Why is Auckland growing?

Auckland is growing. In fact, it’s among the fastest-growing places in New Zealand, both in the short term and over the last century. (We must be doing something right!)

But why is Auckland growing? Where are the people coming from? There is a surprising amount of confusion about this issue.

Some people seem to think that Auckland is growing mainly due to immigration, and that if we “turn off the tap” growth would slow down to a more sedate pace. This perception has been fed by historically high levels of net migration to NZ over the last year – even though this has mainly been caused by New Zealanders not moving to Australia:

New Zealand has had a record net gain in migrants of 61,200 in the September year, driven by more Kiwis coming home and fewer leaving for Australia.

The annual gain in migrants has been setting new records for the past 14 months, and there were 118,800 arrivals in the September year and 57,600 departures…

There was also a net gain of 100 migrants from Australia, the sixth month in a row to show a net gain, reflecting weaker economic conditions across the Tasman.

The fall in migrant departures was mainly due to fewer New Zealand citizens leaving for Australia. Departures of Kiwis to Australia fell 15 per cent to 21,500 in the September year, which is less than half the peak departures set in the December 2010 year.

However, when we look at the data, it turns out that migration is not the main cause of Auckland’s rapid population growth. In fact, most of the growth over the last three decades – and most of the forecast growth over the next three decades – comes from “natural increase”. Auckland is growing mainly because Aucklanders are having children.

But don’t just take my word for it – let’s take a look at the data.

I’ve gone to Statistics New Zealand’s surprisingly unusable Infoshare tool and downloaded the following data:

  • annual permanent and long-term international arrivals and departures to the Auckland region (from the International Travel and Migration – ITM category)
  • annual live births for the Auckland region (from the Births – VSB category)
  • annual deaths in the Auckland region (from the Deaths – VSD category).

I used these data series to calculate annual net migration (arrivals – departures) and natural increase (births – deaths) from 1992 to 2015. I’ve ignored a third source of growth – migration between regions – as it’s relatively small. John P has previously taken a good look at that issue. Here’s the chart:

Auckland sources of population growth chart 1992-2015

This graph shows us several important things:

  • First, net migration – those scary red bars – has been really high in some years, but really low (or even negative) in other years. It fluctuates quite a lot.
  • Second, natural increase is much more consistent over time, although it looks like there may have been a bit of a baby boom during the prosperous Clark years.
  • Third, natural increase is almost always larger than net migration. In 18 of the last 24 years, natural increase accounted for a majority of Auckland’s population growth.

Natural increase accounted for 58% of Auckland’s growth over this period, while net migration accounted for the rest. We’re growing mainly because people are having babies. I have yet to see a proposal to turn off the “baby tap” that does not involve violations of people’s privacy and human rights.

In a similar vein, it’s also worth looking at the composition of net migration. Here’s a chart comparing permanent and long-term international arrivals to Auckland with departures from Auckland:

Auckland arrivals and departures 1992-2015 chart

Notice how the two sets of bars tend to move in tandem. When we get an influx of arrivals, we also get a decrease in departures from Auckland. What this means, in practical terms, is that it capping net migration would force us to cut immigration quite severely in a boom time, to compensate for the fact that fewer New Zealanders leave overseas during these periods. This does not seem like a great policy, as it will hamper businesses’ ability to recruit staff at a time when they are expanding fastest.

So that’s the recent past. What might the future look like? According to Stats NZ’s most recent population projections, Aucklanders having babies will continue to account for the majority of the city’s population growth. 62% of Auckland’s population growth over the next three decades is expected to come from natural increase. Here’s the chart. Net migration is running hot right at the moment – ahead of Stats NZ’s medium projections to 2018 – but it will cool off in the future:

Auckland sources of projected population growth 2013-2043 chart

But let’s say, for the sake of argument, that we did succeed in significantly reducing net migration to Auckland. Setting aside the question of whether this would be a good idea – I don’t personally think it would be – we need to ask how much of a difference it would actually make.

So here’s a quick and dirty simulation. I’ve taken Stats NZ’s population projections and reduced projected net migration by 50% – which I think we can all agree is a significant reduction. The results are shown in the following table:

Year Stats NZ medium projection Population projection with half as much net migration
2013 1,493,200 1,493,200
2018 1,646,500 1,606,500
2023 1,767,500 1,707,500
2028 1,890,900 1,810,900
2033 2,010,500 1,910,500
2038 2,123,000 2,003,000
2043 2,229,300 2,089,300
Average annual growth rate 2013-2043 1.34% 1.13%

As you can see, a major reduction in net migration to Auckland would have very little impact on the city’s population growth. Instead of growing to 2.2 million by 2043, it would only grow to… 2.1 million. Furthermore, the city’s projected annual average growth rate would fall to 1.13%, but that is still much faster growth than Stats NZ is picking for other regions.

