The urban-rural immigration divide: West Coast business owner desperate for staff as Auckland infrastructure struggles to cope

As Auckland rents skyrocket and the city's infrastructure struggles to cope amid an influx of 100,000 migrants to New Zealand, areas of the South Island are facing a declining population and challenges finding staff.

Aotearoa businesses heavily rely on migrants to fill worker shortages and skill gaps – especially in sectors such as hospitality, primary industries and aged care.     

But there is growing concern the level of migration is out of kilter with the country's ability to provide the basics, such as healthcare, housing and education.     

To add to the challenges, migration doesn't affect the country evenly. Auckland's population grew by 47,000 people - 2.8 percent - in the year to June with migration being the main contributor (78 percent), while the remainder was attributed to natural increase (births minus deaths).

But while all areas, except Buller, experienced population increases for a record 16 that was due solely to immigration because they were seeing more deaths than births.

The areas with the largest natural decreases included Dunedin City (190 more deaths than births), Thames-Coromandel District (170 more), Kapiti Coast District (160 more), Nelson City (100 more), Whanganui District (90 more), and Timaru district (80 more).

For places like this, immigration is the only thing propping them up. But Auckland gets the vast majority of migrants.

One West Coast business owner named Gary* said while things have improved from earlier in the year, he's still struggling to find staff. He and his employees are under immense pressure with six vacancies, and he's increasingly worried about how he will manage the demand during the busy summer months.     

"I'm doing seven days a week from 8:30am until late. [Earlier in the year] my sister was working from 7am to 10pm seven days a week, 185 days in a row."    

The struggle to find and retain staff is putting New Zealand's international reputation at risk, especially with summer approaching, he warned.     

"I can see that the summer is going to be really, really busy. It's already got the makings of that, and we really need a strategy to overcome [staffing shortages] because as New Zealanders we have grown accustomed to expecting a lower level of service or a restricted menu or reduced hours at various hospitality venues," he said.  

"Pre-COVID we probably didn't realise how good we had it because looking back on it now, it was pretty exceptional. But now we are offering this lower service and is that something we want our overseas visitors to come to expect when they visit New Zealand? That all the restaurants are closed on Monday or have reduced hours or tiny menus?"

But while South Island business owners struggle to fill the gaps, Massey University sociologist Paul Spoonley said areas at the top of the North Island - including Auckland - are facing huge infrastructure challenges and struggling to accommodate the influx of people.      

Massey University sociologist Paul Spoonley.
Massey University sociologist Paul Spoonley. Photo credit: Newshub

Rental prices in Auckland are increasing faster than the rest of the country due to high demand and constrained supply.

The city is also dealing with ageing waste and water infrastructure, ongoing traffic problems and endemic housing shortages. This is because migration doesn't affect the country evenly.   

Infometrics chief economist Brad Olsen told Newshub while migrants tend to settle in big cities, particularly Auckland, when Kiwis leave they do so from all over the country. This means smaller areas feel the loss more acutely. They're likely to be struggling now given New Zealand recorded a near-record net migration loss of 42,600 citizens in the August year. The record loss was 44,400 in the February 2012 year.      

"Auckland will be losing people but also gaining a lot of people. Other parts of the country might well be losing people and not really having the gains to offset that," Olsen said.     

Analysis from BNZ shows Auckland is the first port of call for inbound migrants with 55 percent of net inflows in the year to June heading to Aotearoa's biggest city. But the data also noted while the migration boom is not well spread in terms of raw numbers, it has been well dispersed relative to regions' populations. 

Even so, Spoonley and Olsen want to see a proper immigration plan implemented which will ensure rural areas have workers and the country has the necessary infrastructure to accommodate migrants and locals.   

Part of this could include bringing back incentives for migrants to move to smaller, more rural parts of the country. Under Sir John Key's National Government, migrants were able to earn more points towards residency if they agreed to live in the regions. It's a policy Professor Spoonley wants to bring back to help make the most of skilled migrants and boost rural businesses.    

"We really need a regional development plan which has immigration as a major part of it. What Canadians have done is they've encouraged their regions to develop those economic plans that factor in the number of migrants.     

"When you look at those long-term plans, immigration was not a major part of what New Zealand's local authorities have considered."    

Spoonley said it would be fantastic if local authorities could work with the central Government to allocate points based on the needs of their region.     

For example, if Napier needed more nurses, it could offer points to migrant nurses who were willing to work in the region for a certain period of time.    

Gary is supportive of a points system, especially if it includes a commitment to stay in a job for a set time.    

As an accredited employer, he can bring migrants from overseas to work for him. But it's a long and costly process and on occasion he has seen the staff members leave within a matter of months – leaving him out of thousands in cash and down a staff member.    

The economic benefits and challenges of migration 

New Zealand recorded a net migration gain of 110,200 in the August year, slightly below the annual record of 117,400 in the February 2012 year. It was driven by annual migrant arrivals reaching an all-time high of 225,000 and 115,100 migrants leaving.

Since around 2014 New Zealand's net migration gain has generally been between 40,000 to 60,000. Then in late 2019, this jumped to more than 70,000. From there it continued to trend up, hitting 90,000 in March 2020 before dropping off due to the COVID-19 pandemic.    

Infometrics chief economist Brad Olsen.
Infometrics chief economist Brad Olsen. Photo credit: Newshub

Net migration dropped into the negatives before it started to pick up again in late 2022. Soon migration was booming with the net gain hitting 77,955 in April 2023, 87,483 in March, 97,381 in June, 103,289 in July and a whopping 110,245 in August.    

Economist Brad Olsen said the extreme uptick in migrants is not only putting pressure on infrastructure but will fuel demand, which could hinder efforts to dampen inflation.     

"If we thought we didn't have enough houses beforehand, add 110,000 more people and you can see where the problem goes. If you think our infrastructure was creaking at the seams before, again, you add more demand and it becomes more pressured. The likes of our health care system. If you thought that the wait times were bad before, again, you're adding more people into the system.    

"So, on the one hand you're adding supply into the economy, which allows it to expand. At the same time, you're adding demand, which can add to some of those pressures," Olsen said.    

He said it is a complex issue, but a lack of long-term planning puts the country at risk of yoyoing between low immigration and extremely high immigration - both of which are unsustainable.    

"[Earlier in the year] we desperately needed more people to come into the country to help support the economy because we just didn't have the resources. It was clear from businesses. It was clear across the board.     

"The challenge, though, is that we've seen net migration swing so hard from one extreme to another. It's gone from the biggest outflow in a decade to the biggest inflow ever by quite a margin.   

"The infrastructure is always going to take more time to catch up. It's easy to bring in a worker to fuel demand [but] you can't build more waterways or water pipes quite so quickly. So, I think the challenge there is more that we haven't been able to plan for the high level of migration. We're always going to be caught on the back foot when you see such big changes."    

Both Olsen and Spoonley want a better immigration plan in place, but while Gary said it would be very helpful - it will likely be too late to help him through the upcoming bumper summer season.