Flight of the Kiwis

MATT PHILP
Last updated 05:00 13/02/2013

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They’re leaving. We are leaving. The great New Zealand diaspora, per capita the world’s largest, has passed the million mark — meaning 1 million Kiwis now live overseas, forging careers, having families, making their mark thousands of kilometres away. Australia is now home to half, with the diaspora’s focus narrowing as its scale grows. 

Those nearly half a million Kiwis who have set up in Sydney, Melbourne, Brisbane and, increasingly, in mineral rich Perth, represent a critical mass of growing magnetic force. “It becomes self-perpetuating,” says Massey University sociologist, professor Paul Spoonley of the drift across the ditch. “Once you have family or friends over there the incentives to go, quite apart from the economic ones, are significant.”

Anxiety about the ramifications of our wanderlust has waxed and and waned for many years. One argument is that there’s no reason to panic when you take into account long term migration patterns and population growth. Another is that we are replacing our skilled leavers with even better qualified migrants — a brain exchange rather than a brain drain. 

But there is rising sentiment that we’ve reached a tipping point, that an ongoing exodus of our best and brightest is a cost this fragile economy can’t easily bear, particularly given many expats have gone for good. So what are the economic effects? Who are our flown Kiwis? And if we accept people will continue to leave, how can we make better use of their talents while they’re gone?

First, some context. Since the early 1970s, we have been sending large and increasing numbers of our people offshore, with emigration peaks occuring in delayed response to the oil shock and Britain entering Europe, the economic reforms of the 1980s and straightened times in the 1990s. 

Pull factors have been at least as powerful, with the flow to Australia beginning in earnest only after 1973’s trans-Tasman agreement loosened restrictions. The rise in numbers at the end of the 1970s can also be partly explained by the first cohort of baby boomers reaching travelling age and wanting to experience new cultures. Whatever the motivations, today New Zealand is the OECD country with the highest per capita immigation and emigration rates. 

Our best and brightest? Kiwis who leave for the ‘lucky country’ have tended to be a cross section, from ditch diggers to brain surgeons. Increasingly, however, the talk is of a ‘trades drain’, as better wages and job prospects draw skilled tradespeople in their 20s across the Tasman. 

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It’s beyond Australia where the diaspora tends to be made up of Kiwis better qualified and educated than the average. New Zealand comes second only to Ireland as an exporter of its skilled and talented people, says Spoonley.

“There is a strong skill leakage going on and it’s quite unaffordable,” says Spoonley. “The fact we get them back having had some experience overseas is quite often a benefit, but the total loss of human capital to New Zealand is significant. We’re essentially a training ground for an economy like Australia. The advantage is that they take unskilled New Zealanders; the disadvantage is that they take too many of our skilled ones, too.” 

Call them loyal

Until 2011, David Brown counted himself as being among the great Kiwi diaspora. Born in Timaru and schooled in biochemistry at Otago, Brown was 27 and working for a milk products venture in Te Puke when he found his first grey hair and realised he hadn’t done his OE. In London, he retrained in IT and eventually joined ABN Amro. By the end of his time overseas he’d risen to regional CIO, based in Singapore, with a Northern Irish wife and three children.

Brown’s encounters with other expats confirmed some typical qualities and motivations. “I’m always immensely proud of how skilled and innovative New Zealanders are. People from other countries are perhaps a little more hesitant at taking on new challenges if they don’t feel skilled or qualified, whereas broadly speaking Kiwis are more, ‘I’ll give it a go’ and are really good at problem solving and finding consensus and pushing things forward.  I’ve also found that most expats are exceptionally loyal to New Zealand and also feel some form of guilt that they’re not back home. But there’s an economic reality and also it’s fantastically exciting to live in a foreign culture, to be different, but also anonymous.”

How strong are the bonds to home? Until recently, that would have been difficult to to answer. But an exhaustive survey by the Kiwi Expat Association (Kea), gave us far better insight into the psychology of our diaspora. 

Titled Every Kiwi Counts, the census collected responses from 18,000 Kiwis scattered around the globe, creating a picture of one of the most globally connected nations on earth. 

