The Big Australians

One of the most fortunate things about being a New Zealander is that we are close to Australia and we have the right to live and work there. This is not just because Australia does many things very well, but simply because Australia is such a wonderful place.

Looking back, I can’t believe I only lived there for twelve months, given how much I enjoyed the experience. One day I shall kick myself, or possibly ask an Australian to do it for me since they will know how to make a good job of that too.

A column about Big Australians could be about so many things.

It could be about the late Bob Hawke, someone who managed to transform Australia in many different ways. (My favourite image of him is here, in this fabulous music video

It could be about Paul Keating, who as Treasurer and Prime Minister managed to further transform Australia into the great place it is today, not least by the Native Title Act and the pension reforms of 1992 and 1993.

It could be about Peter Garrett, whose environmental anthems resonate 40 years down the track.

It could even be about my three favourite Australasian Treasury officials, Ken Henry, Martin Parkinson, and David Gruen, who had an intellectual grunt greater than anything seen on this side of the Tasman. (Although hopefully the new NZ Treasury Secretary will match them.)

But no, it is brief comment about Sydney and Melbourne.

Australasia’s international cities

Every so often the Australian Bureau of Statistics makes population projections. Population projections are notoriously difficult in Australia and New Zealand because they depend so much on migration, and they need to be taken with a pinch of salt. Even so, the 2018 projections for Australia’s future population make stunning reading to anyone who still considers Australia the Big Country with a small population. Australia’s urban population is growing, and forecast to keep growing rapidly.

From 2018 to 2043, using their medium projection, Melbourne is forecast to increase its population from 4.8 million to 7.7 million, Sydney from 5.1 million to 7.5 million, Brisbane from 2.4 million to 3.7 million and Perth from 2.0 million to 3.0 million. Twenty years later Melbourne and Sydney are both projected to have nearly 10 million people. These are large increases.

Statistics New Zealand also forecasts an increase in the greater Auckland region between 2018 and 2043, but only from 1.7 million to 2.3 million.

If these numbers are in the right ball park, they have two implications.

  • First, there is going to be a large demand for construction workers in Australia, which might make it even more difficult to find a builder in New Zealand.
  • Secondly, Auckland is forecast to become a third-tier city in the Australasian city pantheon.  It is not easy to imagine why the world’s best companies would choose to locate in Auckland if they can locate in Melbourne, Sydney, Brisbane or Perth, cities with bigger populations and closer access to the rest of the world.

One of the most distinctive features of the New Zealand economy since 1966 (when the New Zealand Australia Free Trade Agreement took effect, and when New Zealand per capita incomes first dropped below those in Australia) is its integration with the Australian economy. There has been a lot of work making it easier for each other’s companies to operate in each country, and in many ways New Zealand cities now look like Australian cities, albeit with lower incomes.

In addition, a very large number of New Zealanders have chosen to live in Australia since 1966. The projected growth of Australian cities means it is likely that younger New Zealanders will still be leaving New Zealand for Australia in 25 years’ time, possibly in larger numbers, as they chase better pay and the opportunity to work in the world’s most exciting companies. Older New Zealanders are already used to having many of their friends and relatives living in Australia.

This phenomena looks likely to continue if the next generation responds to economic incentives and goes west to the fabulous big country next door.