It’s tempting to think that we could avoid growth pressures by cutting immigration. However, the historical data and population projections suggest that we’d be dealing with substantial growth due to natural increase. Conclusion: it makes much more sense to focus on improving our ability to supply new dwellings.

Population Growth in 2015

Last week Statistics NZ released their provisional population estimates as of 30 June 2015 and there were some interesting results.

All regions in NZ with the exception of the West Coast saw their population increase with the largest increase both in total number and in percentage occurring in Auckland. In total Auckland’s population grew by 2.9% or 43,600 people. That’s not the largest percentage increase Auckland has seen but in terms of the number of people, it the largest increase the region has experienced since 1996 and probably the largest ever. In total growth in Auckland accounted for at least half of all growth in New Zealand (1.9% or 87,000 people) with the next fastest growing regions being Canterbury with 2.1% and Waikato with 1.9% with Bay of Plenty and Otago at 1.7%.

The chart below shows the percentage growth in each region and as you can see Auckland is clearly an outlier compared to other regions.

NZ Regional Population change 2015


The regional growth doesn’t mean there isn’t some strong localised growth occurring. Stats NZ point out that at a Territorial Authority level there are a few areas growing faster than Auckland, they are Selwyn up 6.5%, Queenstown-Lakes up 4.9%, Waimakariri up 3.6%. None of those can hold a candle to the Waitemata local board though, more on that soon.

Having both the largest population and it’s also being the growing the fastest region means Auckland now contains more than 34% of all of New Zealand’s population, that’s up from around 30% in 1996. Below is the change in Auckland’s population since then.

Auckland Population Change - 2015

Within that growth Stats NZ say that migration has played a big role in recent years. Of the extra 43,600 people in Auckland they say 14,500 came from natural increase while 29,100 were from people migrating either domestically or internationally. By comparison last year had 14,200 from natural increase with 19,600 from migration.

While Auckland is definitely growing strongly that growth isn’t occurring evenly with some notable differences at a local board level. The stand out in this area is the Waitemata Local board which grew a whopping 9.7% or 8,400 people in a year after growing by 6% the year before. Other than Waitemata the other local board areas to see a high level of new residents includes Howick, Hibiscus and Bays and Albert Eden.

Auckland LB Population Change - 2015 2

It’s amazing just how much the Waitemata Local Board area was able to grow in one year but where did all of those people go? Looking further we can find that more than half of it (5,460 out of 8,400) went to the CBD area – as defined by the Ministry of Transport for their CRL Targets – which is shown below. In fact combined the two area units in the middle – Auckland Central East and West – had a larger increase in population than any of the local boards (4,100 combined).

Auckland CBD Area Units

The centre of Auckland accounted for over 6% of all population growth in NZ

The best suggestion I’ve heard for such a strong increase is the result of a large number of overseas students after a number of years of lower numbers coming here. Considering that over the last year there hasn’t been a huge number of apartments completed it perhaps suggests there has probably been a number of empty apartments tenanted and an increase in the occupancy of some apartments. The increase saw the city centre population reach over 41,000 people, over 8 times what it was just under 20 years ago. The impact of all of these extra people has been enormous in making the city centre more vibrant and liveable, I’d suggest there’s a positive feedback loop at play.

City Centre Population - 1996-2015 2

Is Auckland costing New Zealand too much?

Auckland is currently growing more rapidly than the rest of New Zealand – as it has been doing for most of the last century. At the same time, other New Zealand regions are struggling with aging populations and drifting economies.

NZ city population growth 1926-2006

Source: Grimes and Tarrant (2013)

Understandably, some people look at these trends and conclude that Auckland’s a bit of a problem. If the city’s prospering while small towns decline, isn’t it because the government is spending too much money trying to pump growth into Auckland and too little elsewhere?

In short, is Auckland costing New Zealand too much?

The answer, in a word, is no. If anything, the government’s spending a little bit less in Auckland than it spends elsewhere. But don’t just take my word for that – let’s take a look at the data on where central government is spending money.

A few years back, NZIER did a useful analysis of where the government spent money and provided services. The following tables summarises their key findings. Overall, they find that Auckland gets only 31-32% of overall government expenditure – slightly less than its share of the population.

Regional government spending table

For all the visual thinkers out there, here’s a chart of government spending per person in New Zealand’s five most populous regions. Aucklanders get less spending per capita than the other large regions. This reflects the city’s young demographics – more workers, fewer pensioners – as well as the economies of scale enabled by larger, denser places.

Regional government expenditures per capita chart

But regardless of those advantages, the picture is clear: Aucklanders get a bit less government spending per person than residents of other regions – not more.