It is a big, relatively talented group, earning good money — salaries that would be in the top 3% here. Most expats maintain strong links to New Zealand but — and this presents a challenge to those who argue the potential economic benefits of the exodus — the bonds are largely social ones, with family and friends at home. Most overseas Kiwis are fairly disengaged economically and politically.

When they do talk about New Zealand, however, their language is overwhelmingly positive. There’s no sense of having been driven to leave a country slipping below the waves. Almost all feel their homeland has made progress; most predict better times ahead.

But here’s the rub: only half our expats intend to come home and 60% of that group say not for at least five years. You can see why it might be difficult: half their partners or spouses aren’t Kiwis; two-thirds of their children either don’t have New Zealand citizenship or have dual, and one-third of our expats have dual citizenship themselves. Notably, those who definitely intend to come home mostly cite lifestyle and family reasons rather than career considerations. 

The Kea survey findings echo a survey of 2600 well educated expats by Kaye Thorn, a senior lecturer at Massey University’s School of Management. She notes the ‘returners’ were more likely to have travelled for culture and adventure and those who don’t come home were more career minded. 

“What it boils down to is the fact that New Zealand is a small economy and if you have a job as the UK-based chief financial officer for a multinational organisation there is nothing equivalent in New Zealand,” says Thorn. “On the other hand, one of the key things that pulls New Zealanders home is when they are about to have kids or their children are about to start primary school — in particular, that tends to bring women back.”

Thorn found two distinct patterns within the diaspora: a ‘boomerang’ trajectory, by which Kiwis head overseas then home, then away again; and a second movement more like stepping stones, with people heading first to Australia, then on to somewhere larger or more obviously foreign, and so on, making increasingly riskier calls. “Some of the people I interviewed had lived in 10 countries.”       

Thorn recognises a large diaspora is inevitable — in an increasingly global skills market, a small economy like ours can’t compete. But the scale of the loss of talent is a worry and the soothing, ‘brain exchange’ argument doesn’t wash with her.

“You can say that most of the people coming into New Zealand are coming in on the skilled migrant category. But the issue is the useability of their skills. The fact is they’re often not able to use those skills to the top of their abilities, so what we have in fact is a situation of brain waste.” 

Meanwhile, among our expats, “those intending to stay overseas are more focused on achievement and success, in objective terms”, she says. “That implies not only are we losing our best and brightest, but perhaps the ones who are most innovative are the ones most likely to stay away.”

Not in all cases, however. Brown brought his young family home last year, choosing to resettle in Nelson. 

The climate and access to good schools were important considerations — leaving Singapore was prompted partly by his eldest daughter reaching school age — but equally motivating was the region’s suitability as a base for a planned business venture. Well serviced by air and sea, with a small but vibrant biotech industry and the internationally recognised Cawthron Institute, Nelson has proved a good choice for launching Deep Biotech, Brown’s venture into using extracts of fruit based products and algae.

Coming home has been a mixed experience. “I had this vision of what New Zealand was, and when I came back it wasn’t quite what I remembered,” he says. Among the highlights has been seeing his kids thriving in school and getting to experience a childhood similar to his own.

What do our expats bring back? In Brown’s case, years of doing business in foreign markets gives his new venture an edge. “The size of the companies I’ve worked with, the teams, the complexities of the issues, have all broadened my outlook.” As soon as he’s established a reliable supply chain, “it’s straight into China”, he says, adding he will be making full use of the Made in New Zealand branding. “One thing I always found very valuable overseas was the New Zealand name.”

And if things go well for the business, there’s a good chance Brown and his family will soon be back in Asia themselves. “I don’t think we’ll be here forever. What I can do is get the business up and running, but when you’re 5000 miles away it is very difficult to picture exactly where you can position your product. You really need to be in market.”

A team of 1 million

Brown’s talents needn’t be lost to New Zealand when he heads back offshore. That, at least, is the view of Kea’s New York-based chairman Phil Veal, who argues the great Kiwi diaspora is potentially a competitive advantage. 

“We’re really just scratching the surface of that potential at the moment. What Kea has been doing in its first 10 years is building the foundations of a very strong global expat network, some 40,000 people, through sheer willpower and human connections … But we’re trying to build a network of a million. One way to think about the potential of that network is that if you’re a Kiwi company doing business outside of New Zealand there should be no such thing as a cold call.”

