00:00:00
this is ockland airport in New Zealand
00:00:03
where flights are packed with passengers
00:00:05
leaving not for holidays but to start
00:00:07
new lives abroad between January and
00:00:10
June 2024 880,000 New Zealand citizens
00:00:14
1.5% of the population left the country
00:00:17
the highest on record for every
00:00:20
returning New Zealander three depart
00:00:22
many Bound for Australia or the UK most
00:00:25
our young workers escaping an economy
00:00:27
plagued by Soaring housing costs falling
00:00:30
wages and Rising unemployment these
00:00:33
departures come as unemployment edges up
00:00:35
by 1% and economic growth stagnates once
00:00:39
praised for its resilience New Zealand
00:00:41
now faces a population crisis and
00:00:43
economic stagnation it's a country that
00:00:46
from the outside many see as a relative
00:00:48
Paradise so what forces are now pushing
00:00:50
an entire generation to abandon the
00:00:52
country they once called home well New
00:00:55
Zealand's economic struggles begin with
00:00:57
its overreliance on two industries
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tourism and agriculture tourism
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accounted for 14% of the country's
00:01:05
entire GDP before the pandemic and
00:01:07
employed 8.4% of the workforce making it
00:01:10
an important part of the economy back in
00:01:13
1999 New Zealand essentially branded
00:01:16
itself and started a marketing campaign
00:01:18
with the slogan 100% pure promoting the
00:01:21
country's natural beauty and outdoor
00:01:23
activities complete with bikers enjoying
00:01:26
views of mountains kayaking paddling and
00:01:29
for some reason in the piano on a beach
00:01:31
the Lord of the Rings movies helped too
00:01:34
the annual tourist influx to New Zealand
00:01:36
grew 40% from 1.8 million in 2000 to 2.4
00:01:40
million in 2006 attributed in large part
00:01:44
to the Lord of the Rings phenomenon for
00:01:46
a country with a population of just over
00:01:48
5 million that's a lot of extra people
00:01:51
between 2007 and 2008 it's estimated
00:01:54
over a billion people saw some kind of
00:01:57
100% pure marketing either in print
00:02:00
television or online it became one of
00:02:02
the world's most effective marketing
00:02:04
strategies however this dependency on
00:02:06
tourism left the nation vulnerable when
00:02:09
Global Travel came to a halt tourist
00:02:11
numbers have since rebounded to 84% of
00:02:14
prepandemic levels but the recovery is
00:02:16
fragile the government's recent decision
00:02:19
to Triple the visitor tax from $ 35 New
00:02:21
Zealand do to 100 has sparked concerns
00:02:24
among industry Leaders with fears it may
00:02:27
deter Travelers further this measure a
00:02:29
seems to fund conservation and
00:02:31
infrastructure projects but it reflects
00:02:33
deeper systematic issues how to sustain
00:02:36
a tourism based economy when its primary
00:02:38
draw the environment is under threat
00:02:41
agriculture meanwhile contributes over
00:02:44
5% of the GDP the highest it's ever been
00:02:47
it's long been another economic
00:02:49
Cornerstone but the sector's Reliance on
00:02:51
foreign workers expose it to shocks
00:02:54
migrant labor which once accounted for
00:02:56
20% of the Agricultural Workforce
00:02:58
dwindled during the pandemic leading to
00:03:01
UNH harvested crops and financial losses
00:03:04
for example in the kiwi fruit industry
00:03:06
alone the labor shortage meant that
00:03:08
approximately 20% of crops went
00:03:10
unharvested resulting in financial
00:03:12
losses estimated in the millions of
00:03:14
dollars at the same time the
00:03:16
government's sustainability policies
00:03:18
aimed at reducing agriculture's
00:03:20
environmental impacts have imposed
00:03:22
additional costs on Farmers these
00:03:24
policies are good for the environment
00:03:26
for sure and they include things like
00:03:28
cutting biogenic me emissions by 10% by
00:03:31
2030 and up to 47% by 2050 compared to
00:03:35
2017 levels but to achieve this farmers
00:03:39
are required to adopt emissions reducing
00:03:41
Technologies which often involve
00:03:43
significant upfront Investments and can
00:03:45