But, you say, what about all these costly transport investments we keep hearing about? Isn’t NZTA putting up megabucks to dig the Waterview tunnels and widen motorways and occasionally build the odd kilometre of busway? Isn’t Auckland Transport looking for money for CRL and light rail?

In other words, maybe we’re putting all our capital investment eggs in the Auckland basket?

NZIER’s report also seems to puncture that myth. They found that Auckland received around 35% of central government’s overall capital expenditures – only a wee bit more than the city’s share of the population. So it’s not like the government’s investing wildly in Auckland and leaving no money for other regions.

That being said, data on transport expenditures alone paints a slightly different picture. When I looked at NZTA’s regional expenditure analysis, I found that Auckland received almost half of the agency’s spending on new and improved roads over the last decade. (Unfortunately, consistent data isn’t available on PT infrastructure expenditure, as a lot of that is funded out of general tax funds or local government rates.)

However, this level of spending isn’t fundamentally out of line with Auckland’s growth. The following table looks at spending and population growth outcomes for New Zealand’s five most populous regions. It compares the share of NZTA’s spending on new and improved roads over the 2004-2013 period with each region’s share of national population growth between the 2006 and 2013 Censuses and their share of projected population growth to 2043.

Region Share of NZTA spending on new and improved roads, 2005-2014 Share of population growth 2006-2013 Share of projected population growth 2013-2043
Auckland 48.5% 55.0% 61.5%
Canterbury 5.9% 6.4% 13.9%
Wellington 10.1% 10.3% 5.2%
Waikato 13.7% 10.4% 7.8%
Bay of Plenty 8.0% 4.4% 4.1%

A couple of things jump out at me from this table:

  • Although Auckland has received a large share of new road spending over the last decade, this may just be enough to keep up with current and projected population growth.
  • NZTA spending on new roads in Canterbury over this period hasn’t been wildly disproportionate relative to its population growth over the same period – although spending figures will have been bumped up by the Canterbury earthquake rebuild. However, Canterbury’s growth projections imply that there may be a case to spend more in the region.
  • On the flip side, Wellington, Waikato, and the Bay of Plenty all received a higher share of spending on new roads than their growth projections imply. Wellington, for example, has received 10% of national spending on new roads over the past decade, even though it’s only projected to accommodate 5% of national population growth over the next three decades. (Transmission Gully will boost the spending figure higher.)

Finally, spending on new roads only accounts for around 1/2 of NZTA’s overall budget. The remainder, which is spent on stuff like road maintenance and PT operations, tends to be distributed on a more or less proportionate basis.

So that’s it in a nutshell. Auckland’s hardly the rapacious parasite that some people make it out to be – it’s not sucking small towns dry of their tax dollars. If anything, it’s the opposite: taxes paid in Auckland fund pensions for small town residents. And while Auckland has been getting a higher share of spending on new roads, that’s not unreasonable given the current and projected rate of population growth in the city.

What do you think about regional government spending?

In defense of population growth

Growth: what is it good for?

Accommodating a growing population can certainly be challenging. It means having to find more money to invest in transport and water infrastructure to enable new residents to live and travel in the city. As Auckland Council’s recent consultation on the Long Term Plan shows, asking people to pay more is never a very popular proposition – even if they like how the money’s being spent.

And, as Stu pointed out in his post on Auckland house prices this Monday, population growth can also put pressure on housing markets. Multiple research papers from the Reserve Bank have shown that increases in net migration tend to be followed by increases in house prices – shown in this chart. Obviously, homeowners do quite well out of this, but others face added costs:

RBNZ net migration and house prices chart

In short, it’s not surprising that some people feel trepidatious about population growth and migration. And it’s not surprising that those anxieties are especially present in Auckland, which is projected to continue growing rapidly over the next three decades.

While unease about population growth is understandable, I’d argue that it’s misplaced. In my view, the benefits of urban population growth in New Zealand far outweigh the costs. While large urban areas can become dysfunctional – think of Beijing’s astonishing smog problems or the high cost of infrastructure in sprawling American cities – New Zealand’s cities are nowhere near large enough for the diseconomies of scale to triumph over the economies of scale.

This is easy to see if we look at the periods when Auckland hasn’t been attracting migrants. Here’s a chart from a presentation on Auckland’s demographics by Auckland Council social researcher Alison Reid. It displays the composition of Auckland’s population growth since 1922. In recent decades, natural population increase – i.e. people having babies – has been the biggest source of growth. Net migration is important, but it can be quite volatile – surging up and then crashing back.

