www.mccully.co.nz - 24 October 2008
A Weekly Report from the Keyboard of Murray McCully MP for East Coast Bays
Oz-Bound Kiwis Double Over Five Years
The election is now a fortnight away. But over the past twelve months hanging around to vote has been too much to ask
for a record number of New Zealanders who have simply voted with their feet. A massive 82,254 Kiwis left this country
for good in the year ended September 2008 according to figures released by the Government Statistician this week. That’s
1,581 each and every week. Or 225 every day.
There are no prizes for guessing the destination of choice. 47,166 New Zealanders departed for Australia in the past
year. That’s 907 per week. And it’s a whopping 18.6% increase on the number of departures in the previous year.
The trend over the past five years has been truly frightening. In the year ending September 2003, 55,103 New Zealanders
in total departed overseas permanently. And a mere 23,393 of them to Australia. That’s right. The number of New
Zealanders leaving for Australia annually has doubled in the past five years.
The cumulative effect of the avalanche of departures is now a problem of very serious proportions. Researchers from
Australia’s leading think tank, the Lowy Institute, have estimated that there are approximately one million Kiwis living
abroad – the equivalent of nearly a quarter of our resident population. By comparison, Australia also has approximately
one million Aussies living abroad – a much more respectable 4.6% of their 21.5 million residents.
And a breakdown of the departures tells an even sorrier tale: over 32% of all of the graduates produced by our tertiary
institutions now live abroad, and contribute their skills to the future of another country. By comparison, the figure
for Australia is a mere 3%.
The position in which New Zealand now finds itself is analogous to the position of Ireland 35 years ago. Indeed the
statistics that best illustrated the parlous nature of Ireland’s prospects at the time were its departure statistics,
especially its young people. The need for a turnaround in this country exists now on roughly a similar scale. And that,
ladies and gentlemen, is what the election on 8 November is all about.
Still Able to Vote
One of the greatest challenges for the National Party in this election is simply the scale by which its support base is
being exported by the Clark/Cullen Government. By definition, the ambitious, the skilled and the better qualified are
over-represented in the hordes now seeking better opportunities abroad. Technically, they are still entitled to vote.
But it will be a challenge to persuade sufficient numbers to make the effort to cast a ballot for an election in a
country they have decided can no longer offer the future they seek.
Based on an average constituency size of 60,000 people, we are now exporting New Zealanders at a rate of approximately
four whole constituencies each electoral cycle. And when those departing disproportionately represent the aspirational,
the educated and the ambitious, we are clearly not talking about Labour Party supporters here.
The vast majority of these departing New Zealanders are entitled to vote. Any New Zealand citizen living overseas, who
has set foot in New Zealand in the previous three years, is entitled to vote in a general election. And on Wednesday of
this week, polling stations opened in New Zealand posts in 44 countries around the world. Internet voting commenced at
the same time – allowing voting papers to be downloaded from the internet and faxed back to the Chief Electoral Office.
To cast a vote, voters first need to be enrolled. But that, too, can still be done. Forms can be downloaded and faxed
back to the Electoral Enrolment Centre. Or a friend or relative in New Zealand can complete the paperwork for you to
So, for those many thousands of economic refugees driven out by the dull, visionless, oppressive, Nanny State policies
of the Clark/Cullen Government, this is payback time. This is the time to kick them right where they didn’t expect; in
the ballot box. And for readers who have friends or relatives who number amongst the economic refugees, make sure they
get enrolled and make sure they vote. For further information or assistance, hit the following link.
The Deposit Guarantee Debate
Last Sunday, National Party Leader John Key called for quicker action over the complex question of guaranteeing
wholesale bank deposits. He offered to fence the issue off from the partisanship of the election campaign, in order to
provide a timely pathway forwards. But apart from the odd officials briefing nothing has happened.
This week, the shape of the Australian guarantee scheme became clearer. In fact the imminent announcement in Australia
had determined the timing of Mr Key’s public call. The problem is that for so long as the Australian government has
arrangements in place to guarantee wholesale deposits, and New Zealand does not, there will be unhelpful and unnecessary
pressures on the New Zealand banking system and our wider economy.
This whole discussion is about the ability of New Zealand banks to maintain coffers with adequate cash to remain in the
business of lending. Moving to guarantee retail deposits, as our government has done, like most other governments around
the world, enables “mum and dad” savers to feel comfortable about leaving their cash in the bank. But in order to keep
adequate funds, the banks also need wholesale funds from large institutions in his country, and they also need access to
cash from overseas funders. For so long as the Australian government (and many others) guarantees these wholesale funds,
and the New Zealand government does not, our banks will find it difficult to access sufficient cash.
Dr Cullen has been asserting that there is no problem. The banks have sufficient cash to last them until close to
Christmas. But there will be a problem sometime soon. Because banks that can’t be confident that they can top up their
cash resources start behaving much more cautiously with the cash they have got. They slow down their lending. And that
is not what our economy needs right now.
In short, the issue at the moment is one of confidence within the banking sector. The sector needs to know what the
government will guarantee and on what terms. Then banks can start to put future funding arrangements in place. Right now
they can’t. So either the Clark/Cullen Government is being deliberately obtuse, or they plan to use the wholesale
guarantee announcement closer to the election, in an attempt to gain political momentum, just as they did with the
retail guarantee announcement at their campaign opening.
Either way, it isn’t helping with the important task of bolstering confidence amongst the banks and within the wider
economy. And it isn’t helping home owners and small businesses.
While the Reserve Bank cut the overnight cash rate (OCR) yesterday by a full 1%, only a part of that will be passed on
to bank customers. For an obvious reason: The more difficult that it appears the Government is going to make it for
banks to secure future funding, the more expensive that funding is going to be. So the banks will hold off from
providing interest rate cuts to customers that would otherwise have been possible, to give themselves the capacity to
meet the more expensive funding costs they, the banks, must now plan for.
So the point that Mr Key made last Sunday is fundamentally important: it is in absolutely everyone’s interests to get
the wholesale guarantee scheme sorted out as soon as possible. Unless, of course you happen to be a government facing an
election in two weeks. And you plan a repeat of the shabby stunt we saw on the occasion of the Labour Party launch.