With Cameron Bagrie
Consumernomics in Aotearoa
As Aotearoa opens its borders again to a job market rich in opportunity, we pondered the future shift in demographics and what this will mean for the New Zealand economy. Economist Cameron Bagrie takes a look at how demographics are a key influence on the economy. And asks whether businesses fully appreciate the structural shifts and integrate this into their business strategy? What role does Consumernomics play in Shifting demographics?
Ageing Population
One such structural shift, not unique to Aotearoa, is an ageing population in the first world economies. The population aged 65-plus is expected to increase from 800,000 to 1.4 million in New Zealand by 2043, with a large rise in the population aged 85 and above. We should not assume things about these segments – after all, who are the people buying all the e-bikes? Along with that is slower growth in the working age population. Current worker shortages are likely to persist.
Ever-evolving cultural mix.
New Zealand’s population is projected to increase to 6.1 million by 2043, according to Statistics New Zealand’s medium projections, an average annual population rise of 0.9% per year.
Within those projections, population growth for Māori is expected to be 1.7% per year, and Pasifika 1.9% – rates that are three to four times greater than what has been projected for European population growth, signifying a major pivot. The Asian population is projected to achieve an average population growth of 2.9%. The immigration reset might mean those numbers need to be adjusted.
Those identifying as Māori represent around 17% of the current population. By 2043, it is estimated to be 21%. The Pasifika population’s share is 11%.
A growing asset pool
Māori household assets totalled $131 billion in 2021 according to Statistics New Zealand, a large number and pool of consumers, though only 7% of total household assets. The story is worse for Pasifika, who represent 8% of the current population but hold only 2% of household assets.
Those figures are well above other estimates provided by BERL (Business and Economic Research Limited) and Infometrics and suggest the Māori economy is being significantly understated.
Māori household assets increased from $76 billion in 2015 to $131 billion in 2021 though, rising faster than New Zealand as a whole. Wealth is being created. Wealth creation means more consumption and options.
In terms of the physical numbers, the population identifying as Māori is expected to increase almost as much as the population identifying as European between 2018 and 2043.
Gisborne’s Māori population is expected to be 69% of the total population by 2043. Southland’s projections have Māori share of population doubling from 11% in 1996 to 24% in 2043.
A young population of pending customers and workers
To fully appreciate the scale of change, you need to break the data down into age groups (Figure 1).
Māori currently represent more than 25% of the population aged 0-14 years and almost 25% of the high school-age population. The Māori population is young, which will be a key contributor to growth in the workforce. They will become more active consumers and politically influential if they vote.
It signifies potentially major shifts in consumption and demand patterns.
One concern is education. Regular school attendance for Māori and Pasifika students is below 50%. It is around 60% across all groups down from around 70% a decade prior. Truancy has risen a lot across the board. Sixteen percent of Māori students attend school 70% or less of the time. Tai Tokerau, Hawke’s Bay and Tairāwhiti have the lowest attendance rates. The current system is not working across all segments. Hard questions need to be asked and answered.
Nineteen percent of kids in decile one attend school less than 70% of the time.
The education system of today is a key barometer of where the economy is going to be 30 years down the track. “Houston, we have a problem” is an understatement.
Aotearoa Devided, but there is hope
Aotearoa is very divided at present, whether that be across the ethnic divide or the gap between the haves and the have-nots. A divided society is an unhealthy society, and that impacts the economy.
So, when you hear about the need for cultural inclusiveness, take notice, and not just for cultural reasons.
Shifting demographics are tomorrow’s workforce. And tomorrow’s customers. The Māori economy and population is growing in relevance and will influence consumer trends. Think about the political landscape too.
There is a lot of work and mending to do.
Bagrie Economics is a boutique research firm that specialises in independent, authoritative analysis of the New Zealand economy and economic issues generally. We don’t do spin or over-complication, just honest analysis of trends and figures.
The views expressed in this article do not represent financial advice.