Auckland components of population growth 1922-2012

What stood out to me from this chart was that the years with little or no net migration to Auckland have not been good times for the city. Net migration slowed to a trickle during the Great Depression, and turned negative during the constrained years during and after World War Two. More recently, quite a few people fled Auckland during the economically calamitous Muldoon years. Net migration remained low during the painful adjustments imposed by the following two governments.

I wasn’t living in Auckland during the 1990s – my parents had joined the queues leaving via Auckland airport – but friends who were say that the city was turning into a ghost-town. History shows that shutting off the migration tap has never led to a better, more vibrant city or more opportunity for residents. It’s simply been a sign of failure.

My hypothesis is that New Zealand has a strong feedback loop between net migration and economic growth. When growth prospects get worse – as they did in the 1970 and 1980s – it dissuades people from coming here and encourages Kiwis to leave for greener pastures. This in turn worsens growth prospects by sucking consumer demand out of the economy and reducing perceived household wealth (i.e. lowering house prices).

By contrast, good growth prospects tend to attract migrants to New Zealand’s cities and encourage potential emigrants to stay. This in turn leads to a virtuous cycle between higher growth and increased migration.

We can’t fully control this process, as it depends in part on what’s happening in Australia and the rest of the world (not to mention macroeconomic variables that we don’t fully understand). But we can make sure that our cities are in a good position to take advantage of population growth.

The first, and most important thing we can do is to build better cities that are able to attract and efficiently accommodate more people. In Auckland, for example, we’ve got some challenges, including transport investment that’s been heavily skewed towards cars (and only cars) and rising house prices. But the flip-side of those is that we’ve got great opportunities to:

  • Improve transport choice by investing in Auckland’s “missing modes” – a frequent bus network throughout the city, rapid transit infrastructure, and safe walking and cycling infrastructure
  • Improve housing choice by providing opportunities for people to develop higher-density residential typologies in market-attractive areas
  • Invest in great public spaces, such as Auckland’s waterfront and increasing numbers of shared spaces.

Second, as we attract more people to our cities, we need to accommodate them in an efficient and environmentally responsible way. This means enabling people to live in areas that are accessible to jobs, shops, and other amenities. As I found when I looked at carbon emissions from commutes in New Zealand cities, people in inner-city areas are considerably more environmentally friendly than their co-workers from the urban fringe.

Annual CO2 emissions per commuter DRAFT v1

Moreover, the data shows that increasing density can be a positive-sum game for existing communities as well as for the environment. At the city level, we can’t observe any relationship between rising population densities and congestion – fears of traffic-choked streets just don’t seem to have materialised in practice. (So much for diseconomies of scale!)

On the other side of the ledger, suburbs with higher population densities have better consumption choices. Many of the services that people rely upon – from vege shops to Japanese restaurants to public transport to roads – exhibit strong economies of scale, which means that they get better when there are more people around.

Which suggests that there is also a third important thing that we need to do, which is to tell good stories about the opportunities that urban growth will offer us. New Zealand’s used to thinking of itself as a rural economy with some cities sprinkled around as afterthoughts. That’s a dated and inaccurate self-image when over half the economy is located in our three largest cities.

So, what’s your perspective on urban growth?

Aucklands population to continue to grow strongly

Late last week Statistics NZ released their latest regional population projections from 2013 through to 2043. It once again highlights just how much growth is expected to occur in Auckland with them projecting roughly an extra 500,000 to 900,000 people in the region within 30 years – that’s a 36-63% increase on what we have today.

All 16 regional council areas are projected to increase in population between now and 2028, Statistics New Zealand said today.

“The short-term trend partly reflects the current high level of arrivals into New Zealand, and the current low level of departures,” population statistics manager Vina Cullum said.

“However, population growth will slow in the longer term as our population continues to age. This will see the number of deaths increase relative to births. Also, net migration (arrivals minus departures) exceeded 50,000 in 2014 and is unlikely to remain at that level.”

Auckland will continue to be New Zealand’s fastest growing region, and account for three-fifths of the country’s population growth between 2013 and 2043. From an estimated population of 1.5 million in 2014, Auckland is projected to reach 2 million in the early 2030s. That means out of every 100 people in New Zealand, 34 currently live in Auckland, but this will increase to 37 in 2028 and 40 in 2043.

Natural increase (births minus deaths) is projected to account for three-fifths of Auckland’s growth, and net migration the remaining two-fifths.

Of New Zealand’s 67 territorial authority areas, 51 are projected to have more people in 2028 than in 2013. However, only 30 are projected to have more people in 2043 than in 2028.

The fastest population growth between 2013 and 2043 is expected in Selwyn and Queenstown-Lakes districts, up an average of 2.2 and 1.8 percent a year, respectively.

