By Distinguished Professor Paul Spoonley, Pro Vice-Chancellor of the College of Humanities and Social Sciences, Massey University.
This second decade of the 21st century is proving to be one of the most transformative globally and locally, especially in terms of demographic change.
The consequences for the ageing of societies from the pipeline effects of the baby boom in the post second world way period combined with declining fertility levels is changing the composition and economic dynamics of nearly all of the OECD states.
The late twentieth century contracts that provided a degree of welfare and stability began to unpick with major shifts in economic and political ideology in the last decades of the century. The first decade of the twenty-first century ended with the Global Financial Crises but as countries, including New Zealand, emerged from the crises, the key elements of the new demography were more obvious.
An ageing population
In New Zealand, this is represented by the doubling of the population aged over 65, with parts of the country seeing this age group representing a third of the total local population. This is unprecedented in New Zealand history. Are we prepared for this fundamental shift? Are we – in terms of national policy or local provisions – age friendly, in this case in a society which is dominated by older age groups? The retirement commissioner has asked about the age of superannuation entitlement (increasing it to age 67) or how to pay for this benefit in the future. These are critical policy and political issues.
We know what is happening and when it will happen. We know how much of the government’s resource is required. We know the implications for the health care system. But there seems a reluctance to engage with what is rapidly arriving. Why?
The second element is the possibility that fertility levels will go sub-replacement. New Zealand is one of the few OECD countries that is currently still at replacement levels (2.1 children per woman) compared to Australia (1.7) or parts of Europe (1.2). We will go sub-replacement but just not now.
The question then becomes how you grow the population – or at what rate and how?
Interestingly, New Zealand grew at 2.1 percent in 2016 which is high by OECD standards. By contrast, Japan was the first modern state to decline in terms of its total population. Japan and Germany are the most advanced aged societies who are struggling to deal with population stagnation and increasingly decline. Did you wonder why Germany accepted a million Syrian refugees? Humanitarian considerations were part of it but also they represented a significant injection of people in a society which is struggling to find workers.
It is a common problem – population stagnation – and will grow more common, if not in terms of a national population, certainly in terms of sub-national regions. We anticipate that two-thirds of New Zealand’s territorial authorities (TAs) will experience population stagnation or decline over the next decade. Again, we can see what is happening in other countries and we know what is already beginning to happen in parts of New Zealand. Should we allow Auckland to continue to grow at its current rate (60% of New Zealand’s population growth will occur in Auckland over the next two decades) or should we allow some regions to decline – demographically and economically?
This brings us to another issue – immigration. Since the GFC, the gross and net inflows have been at an all-time high, although there is a lot of confusion about the various elements that make up the numbers (for example, the fact that the 125,000 Permanent and Long Term immigrants who arrived in 2016 included about 35,000 New Zealanders and Australians). But the net gain at 70,000 represents 1.4% of New Zealand’s current total population – which is a lot higher than the OECD average at 0.6%.
It has reinforced New Zealand’s 21st century diversity – what we have labeled superdiversity – with a quarter of the population born in another country and 40% of Aucklanders. In the latter case, a quarter of all Auckland residents are now members of one of the city’s Asian communities, a big change from colonial policies which denied Asians entry or citizenship rights if they were resident here.
Again, we should continue to debate the policy implications of such inflows, especially as immigrants now constitute a significant and growing element in population change and growth. And they are significant part of the growth of Auckland.
Dealing with demographic disruption
These demographics shifts are transformative in every sense of the word. I have suggested that we face the possibility of “secular stagnation” as the new demography changes and perhaps diminishes, our economic and social possibilities. But we do have options.
What is frustrating is that we know what is coming (structural ageing), we have policy options (regional development) and we can learn from other countries as we follow a similar demographic trajectory but we (as political and other communities) struggle to fully engage with the issues and to take the hard decisions.
It is difficult to avoid over-politicising issues ( immigration or raising the age of superannuation eligibility) but these are critical issues which require innovative and non-traditional options – and we need to act in the interests of the future of this country.
Distinguished Professor Paul Spoonley FRSNZ is Pro Vice-Chancellor of the College of Humanities and Social Sciences, Massey University and is one of the lead researchers on an MBIE-funded project, Capturing the Diversity Dividend of Aotearoa New Zealand.
The Sciblogs Horizon Scan
This post is part of the Sciblogs Horizon Scan summer series, featuring posts from New Zealand researchers exploring what the future holds across a range of fields.