New Zealand's demographic crisis: an urgent call for a cross-party population strategy
Chelsea Daniels interviews Emeritus Professor Paul Spoonley about a new report warning of rapid demographic change in New Zealand.
Summary
A new report from the Koi Tū Centre for Informed Futures warns that New Zealand faces an accelerating demographic transformation it is institutionally unprepared to manage. Emeritus Professor Paul Spoonley, co-author of the report, outlines the scale of the challenge and the case for urgent cross-party action. He argues that within decades, a quarter of New Zealand's population will be aged 65 or older — a situation unprecedented in the country's history — while fertility rates have already fallen to 1.55, roughly 25% below replacement level, with further decline expected. He warns that smaller towns and rural communities are experiencing what he calls "hyper-aging," without the infrastructure or services to support elderly populations, while funding models still assume population growth. He and Sir Peter Gluckman are calling for an independent commission to develop a long-term, cross-party population strategy, arguing that the three-year electoral cycle and political point-scoring are preventing the kind of 20-to-30-year planning the country urgently needs.
Key Takeaways
FULL TRANSCRIPT
Introduction
Chelsea Daniels: A new report suggests that New Zealand's rapidly changing demographic makeup has reached a critical point. Within decades, a quarter of all New Zealanders could be 65 years or older — a situation unheard of in our history. At the same time, migration patterns are shifting, cities like Auckland are absorbing most of the growth, and regional decline is accelerating. The Koi Tū Centre for Informed Futures report is out today. On the Front Page, Emeritus Professor Paul Spoonley unpacks the data with us — the risks of inaction, and what a credible strategy would look like for our cities, regions, and prosperity.
Why now is the critical moment for a population strategy
So, Paul, why do you think now is the moment for a population strategy?
Paul Spoonley: It's the moment because through the 2020s, New Zealand has been changing very, very fast. By the 2030s, a very different country in terms of its demography will have emerged. If we don't act now, we're going to get slammed by some of the big changes that are beginning to occur. We know what New Zealand is going to look like in 10 or 20 years, so why don't we do something about it now?
Chelsea Daniels: Is it moving so rapidly that, say, 2010 to 2020 looks a lot more different than, say, 1980 to 2000?
Paul Spoonley: Yes, it does. The last time we had anything as seismic and as significant as this was the baby boomer arrival, between 1945 and 1964. The baby boom really changed this country, as it did many others. We experienced what was called a demographic dividend — very large numbers entering the education system and then entering the workforce. We need to flip that around now and understand that we are not going to see large numbers of people entering our education system or our workforce over the coming decades. There are deficits that are beginning to emerge. I'm not sure that New Zealanders quite understand all the moving parts, but it is certainly going to be a seismic change for this country.
Chelsea Daniels: Give me a couple of examples of how quickly we're changing and how we're changing.
Paul Spoonley: If we go back 30 or 40 years, less than 10% of the population would have been aged over 65. In a couple of decades, 25% of the population will be aged over 65. So how do we pay for that ageing population — healthcare, superannuation? In terms of the current decade, between 2025 and 2035, there are going to be almost 40,000 fewer children in our primary school sector. That's a result of declining fertility. That drop in fertility is going to have a very significant impact, firstly on education and then on the workforce — on the available workforce.
Regional decline and the hollowing out of smaller communities
Chelsea Daniels: I can imagine that New Zealand isn't alone in seeing an ageing population or lower fertility rates. Are any other countries moving to act? Because we've known that we've had an ageing population for a while. It's just one of those things we kind of know. We talk about it sometimes. But why is the tipping point now? Why do we have to do something?
Paul Spoonley: It's because New Zealand is at the back end of the OECD queue. If we want to look at ageing societies, we need to look at Germany or Japan — they're about 30 years ahead of us, a long way down the pipeline. You're right that we can see what's coming in terms of the ageing of the population. But what's underpinning it is the declining fertility. And then there's the question of where people are living. We're seeing more and more people living in the top half of the North Island, more in Auckland. Auckland, along with Hamilton and Christchurch, are currently the growth points for New Zealand. And then we've got the possibility of immigration. When immigration is high, the population of the country grows. But when it's low — and it is low at the moment — what happens is that population growth gets confined to a very small number of centres, and other parts of the country either see stagnation or they're beginning to see population decline. We haven't really talked about population decline, and we need to.