Veal’s view is now the orthodoxy when talking about the diaspora, but it wasn’t that long ago that official views on those leaving were more ambivalent, even hostile. Former prime minister Helen Clark, addressing questions about covering Australia’s social security bill for Kiwis, once told reporters there wouldn’t be a bean for “people turning their backs” on New Zealand. 

In a recent paper, Victoria University diaspora expert Alan Gamlen traces the beginning of a warmer strategy towards expats to the Clark government’s 2002 Growth and Innovation Framework, which talked about developing a knowledge economy. Kea was just one of a “range of market oriented initiatives to ‘engage the diaspora’ for the country’s economic benefit”, he notes.

Veal — whose globetrotting years took him from a civil engineering degree in New Zealand to Miami, where he “painted rich ladies’ houses”, to an engineering job in London and on to management consulting in New York — says tapping expats’ experience and contacts could be powerful. “Expats who are in market have all sorts of capabilities that can be put to use for New Zealand. 

“It goes beyond, ‘I’m going to call out of the blue from New Zealand and ask you to introduce me to the head of procurement at Chevron.’ More like, ‘How should I structure my company going into the US? What sort of business model would you use? How would you price this product?’ There is capacity out there to help shape Kiwi businesses to meet the world.”

There’s no shortage of goodwill to tap. “People who identify as New Zealanders, there’s a fierce pride there and most are very engaged. From a personal perspective my own connectedness is now a lot stronger. I didn’t spend a lot of time thinking about New Zealand when I was in Miami, beyond phoning mum and asking for the All Blacks score, but I’ve become more and more engaged and I think that’s a typical curve.”

The task is to somehow better connect New Zealand-based businesses with expats, who could be mentors, sources of contacts, even investors. Last year Kea put out a report titled Foreign Investment from Kiwis: the Potential for New Zealand’s Diaspora to Invest in Our Productive Economy. The survey found plenty of willing investors, some of whom were already taking a stake in Kiwi companies. 

It also, unfortunately, uncovered barriers — although not the suspected ones of tax structure issues and other fundamentals, which weren’t viewed as deal breakers. Rather, expats baulked at New Zealand businesses’ limited commercial sophistication and ambition. More positively, they saw Kiwi entrepreneurs as talented and motivated.

Auckland business strategist Debbie Humphrey conducted follow up research for Kea on 30 particularly well heeled expats who indicated a willingness to invest in New Zealand. 

“All of them have multiple touchpoints into New Zealand and are receiving investment opportunities all the time,” says Humphrey, adding most of these actively investing expats live outside the US and Australia. 

“They are keen to get involved for a few reasons. One, they believe New Zealand has innovative businesses. Two, they believe they can add smart capital to those businesses as well as equity — they want to roll their sleeves up and get involved. Thirdly, they are looking to find a way to build a bridge back to New Zealand. The companies they’re most keen on? SMEs with some validation that are interested in expanding; they aren’t hugely interested in startups.”

How do you encourage more of this investment? Humphrey says the focus should be on getting those expats who are already investing here to up the ante. “They’re sophisticated, experienced and they already have a strong preference for whatever reason in investing in New Zealand. They are the ones who will influence others to connect back into New Zealand. If others who are more purely commercially minded see [deals being done], it may persuade them to change their view on New Zealand as an investment destination.”

She rates Kea as the best body to tackle the task. “It’s not a wine and cheese brigade; you come to a meeting and you meet the head of economic policy at BNZ, or the Prime Minister. And the more economic conversations we can have, and the more we build connectivity between expats and New Zealand business through vehicles like Kea, the more they will want to invest in New Zealand.”

Says Veal: “As we build our networks we should facilitate a lot more of those conversations. So we’ll be saying, ‘Look, you run the NHS in the UK, professor Malcolm Grant, so next time you’re in New Zealand we’d like you to meet Ian McCrae at Orion Health and these other people’. We can be very targeted about that. “The other thing that needs to happen is we need to get much better at telling the New Zealand story. Offshore investors think of New Zealand as this wonderful place where they grew up, a great place to visit, but they don’t think of it as an innovation powerhouse. Well, that’s something we need to change.”

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