A tsunami of wing clipped kiwi?

Written By: - Date published: 9:52 am, November 9th, 2020 - 45 comments
Categories: Economy, exports, immigration, International - Tags:

Liam Dann @ NZ Herald is reporting (paywalled) “Historic wave of returning Kiwis has just begun – new expat survey“. The press release from KEA is here. The results of the survey are here. I’d just comment that this survey is effectively self-selected and more about intention than plans.

But the rush back home has definitely been happening and appears to mainly be constrained at present by the limits on quarantine facilities. Liam Dann also did a piece over the weekend “What went wrong? Why is the economy doing so well?” that looked at some of the immediate implications.

Why are things going so well for the New Zealand economy?

Latest unemployment numbers came in at 5.3 per cent last week – a figure that for most of the past few decades would have been considered pretty good.

It isn’t good, of course.

The pandemic and the closure of New Zealand’s borders made about 37,000 more people unemployed in the September quarter.

And that doesn’t include those who have lost work but don’t qualify as officially unemployed for a variety of statistical reasons.

But relatively speaking, 5.3 per cent unemployment is not bad, either.

In April, for example, Treasury forecast that unemployment would hit 9.8 per cent in the September quarter.

In the early 1990s it was close to 11 per cent.

If we were able to send this week’s data back to our panicked selves of seven month ago – we would breath a sigh of relief.

The forecasts of bank economists have also proved overly pessimistic.

NZ Herald: “What went wrong? Why is the economy doing so well?

As he points out, there is a point of view that keeps looking at the data and persisting in saying that it isn’t going to last. That it is all being propped up by the money flowing out of government debt. And yes – there is some truth that happened – especially during the lock downs. But the wage and business subsidies are either stopped or winding down.

Sure, we’re going to keep hearing that from the likes of David Seymour. Richard Harmon @ Politik in “The debate we didn’t have” (paywalled). But I have sparrows from winter who appear to have similar memories than David Seymour @ ACT – short-term and related to feeding. My partner was feeding some young sparrows when it got cold and they still pop in hopefully months after we stopped. Seymour is still repeating the same motions and words he did early this year and clearly hasn’t engaged his brain yet.

Kiwibank Chief Economist, Jarrod Kerr said the unemployment figure highlighted the damage from the lockdown.

“The spike is essentially payback for a counterintuitive fall in the number unemployed – and the unemployment rate –in the June quarter,” he said.

He pointed out that to be counted as unemployed someone has to be actively seeking work and for many, that was not possible during the lockdown.

“An inability of those unemployed to seek paid employment during lockdown masked the true damage,” he said.  

“We got lucky on Covid-19,” said Seymour.

Politik : “The debate we didn’t have

Seymour then proceeds to compare it with the much smaller increase in absolute employment in one quarter that happened in the GFC – ignoring that the GFC was unfurling for over than eighteen months in NZ before it had its full effect. Comparing a one-off event an increase in unemployed after the release of a wage subsidy is a comparison between a rising flood and a tsunami.

But also in case he hadn’t noticed, the sugar rush part of the fiscal stimulus has been pretty well finished for a while now. It currently requires that businesses are able to demonstrate that they had something like a drop of 40% from the same months last year.

Larger businesses have been regularly paying back subsidies received because they no longer met the requirements when they took them for. This is the only sensible and rational approach when you have the IRD eventually going to have a look at businesses wholesale using a massive computer system to compare time data not only of the business, but also their employees.

But we are approaching a crunch point for this view.

The wage subsidies are finished and we are about to feel the absence of international tourists more acutely as we reach the traditional peak of the season.

But if anything, the risk of that narrative proving incorrect appears weighted to the upside.

In other words, the bigger risk is that things keep going better than expected.

Perhaps our economy was just more robust than we thought.

NZ Herald: “What went wrong? Why is the economy doing so well?

