Despite all the chatter about strategies to increase the population of Hawke’s Bay, can we really defy the natural trends?

The current ‘bible’ for economic development in Hawke’s Bay is the Regional Economic Development Strategy (REDS), prepared by the Regional Council with the advice of the usual stakeholders – the Chamber, other business voices, EIT, Mãori, other council representatives.

In assessing the Bay’s overall prognosis, REDS lists these weaknesses and threats with respect to population:

  • Low population growth relative to some other regions and decreasing ratio of working age demographic.
  • Higher proportion of population without formal qualifications and fewer with post school qualifications than national averages.
  • Population projections indicate slow/low growth for the region, which makes the region less attractive and harder to gain the economies of scale needed for service provision.
  • Working age population is forecast to reduce 10% between 2011 and 2031, with an increase in the proportion of unskilled Mãori population. Young Mãori could represent fully half of Hawke’s Bay’s entire workforce by 2021.

These are not the sort of demographic realities that point to a dynamic and prosperous future for Hawke’s Bay. And the more deeply one examines the trends and the composition of our population, the bleaker the future looks.

The future starts here.

While a blizzard of statistics can be thrown about, the basic reality is that slow or – god forbid – negative population growth happens for two basic reasons. Natural growth ceases as the area has more elderly than children (the prelude to more deaths than births). And, that reality is not offset by net migration into the area – more people moving in than leaving.

The economic impact of the region’s population dynamics depends upon not just more people – potentially translating to more incomes and more consumers – but as importantly upon the composition of the population. Is the emerging population profile one that suggests more children or more elderly, more workers or more retirees, higher job skills and education levels or lower?
The answers to these further questions are not encouraging. For example…

  • In Hastings District (where the numbers have been examined most closely in the Bay), there will be more elderly than children somewhere between 2021 and 2026. Currently there are just above six elderly for every ten children.
  • Hastings population will grow until 2031, but virtually all of that growth will be at age 65 plus. Nationally, the 65+ population is projected (mid-range) to grow 61% from 2011-2026, while the under-64 population grows just 5.4%. Nationally, the median personal income of those 65+ is $15,500 – not a lot of consumer spending power there.
  • The growth of Mãori population in the region has been significant (16% between 1996 and 2006); however it merely offsets the loss of younger Europeans. The median personal income for Mãori in Hawke’s Bay is $19,200 – again, not much of an economic driver.

Given these trends, what can be done? Can local government deliver?

Our political, business and civic leaders pronounce that they will arrest or even reverse the negative trends, which suggests that they can deal with the root causes. Can they actually forestall the inevitable? Collectively, their solutions boil down to four:

First, more and better jobs, both to attract new migrants (and ideally migrants capable of earning higher incomes, not simply more seasonal labourers) and to hold on to current residents who leave to seek better opportunities (including students and young adults).

Second, to further attract those new worker/migrants, enhancing the Bay’s ‘quality of life’ and ‘great place to bring up kids’ appeal, by creating ample sporting and cultural amenities and delivering on the ‘green’ image.

Third, marketing Hawke’s Bay as an attractive relocation destination for the older, retirement planning, age bracket.

Fourth, to deal with the potential economic ‘drag’ of a large contingent of young, under-educated and under-skilled residents (not exclusively, but predominantly Mãori), placing more attention on lifting education qualifications and – perhaps as urgent – relating education to the skills needed to meet actual available or emergent jobs.

Of special interest these days, given the political calls to examine the Bay’s economic and social performance, is the extent to which local government can in fact influence or deliver upon
such solutions.

The drag problem

Let’s begin with the ‘drag’ problem – the present and possible future lack of education and skills in the key segment of the Bay’s population that is growing … our youth.

Of all the areas where local government might intervene, at first glance this seems the least likely area for our local bodies to play a meaningful role. It’s plainly the turf of our education establishment, which must deliver both fundamental competence and also work with those in the local workplace to ensure that more advanced skill training is related to real-world job opportunities. As EIT’s Claire Hague has noted in her BayBuzz columns, most Hawke’s Bay students are not headed for university.

Of Hawke’s Bay’s Mãori population, 36% are under the age of 15. And of those employed, approximately 35% of those age 15 years and over are labourers and 45% have no formal education qualifications. As we asked in an earlier BayBuzz article (Choosing to be poor), is this a group consigned to provide low wage labour forever, staffing the Bay’s fast food outlets and fields?

Breaking this cycle isn’t entirely up to Hawke’s Bay’s (or the nation’s) schools. If kids come to school malnourished, otherwise unhealthy, psychologically traumatized by violence in their homes, or absent family role models who prize education, then schools are handicapped in what they can accomplish, to say the least. If local political leaders can use their convening and agenda-setting power to do more to champion the general well-being of youth, especially the youngest, perhaps that’s the most we can expect of our local bodies in terms of advancing education (see Claire Hague’s column in this edition).

