‘Silver economy’ – a silver bullet for regions?

Could the spending power of a growing ageing population and an emerging Māori economy provide a new base for economic and social prosperity in regions?

Major population changes are set to transform New Zealand, and could offer possible options for regional economic prosperity in the form of the ‘silver economy’ and in post-Treaty settlements.

Distinguished Professor Paul Spoonley, a sociologist and the Pro Vice-Chancellor of the College of Humanities and Social Sciences at Massey University, has been generating debate about the challenges of the future for regions.

He and his colleague Associate Professor Richard Shaw discussed the implications and possible solutions of New Zealand’s fast-changing demographics at the latest of the University’s New New Zealand Forum series, held in New Plymouth recently. It was informed and inspired by a $5.5 million Government-funded research project he is leading, titled Capturing the Diversity Dividend of Aotearoa/New Zealand.

The forum, titled The New Heartland – Changes in the Regions, drew around 150 local businesses, community, iwi and youth leaders – with several joining a panel alongside the Massey presenters to examine the challenges ahead for the region. Vice-Chancellor Steve Maharey facilitated the event.

Vice-Chancellor Steve Maharay hosting the New NZ Forum in New Plymouth.

What do you do in a province where the over 65s out number the children?

By next year, New Plymouth will lead the country’s regional centres in having the highest proportion of people aged over 65 in relation to under 14s. But the demographic changes forecast for the area are the same ones facing many regions, Professor Spoonley emphasised.

“It is always important to look at what is happening economically, and we need to understand where the labour market is going,” Professor Spoonley said. “But alongside that, demographic change is going to re-shape New Zealand in fundamental ways, and in ways we’ve never experienced before.”

While the term ‘secular stagnation’ has gained traction in Europe to describe demographic changes that are likely to “compound or constrain some of the economic opportunities that we have,” he believes the answers lie in facing demographic changes with optimism.

A massive surge in the size of the ageing population across New Zealand – from 600,000 in 2013 to over one million a decade on – is “not a problem, it is simply the new reality,” Professor Spoonley says. And although 65 is the official age of superannuation eligibility, more than a quarter of those aged 65 and over are in paid employment today. What's more, “we have the healthiest and wealthiest population of over 65s ever,” he says.

Another factor in forecasting the region’s economic outlook is in regard to Treaty settlements for seven of Taranaki’s eight iwi. Worth around $400m, these will be a game changer, he says. Māori make up just over 17 per cent of the region’s population, with a median age half that of Pākehā, which is in the 40s. It is vital young Māori engage in education and employment training if gains are to be made, he added.

Watch the forum video.

Making way for the ‘silver economy’

Cue the ‘silver economy’, a term referring to the surging consumer power of ageing, affluent baby boomers, and the economic value of the goods and services produced for this group. It is being widely researched and embraced in other Westernised nations, resulting in a new economic driver delivering to a cohort with different, bolder aspirations in old age than previous generations. But New Zealand has been slower to grasp and harness this new economic force, says Dr Shaw, co-presenter and Director of External Connections with Massey’s BA.

The spending power of this sector of the population globally represents the world’s third-largest economy, he says, and is estimated to reach $15 trillion by 2020.

Alternative housing to suit the needs of ageing baby boomers is one of the key issues New Zealand’s ‘silver economy’ will need to grapple with, Dr Shaw says.

Jobs skills, immigration and connecting to the diaspora

Maintaining skilled workers in regions like Taranaki is a major issue for businesses and employers, Professor Spoonley said. Regions struggle to attract both internal and overseas migrants, as Auckland continues to be the centre for growth in population and jobs – the agglomeration effect.

Population stagnation in regions could be addressed, in part, by developing regional immigration policies – an idea touted by Professor Spoonley for some time, and recently reinforced by changes to Government immigration policy.

Taranaki, as with other regions, needs to develop a vision and a plan for what it wants and where it is heading, and “to develop something much more proactive, such as regionally-focussed approaches because a national immigration policy is not going to send you many immigrants,” he advised.

It was important to highlight the region’s positive aspects, such as lifestyle  – the most important reason immigrants come to New Zealand.

Another potential untapped skill source is the diaspora – 800,000 New Zealanders currently live elsewhere overseas. Regions could draw on that to recruit and attract people home, or by using the skills and connections of the diaspora where they are, Professor Spoonley says. “We tend to see them as abandoning us, rather than as an income and skills source.”

Panellists at the event were; Barbara Kuriger, MP for Taranaki-King Country, National Party (who addressed the forum via a pre-recorded video clip); Ryan Evans, editor of the Taranaki Daily News; Stuart Trundle, chief executive of Venture Taranaki; Richard Williams, chief executive of the Chamber of Commerce; and Hayley Radich, from Sacred Heart Girls' College.

Ms Radich was selected from among the 41 Year 12 students who attended a three-hour Young Leaders’ Symposium earlier in the day. She spoke on behalf of the group to outline what they had identified as the key issues for Taranaki youth.

These were; the lack of a university in the region; new approaches to preventing youth suicide; socio-economic inequality preventing too many young people from fully participating in education; and the need for alternative income and employment sources in the future beyond what they consider unsustainable dairy and oil industries.

This was the second New New Zealand Forum this year, with another held in Hastings in June.

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