Exports have been doing well. Most of our major target markets haven’t been overly affected by the pandemic. The virus is out of control in the North and South Americas and Europe. As Liam Dann says “Overall something like 75 per cent of our exports by value are now to the Asia Pacific.”. If you look at any trade page you’ll see something like this (I highlighted the Americas and European destinations).

Top export destinations of commodities from New Zealand in 2019:

  • China with a share of 27% (11 billion US$)
  • Australia with a share of 14.5% (5.74 billion US$)
  • USA with a share of 9.4% (3.71 billion US$)
  • Japan with a share of 5.84% (2.31 billion US$)
  • Korea with a share of 2.81% (1.11 billion US$)
  • United Kingdom with a share of 2.47% (980 million US$)
  • Hong Kong with a share of 2.12% (838 million US$)
  • Other Asia, nes with a share of 1.95% (773 million US$)
  • Singapore with a share of 1.87% (741 million US$)
  • Malaysia with a share of 1.77% (703 million US$)

We haven’t got full data yet, but even the badly afflicted destinations appear to have been not doing too badly for our exports. Wines in particular appear to be valued during lock downs.

The other three main sources of income for NZ are flight related.

  • Overseas tourism is obviously munted – but it appears to be partially offset by our tourists not going offshore and having to move within NZ. Making kiwi flightless again also appears to be good for balance of trade. Our exports of cash have diminished markedly without overseas flights. The full effects of this won’t really show until about now. But there has been 6 months for these seasonal businesses to adjust.
  • Students not arriving will continue to plague the education sector. Hopefully they’re flexible enough to adjust to that, because they have at least another year of that. Probably more as I can’t see that trade reviving very fast. Parents tend to be somewhat risk adverse about children.
  • Immigration – we’ve had a major fall in migrants. But not really.

It looks like this year we’ve had something like 50,000 kiwis or permanent residents returned – keeping our immigration industries like real estate agents busy. Plus stacked immigration or refugees who’d like to get some place that isn’t quite as traumatic as they’ve been observing.

According to KEA’s survey there are upwards to half a million kiwis who think that they may be heading our way. Now I suspect that is over the top. But there are a lot of people I know who are planning or thinking on returning. I wouldn’t discount it. And we can’t refuse them – just make them go through quarantine.

I’m just not sure where we’ve going to stack them. Especially here in Auckland where most of them say they want to go. Fortunately most will have urban skills and be able to feed into our burgeoning urban exports.

45 comments on “A tsunami of wing clipped kiwi? ”

  1. Janet 1

    Yes the cuckoos are planning to come home it seems.

    more from the same pay-walled article

    "More than 50,000 Kiwis have already returned home this year as the pandemic has ravaged the world.

    But as many as 500,000 could be on their way in the next few years.

    A survey of 15,000 expats by KEA (Kiwi Expats Association) found that 49 per cent were planning to come home.

    About half of them said they would be returning in the next two years."

    They cannot expect full free healthcare, superannuation and welfare generally. Any entitlement will need to be on a pro-rata bases -time worked in NZ / time worked off-shore.

    • alwyn 1.1

      You say that "They cannot expect full free healthcare …..".

      That may be your opinion but I certainly don't think it is the opinion of ex-pat Kiwis, or at least I know it isn't the view of a number of Kiwis I know who live in Australia. There sole reason for planning to come home is that they do expect to get welfare benefits here which they don't get in Oz.

      Mind you they don't expect to stay here if things pick up in Australia. They will be gone from here as they seem to think of New Zealand as simply being a safe haven, and a generous benefactor, in a storm.

      That is only anecdotal of course. It tends however to be the view of the children of my friends where the children are currently in Australia. There are quite a large number of them looking at the prospect of a (perhaps temporary) return.

      Since there doesn't seem to be any indication that our Government has any intention of cutting back benefits, or Superannuation entitlements, here I would think that their belief in what they are entitled to will prove to be true.

      • Tricledrown 1.1.1

        Alwynger if you have been out of the country for more than 10years you have no access to any benefit except an emergency Benefit which is much lower than standard benefits and has to be paid back. There are other stand down periods as well.

