The effect of changing demographics – implications and approaches Dr Natalie Jackson* Invited Address to Local Government Infrastructure Management Forum– Wellington – 30 th March 2015 * Director, Natalie Jackson Demographics Ltd., Professor, School of People, Environment and Planning NATALIE JACKSON DEMOGRAPHICS LTD 1 11/06/2016

Implications for growth- Implications for demand-

Ageing-driven growth is not the same as youth- driven growth Source: Statistics NZ 2015 Projected population of New Zealand by age and sex, 2014(base)-2068 (50 th and 90 th percentile)

Numerical ageing is clear and present 11/06/2016NATALIE JACKSON DEMOGRAPHICS LTD 4 Statistics New Zealand, Estimated Resident Population and Population Projections (2012 and 2015) You are here

Structural ageing differs greatly across the country 65+ years: 26.6% (1996 = 19%) 65+ years: 11.4% (1996 = 10.1%) Statistics New Zealand ERP 1996, 2001, 2006, 2013

New Zealand’s population growth has never been shared evenly North Island: , 32% Census Area Units (CAUs) declined ( = 25%) South Island: , 36% CAUs declined ( = 27%) Auckland accounted for 52% of growth (47% ) : Auckland plus 5 TAs (4 = cities) accounted for 75% of growth; Auckland plus 12 TAs accounted for 90% of growth Remaining growth spread very thinly across 32 TAs while 22 declined

Auckland’s greater share projected to continue – however not just because of urbanisation/agglomeration.. Source: Author/Statistics New Zealand (2015), Subnational Population Projections: 2013(base)–2043

Increasingly, hyper-ageing age structures will bring about the end of natural growth 65+ years: 25.6% (19%) Old form of decline Net migration loss – mainly of reproductive age people >> hollows out the age structure New form of decline Net migration loss + natural decline – the loss of reproductive potential becomes self- reinforcing

Migration will not solve ‘the problem’ *US Census Bureau International Database; Statistics NZ 2012 Projected subnational population of New Zealand by age and sex, 2006(base)-2031 [2012 Update]

A ‘useful’ rise in the birth rate is unlikely – and its 20 years too late Baby Boom ‘echoes’ ‘Official’ Baby Boom 2.1 TGYH

Projected change at total population level - suggests an initial reduction in TAs experiencing decline

Total change will be underpinned by massive age- structural transitions which will affect every aspect of infrastructure provision

Following Gen TGYH (the last major echo of the baby boom), the population 0-14 years will shrink – in most regions/TAs

Decline at 0-14 years will be accompanied by shrinkage at labour market entry age There will be a short respite during the 2020s as a recently born baby ‘blip’ passes through these age groups

The ‘prime’ working age population (15-64 years) will shrink significantly in many areas – in 2018, 43% of WAPs are projected to be smaller than in 2013 and 61% by 2023 (whilst 8% larger at national level) And yes, people aged 65+ years will work much longer than before, but will not prevent the shrinkage

Significant shrinkage will now occur at years as the baby boomers vacate that demographic It will be some time before there is growth again at these ages

The year population is currently growing significantly as it receives the largest baby boomer cohorts This demographic will then decline

The 65+ year age groups are also now growing significantly as the leading edge boomers arrive – this is unavoidable growth Growth at these ages will slow as the baby boomers move on to old-old age

First will come massive growth at years This will generally slow between 2023 and and be followed by decline

.. growth at 75+ years will follow suit..growth >> slower growth, but numbers will not decline

Only 17 TAs will not have all growth to 2033 at 65+ years % growth at 65+ years Territorial Authority Area (SNZ 2015 Revision) % Kapiti Coast; Whangarei; Carterton % New Plymouth; Waipa; Hurunui % Wellington; Waimakariri; Christchurch; Palmerston North 55 % Waikato 46-48% Ashburton; Tauranga % Auckland; Selwyn; Hamilton; Queenstown Source: Statistics NZ 2015 Projected sub-national population of New Zealand by age and sex, 2013(base)-2043 NB. 11/16 Regions (69%) all growth at 65+ years 11/06/2016NATALIE JACKSON DEMOGRAPHICS LTD 21

2/3 NZ TA’s already have fewer labour market ‘entrants’ than ‘exits’ (unemployment is likely to fall >> disappear >> labour costs will go up) OBSERVED PROJECTED Source: Author/Statistics New Zealand, Estimated Resident Population;( ) ;Subnational Population Projections: 2013(base)–2043 TGYH arrives!

New Zealand Employed Labour Force 1996, 2013 (+23%) Source: Author/Statistics New Zealand Customised Occupation Database 11.5% 27:10 9:10 Av. Age 38.3 years Av. Age 43.3 years The employed labour force already has fewer people at entry than ‘exit’ age

We have recently entered a ‘demographically-tight’ labour market Projected Source: Statistics NZ various years; (2015) Projected population of New Zealand by age and sex, 2013(base)-2043 Baby Boomers entering labour market Baby Boomers leaving the labour market Ratio of potential labour market ‘entrants’ (15-29 years) to ‘exits’ (55+ years)

Many Industrial and Occupational ‘entry: exit’ ratios are getting seriously low Skills shortages are increasing; labour shortages will follow

Approaches – McMillan, Rachael (2015 forthcoming). Anticipating depopulation – strategic interventions to population decline. Masters thesis, University of Waikato.

“Towns are like businesses – they need to keep reinventing themselves in the global marketplace to remain competitive. However, the market has not been able to find the solution to demographic decline. There is a symbiotic relationship between the regions and the cities that is important for national competitiveness that cannot be ignored. Regional policy trends are shifting away from single sectors to cooperative, multi-actor approaches that deal with place- based issues.” McMillan (2015 forthcoming) 11/06/2016NATALIE JACKSON DEMOGRAPHICS LTD 27

Summary of policy positions 11/06/2016NATALIE JACKSON DEMOGRAPHICS LTD 28 Do nothing Denial Ignoring Passive restructuring Market adaptation Countering Competitiveness Interconnection Accepting Managing Utilising McMillan, R (2015 forthcoming)

The old economy versus the new economy 11/06/2016NATALIE JACKSON DEMOGRAPHICS LTD 29 McMillan, R (2015 forthcoming); Adelaja et al. 2009

The A-B-C of population ageing Accept o Major demographic shifts are coming to a region near you o Awareness >> Alarm >> Acceptance Buffer o Revisit/revise business plans, policies, principles on which they are based o It’s the ‘can’t do it because’ that has to change Choose your strategy o Communicate, collaborate, conserve.. o Watch out for McMillan 2015 Local government and business leaders will need to show the way..

Thank you Enquiries welcome Website: Planning for a changing world NATALIE JACKSON DEMOGRAPHICS LTD 31 11/06/2016