The projections are not predictions, but an indication of the size and composition of the future population. Statistics NZ produces low, medium, and high growth projections for every local area every 2–3 years to assist planning by communities, local councils, and government.

You can see the annual projected growth for each region below. As you can see the growth Auckland is leaps and bounds ahead of anywhere else and the only region to even come close is Canterbury and only if it sees the high projection outcome.

Annual Population Change 2

Of course when you look at the change on an actual number basis Auckland’s expected growth is even more extreme. This is based off the medium projection. Due to most regions being a fairly similar size it can be hard to tell them apart. In Canterbury, the vast majority of projected growth will happen in the Christchurch City Council area or in the two surrounding districts – Selwyn and Waimakariri. I think that is going to make it increasingly important for the region to start looking at some rapid transit options – unless it wants to follow Auckland’s mistakes.

NZ Regional Population Projections 2013-2043

Another way to show the level of growth in Auckland in particular is below. This is the projected cumulative growth from 2013 to 2043 for Auckland and the rest of the country. Auckland grows by over 730,000 people while the rest of the country by only around 460,000 – of which about 80% is in Christchurch, Wellington, the Waikato and the Bay of Plenty.

Auckland vs Rest of NZ growth - 2013-2043

Every time the issue of Auckland’s strong growth comes up many people highlight the challenges it adds, in particular the cost of new infrastructure and housing however I feel it’s also worth remembering that it presents a lot of opportunities too. Instead of trying to cap the city’s growth like some have suggested in the past we should embrace it as that will not only make the city stronger but also help make the country as a whole stronger.

One question people often have is how realistic these projections are and how past projections turned out. As it happens Auckland tends to track slightly ahead head of the medium projection. Here’s what was predicted to occur from 2001 – 2026 – the blue area represents the range of low, medium and high growth projections.


Auckland Population Project - 2001 - 2

Stats NZ have also made predictions within Auckland down the local board level and in many ways this provides a more interesting and useful look at how the city is changing. Like we see nationally, there are expected to be some areas that grow much stronger than others and one of those is the Waitemata Local Board area which covers the city centre and inner suburbs. Population in the area is expected to almost double from 2013 around 81,000 to 152,500 which if it occurs would make the Waitemata Local board area have the third largest of any board in Auckland.

In addition to the City Centre the local boards that are likely to see a lot of greenfield development are also high on the list.

Auckland Annual Population Change 2

I won’t publish a graph of the actual projection numbers as it’s simply too messy to read easily. Some of the

Mapping population changes and young(ish) adults

Yesterday reader Aaron Schiff published this post looking at how population had changed across the country and compared it to how it had changed for the 20-34 age group.

Young adults represent the future of New Zealand’s economy, so I think it’s interesting to look at what is happening to them over time.

Using Census data I’ve made some dotmaps of population changes between 2013 and 2001. In the following maps, there is one blue dot for each new person in census area units that experienced population growth over this time, and one red dot for each person lost in areas where the population shrank.

In each case the maps compare changes in the total “census usually resident” population with that of young adults aged 20 to 34. People in this age group are generally finishing up education, entering the workforce, starting families, and buying houses. The maps show changes in where people live, which reflects a number of factors including earning prospects and cost of living (among other things).

First, the national picture. Total population increased in all of the major cities, most smaller centres, and many rural areas too. In comparison the increase in young population is more concentrated on urban centres.

Aaron Schiff Population - All-NZ-Combined

There’s a couple of interesting things that really stand out here. There’s been growth in large parts of the country which isn’t unexpected but some areas, particularly the far north, East Cape and parts of the central North Island haven’t done so well. Perhaps more interesting is there’s also a couple of places noticeable that have seen general population increasing while flat or declining young populations. This includes some of NZ’s more popular areas due to climate or scenery such as the Coromandel Peninsula, Hawkes Bay, Nelson and Queenstown/Wanaka areas. In addition there seems to be a general decline in the youngish population from rural areas. Back to Aaron’s post:

In the Auckland region, total population increased in almost all areas. The changes in young adult population are very different – a big increase in the CBD but reductions in many areas surrounding the CBD, and growth in outlying areas. I would hypothesise that this reflects housing costs more than anything.

Aaron Schiff Population - Auckland-Combined

The areas just to the west of the CBD (Freeman’s Bay, Ponsonby, etc) are especially interesting. The total population in these areas grew very little between 2001 and 2013, while the young adult population reduced significantly.

Aaron Schiff Population - AKL Central

Firstly I’m surprised that some areas have had overall population losses, some like around Glen Innes might be related to a smaller population while Housing NZ start to redevelop their land, something that will almost certainly see the population jump over time. Other areas like that experienced population loss like Herne Bay might be more related to houses being lived in by (wealthier) older couples whose children have left home.