        Facts instead of tormenting divisiveness but as unusual you always have divide New Zealanders with your ignorant Trumpish rhetoric.

    • Tricledrown 1.2

      Janet there are standown periods for New Zealanders returning home depending how long they have been out of the country.

      Seeding division is a Trumpish uneducated simplistic and nasty.

      Many of these people are bringing lots of Money ,are highly educated motivated people we have been wanting in our economy for a very long time.

      So they will be paying higher taxes and contributing more to the economy than you I bet.Do you pay enough taxes to cover your govt services.

      These returnees will have skills and experience that you only get by going overseas and working in much bigger economies.

      • woodart 1.2.1

        yes, many, if not most returning kiwis will bring skills and $$$ that will benefit the country.

      • Janet 1.2.2

        “So they will be paying higher taxes and contributing more to the economy than you I bet.Do you pay enough taxes to cover your govt services.

        No, I do not pay enough taxes now to cover the superannuation I get now ! BUT I am still running a small farm and am working fulltime on it and over all my working years – not all self -employed but , all in NZ , I will have relatively paid much more tax to the NZ government than many returning will have when they retire.

        I had a friend return to NZ who had worked half his working life in NZ and the other half elsewhere in the world. He was over 70 when he returned home. He was stood down, I think it was 5 yrs , before he could receive any superannuation. In his case it would have definitely been better for him if he could have received half- superannuation from the year he returned home. Pro-rata . I think there are things that need to be addressed to make everything fair.

  2. SPC 2

    The lack of students, tourists and migrant workers means more jobs for locals.

    And we will hear a lot of businesses complaining about that – locals not skilled (less mention of having to pay less skilled locals more to do the work).

    And the numbers of Kiwis coming in is rationed by managed isolation, and some of them are just relocating because they can work on-line and enjoy society freedom and others – in front-line education and health, who can walk into "safe" jobs.

    The tentative plans of those overseas, will for most, come to nothing (as they will still be in the queue when this is over – by effective treatment if not vaccine).

    I do not see any population increase inflow – because the numbers coming in from Oz (loss of jobs) is restricted, and yet those of use who want better pay and cheaper housing can still go to Oz.

  3. RedLogix 3

    This is a theme I've returned to often. Some 25% of all people born in NZ now live elsewhere, often chasing opportunity that simply didn't exist here.

    The unexamined risk was that a global event like COVID could precipitate a mass return. The big impact being obviously to an already stressed housing market.

    Yet many will also return with capital and valuable experience that we can embrace wholeheartedly if we can set aside our often parochial instincts.

    • Janet 3.1

      Yes I welcome them home too, they are us , and they will replace the so called "need" for continuing immigration , but "More than half of respondents had been away for more than 10 years." They will be coming to an age when they will need more healthcare and then superannuation and they have not been paying forward for this.

  4. Muttonbird 4

    They should be made to build new and pay for their own required infrastructure. Existing residential property should be off limits to these fair-weather Kiwis.

    • SPC 4.1

      For mine, its those borrowing money to buy investment property who should be restricted to newbuilds. How this can be done is the problem/question? Maybe a mortgage surcharge on loans to investors when they buy existing homes.

      • Patricia Bremner 4.1.1

        In other countries the deposit controls investors. Up to 50% cash deposit for investment properties with strong tax rules for the first 5 years.(not borrowed money) and low deposit for home owners who must live in the property as their principal address for 3 years.

        Many Kiwis coming back will have been in unsecured work, which has since disappeared.

        They are looking at the employment, but housing keeping warm and food costs will be a shock for those returning from Australia particularly.

        Many will though bring portable business and wealth. So over all people seeing this as a desirable place to live is beneficial.

        Keeping the virus under control is critical to this so the continued control through the voucher system is sensible. The promoting of "sad cases" will continue, and perhaps we need a facility kept for medical emergency critical or some of those situations which can not be planned for. jmo.

