people wanting to come here than we have capacity for. Note the word capacity, not space. We have plenty of space. Japan squeezes 122 million people into a land area just 40 per cent larger than ours. The UK, with slightly less area than us houses just on 68 million people, 12.7 times the population of New Zealand. So it’s not about the space.

But capacity is a different beast. And through bad planning, poorly directed investment, and a gradual decline in our ability to back ourselves to follow through on a good idea, we have failed to build the capacity to cope with a level of population that we have long wished for.

So what can we do?

Firstly, we need to somehow limit our intake for a few years. Not because we don’t want the people who want to come here. We do. But it’s no good if we can’t cope with them.

During the break at the border, we need to put some serious work into our transport infrastructure, housing, healthcare and education frameworks. We have to be able to cope with more people. We need to get on top of the crimewave too, before we start importing more lawlessness from other countries.

We should then prioritise the arrival of those people who are close family members of those who are already here and contributing positively. Families create better societies.

Next up, we need to focus on our priority professions. We need doctors, nurses, teachers and policemen. But we also need truck drivers and highway workers. Let’s get them in, fast track the qualifications of those who need them (we already have too many doctors driving taxis), and get them using their skills to help build our country.

While the rest of the world is in strife, there is an opportunity to overcome our financial malaise. After all, we need money. Why not open our doors to wealthy people looking for a new place to call home?

Despite the fact that we’re not currently putting our best face on, compared to their homelands, we have great appeal. We’re isolated from many of the world’s trouble spots, and although not perfect, we’re cleaner and greener than most.

We offer an outdoor lifestyle that’s up with the best and we do activities that rich people love, like sailing, golf, skiing and wine-making, as well as anywhere in the world. And we’re cool.

A special tax category to encourage the world’s wealthiest to base themselves and their worldwide income here, would make an enormous difference to our prospects. Maybe we cap it at 200 people, a limit which in turn will increase demand. Properly structured they’d bring a billion dollars of tax income, not to mention the value that comes with them having businesses and employing people here.

But we need to get the basics right.

And we need to learn how to turn our aspirations into action.

I remember being a part of conversations about a waterfront stadium in Auckland in the 1990s. Those conversations are still going. What has it cost for the various proposals over the years? What is the opportunity cost of no decisions being made? Just ask Christchurch. When the post-earthquake planning was done, a new stadium was planned for 2017. The anticipated cost as I recall, was $280 million. But, in true Kiwi fashion, we debated it, put it off. Construction finally commenced at the end of 2022. It will be finished in 2026 and the final cost is projected at $683m.

Indecision costs us money.

Even putting the red tape to one side, such hesitancy is a function of us not really knowing what we want or who we want to be. Believe it or not, we need vision and aspiration. And then we need to go for it, selectively and within our financial boundaries.

I get a sense that the current Government is working on this stuff. But I’m not convinced that the aspiration is clear enough or the activity is fast enough.

We must be bold. Let’s accept that six million is the new target. Then let’s build the country for that number. And then we can open the doors to the desirable people who want to contribute to this country. When we’re ready.

Bruce Cotterill, a five time CEO and current Company Chairman and Director with extensive experience across a range of industries including real estate, media, financial services, technology and retail. Bruce regularly blogs on - where this article was sourced

1 comment:

I.C. Clairly said...

Most look at this issue quantitively, rather than qualitatively. The assumption seems to be "we are going to have massive population growth. OK, so how are we going to make the infrastructure to cope?"

We only "need" more infrastructure and yet more immigrants to service the ever-increasing population (the "skills shortage" argument) because of the above presupposition, i.e. that having unending mass immigration at replacement levels is a given, and that there is no other option.

How about we have no immigration, or even start deporting some of these people. That would forestall, an solve, many of the problems at a stroke. But no, solving problems in a pragmatic and unapologetic way is "racist" (because brown people tend to be a large element of so many social problems, much to the annoyance of the egalitarian idealists and social constructivists out there)

As the author notes, New Zealand's population has increased by 25% in 10 YEARS. That is staggering.

But not only is this an extra 1/4 of the population, these people are, by and large, ethnic and cultural aliens. Everyone notices this, and most probably, feel uneasy about the rapid demographic change and accompanying changes to the social fabric.

Look into a crystal ball: on the current trajectory, in 50, or god forbid 100, years from now, the society that formed an once constituted New Zealand will be gone and will have been replaced beyond recognition. All because people were scared of being thought of and called racist.