It’s the youngish population that’s seen the most change and what I notice is it’s most prevalent in what are generally higher socio economic areas e.g. both the western and eastern bays, Mt Eden, Devonport, Titirangi. Again to me this likely reflects a combination of factors including:

  • Children of Baby boomers who have left home
  • Generation Xers (born 1960-1980) who might still live in the area with young families but have obviously aged outside the 20-34 age bracket
  • House price rises that have put home ownership out of reach for many younger people in these areas.

As to where the growth in young people has been happening, it’s been incredibly strong in the CBD which reflects the growing number of students who are choosing to live more urban.

All up it’s really interesting to see where the changes are occurring so thanks Aaron. Also if anyone wants to help put the data into an interactive version then please let Aaron know

Northward drift no more

As a youngster in Social Studies class, I remember being regaled with stories of the Northward Drift, that well-known phenomenon of people moving from the South Island to the North Island, and to Auckland from everywhere that wasn’t Auckland. How we thrilled to the tales of those intrepid folk, heading north on their oxen-drawn wagons (we assumed) to the land of plenty. However, by the time I was learning about it in the late ’90s or thereabouts, it wasn’t really happening any more. Tables from Statistics New Zealand show that, on a net basis, people have been moving from the North Island to the South Island since the late ’80s (and the good people at Stats NZ have also written a good “mythbusters” article on it). It took a devastating earthquake to reverse the trend, with the South Island finally losing people to the North Island again in the five years to 2013:

South to North

As for Auckland, it took a little while longer to follow the trend, but Auckland has been losing population to other regions since the late ’90s. I wrote last year that

[Auckland has] had a decade of negative migration, in domestic (or “internal”, i.e. within NZ) terms. It will be interesting to see if this trend continues when the 2013 census results come out. The “northward drift” of population, which certainly has been a factor in the past, doesn’t seem to be happening any more.

Well, the 2013 census results are out, and they do indeed show a continuation of this trend – although it has slowed significantly.

Internal Migration for Auckland

This leads to the inevitable media coverage on “Aucklanders moving to [insert other town or city here]”. Google this for Tauranga or Hamilton and you’ll see these articles getting written at least once a year for each city – it’s a reliable page-filler and it’s easy enough to find a couple of case studies to interview.

Now, the “net” numbers shown here represent the difference between two much larger numbers – total internal immigrants, and total internal emigrants. These numbers were each around 60,000 for the five years to March 2013 – what we’re seeing is just the net result of fluctuations (or trends) in each of these numbers.

The articles (and the people mentioned in them, including real estate agents and so on) usually make the mistake of thinking about these migration flows as being one way. They’re not. Of course real estate agents in Tauranga will notice home buyers moving from Auckland – and vice versa, if anyone had bothered to ask the agents in Auckland. However, the effect will be much more noticeable in the smaller city, because Hamiltonians will notice a couple of thousand new residents coming from Auckland, whereas it’ll be a bit harder to see that when the new residents get spread around a city with ten times the population.

Even so, we’re now looking at a fairly well established trend which has generally been heading in one direction for the last 30 years. It’s probably safe to say that overall, more Aucklanders will keep leaving for other parts of New Zealand than the reverse.

However, it’s worth pointing out that these numbers just aren’t that big in the context of Auckland. We’re talking about a net loss of 4,653 people over the last five years, whereas Auckland is generally growing at 20,000 to 25,000 people each year (and probably faster at the moment). In the graph below, I’ve broken down Auckland’s overall population growth into gains from internal migration, international migration, and “natural increase” (births minus deaths). Note that my data for those other two items only goes back 20 years.

Overall Population Growth for Auckland

Compare those three elements of Auckland’s population growth, and it becomes pretty obvious why it’s much more important for us to analyse and understand the factors behind international migration, and natural increase. For other towns and cities, internal migration can be pretty important – it’s a key driver of growth in Hamilton and Tauranga, for example – but for Auckland, it’s pretty small stuff.

New Zealand can’t put the urban genie back in its bottle

Although the majority of New Zealanders have lived in towns and cities for almost a century, it sometimes seems like we’re in denial that we live in an urban nation. This unease came to the fore during the debate over the Auckland Plan and the Unitary Plan. As it turns out, some people are uneasy about Auckland’s emergence as a large and increasingly sophisticated city.

At that time, the NZ Herald published several articles calling for a “national population strategy” to forestall further growth in Auckland. Here’s one example from May 2013:

Redirecting people away from settling or living in Auckland would be a positive step. A good example is in Invercargill where students pay no fees. The fees at Auckland learning institutes should be increased and those elsewhere removed or reduced significantly.