        • SPC 4.1.1.1

          I would have the deposit controls like that, but the RB Governor is independent and his brief is merely to keep banks safe and manage inflation – not equity, or any sort of housing policy as such.

  5. Sanctuary 5

    There is huge potential culture clash that could occur here – a huge influx of highly self-regarding expats who may exude an attitude of doing us all an enormous favour by gracing us with their return running head long into a locals who might regard them as fair weather kiwis will make for interesting times.

    • AB 5.1

      I fully expect to be condescended to by at least some of these unimaginably brilliant returnees. I’ll get used to it.

  6. Pat 6

    Unemployment is a lagging indicator and the assumptions about returning expats are exactly that, assumptions….many are returning temporarily and not all are cashed up and able to purchase property.

    The local economy is still being supported by wage subsidies (only recently ended), enhanced unemployment payments (due to end), mortgage holidays (end in March) and the export markets can be expected to decline as our offshore markets also feel the impact of shrinking economic activity.

    The impacts do not happen instantly and the longer the recession lasts the greater the cascade effect

    • Tricledrown 6.1

      Pat bordering on xenophobia for years we have been complaining about the brain drain and how do we attract these highly educated people back to NZ.

      Now we are getting these people back some people are trying to make divisive cheap nasty political shots.

      • Pat 6.1.1

        Are you suggesting that my comment is expressing xenophobia and is some sort of cheap shot?

        • Tricledrown 6.1.1.1

          Yes claiming our economy is going to be much worse is completely unfounded most economic indicators show there are many areas of facing major shortages in Labour Bank economists and David Seymour have claimed double digit unemployment are going to hit NZ.

          They have been proven Wrong.

          This type of hysteria is feeding into the narrative that returning kiwis are taking NZ jobs.

          Facts please .

          Exports are going up in most areas because we are Covid free,especially as meat processing plants many of the countries we export to have shut because of Covid.Primary exports are well up on previous years so let's have some balance in the argument.

          • Pat 6.1.1.1.1

            What part of 'lagging indicator' do you not understand?….the major economic impacts of the GFC did not present until 2-3 years after the event…it takes time for businesses to fail, it takes time for mortgages to fall into arrears, it takes time to retrain and develop new employment opportunities.

            Do you expect the government is willing or able to sustain the pre covid level of activity for 3 years?….they themselves say they cannot.

            As to exports our covid free status has little to do with whether our major markets can buy what we can offer, indeed their own covid ravaged economies will increasingly struggle with unemployment and reduced GDP (recession)….not to mention the increased cost of transport from the most transport isolated part of the world.

            And am still not sure where the xenophobia enters into the discussion

            • Tricledrown 6.1.1.1.1.1

              Pat National were in power after 2008 their policies lead to a worse scenario then tax cuts for the well off tax increases for the poor .

              Minor stimulation packages that created a few jobs in roading.

              The Canterbury earthquakes were the turning point that got the economy of its knees effectively an accidental stimulation package of $80 odd billion $66 billion from insurance payouts the National govt got re elelected on the back of the economic stimulus it created.

              Labour this time around has pumped $200 billion in stimulus so far over 4 years .free apprenticeships as well

              So I don't expect the downturn to be as bad as the neigh sayers.

              Also Grant Robertson has said he will do more if necessary.

              [Please stick to one e-mail address, thanks]

              • Tricledrown

                Sorry also the $25 dollar benefit increase .

                Nationals GFC response was to blame the poor and drug use by beneficiaries which was eventually proven a total lie as around only 1% use compared to 10% among workers Todd Barclay ironically caught out in Bill Englishs (the DP and finance minister who demonized the unemployed)old electorate.

  7. Adrian 7

    After 2 years in Britain young Kiwis are sent packing anyway so the natural return rate is 50% give or take the few who can get residency.

    I'm surprised the 20% "Want To Come Home "rate is so low even with Covid.

    I think the survey is bullshit.

