New Zealand will need to increase its retirement age in the next 10 years to create a supportive economy for the country's ageing population, economist Shamubeel Eaqub says.
"We know that the retirement age has to be increased at some point in time," he said.
"We are living longer and healthier and it's going to create significant fiscal issues."
The principal economist at the New Zealand Institute of Economic Research was speaking at the Local Government NZ conference in Nelson about economic challenges facing the country's regions and in particular declining "zombie towns".
"Secular and unstoppable forces - technology, urbanisation, globalisation and ageing - are marginalising many regions," he said.
"Current policies are not working. It is an uncomfortable reality, but it is not without hope.
"It cannot be a conversation of envy about Auckland and the rest, rural and urban, environment and economy."
Eaqub said each region would be different so the same policy for all was not going to work.
"Economies are not like a game of rugby – you can have two winners if we co-operate and work together for a better New Zealand," he said.
"We must own up to the challenges facing our regions and the solutions, leveraging local strengths, must be for our young people."
Speaking after his presentation, Eaqub said inequality was a concern.
"The story around inequality for me is that we are starting to get these concentrations of poverty and lack of opportunities in certain places, and that's partly a reflection of the lack of jobs in the community and all those other parts that then creates vicious cycle," he said.
Different solutions were needed for different generations, including good welfare policies for older generations and education and job opportunities for younger generations.
"I'm not sure we are there yet. Our welfare policies are very good at providing a safety net, but perhaps we are not so good at reducing poverty," he said.
While education opportunities came through a number of avenues it was about more than just university training. An adaptable workforce with strong literacy and numeracy skills with the ability to think and problem-solve was needed.
Eaqub called for a shift in mindsets and to build on existing capacity by putting more resources into areas that worked.
He said it was time the country had an honest conversation, led by the Government, about its future population size as there was space to grow through migration, but "envious and racist" connotations needed to be left behind.
Chief executive of global accounting software company Xero, Rod Drury, told the conference New Zealand regions needed to think of themselves in global terms.
He said councils should create digital brands getting visitors connected as soon as they reached a destination and the emotional experience New Zealand created could be harnessed and spread through social media.
Drury described New Zealand as "Fiji with snow" rather than the European fantasy people tended to have, and said regional areas needed to think of themselves globally instead of in relation to Auckland or Wellington.
"We're Nelson, part of the world," was the way towns should view themselves, he said.
He said New Zealand was making positive moves away from manufacturing towards a knowledge-based economy with companies like Xero, which were creating "location-independent jobs".
For example, Xero hoped to open a new contact centre with high-skilled workers in the provinces within a couple of years.
"Every town should have a call-centre strategy," he said and promote the lifestyle opportunities and cheaper house prices in the provinces to attract workers and investors.
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