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Looking Past the 20th Century: May 2000

Looking Past the 20th Century

Significant global changes and local circumstances are driving New Zealand's future, Government Statistician Len Cook says in his final publication as head of Statistics New Zealand.

The report, Looking Past the 20th Century, available free on the Statistics New Zealand website (www.stats.govt.nz), identifies and explores some of the issues which will have a major impact on New Zealand in the future. These issues include the ageing population, the impact of information technology, social change in family formation, employment, environmental degradation, and the future for Mäori and Pacific peoples.

"Some of our future is fairly certain even though there may be quite large changes in store for us," Mr Cook says.

"Much of the statistical information, although previously available, has not been considered from this kind of perspective. Such information - about ourselves as New Zealanders and our place in the world - is a valuable resource and we should be using it. It can help us find potential solutions to likely problems in the future, whether we are in government, business or the community.

"One measure of the success of New Zealand's public policy is how well we forsee society's future shape and ensure that our policies, which impact on every aspect of our lives, fit in with global trends and local factors," Mr Cook says.

This publication is the first in a proposed comprehensive and integrated approach to providing information through the internet.

Len Cook

GOVERNMENT STATISTICIAN

Highlights of Looking Past the 20th Century

The big shifts in train

Demographic issues

The New Zealand population will continue growing, but at a slowing rate of increase, until deaths will exceed births in some 40 years time. This is a result of declining fertility (which is dropping more slowly in New Zealand than in comparable countries), rising life expectancy, and the ageing of the post-war baby boom cohorts.

Through higher fertility and a significantly younger age mix, Mäori and Pacific births are a growing share of all births. When the regional effect is included it suggests that about 40 per cent of new entrants to the labour force in Auckland in 20 years time will be non-European. This highlights the national economic advantage that would result if success in reducing long-standing ethnic disparities in educational standards were achieved.

Changes in society

New Zealanders' health has improved markedly over the last 50 years, but our health status has not kept pace with that of many other developed nations. While we may be living longer, and older people have significantly enhanced life expectancies, improvements since 1990?92 are largely due to a reduction of mortality rates at late-working and retirement rates. For most of the century, mortality improvements were concentrated in the young and middle years. Implications for the cost and provision of health care associated with ageing are further compounded by the extent of disability associated with age. In 1998, over 50 per cent of New Zealanders 65 and over had a disability, with significant numbers needing help with everyday activities such as preparing food, bathing, housework, getting out, and shopping. Women are less likely to be disabled, and can expect a few more years without disability than men.

Crowding, which appears to affect about 3.4 per cent of the New Zealand resident population, is declining nationally and is associated with lower paying jobs, lower personal incomes, higher unemployment, and greater reliance on income support. Crowding is also associated with ill-health and psychological stress, and it may affect educational achievement. Resulting from lack of accommodation per se and particularly lack of affordable rental accommodation, crowding occurs chiefly in South Auckland and is concentrated among Mäori and Pacific families who tend to have lower than average household incomes, larger families, and / or multiple family households.

Sustainable global environment

New Zealand has a rich and diverse natural heritage that continues to both enable and be at risk from human activities and a number of introduced plant and animal species. Human settlement has already resulted in a significant loss of indigenous biodiversity with substantial numbers of New Zealand's endemic species being extinct or endangered. Before human settlement New Zealand had approximately 23 million hectares of indigenous forest. Approximately 6.3 million hectares or one quarter of New Zealand is now forested land and this has increased since 1970. However, much is exotic forest.

Tourism in 1995 directly added to GDP (gross domestic product) some $2.9 billion, or 3.4 per cent. If indirect flow-on effects are included ? eg tourism industry providers such as transport firms, hotels and restaurants purchase goods and services ? then a further $4 billion of GDP is accounted for (4.6 per cent was generated in 1995). International tourists' spending was $4.3 billion in New Zealand in 1995. Domestic tourist spending added a further $3.5 billion on recreation and pleasure while business and government spent $1.3 billion on travel in that year. With tourism as a growing industry the debate round sustaining our unique environment, and the extent human impact is compatible with that, is likely to increase.

Governments and institutions

New Zealand now has only at 18 per cent of its workforce in public employment. Few countries have a lesser share. More women than men are in public employment (55 per cent), although they are a large minority in the workforce (42 percent). Between 1990 and 1997, when employment in total grew by 16.5 per cent, public sector employment fell by 19.2 per cent.

Knowledge economy

The industry within New Zealand employs two percent of the labour force (or one half of the number involved in farming). The number of people working in an IT industry and as a proportion of the total working population has increased. Yet the industry remains youthful and conservative in terms of its employment. The industry attracts males rather than females, with males more likely to be in managerial roles than women who, in turn, dominate the data entry occupation grouping. Moreover, across the industry as a whole, employees are predominately Päkehä. However, those of Asian ethnicity figure very strongly in skilled IT occupations while Mäori and Pacific peoples have low participation rates across all IT occupations. There are also generational and socio-economic differences in adapting to, and using, computers that computer penetration into schools may not offset.

Trading

The early to mid-1990s has seen business income earned by households increase more than 36 per cent, and it appears to be stabilising at round 13 percent of total household income. In the past, income from farming has driven changes in this contribution to the economy. Although the non-farming component of this income has grown steadily since 1994, fluctuating farm incomes over the same period continue to be a major determinant of New Zealand's economic growth, demonstrating that despite more than a decade of economic reform, it is the rain that perhaps still most influences economic performance.

Facets of wealth

Cultural and national identity

Wealth can embrace social, cultural, and economic capital, environmental resources, human capital, and the public and private institutions that guide our lives. Economic resources, such as those in the natural environment, have a value far beyond their capacity to generate income. The social capital that contributes to society functioning effectively involves social behaviours, expectations and networks which have individual and aggregate benefits outside their ability to assist the market.