  8. Tony Veitch (not etc.) 8

    I bought a can of Ukrainian beer the other day (it wasn't very nice!) – why the f*** do we need beer from obscure parts of Europe or anywhere? Choice???

    Our exports will see us through the pandemic because we are a food producer, but perhaps we need some sort of import licensing policy (like in the 1960s) so that places like the Warehouse and others cannot bring in a lot of useless crap.

    • greywarshark 8.1

      I bought some little pottles of tiramisu? made in ITALY out of the supermarket chiller the other day. Quite nice, but totally inefficient except from the 'logic' and logistics of the free market. They are largely dairy goods, and can be made well by NZs. They had got to the clearance of the sell-before items, so gave them a whirl at a reduction. I prefer to buy it made at the local Italian pizzeria and wine place which I like to frequent, which has small desserts and baked goods.

    • Phil 8.2

      Most 'foreign' beer sold in NZ is brewed locally under license and tastes nothing like the true-equivalent. What was the brand?

      • Tony Veitch (not etc.) 8.2.1

        Sorry, thrown the can out but as I recall, Oblomon or similar. It did say 'imported' on the can.

      • tc 8.2.2

        Totally Phil, they stamped out the parallel importing of genuine Stella/Becks etc years back as chains like 'The Mill' would trumpet them being same price but imported.

        Independent (part of Asahi now) brews many aside from the 2 lion made beers mentioned above they're all consistently inferior.

        All good as kiwi craft beer is fantastic and nibbling ever so slightly into the main brands.

    • Tricledrown 8.3

      Don't buy foreign beer and then complain if we want to export then we need to import if we shut down imports other countries will do the same.

  9. Ad 9

    This government is spending tens of billions of debt and tax funding on infrastructure projects that make marginal improvements, but don't alter the economy at all.

    Even if we are able to sustain the same economy as before, that's not a good thing.

    • Overseas tourism indeed tourism itself is a low-wage, low-productivity, low-input, low-innovation economic sector. Propped us up for a decade.
    • Tertiary education as we practice it here is a low-wage, low-productivity, high bulk input, low-innovation economic sector.
    • Dairy and meat and forestry and fishing are predominantly low-wage, low-productivity, high bulk input sectors
    • Then there's the other mainstays of our economy, finance and insurance and property. The wages and salaries are better, but they are industries based principally on paying rent of one kind or other
    • And finally there's government infrastructure expenditure of tens of billions in debt and taxes. This is a low-return, low-productivity, low innovation sector. And as above in property, most of the money is tied up in rent in the form of maintenance.

    I’m really glad that the world continues to drink our wine, and elated that we are nowhere near 9% unemployed so far. But how much more of our money do central city landlords need in implied subsidy of their wealth?

    The above pretty much sums up our main private sector employment. Rod Oram and the Productivity Commission have been saying similar things for a while. But I haven’t seen fresh thinking out of MBIE or others on this whole picture for a while.

    The effort from government and private sector that's missing is the one where we start to focus on business sectors with low bulk and mass, high innovation requiring high brain input, low use of mass cheap labour, and high salaries. And doesn't need us to meet us in person.

    There's no useful plan yet other than advanced make-work programmes, and sectoral packages that continue to prop up what is simply not advancing our interests.

    It's great to have more Kiwi come home, but they need the focus and framework from central government and business that is more substantial than that outlined by Ardern so far.

    • Tony Veitch (not etc.) 9.1

      Yes Ad, we still suffer under the neolib mantra – low wages, bulk products so the rich can get richer, houses as commodities rather than a basic right, cheap imported labour and so on.

      Labour have the mandate to change all that, but will they, that is the question. I'm not holding my breath.

    • RedLogix 9.2

      focus on business sectors with low bulk and mass, high innovation requiring high brain input, low use of mass cheap labour, and high salaries.

      Often the precise kind of thing us 'entitled' ex-pats have been exposed to.

      When I went to Australia in 2013 I thought I knew what I was doing, seven years later I can only say that I was wrong. Yet the really silly part is that if I came back to NZ right now there would be no work for me, over qualified and too old.