Chelsea Daniels: Tell me about it.
Paul Spoonley: It's tending to occur in smaller towns and rural centres. I would talk about hyper-aging when you get to 30% of your community being aged over 65. The problem is: do we have the resources and facilities in those communities for an ageing population? Do we have a dementia unit? Do we have aged care? Do we have social facilities that enable older people to engage with different generations and different communities? When you start asking those questions, you realise that New Zealand has talked about ageing and has done some things about ageing, but there are big, big gaps. What we see is the facilities increasingly concentrated in our main metropolitan centres, while these smaller communities, which are ageing much faster, really don't have the resources, services, and infrastructure that will help an ageing community.
Chelsea Daniels: It doesn't really make that much sense, because I would assume that if you were a retired couple looking to downsize, you wouldn't want to be living in central Auckland. You'd want to be out in the green pastures, enjoying life with some fresh air. So it doesn't really make sense that the facilities for the ageing population are so concentrated.
Paul Spoonley: No, it doesn't. But nearly all of our funding models assume population growth and assume a sort of mass population spread around New Zealand. We're getting to the point — and that's why the urgency is increasing — where you're simply not able to provide the infrastructure in these smaller communities for a significantly aged population. There are some other consequences too. We are relying on people on fixed incomes — superannuation — to pay for these facilities through local rates and taxes. When you think about what we've seen in terms of insurance, rates, water, and anything else you can name, and the increases in the last two to three years, you realise that if you're on a fixed income, those things become increasingly difficult to meet. We've got this pressure where smaller communities need to tax more, rate more, to provide these facilities, but with a community that isn't able to pay significantly increased rates. There are some major tension points around affordability and how we provide for this new population that we're going to see.
What government should do — and the case for an independent commission
Chelsea Daniels: What should we be doing right now? What should the government be doing right now to anticipate this in 20 years' time?
Paul Spoonley: Knowledge is important — making sure we understand the dynamics and what's causing them. We know it's coming, so let's plan for it. What frustrates Sir Peter Gluckman and myself is that a lot of this gets politicised very quickly and we divide up. We would like to take it out of the political arena to some extent and ask: can't we develop — we've suggested a commission, an independent commission — can't we develop some policies which think 5, 10, 15, 20 years out, and which anticipate these population changes and what we should be doing? Our frustration is that we don't have a population strategy, and we should, and that our mechanisms for considering it don't appear to be working particularly well at the moment, particularly with a three-year election cycle and with the way in which these things get understood. We can see that around immigration in recent weeks. That's our hope, Chelsea.
Chelsea Daniels: Famously, New Zealand isn't amazing at forward planning — we see that in infrastructure and things like that. What are your hopes that there will be actual cross-party collaboration on something like this?
Paul Spoonley: My hope is that people in New Zealand understand that education, healthcare, infrastructure, and population are big ones which we need to think 20 to 30 years out, and to come up with some policies that work. It's not going to work when we hit one of those walls where, for example, superannuation becomes unaffordable, and your generation will struggle. We know what's coming. It's just: can we establish a mechanism with these big, meaty, long-term strategic issues to then develop some strategies which get bipartisan support? I'm an optimist. Is it likely? Possibly not. But we're putting it on the agenda to say this is serious. We need to think about this.
Why young New Zealanders are having fewer children
Chelsea Daniels: Why do you think younger people are having fewer kids?
Several young New Zealanders share their views:
"My parents had kids by the time they were my age, but we would not be able to afford to have a child now. Most people our age can barely afford to live for themselves. I can't pay my rent."
"I guess people are busy, live busy lives, have careers. Cost of living crisis for sure. And I'm still getting my life in order."
"A lot of people don't want to bring kids into this world with the current climate — the environment, things going on politically. People don't want to bring children into the world for them to grow up like that."
Chelsea Daniels: In terms of low fertility, what do we do? I mean, you couldn't pay me all the money in the world to have a child right now, in this economy. A lot of women in my age group — millennials and Gen Z and beyond — are going down the same path. The dream is no longer a husband, a golden retriever, a white picket fence, a house with a lifestyle block, and three kids to look after. That's not the dream anymore. So how do we address that situation?