As so much of the population increase is likely to come from an increase in births, a decrease is urgent. Incentives need to be provided such as free contraception, especially to those under 20 years of age. The provision of family benefits regardless of whether you have two or 10 children should be looked at.

Here’s another one from June 2013:

Short of putting contraceptives in the water supply we are unlikely to do much about our rate of natural increase – so realistically any policy needs to focus on migration patterns, particularly within New Zealand – the so-called “northward drift”.

Realistically we cannot talk about Auckland in isolation from the rest of New Zealand. We have no national population strategy – though some useful work has been done in the past. Neither do we have a regional development strategy, an essential mechanism for achieving a more equitable sharing of economic and population growth.

This is a seductive idea, but it won’t work. Developing policy to redistribute growth is bloody hard without spending massive amounts of money and tightly controlling economic activity. If we seriously tried to subsidise or regulate growth away from Auckland, we’d probably just end up misallocating resources and reduce our wellbeing. As urban economist Edward Glaeser is fond of pointing out, good policy should aim to help poor people rather than poor places.

Fortunately, we don’t have to speculate about the consequences of regional growth policies, as we have a real-world historical example to draw upon. From the 1930s to the 1980s, NZ tried a massive policy experiment – it invested heavily in regional development and used regulatory controls to spread investment and employment around the country.

Looking back on it, the reach of these regulations and investments is extraordinary. So, for example, you had:

  • Economically costly production and export subsidies for farmers were propping up uneconomic farms. By 1984, subsidies accounted for almost 40% of the average sheep and beef farmer’s income.
  • The Transport Licensing Act 1931, which banned trucks from moving goods more than 150 kilometres before its repeal in 1982. This imposed high costs to distance, encouraging small-scale local production rather than centralising plants.
  • Regulations that virtually prohibited the opening or closing of meatworks and other rural processing plants between the 1930s and 1980s. When the Patea meatworks closed in 1982, they were the first meatworks to close in half a century – which is bizarre when you realise how much cheaper refrigerated shipping got over this period.
  • A policy of distributing major industrial facilities around the country – an aluminium smelter for Bluff, a steelworks for Glenbrook, a pulp and paper mill for Kawerau, etc.
  • The use of the Railways Department and Forest Service as rural employment schemes.

So it’s worth asking whether these policies worked. We know that they were economically costly – but did they actually succeed in redistributing growth from Auckland to the regions?

The data suggests that the answer is no. Here’s a graph of population growth in New Zealand’s major cities from 1926 to 2006 from Grimes and Tarrant (2013). As it shows, Auckland’s population growth began diverging from Wellington and Christchurch early on – probably after World War II.

NZ city population growth 1926-2006

Furthermore, the almost total removal of rural subsidies during the 1980s doesn’t seem to have accelerated Auckland’s divergence. In fact, Auckland’s annual per capita growth rate seems to have fallen after deregulation, although growth slowed more in other places.

In short, we should accept the reality of urban growth: People want to live in Auckland and start businesses here for good reasons, and we can’t (and shouldn’t) try to stop them. The idea that we can put the urban genie back in its bottle is sheer fantasy. If we try, we’ll only make ourselves worse off.

Our only choice is whether we will have a good city – an interesting and prosperous place – or a crippled, unsuccessful city. Given that, our focus should be on making the best urban places we can. We need Auckland to be a dynamic and liveable city rather than an overgrown small town. And that means investing and planning in a city-like way: getting ambitious about rapid transit, celebrating our mixed-use public spaces, and accepting that density and amenity aren’t mutually exclusive.

Is this Auckland 2040?

Is this Auckland 2040?


New Zealand’s population growth highest in a decade

New estimates from Statistics NZ based show New Zealand’s population is growing at the fastest rate for over a decade

New Zealand’s population is growing at its fastest rate for over a decade, according to new estimates released by Statistics New Zealand today.

The country’s population grew by 67,800 people, or 1.5 percent, in the year to 30 June 2014. This came from natural increase (births minus deaths) of 29,500 and net migration (arrivals minus departures) of 38,300. New Zealand’s estimated resident population was 4.51 million at 30 June 2014.

“This is the first release of population estimates using results from the 2013 Census and Post-enumeration Survey,” population statistics manager Vina Cullum said.

The estimates are the best available indication of how many people currently live in New Zealand because they include people missed by the census, including those who were temporarily overseas on census night.

New population estimates at the earlier date of 30 June 2013 are also available for broad ethnic groups, and we have revised population estimates for subnational areas.

“These estimates confirm increases in all ethnic populations since 2006. Even the broad European ethnic population has grown to 3.31 million despite its older age structure,” Ms Cullum said.