make it tough for Farmers to be
00:03:47
competitive in global markets these
00:03:49
vulnerabilities are compounded by
00:03:51
government austerity measures following
00:03:53
the economic downturn that started in
00:03:55
2022 the center right National party
00:03:58
that was elected in 20 23 initiated
00:04:01
widespread public sector cuts and
00:04:03
reduced spending to control debt but
00:04:05
there were some negative side effects
00:04:07
public healthcare for example saw
00:04:09
funding cuts that stretched hospitals to
00:04:12
their limits increasing weight times and
00:04:14
reducing available staff in critical
00:04:16
areas in education capital investment
00:04:19
for school infrastructure projects was
00:04:21
delayed or cancelled leaving a lot of
00:04:23
schools operating under substandard
00:04:25
conditions transport and infrastructure
00:04:28
were also hit with delay in road
00:04:30
maintenance and a scaling back of
00:04:31
planned projects under something called
00:04:33
the national land transport fund the
00:04:36
broader economic symptoms are Grim
00:04:38
unemployment Rose to 4.7% in mid 2024
00:04:42
and the economy contracted for four of
00:04:44
the last 5 quarters annual growth
00:04:47
remains stagnant at
00:04:49
0.2% while interest rates have surged to
00:04:51
over 5% in an attempt to slow inflation
00:04:54
you see in New Zealand's case inflation
00:04:57
climbed above 7% in 2022 2 while above
00:05:00
the Reserve Bank of New Zealand's target
00:05:02
range of 1 to 3% so to basically cool
00:05:06
the economy The Reserve Bank increased
00:05:08
interest rates which makes borrowing
00:05:10
things like taking out loans and
00:05:12
mortgages more expensive this
00:05:14
discourages spending and investment
00:05:16
helping to reduce demand for goods and
00:05:18
services which in turn slows price
00:05:21
increases this affects jobs because
00:05:24
businesses face higher costs for loans
00:05:26
which makes it harder to expand or
00:05:28
invest in new projects
00:05:30
this can slow job creation or lead to
00:05:32
layoffs which is part of the reason why
00:05:34
a record
00:05:35
88,200 citizens left in the year ending
00:05:38
June 2024 a 70% increase from
00:05:42
prepandemic figures many of these
00:05:44
immigrants are young professionals
00:05:46
driven abroad by Rising costs and a lack
00:05:48
of economic opportunities but to really
00:05:51
understand what's going wrong with New
00:05:52
Zealand's economy we have to go back to
00:05:55
the 1980s the fourth labor government
00:05:58
led by Prime Minister David Lang and
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Finance Minister Roger Douglas came to
00:06:02
power during a crisis the country was
00:06:05
drowning in debt inflation was rampant
00:06:08
and years of heavy-handed economic
00:06:10
controls under prime minister Robert
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malun had stalled growth the
00:06:14
government's solution came to be known
00:06:15
as roganomics a radical market-driven
00:06:18
transformation of the nation's economy
00:06:20
inspired by Reaganomics in the United
00:06:23
States and thatcherism in the United
00:06:25
Kingdom What followed was nothing short
00:06:27
of a revolution State Subs ities that
00:06:30
had propped up Industries like
00:06:31
Agriculture and Forestry were pulled
00:06:33
overnight forcing businesses to adapt or
00:06:36
fail the financial markets were
00:06:38
deregulated foreign exchange and
00:06:40
interest rate control scrapped and the
00:06:42
New Zealand dollar was floated meaning
00:06:45
that its value was no longer fixed by
00:06:47
the government but determined by supply
00:06:49
and demand in the Global Currency
00:06:50
markets public Enterprises from
00:06:53
telecommunications to banking were
00:06:55
corporatized and prepared for sale these
00:06:57
moves were buil as necessary to Modern a
00:06:59
stagnant economy but their impact would
00:07:02
be felt far beyond the balance sheets
00:07:04
taxes were restructured in ways that
00:07:06
reshaped Society a new goods and
00:07:09
services tax was introduced while the
00:07:11
top income tax rate was slashed from 66%
00:07:14
to 48% inflation dropped into single
00:07:17
digits but unemployment surged as