      As for transforming our economy; I’d put my bet on radically improving our agricultural and horticultural sector. It’s what we’re good at.

      • Ad 9.2.1

        When do you start winding back Red?

        Most people who work in and out of countries have some idea of what their little cottage on the hill will look like, and when.

      • Draco T Bastard 9.2.2

        As for transforming our economy; I’d put my bet on radically improving our agricultural and horticultural sector. It’s what we’re good at.

        Its what we like to think we're good at but the reality is that there's no such thing as radically improving our agricultural and horticultural sector. Neither is an 'industry' that can be radically altered. Improvements are in the slim to none basket which is why the farmers keep complaining about the rules necessary to protect our waterways and other aspects of our environment.

  10. Craig H 10

    Tourism is a high portion of our GDP, but I think it helped that more than half was domestic tourism anyway, as stated we have had a lot of our own international tourists become domestic tourists (my wife and I did 2 weeks around Northland after our planned USA trip was a Covid casualty, was fantastic), and a lot of workers in the high volume international tourist market (e.g. Queenstown) were migrants, so when they lost their jobs, the impact on our labour market statistics was nil.

    • woodart 10.1

      yes, tourism very much a double edged sword, when it comes to employment, and $$$$ in or out of NZ. add to that, environmental costs( poo in waterways, and jet fuel burnt). would like to see some data re education industry and cheap foreign labour. suspect their is a high crossover.

      • Craig H 10.1.1

        Hard to say – I surmise that international education has less migrant employment because a lot of it is via NZ institutions (schools, universities and polytechs) with NZ teachers and educators. Obviously there are also private training establishments (PTEs in the industry lingo), but they still employ some NZ staff.

        • CrimsonGhost 10.1.1.1

          Nah man. student Loan scheme was National Neo-liberal bullshit in the first place. Was the general population asked via referendum if a good idea? No! Time for Universal Student Allowance or GMI or UBI. Time to write down debt/steadily work towards abolition of SLS. I like NZF idea (but expanded) of writing off 5%-10% for every year debtor working in NZ for benefit of NZ society & paying taxes. Charge an arm and a leg to overseas NZ debtors, but give a carrot of 10% off if they commit to returning and working for/in NZ for 5 years. Institute a matching system like Kiwisaver. every dollar paid down, Gov wipes .50c. SLS is a dead albatross around our younger peoples necks. The fact it's so actually pushed a lot of people to go offshore/stay offshore to avoid those concrete boots. A perverse incentive/hopefully unintended consequence of the stupid policy …along with making it harder for young to save for homes/get mortgages.

      • Poission 10.1.2

        Education is an interesting problem,fees (direct transfer are around 1.1 b) the rest of the assumption for the gdp makeup is living cost expenditure food, accomodation etc( some of which is driven by domestic work) which is transferable to a nz resident.

  11. Daily Lurker 11

    Be great to have them back once any overdue student loans are paid. Genuine hardship cases excepted.

    • Draco T Bastard 11.1

      The only thing that should be done with student loans is that they get written off.

    • CrimsonGhost 11.2

      Nah man. student Loan scheme was National Neo-liberal bullshit in the first place. Was the general population asked via referendum if a good idea? No! Time for Universal Student Allowance or GMI or UBI. Time to write down debt/steadily work towards abolition of SLS. I like NZF idea (but expanded) of writing off 5%-10% for every year debtor working in NZ for benefit of NZ society & paying taxes. Charge an arm and a leg to overseas NZ debtors, but give a carrot of 10% off if they commit to returning and working for/in NZ for 5 years. Institute a matching system like Kiwisaver. every dollar paid down, Gov wipes .50c. SLS is a dead albatross around our younger peoples necks. The fact it's so actually pushed a lot of people to go offshore/stay offshore to avoid those concrete boots. A perverse incentive/hopefully unintended consequence of the stupid policy …along with making it harder for young to save for homes/get mortgages.