Paul Spoonley: I don't think there's anything that the government can do, because governments around the world have tried to reverse fertility decline and it hasn't worked. I think you've hit on something really significant. We know that increasing levels of tertiary qualifications among women, and the fact that they're in the workforce, are two important drivers when it comes to women considering their own fertility futures and whether they're going to have children. But increasingly, it's the cost of having children — you're playing off the cost of living, or buying a house, against having children. And the other thing which I think is super important is that your generation — millennials, Generation Z — actually takes a very different approach to having children. There's a cultural shift, a shift in values and the way in which we see these things. Older male politicians telling young New Zealand women to have children is never going to work.
My answer to your question is: there's not much we can do about reversing fertility decline. I think it'll keep going lower, by the way. I think it hasn't hit bottom yet. It's at 1.55, so it's about 25% below replacement levels. I think it'll keep going down. It might well hit 50% below replacement levels. That's the reality. So what we should be doing is saying: we can't change it, this is what's going to happen — how do we change other things? For example, investment in education, which will have an impact.
Lessons from overseas — what works and what doesn't
Chelsea Daniels: You mentioned we're about 20 to 30 years behind some other OECD countries when it comes to this. So we're in a good position to see what other countries are doing well and not so well. Are there any examples of things we definitely should not do versus things that actually look to be working?
Paul Spoonley: If you think about France or Japan at the moment, they've tried quite late in the piece to reform pension schemes, and it's hit a huge brick wall in terms of the population — major discontent, major protest. So can we please consider, discuss, and decide what we do to make sure superannuation is available to your generation in the future? We're going to have to think about ways of doing that.
I think there are some countries which are doing much more than we are to keep population in smaller centres and rural areas. That's often not about the job — there are jobs. It might not be about housing, because housing isn't particularly expensive there. It's about accessing a local GP, accessing good quality education, being able to enjoy community life. It might be something as trivial as a barista. When you look at New Zealand, you see that emptying out — I've used the word "hollowing out" — of these rural and smaller centres. There have been over 200 schools that have closed in the last few decades. There just isn't the infrastructure there that would either attract a young family or keep a young family.
When it comes back to fertility, I can't think of anybody I would say is doing it well. There is literally no country that has managed to reverse fertility decline.
Immigration as a key lever — how many and what kind
Chelsea Daniels: Immigration — we actually do a pretty good job around immigration, as do Australia and Canada. The question for me is: there are obviously some people who are anxious about it, so we should talk about that. What should we aim for on a yearly basis?
Paul Spoonley: Canada and Australia aim for around 10% of the population in terms of arrivals. For New Zealand, that would be around 50,000. We need to talk about the net gain, because that's a different figure. At the moment, we're seeing quite a lot of people leave — both New Zealand citizens and immigrants. I think it probably is around that 30,000 to 40,000 figure per year as a net gain. Remember that in recent years, we've seen a net gain of over 130,000. So that's a long way off what I would regard as a medium, relatively conservative level of migration to this country.
Chelsea Daniels: It also depends on how many migrants we need for our labour force. And I'm assuming we will need those migrants in future, considering we have an ageing population.
Paul Spoonley: I certainly do. First of all, we need a workforce — a healthcare workforce — to look after us. It's what I call the "who's going to wipe my chin" syndrome. But we've also got major shortages beginning to occur. Business New Zealand last year looked out two decades and said we're going to be short of 250,000 workers. That's a big amount.
Chelsea Daniels: That is a very big amount.
Paul Spoonley: It is. And when you look at our health workforce, for example, around 40% of the people recruited and appointed last year in terms of nursing were overseas-trained. So we're already reliant on overseas-trained medical professionals. The question becomes: we need to maintain that supply of medical professionals because it's essential to our workforce — in this case, our healthcare workforce. We're going to need immigrants. The question is how many, what sort, and how does it relate to the other elements of our population change, such as fertility and ageing, in a way that makes sense.
A final message to ministers
Chelsea Daniels: If you could give ministers one message from this report, what would it be?
Paul Spoonley: You know what's coming in terms of our changing population. Why don't you look to have that discussion together, across party lines, in terms of what we should anticipate and what we should do about it? Can we have something which works in the interests of New Zealand Inc, not in the interests of your particular constituency or party?
Chelsea Daniels: Thanks for joining us, Paul.
Paul Spoonley: Thank you, Chelsea.