00:07:20
traditional Industries like
00:07:21
manufacturing and agriculture buckled
00:07:23
under the pressure by the end of the
00:07:25
decade New Zealand was the only
00:07:27
industrialized nation in the world to
00:07:29
record negative GDP growth in 1989 as
00:07:33
the economy entered a prolonged
00:07:34
recession the speed and scope of these
00:07:37
reforms were pretty unprecedented
00:07:39
Douglas and his allies in the treasury
00:07:41
operated with near absolute power
00:07:43
leveraging the Parliamentary majority to
00:07:45
bypass descent public input was largely
00:07:48
ignored critics later described this as
00:07:51
an elected dictatorship where sweeping
00:07:53
changes were imposed without a clear
00:07:55
Democratic mandate the long-term
00:07:58
consequences were equally tramatic
00:08:00
chronic underinvestment in
00:08:01
infrastructure and public services
00:08:03
became evident as the years went on
00:08:05
while the government boasted about
00:08:07
creating a leaner more efficient State
00:08:09
the cuts came at a cost New Zealand's
00:08:12
productivity measured as GDP per hour
00:08:15
worked slipped quite dramatically in the
00:08:18
1970s New Zealand's workers produced
00:08:21
about the same amount per hour as
00:08:22
workers in the 38 countries that make up
00:08:25
the organization for economic
00:08:26
cooperation and development or Oe CD
00:08:30
today they produce 20% less per hour
00:08:33
compared to the middle ranked oecd
00:08:35
countries what romics achieved wasn't
00:08:38
just an economic restructuring but a
00:08:40
complete ideological shift it entrenched
00:08:43
the belief that markets could solve
00:08:44
nearly every problem governments that
00:08:46
followed regardless of political
00:08:48
alignment accepted this framework even
00:08:51
now efforts to reverse the effects of
00:08:53
privatization or rebuild public
00:08:55
investment face opposition rooted in
00:08:57
this Legacy New Zealand's econ economy
00:08:59
became more open but the costs were
00:09:02
quite evident inequality grew critical
00:09:04
Services faltered industries that once
00:09:07
provided stable jobs disappeared what
00:09:09
began as a promise of prosperity Ended
00:09:12
as a story of Rapid reform and while the
00:09:14
country still had a relatively strong
00:09:16
social safety net compared to a lot of
00:09:18
other countries definitely weakened
00:09:21
within this came something called the
00:09:22
employment contracts Act of 1991 which
00:09:26
transformed the labor market this
00:09:28
legislation replaced Decades of union--
00:09:30
driven collective bargaining with
00:09:32
individual employment contracts
00:09:34
fundamentally altering how workers
00:09:36
negotiated pay and conditions employers
00:09:39
could now bypass unions dealing directly
00:09:42
with employees while framed as a move
00:09:44
towards flexibility and efficiency the
00:09:46
ECA marked a dramatic shift in workplace
00:09:49
power dynamics union membership
00:09:51
collapsed in the Years following its
00:09:53
introduction in 1991 43% of workers were
00:09:57
unionized by 19 99 that figure had
00:10:00
plummeted to
00:10:02
21.7% this wasn't a gradual decline it
00:10:05
was a deliberate dismantling of
00:10:07
collective labor power workers faced
00:10:09
greater risks strikes became rare and
00:10:12
employers gained substantial leverage in
00:10:14
determining wages and conditions
00:10:16
performance-based contracts and variable
00:10:19
hours became common providing employers
00:10:21
with flexibility but leaving workers
00:10:23
exposed to instability the effects on
00:10:26
wages were quite striking before the ECA
00:10:29
Labour's share of New Zealand's income
00:10:31
was relatively stable after its
00:10:33
introduction this share began a steep
00:10:35
decline unions lost power and workers
00:10:38
had to negotiate contracts individually
00:10:40
making it harder to get pay raises by
00:10:43
2023 wages accounted for a historically
00:10:46
low proportion of national income
00:10:48
reflecting Decades of suppressed
00:10:50
earnings growth what made up for that
00:10:52
share drop was Operation surpluses and
00:10:55
returns to Capital basically lower wages
00:10:58
with higher business profits
