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Letters from the Southern Man

Migrating is more than just filling in forms and submitting paperwork, its a complex process that will test even the most resilient of people. 

Understanding New Zealand is paramount to your immigration survival and to give you a realistic view of the country, its people and how we see the world, read our weekly Southern Man blogs. Often humorous, sometimes challenging, but always food for thought.

The Year That Was and What May Be

Posted by Iain on Dec. 9, 2016, 4:16 p.m. in New Zealand Economy

The Year That Was and What May Be

As the Prime Minister passes the baton to his long time Deputy and the year starts to draw to a close, it is a good time to take stock of what the economy holds for New Zealand over the next three years.

The Ministry of Business, Innovation and Employment forecasts another 183,000 jobs in that time, which is not far off that of the past three years. That’s pretty impressive and promising if you are contemplating a move to New Zealand, given about half of those jobs are estimated to be skilled or highly skilled. I have no doubt the mismatch between the skills we have and are creating at home will mean that’s around 50,000 jobs that migrants will have to fill.

Government coffers are set to swell on the back of 3–3.5% predicted growth in the economy over that time.

Treasury is forecasting surpluses over the next three years of around $11 billion (around $8 billion three years out). The Government is already in surplus, dented somewhat by the cost of the latest infrastructure bill from the earthquake of last month.

Things then are looking pretty rosy. We have to hope Donald trump doesn’t go and do anything too stupid as it only ever takes one shock (natural or man made) to put a dampener on any predictions.

For those of you thinking of timing a move, those that stare into their crystal balls believe we are going to start to see interest rate rises next year as all this good economic news starts to feed through into inflation in late 2017. Right now it is sitting at 0.2% but with unemployment predicted to fall to around 4.5% over that time (with skilled unemployment even lower) inflation is going to start to reappear we are told.

That has today seen a jump in the value of the dollar as markets start to build in such expectations.

What challenges lie ahead:

  1. Hospitality and infrastructure groaning under the high numbers of tourists. Government is proposing (and I’ll bet will get) a bed tax or similar to help expand infrastructure in areas where locals cannot afford to fund toilets and public amenities tourists require out of a small local rates base. Tourist numbers are increasing exponentially – a good problem to have.
  2. Infrastructure groaning under the continued high rate of net migration. With the Australian economy contracting 0.5% recently no doubt those Aussies will continue to stream across the Tasman and more Kiwis will come home. All points to continued upward pressure on house prices, pressure on schools and hospitals (but what a nice problem to have)
  3. Continued mismatch between local skills sets and the jobs being created is both a political and economic issue – the Government needs to start addressing this more holistically. I may be in the visa game and making a positive contribution to the nation’s skill base but our own children should be coming first. Education reform and how we subsidise University courses needs to reflect the skills we need rather than the ones we are awash with.
  4. 2017 – The year of the inner bigot? We have seen this wave of bigotry spread from Europe to the UK to Australia and the US in 2016. We are heading into an election year in New Zealand where there is always a minority of people who’d prefer it if all migrants came from the UK and we could ‘return to the dream time of 1970’ (God forbid, I’d be the first one out the door). There is the prospect of the one party that advocates this holding the balance of power in any future administration. If that happens this populist politician will no doubt do what he did last time he held the balance of power and could try and cut migrant numbers – nothing. That’s right – he campaigned on slashing migrant numbers became the Deputy PM and did...nothing. Clearly a wasted vote and my advice to anyone concerned about changes to migration settings based on the resignation of the PM this week or who might be PM next week or in power a year from today is to relax – 90% or more of New Zealanders not only see migration as positive but in our best interests. Not to mention, we like being ‘international’. New Zealand in the 1970s had to have been one of the dullest places on Earth. Today it is vibrant, outward looking and connected. The challenge for our politicians is not to succumb to the temptation to go all ‘Trump’ on us just to get their hands on the levers of power. There will be those that cannot resist of course and they’ll grab the headlines.

All in all it’s been a good year for the country and the people. Things for the most part continue to get better for the significant majority. The economy is in good shape, the people have made clear they don’ want tax cuts with these surpluses but improved Government services, more money to go to health and more to education. I am with them. Our collective hard work, creativity and tolerance has built the foundation for a very prosperous few years.

If the rest of the world can hold it together and there are no major economic shocks all should be well as we kiss goodbye to 2016 and welcome in 2017.

Until next week

Iain MacLeod

Southern Man

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