The June 2013 estimates put the Māori ethnic population at 692,000, the broad Asian population at 541,000, and broad Pacific population at 344,000. An estimated 53,000 people identify with Middle Eastern, Latin American, or African ethnicities.

Population growth was 1.5% over the last year compared with an average for the 2006-2013 period of 0.8%. The graph below shows the change in population over the last decade.

NZ Population Change 1992 - 2014

One of the big factors has been a strong increase in net migration

NZ Net Migration 1992 - 2014

Traditionally the majority of that net migration increase ends up in Auckland so it will be interesting to see if that trend continues when the regional information is released later this year.

More migrants! Sweet.

Several recent reports and articles have discussed trends in migration and its impacts on New Zealand.

In terms of trends, net migration is at a 10-year high. The recent surge in net migration trends is shown below.

Net migration

The simple reason advanced for the positive net migration trend is that our economy is doing relatively well compared to most of the countries with whom we compete for skilled labour. This is both 1) reducing the number of kiwis departing these shores and 2) attracting more people from elsewhere to come live/work here (some of whom will of course be NZers). Put simply, less out and more in = higher net gain. Trends in long term departures and arrivals are illustrated below.

Arrivals and departures

So what might be the impacts of higher net migration?

Usefully, the people at NZIER have been researching the impacts of migration on New Zealand’s economic performance. They find that for every 40,000 additional net migrants, our GDP per capita increases by approximately $400 p.a. Why? Well, there are apparently a number of microeconomic channels through which migration contributes to economic output, specifically:

  • They provide firms with new skills
  • They increase innovation and entrepreneurship
  • NZ businesses benefit from greater scale and competitiveness
  • They increase returns from public investment

The general message is fairly simple: Migrants increase the diversity and scale of our labour market and firms, while also increasing the returns on public investment (which typically have relatively fixed costs, such as infrastructure and institutions). It’s worth pointing out, however, that only the first two economic channels listed above are actually specifically linked to migration. The last two microeconomic channels are pure economies of scale, which would also result from a higher domestic fertility rate.

Which brings me nicely to another (potential) benefit from migration: Greater diversity in potential partners.

I know this sounds flakey, but I’ve just recently been struck by how many of my NZ friends (including several of my fellow bloggers) are partnered up with people of foreign origin. Which raises an interesting proposition: Is it possible that higher rates of net migration have an indirect impact on domestic fertility rates? I’ve been asking my mates but they’re a bit coy on the topic. But it seems reasonable to suggest that if migrants introduce diversity/specialisation into the labour market then perhaps they do the same for the “partner market”.

I guess the net effect depends not only on the quality of the match, but also migrants’ relative preferences for making babies compared to the existing NZ population (to which they are added). This is an area that may warrant further NZ-specific research (NB: The World Bank has analysed migration and fertility impacts in this paper. The key finding appears to be that migration reduces home country fertility and increases destination country fertility, as I would expect. However the World Bank appear to attribute this to simple differences in preferences, rather than better matching).

Are there negative impacts from migration?

The most obvious is the additional demand for housing that results during times of high migration, which could in turn lead to higher property price inflation and ultimately higher interest rates. This will not only curb domestic demand across the economy, but it will also tend to inflate the currency and undermine NZ’s export competitiveness. This issue is all the more relevant in the Christchurch context and, in my opinion, supports the Reserve Bank’s decision to implement loan-value requirements as a temporary curb on housing demand in these relatively exceptional circumstances.

Some people suggest that higher net migration might reduce social cohesion, although specific details on exactly what is meant by social cohesion are difficult to come by.

Data from StatisticsNZ (as discussed here on KiwiBlog) suggests people of Asian ethnicity in New Zealand have much lower rates of criminal offending than the general population, while the opposite is true of Pasfika ethnicity. However, this difference may be attributable to differences in the relative incomes of these two migrant groups.

I can’t help but wonder that if 1) more kiwis are staying here and/or returning from overseas (where approximately 1 million currently reside) and 2) kiwis who hook up with migrants are generally happier than they would be otherwise, then it seems possible that current trends will actually bring people/families together and thereby supports greater “cohesion”. So ultimately I think this supposed “negative” effect of migration is likely to be over-stated and that, on balance, migration has net positive impacts for NZ’s socio-economic performance.

So what should we expect from future trends in migration?

Well, if the results of this international survey are anything to go by then NZ can expect to see positive net migration numbers for some time. The survey ranked New Zealand ranked fifth overall for preferred destination and subsequently estimated that our population would increase to over 9 million in the event that everyone who wanted to migrate here was able to do so. Of course, the relative performance of NZ’s economy will be the main determinant of whether current rates of migration are sustained.

All I hope is that we start to get people like Emma Watson and/or Hayley Williams migrating here to vie for my affections. Sweet.