00:10:59
for workers this meant fewer resources
00:11:02
for Essentials and increased Reliance on
00:11:04
secondary jobs the eca's influence
00:11:07
extended Beyond wages though its
00:11:09
emphasis on cost cutting discouraged
00:11:11
investments in productivity enhancing
00:11:13
Industries businesses particularly in
00:11:16
agriculture and tourism leaned on
00:11:18
lowcost labor instead of adopting
00:11:20
Technologies or strategies that could
00:11:22
increase output per worker these
00:11:25
industries already Central to New
00:11:27
Zealand's economy became even more in
00:11:29
trenched as the main drivers of growth
00:11:31
while Agriculture and tourism brought in
00:11:33
Revenue their low productivity made it
00:11:36
difficult for the country to keep Pace
00:11:37
with global competitors focused on high
00:11:40
value sectors like technology and
00:11:42
advanced manufacturing at the same time
00:11:45
casual and part-time work surged
00:11:47
employers took advantage of the act's
00:11:49
provisions to expand non-standard
00:11:51
employment Arrangements non-standard
00:11:53
employment Arrangements being things
00:11:55
like gig work fixed term contracts and
00:11:58
seasonal work work this inadvertently
00:12:01
contributed to more immigration being
00:12:02
needed while this allowed businesses to
00:12:05
adapt to demand fluctuations it also
00:12:07
meant less job security and fewer
00:12:09
benefits for workers the shift to a
00:12:12
precarious labor market widened income
00:12:14
inequality creating a growing divide
00:12:17
between stable High income earners and a
00:12:19
vulnerable underpaid Workforce the ECA
00:12:22
was introduced during a period of
00:12:24
sweeping economic reforms but its impact
00:12:27
on Labor Relations is quite unique it
00:12:29
didn't simply create a more flexible
00:12:31
labor market it restructured the economy
00:12:34
to prioritize short-term efficiency over
00:12:36
longterm resilience by cutting wage
00:12:39
growth and shifting risks onto workers
00:12:41
the ACT left New Zealand's Reliance on
00:12:43
industries that couldn't generate
00:12:45
sustainable high value growth the
00:12:48
employment contracts act also created
00:12:50
the conditions for New Zealand's housing
00:12:52
crisis to take root wage suppression and
00:12:55
labor market deregulation shifted
00:12:57
economic behavior with diminished
00:12:59
incomes workers had less purchasing
00:13:02
power while businesses focused on cost
00:13:04
cutting rather than productivity
00:13:06
funneled resources into safer more
00:13:09
profitable Investments like real estate
00:13:11
as wages stagnated home ownership became
00:13:14
less attainable for the average worker
00:13:16
transforming housing into a commodity
00:13:18
rather than a shelter between 2000 and
00:13:21
2021 inflation adjusted house prices in
00:13:24
New Zealand Rose
00:13:26
256% compared to much lower increas
00:13:29
increases in countries like the United
00:13:30
States with 64% and the United Kingdom
00:13:33
with
00:13:34
110% a series of policy decisions during
00:13:38
and after the eca's implementation made
00:13:40
housing investments particularly
00:13:42
lucrative the government didn't tax
00:13:44
profits made from selling property and
00:13:46
zoning rules made it easier to buy and
00:13:49
develop land this encouraged investors
00:13:51
to focus on property driving up housing
00:13:54
prices as people competed to make money
00:13:56
from real estate people and businesses
00:13:58
start putting their money into areas
00:14:00
like Technology and Manufacturing that
00:14:02
could improve productivity instead they
00:14:05
focused on housing because it was the
00:14:07
easiest and most reliable way to make a
00:14:09
profit this shift had cascading effects
00:14:12
on New Zealand's economy by 2022 housing
00:14:15
affordability had plummeted with rents
00:14:17
and mortgages consuming 30% or more of
00:14:20
disposable income for 46% of renters a
00:14:24
figure that had been 19% in the 1980s as
00:14:27
property prices saw construction costs
00:14:30
became another bottleneck local councils
00:14:32
didn't have enough money to improve
00:14:34
infrastructure which made it harder to
00:14:36
develop land this led to cities
