Australia reaps the benefit from NZ’s decline with citizenship rules

Dr Oliver Hartwich
The Australian
26 April, 2023

It is sometimes a personal experience that brings abstract policy discussions to life. And so let me share with you a chat I had last Friday with an Uber driver in Auckland.

He was a Pakistan-born New Zealander who has called Auckland home for 21 years. On our way from the CBD to the airport, he shared his story of how he and his family are planning a move to Australia. The cost-of-living crisis, high crime rates, and better opportunities across the Tasman Sea influenced his decision, he explained. All his friends were thinking about the same move.

Since he first arrived in New Zealand more than two decades ago, my driver usually voted Labour. But now he blames the Labour Government for the decline of the country – and he certainly would not vote Labour again in this year’s election.

I thought of this conversation when I heard the Australian Government’s announcement that New Zealanders residing in Australia will now have access to a faster pathway to citizenship. They will be able to apply for an Australian passport after just four years.

But amid the talk of friendship and shared values between the two nations, one cannot help but wonder if this policy change is truly about camaraderie. When you scratch the surface, it appears that Australia’s national interest is the driving force behind these policy shifts. And frankly, it has never been different.

Rewind to 2001. Australian Prime Minister John Howard introduced the Special Category Visa (SCV) for New Zealanders in Australia. At the time, Australia’s national interest lay in addressing welfare dependency, economic strain, and border security concerns. The relatively open border between the two countries was seen as vulnerable to exploitation by third-country nationals. As a result, Howard’s policy restricted New Zealanders’ access to social welfare benefits and imposed stricter residency and work requirements.

Fast forward to today, and Australia’s national interest has shifted. The country, like many others, faces labour shortages. Attracting skilled New Zealanders to its shores now serves Australia’s interests well. The policy change is a strategic move to bolster Australia’s workforce, and the friendly rhetoric is merely a bonus.

The talk of common history and shared values is certainly appealing, and it is a narrative that the New Zealand government and its people want to hear.

But, in reality, this decision was primarily made to serve Australia’s own interests. Australia is doing what works best for itself, and the impact on New Zealand would not have been a priority in the decision-making process.

The potential consequences of this policy change for New Zealand are dramatic. Easing the path to Australian citizenship will exacerbate the existing brain drain, with New Zealand’s skilled workforce being lured across the Tasman Sea. The potential loss of professionals could harm the country’s social and economic fabric.

The labour market situation in New Zealand is already difficult enough, with severe labour shortages affecting practically every industry and business. It comes as New Zealand’s population growth has hit a 36-year low.

Last year, a survey showed that 1 in 5 New Zealanders were considering leaving the country. Meanwhile, the tight labour market is one of the reasons for rising wages and consequently, inflation pressures.

The New Zealand healthcare sector has been hard hit already, with thousands of New Zealand nurses registering to work in Australia in pursuit of better pay. Nurses in New Zealand are demanding political action amid a chronic staffing crisis. Auckland’s urgent care clinics are also grappling with staff shortages, and New Zealand finds itself unable to plug the gaps with inward migrants.

The exodus of skilled workers is not limited to healthcare. Industries such as construction, agriculture, and hospitality are also struggling to find the workforce they need to maintain operations.

The hundreds of thousands of New Zealanders already in Australia will be grateful their status has now improved substantially. And, potentially, hundreds of thousands more will now feel encouraged to follow them.

So, for New Zealand, this development is sobering. On Sunday, Prime Minister Chris Hipkins attended an Australian citizenship ceremony at which dozens of his fellow Kiwis were made into Australians. And Hipkins, at least for the TV cameras, put on a happy face and pretended that this is all wonderful news.

In truth, Hipkins had little alternative but to welcome the Australian government’s move. Successive New Zealand prime ministers have lobbied their Australian counterparts to improve the rights of Kiwis in Australia. But now that it has happened, it is clear that the benefit to individual New Zealanders will come at the expense of New Zealand as a country. It certainly is no gift from Australia, but a strategic move designed to benefit the Australian economy.

So, what can New Zealand do in response to this Australian move? The best option is to address the very conditions that prompted my Uber driver to consider leaving: Improve living standards, increase New Zealand’s GDP per capita, enhance public services, especially in health and education, and restore law and order. By doing so, New Zealand could retain and attract the skilled workforce it desperately needs to thrive.

Sadly, the current government seems to be taking the opposite approach. Instead of fostering a competitive environment, it is openly considering new taxes on the most successful individuals in society. This would erode one of the few remaining competitive advantages New Zealand has over Australia, its slightly lower tax burden.

In the end, it is the individual choices of people like my Uber driver that reveal the true impact of policy decisions.

For New Zealand’s sake, its government must take action to address the underlying issues driving its citizens away. Perhaps it should conduct the occasional exit interview with people like my Uber driver to understand what made them change their minds about living in New Zealand.  

Otherwise, New Zealand’s brain drain will continue.

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