Editorial: Rising population the backdrop to Steven Joyce's pre-Budget economic announcements
New Zealand is going through a growth spurt, both economically and in terms of population. It is happening more quickly than we might think.
According to Statistics NZ's oddly fascinating "Population Clock" web page, which updates constantly, the estimated population is currently 4,793,00 and is growing by a new person every three-and-a-half minutes.
Partly that's because Kiwi women are producing babies on average every 8 minutes and 45 seconds. Partly it's because every 6 minutes or so, another person gets added to the total through the ebb and flow of migration. We die off at a rate of one person every 18 minutes, so the number of us keeps going up.
This has always been the case, of course, but the rate of growth is outpacing the predictions right now. Back in 2013, the number-crunchers believed the population would hit the milestone 5 million mark in 2026. By last October, the date had been brought back to 2020. At this rate, it could happen as early as late next year.
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All the current debates about immigration, house prices and clogged Auckland motorways have to be considered against this background of ever-increasing population loads. The same goes for our worries about water quality for as long as agricultural production is the main driver of the economic progress which makes New Zealand an attractive place to live.
In a speech to the Wellington Chamber of Commerce on Thursday, Finance Minister Steven Joyce was at pains to stress how well that economy is doing. Of course he was – he delivers his first Budget next month and it's an election year.
A couple of his numbers stood out, however. New Zealand's employment rate is 66.9 per cent, compared with 60.9 per cent in Australia. Of those New Zealanders employed, 74.6 per cent are working full-time, compared with 64 per cent of working Australians.
These numbers strengthen the impression that Australia is a not-so-lucky country right now. The end of the mining boom has had a particular impact in Western Australia. While New Zealanders obsess about escalating property values, some West Australians now worry about finding jobs while house prices in Perth have slumped by a median of 8 per cent over the last two years.
Australia's loss is sometimes New Zealand's gain. The net westward flow of New Zealanders crossing the Tasman for better prospects has been reversed. Again, that helps explain why inward migration and population growth are so high.
But the Western Australian experience shows how quickly bubbles can burst.
The headlines which followed Joyce's speech focused on $11 billion of new infrastructure spending over the next four years (most of which had already been announced) and giving tax breaks to lower income earners. An equally important signal came in Joyce's announcement that a new target will be set to reduce government debt – from 20 per cent of gross domestic product to 15 per cent.
This is a prudent move. Sooner or later, our progress will be checked, and potentially quite suddenly. It could be because of another natural disaster, or an external cause such as the next global financial crisis.
Lower debt will give the government of the day more options to quickly return our growing population to prosperity.