00:14:38
spreading out and land prices going up
00:14:41
making housing even less affordable in
00:14:43
New Zealand the labor market weakened by
00:14:46
the ECA became entwined with the housing
00:14:48
crisis with wages unable to match the
00:14:51
spiraling cost of living critical
00:14:53
Industries struggled to retain workers
00:14:56
professionals left in record numbers bus
00:14:59
businesses facing labor shortages turned
00:15:01
to lowcost immigrant workers this influx
00:15:04
placed additional strain on Urban
00:15:06
infrastructure transport water systems
00:15:09
and schools already struggling to
00:15:11
accommodate Rising populations yet these
00:15:14
challenges were never met with
00:15:15
sufficient investment instead resources
00:15:18
continued to pour into speculative
00:15:20
housing housing inequality deepened as
00:15:22
home ownership declined between 1986 and
00:15:26
2013 home ownership had fallen from 74%
00:15:29
to 65% with over 1% of the population
00:15:33
living in severe housing deprivation
00:15:35
homeless families crowded into cars and
00:15:38
motels and emergency housing costs
00:15:40
ballooned to $4 billion annually a
00:15:43
number that has doubled since 2017 the
00:15:46
housing crisis illustrates how
00:15:47
interconnected economic forces shape
00:15:49
National policy outcomes what began with
00:15:52
suppressed wages has spiraled into a
00:15:54
self-reinforcing loop unaffordable
00:15:57
housing drives migration weakens
00:15:59
productivity and strains infrastructure
00:16:02
as New Zealand remains locked in this
00:16:04
cycle the housing market once seen as a
00:16:06
refuge has become the single largest
00:16:09
obstacle to New Zealand's economic
00:16:11
recovery but New Zealand's economic
00:16:13
challenges go even deeper they're rooted
00:16:15
in structural weaknesses that leave the
00:16:17
country struggling to keep Pace with the
00:16:19
modern world one of the clearest
00:16:21
indicators is research and development
00:16:24
in 2019 New Zealand allocated
00:16:27
1.47% of their GDP P to R&D ranking 26th
00:16:31
out of the 38 oecd countries compare
00:16:34
that to South Korea where 4.5% drives
00:16:37
technological innovation or Israel where
00:16:40
similar levels of investment fuel a
00:16:42
booming tech industry for New Zealand
00:16:45
this lack of commitment has meant fewer
00:16:47
breakthroughs it stagnated industrial
00:16:49
growth and led to an inability to
00:16:51
develop competitive high value sectors
00:16:54
that could really help diversify the
00:16:56
economy the issue is made even worse by
00:16:58
the fact that New Zealand depends pretty
00:17:00
much completely on Australia as a
00:17:02
primary trading partner while proximity
00:17:04
makes Australia an obvious choice it
00:17:07
also highlights a missed opportunity to
00:17:09
diversify trade relationships the UK
00:17:11
with its integration into the EU for
00:17:13
decades built trade networks across
00:17:16
Europe Canada leverages its access to
00:17:18
the US the world's largest economy to
00:17:21
grow its Industries New Zealand by
00:17:23
contrast sends agricultural Goods to
00:17:25
Australia relying on a narrow export
00:17:27
base that leaves it vulnerable to Market
00:17:30
disruptions everything is more expensive
00:17:32
due to its geographical isolation what
00:17:35
this also means is that shipping costs
00:17:37
are high while the small domestic Market
00:17:39
limits economies of scale one of the
00:17:42
ways to measure this is through
00:17:43
something called purchasing power parity
00:17:46
an economic measure that compares the
00:17:47
cost of living between countries by
00:17:49
determining how much money is needed to
00:17:51
buy the same goods and services in
00:17:53
different places when comparing New
00:17:55
Zealand to other Western countries it's
00:17:57
significantly lower
00:17:59
domestically New Zealand's small Market
00:18:01
creates more barriers to progress with
00:18:03
just 5.2 million people it lacks the
00:18:06
scale needed for major industrial
00:18:08
expansion businesses struggle to justify
00:18:11
investments in productivity enhancing
00:18:12
Technologies or Workforce Development
00:18:15
when consumer demand is inherently
00:18:17
