In the game that really matters, Australia is smashing NZzzz

New Zealand’s grip on the Bledisloe Cup looks permanent.

But in the great economic game they play in heaven, Australia is utterly dominating the Kiwis with mounting evidence the financial gap between the trans-Tasman nations is widening.

And it is playing out via immigration trends that suggest unless something changes, New Zealand will be little more than a retirement community for dairy farmers, Lord of the Rings tragics and worn-out All Blacks.

New Zealand continues to dominate in the Bledisloe Cup. Meanwhile, Kiwis are surging to Australia in search of better opportunities.Credit: Getty Images

Amid the recent debate over migration in this country, the events unfolding between Australia and New Zealand have been largely ignored.

Not in New Zealand. It’s reached the point that the nation’s treasury department recently released a series of research papers with most focusing on the movement of people out of the country and across the Tasman.

The work was done for two reasons: New Zealand’s economy is in all-sorts of trouble and there has been a lively domestic debate about immigration.

There’s no getting away from New Zealand’s current economic woes. GDP is around the same as it was two years ago with annual growth now at minus 1.1 per cent (and worse on a per capita basis). Both inflation and unemployment are higher than in Australia.

Immigration, and population growth in general, have also become a major debating point.

Ahead of COVID, annual net migration to New Zealand (population 5.3 million) was around 30,000. But, like Australia, after COVID it soared and reached more than 135,000 in late 2023.

It retreated to just 12,000 to the end of September this year.

What prompted some of the research by the NZ Treasury was Australia’s influence/pull on those migration figures.

While New Zealand’s net migrant intake is in the black, it’s an entirely different story in terms of its trans-Tasman neighbours. In the past 12 months, 29,000 more people left New Zealand for Australia than vice versa, while over the past four years the total number who made that trip from Aotearoa is 165,800 – far more than the 75,800 who went the other way.

More than 900,000 New Zealanders don’t live in New Zealand, and of the Kiwi diaspora, about two-thirds are in Australia. The Gold Coast, Redbank Plains in Brisbane, Point Cook in Melbourne and Blacktown in Sydney are all Kiwi hotspots.

New Zealand’s total diaspora – almost 20 per cent of the country’s population – are, according to NZ Treasury, a “contingent asset and a contingent liability”.

Credit: Dionne Gain

It is estimated that of all NZ-born residents aged between 40 and 44, about a third had at least spent some time overseas but they paid 42 per cent of all personal tax of this group. In other words, they were earning more (and paying more tax) than those who had never ventured away from NZ.

But if all the Kiwis living abroad were to return it would put a substantial strain on the nation’s budget.

Australia is an attractive destination for New Zealanders. Higher wages and a stronger jobs market act as a huge incentive to cross the ditch.

And when they make the move, the NZ Treasury research found Kiwis are more likely to stay here rather than return to the Shaky Isles.

One in five Kiwis in their 20s leave the nation. That climbs to 30 per cent for those with a bachelor’s degree, and it reaches 40 per cent for those with a master’s degree or higher.

Fewer people are heading into New Zealand as more leave the country permanently.Credit: Getty Images

Anyone who grew up in a country town would recognise the pattern. Young people head for the big smoke, be it for study or work, leaving a large demographic hole in the town in which they were raised.

It’s one reason why regional areas are increasingly different to urban parts of the country – they are older, have fewer kids and are less affluent. Much of that is simply due to the departure of people in their late teenage years or early 20s.

In this case, Australia is the big smoke and New Zealand is the small country town.

Without change, that’s New Zealand’s future.

The Asia-Pacific head for Capital Economics, Marcel Thieliant, noted this week that the trans-Tasman exodus will continue to weigh on the Kiwi economy.

“The tighter labour market in Australia will continue to encourage large numbers of New Zealanders to move to Australia, holding back the recovery in the housing market and consumer spending,” he said.

New Zealand’s statistical agency estimates that in the three months to March this year, 58 per cent of all Kiwi migration was to Australia.

A large proportion of those people are never going back to New Zealand.

The economic problems of New Zealand are currently taxing both the government of Christopher Luxon and the nation’s central bank (which lost its governor in very murky circumstances earlier this year).

A poor economy acts as an incentive for those with skills and education to head for greener pastures. In this case, the greener pastures are just a 3½-hour flight away in a nation that is, apart from the accents and quality of its cricket and rugby teams, largely the same.

But one is offering better wages, a stronger economy and more options.

From Phar Lap to Crowded House to Russell Crowe, Australia has a proud history of taking the best New Zealand has to offer and claiming it as our own. We are still in dispute over the pavlova.

Unless New Zealand gets its economic house in order, the brain and talent drain out of New Zealand will only accelerate.

Shane Wright is a senior economics correspondent for The Age and Sydney Morning Herald.

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