Job creation

Looking at the other ‘solutions’ to stagnant population growth, job creation probably receives the most emphasis. And this is rightly seen as the task of the business sector.

So what’s the role of local government?

Most in the business community would seem content if our local bodies merely better facilitated the entry process for relocating businesses and the expansion of existing ones – things like simplifying the consenting process and ensuring that adequate commercial and industrial land has been set aside.

However, local government has a bigger role to play, chiefly in terms of providing and maintaining transportation infrastructure – from roads to the port and airport, facilitating broadband installation, providing industrial waste disposal – to promoting Hawke’s Bay to target markets as a business destination, to providing rates deferral or other incentives to relocating businesses.

The business community itself can provide none of these enablers.

Promising ‘quality of life’

The ‘quality of life’ solution to growing the Bay’s population involves a significant role for local government, although hopefully in partnership with the private sector. Millions of ratepayer dollars are devoted to building and maintaining ‘quality of life’ amenities – museums, galleries, as well as sport and recreation facilities from stadiums to playgrounds to cycle trails. And beyond that is the challenge of protecting our environment as a major attraction – from iconic landscapes to world-class fishing rivers.

As noted above, over and above the enjoyment of our current residents, in the context of attracting migrants, there are two target audiences for this investment – the workers who are supposed to fill all those attractive new higher-paying jobs, and the folks (especially the upscale variety) looking for a retirement haven. This requires projecting Hawke’s Bay effectively beyond the Bay – premium food and wine events, attracting conferences and sporting events, and of course basic tourism promotion.

So, if we do all of those things, will they come … or stay? If they do, Hawke’s Bay as a rural province will be bucking the tide. And if not, things will get mighty grim around Hawke’s Bay.

It gets worse before better

In a key study of New Zealand population trends, Natalie Jackson, a professor of demography (Waikato) and director of the National Institute of Demographic and Population Analysis, paints a worrisome picture of rural New Zealand.

In particular, Dr Jackson, who has advised the Hastings Council on the matter, has analyzed the ageing of our population. She’s looked at the trends no economic policies will soon reverse, simply because they are built into the nation’s overall age profile, because of declining birth rates, greater longevity and the fact of the dominant Baby Boomer cohort working its way through life.

These trends will not change, whatever our political and business leaders decree. And they will be compounded uniquely in New Zealand – and especially non-urban regions – by a net migration loss of young people, especially in the 20-24 years cohort, but extending from age 15 to 29 years. This has created a “deep bite” in today’s age structure across ages 25-39 (our “reproductive base”).

Her conclusion is that rural areas of New Zealand will inevitably lose total population, especially working age population, even while the ageing (and more dependent) population increases. As she puts it: “New Zealand is facing the permanent end of population growth in many of its regions … a process which is poorly understood and will make responding to baby boomer retirement and ageing even more difficult.”

Rural areas like ours will require net inward migration just to maintain population size, let alone grow. Hawke’s Bay will face two predicaments…

In Hawke’s Bay, Dr Jackson estimates that we still have 10.6 people entering the work force for every 10 at exit age. That is, slightly more workers than non-workers. But this ratio will shift within 15 years, tightening labour supply and lifting costs. A problem for businesses.

At the same time, with most of Hawke’s Bay’s population growth over the next two decades coming from the 65+ segment, local government will face new challenges.

For one thing, ratepayers less able to foot the bill! How do local bodies increase services when an increasing proportion of the ratepayer base is living on fixed and limited incomes? At the same time, the elderly population will require more servicing of its needs – from mobility services (now provided by the Regional Council at an annual cost of approximately $500,000) to appropriate housing, recreation and home care options – at least some of which will be ratepayer funded.

Dr Jackson notes that the problem is not too many old people … it’s too few young people (with employment). And in a general comment with special pertinence here in Hawke’s Bay, she observes: “Clearly young Mãori will play a significant role in New Zealand’s future labour force, and attention to their specific educational, training, and social needs must be a paramount consideration.”

How does Hawke’s Bay move forward then?

First, we should sort out the roles of our local government, business and other sectors, and press ahead with all of the ‘solutions’ described earlier. Not to do so ensures a downward slide.

Second, we must invest in our region’s key human asset – our Mãori youth.

Third, we should take some advice from Dr Jackson, who offers these ABCs:

[Note: To some degree, all observers are holding their breath, awaiting release of the 2011 census figures; all stats in this article reflect 2006 census.]

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