capped as a result many Industries stick
00:18:20
to traditional lowcost models
00:18:22
reinforcing the country's Reliance on
00:18:24
agriculture and tourism these sectors
00:18:26
contribute to the economy but do little
00:18:28
to close the productivity Gap with
00:18:30
global leaders these pressures Ripple
00:18:33
across Society talented young
00:18:35
professionals leave for better prospects
00:18:37
abroad draining the workforce of its
00:18:39
Future Leaders infrastructure lags
00:18:41
behind unable to meet the demands of a
00:18:43
growing urbanizing population Public
00:18:46
Services dependent on a thriving economy
00:18:48
face funding shortages leaving health
00:18:51
and education systems overstretched the
00:18:53
result is a cycle that feeds on itself
00:18:56
low productivity limits growth which
00:18:58
cails investment leaving the country
00:19:01
unable to break free from its
00:19:03
constraints so what can be done well New
00:19:06
Zealand's economy can't rely on the past
00:19:08
tourism and agriculture while essential
00:19:11
have limits diversification is a must
00:19:14
the government has begun increasing
00:19:16
funding for research and development
00:19:18
offering grants to Tech startups and
00:19:20
expanding Partnerships between
00:19:21
universities and businesses like I
00:19:24
mentioned earlier the country spends
00:19:26
1.47% of GDP on R&D way behind leaders
00:19:30
like South Korea which allocates
00:19:33
4.5% to close this Gap new tax
00:19:36
incentives and funding for Green
00:19:37
Technology could bring New Zealand
00:19:39
closer to being a hub for Innovation
00:19:41
rather than simply a producer of raw
00:19:43
exports the housing crisis also needs to
00:19:46
be addressed Decades of underinvestment
00:19:48
and speculative property buying have
00:19:50
left home ownership Out Of Reach for
00:19:52
many policies like the unary clan in
00:19:55
Oakland have started to allow greater
00:19:56
housing density while the government has
00:19:58
ramped up State housing construction
00:20:00
after years of neglect housing
00:20:02
initiatives including tax reforms on
00:20:05
property speculation are slowly cooling
00:20:07
the market with prices in some areas
00:20:09
Falling by up to 9% however the pace of
00:20:13
change must accelerate public housing
00:20:15
projects need better funding and urban
00:20:18
zoning laws require further relaxation
00:20:20
to unlock the supply needed to meet
00:20:22
growing demand in terms of Workforce New
00:20:25
Zealand has to put a stop on the brain
00:20:27
drain of their next generation creating
00:20:29
high value jobs domestically is the only
00:20:31
way to stem this tide investment in the
00:20:34
green economy offers a possible solution
00:20:37
projects like air New Zealand's adoption
00:20:39
of sustainable Aviation fuels and the
00:20:41
rollout of electric vehicle
00:20:42
infrastructure show the country's
00:20:44
potential to lead in low carbon
00:20:46
Technologies by expanding ecotourism
00:20:49
electrifying transport and supporting
00:20:51
sustainable agriculture New Zealand can
00:20:53
create jobs that align with its 100%
00:20:56
pure brand while attracting Global
00:20:58
Talent
00:20:59
the green economy looks set to redefine
00:21:01
New Zealand's future the global market
00:21:03
for green technologies is expected to
00:21:05
reach $53 trillion by 2030 and New
00:21:09
Zealand is uniquely positioned to lead
00:21:12
its abundant renewable energy resources
00:21:14
could power industries like green data
00:21:16
centers which Amazon and Microsoft have
00:21:19
already started investing in sustainable
00:21:21
food production leveraging the country's
00:21:23
natural assets could dominate export
00:21:25
markets if paired with aggressive R&D
00:21:28
into emissions reduction these
00:21:30
opportunities require bold action
00:21:32
without them the country risks remaining
00:21:35
trapped in a cycle of low productivity
00:21:37
and declining Global relevance a
00:21:39
position that no country wants to be in
00:21:42
only time will tell if New Zealand like
00:21:44
many other anglosphere countries such as
00:21:46
Canada Australia and Ireland will fix
00:21:49
this economy crisis they have thank you
00:21:52
for watching