Work and opportunity

The impact of the Employment Contracts Act has not been uniform. Over most of the last 30 years, median incomes of wage and salary earners have increased faster than that of employers and the self-employed. The five years 1991 to 1996, however, that coincide with the Employment Contracts Act coming into force, have seen median incomes for wage and salary earners increasing by less than 10 per cent compared with nearly 16 per cent for the self-employed and more than 20 per cent for employers.

Women's lower participation in the labour force and their greater dependence on government income support account for some of the gender differential in income between men and women. While that differential narrowed from 1971 to 1991, but may have steadied since.

Social capital

Wealth per capita measures of the World Bank suggest that New Zealand is about tenth in the world, while we are not even in the top 20 in GDP per capita terms. This suggests that we are either economically less efficient or are capturing gains in our wealth in currently immeasurable ways, perhaps in a high quality of life, or both. Measuring social capital will help us assess our situation and enable us to appreciate how we can maintain and advance our position in this area.

Human Capital

Human capital is defined in a recent OECD report as: The knowledge, skills, competencies and other attributes embodied in individuals that are relevant to economic activity.

Human capital is emerging as a key determinant of international competitiveness. Its very long development period makes it necessary to understand the stock of the capital, the influences on it, and the way in which that capital and those influences alter as a result of generational change. However intangible and broad the nature of human capital might be, there are significant similarities between New Zealand and Australia. This may not be surprising, given the similarities of industry development and labour force experiences, cultural background, and educational processes. Those similarities perhaps reinforce concern about our ability to shift from a relatively poor performance among OECD countries, not only because of the level of performance, but also because of the rate at which these measures are likely to change.

- Overall, New Zealand and Australia share below average results for upper secondary participation, yet are above average for tertiary participation. Overall, New Zealand is significantly below most OECD countries in the average years of schooling.

- Comparing the upper secondary education of 45?54 year old adults with that of 25?34 year olds, both New Zealand and Australia show relatively low generational improvement. Such differences result in our relative OECD position declining because of the greater change shown in Belgium, Korea, Ireland and Greece.

- New Zealand invests less in education than many OECD countries, and expenditure per student is most noticeably less at the primary level. National research and development spending is not even two thirds of the OECD average, and only countries that are noticeably poorer spend a smaller share of GDP on research and development.

Environment

New Zealand has an unusually high stake in environmental management, through the significance of the impact on our capital base of environmental resources. This puts New Zealanders in the most wealthy fifteen countries of the world, in per capita wealth. Recent World Bank estimates of wealth per capita acknowledge a particularly high contribution per capita of 'natural capital', exceeded only by Saudi Arabia. This natural capital contributes some 20 percent of the per capita wealth in New Zealand, unlike North America and Western Europe, where natural capital contributes five and two percent respectively. For the Middle East, subsoil assets (oil mainly) make natural capital twice as significant as in New Zealand. New Zealand's natural capital is mainly made up of pastureland, cropland, and protected areas.

Investment and savings in New Zealand How New Zealanders get their income and what they do with it has changed over the past two decades. Market income contributes less, savings have fallen (Invest 2) possibly because of fluctuations in social assistance grants and investment income, and benefits have grown to reach a similar level to taxes on households. Possible explanations for this include:

- Householders have attempted to maintain accustomed levels of consumption, so that household savings have fallen.

- Households are also having to pay directly for many previously subsidised government services, with household spending on health and medical services increasing just over five times from 1983 to 1997. Total consumer spending increased just over three times during the same period.

- Easier access to borrowing. As at March 1999, outstanding credit card balances had increased 20 times since 1991, rising from $100 million to $2.04 billion. In contrast, household disposable income rose just over four-fold, rising from $15.4 billion in 1981 to $62.2 billion in 1999.

- Student loans have grown dramatically from $171 million in 1983 to $1,687 million in 1997. This may represent a combination of both increased charges for public services and easier credit facilities.

The future for New Zealanders

Mäori

Mäori are much younger as a group in the New Zealand population, will provide a large minority of new entrants to the workforce after 2010, and will be a significant influence on economic performance. This demographic change will lie alongside a large increase in the older Mäori workforce over the next two decades. Young Mäori have long had a significant chance of being unemployed in teenage years. In 1992 nearly half of all Mäori teenagers in the labour force were recorded as unemployed. This constrains expectations of any significant improvement in the income distribution of Mäori in the medium term.

At the same time that young Mäori have a one in three chance of being unemployed (significantly influencing the chances of a strong market based economic advancement for Mäori) they are growing as a share of the total young workforce. Mäori are now more likely to be self-employed, following a trend in this direction in the economy overall perhaps stimulated by labour market and other public changes. They are also concentrated in industries most at risk from the global economy or from technological change. Again, this may make those currently employed vulnerable in the future.

Pacific peoples

Auckland is a city where job and population growth are becoming dominated by Mäori and Pacific communities. Pacific peoples provide nearly 30 percent of births and, in 20 year's time, will provide some 30 percent of new job entrants. Pacific peoples are a growing voting force, they represent a large share of the growth in consumer markets and consumer-oriented education and health services and, by 2050, they will be one of the largest consumer groups in Auckland.

There are now some 6,000 Pacific peoples aged 65 or over. By 2050, there will be 11 times as many, or 68,000. Now there are about 13 children under 15 years for every elderly person, but by 2050 there will be barely 2.5. The median age will shift from 21 years to 29 years. Pacific peoples will be 13 percent of the population, but five percent of the population 65 and over. We do not know how different their quality of retirement will be given, for example, the implications of vastly different rates of diabetes.


ENDS

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