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OPINION: Leaving the farm that is New Zealand

What the government can - and can't - do to lure ex-pats home.

Cathy Odgers
Mon, 18 Jun 2012

Fran O'Sullivan scribed a piece while I was traveling recently about stemming the flow of NZ expats. She has focused on an organisation called Kea.

In it she fingers governments left and right for not keeping expats at home or enticing them back. It's not quite that simple. Nothing a government realistically can do in NZ will ever entice me back to be just an employee, NZ never having favorable tax regimes for workers and still focused on being one big sleepy farm for its inhabitants.

In 2013 I qualify as a 10 year non-resident with an expat tax concession. Still on its own this won't get me back.

I want to put an idea out there. It is actually NZ business and the make-up of the economy itself that prevents young New Zealanders from coming back and leaving in the first place.

But unlike the doomsayers I do not agree that this is a bad thing.

Long term expats (those of us not on three-year bounce back OEs) are generally a horribly creative and difficult bunch of individuals. If we were "family orientated" or "team players" we probably never would have thought twice about returning and be back as soon as possible.

I was told when I took off overseas in 2003 that if you don't come back after three years you never come back. I'd stretch that out to five by today's standards but the point remains there comes a time when coming back to be just an employee is too hard. I reached that point after six months and knew I was going to have too much fun.

I had just landed off a plane from the Caribbean in New Orleans about to take my heels off certain to wreck the pantyhose I had on by jumping on to the drawbridge of a barge of a mad screaming notoriously difficult sexist client who only dealt in cash down the Mississippi. I had a "sh*t this is cool" moment about the time his suitcase full of cash opened and I noticed a huge ladder right up both legs of the pantyhose and my knee dripping with blood where I'd cornered it on the exposed steel.

I sat in the meeting on this freezing barge for two hours not acknowledging the continuing seething pain in the gash. The client became less difficult as he looked at it but didn't acknowledge the wound dripping on his steel floor and after the two hours offered me the first aid kit. Most clients in that job were similarly mad.

In NZ you are as a graduate after four or five years of mind-numbing study put on a professional career path that means sucking up to an HR department full of bitchy second and third rate BA graduate females, being more establishment than the old fools running the place or simply biding your time waiting for those above you to just **** off or die.

In the meantime banks lend billions of dollars for the lowest achievers in your class who left school at 15 to buy a piece of land and pretend to farm on it for the lowest ROI's on capital around so they can get tax free capital gains and leverage to buy more land that only themselves will get rich off.

And the decision makers and other collective knockers in New Zealand wonder why we leave for "flash jobs" and "big money" overseas and don't come back? Well we can't all be farmers with million dollar debt earning capital gains on million dollar property can we?

If you are a woman it is a special no-brainer. Women still only belong on farms if they marry a farmer. It is not something you can do on your own. There will be fewer women farmers farming alone than women CEO's and company directors.

NZ employers will never give you the opportunity as you receive overseas as quickly if not at all. As an expat there's been considerable money spent in hiring you and comparatively you are treated like a rockstar. Before you know it you have positions of responsibility you would wait 10 years in NZ to even be considered for. I got given staff. Something no NZ employer would have let near me. My management style in NZ is a legal hazard. In Asia it's called "systems and process driven" and required to get things done.

You get to travel to places you've read about in magazines, stay in a nice hotel and work there. While your contemporaries are back in NZ flying Air NZ link to Nelson for the day or overnighting at the Novotel in Rotorua.

Your clients are doing amazing things. Your contemporaries are dealing with branch offices of major companies. You've visited and worked with the head offices in Singapore or London.

Not a pleasant example but while your contemporaries receive a travel allowance to get to the North Shore to see the IRD, you've travelled to New York to meet with the IRS for a week.

It takes a special kind of person to be an expat because deep or not so deep down we are all a bit mad and loose and like it that way. This state comes from many years of not having rules. We tend not to like them. As long as you follow basic laws in the country you live, life as an expat accords you the right to get away with all manner of activity and blazen cheek. In NZ you must abide by the rules at work under hierarchy.

Derek Handley is a fabulous example. A New Zealander, he was born in Hong Kong and has floated around the world without borders. His family company of which he is a part of has done well buying and selling overseas and good on them. He runs around telling everyone now how we must be more sustainable and environmentally friendly yet he's a millionaire consumer jetting back and forward to the USA who is of all things flying to the bloody moon on Branson's Virgin. Expats can get away with that. Rules are for other people.

If Derek was born in New Zealand to a farming family without a global outlook he would probably have ended up milking cows with his siblings. And that is the problem NZ has. It has been able to get by being average.

Most NZers don't have it in them to venture past the comfort zone of Australia. The lifestyle beyond is pretty hard, forget about a harmonious relationship most of them turn tits up. Those that talk about how much money they could make overseas do not count as they will never go and do it.

So what will bring NZers back?

1. Family and duty is the first thing - nothing that a government can contribute there.

2. The next thing is timing. Whether it be the expat has just run out of steam, lost their job in a recession where they are living or has had enough, again nothing to do with government in NZ.

3. And the third thing I don't think is any form of employment or "jobs" as the left so cling to when they say "where are the jobs"? It is the chance to own their own business. O'Sullivan glossed over this but knows it.

That doesn't mean a whole host of grants and corporate welfare needs to be showered on the new bludging hipsters who then sell their companies offshore - high tech. But what it means is that corporate tax rates have to be considerably lower than countries where expats could set up their business, tax deductions for expenditure more readily available, work permits available to bring in expat expertise of folk you've met and liked overseas and a far looser approach by the IRD with regards the bureaucracy of business. In essence the government has to create a framework that replicates the conditions of its jurisdictional competition. Tinkering with tax laws has helped but not contributed much to this.

New Zealand policy makers need to realize that unlike a farm, the rest of the world doesn't have fences anymore. People who are capable can live wherever they like. New Zealand will get stuck with a nation of people born into the privilege of being land owning via their own parents, or those that cannot move because of family or their skills are not wanted elsewhere. Everyone in between is mobile.

What O'Sullivans piece pointed us to through KEA is that NZ may be better off leaving expats overseas. For as long as I've been working commentators harp on about needing to "add value" to exports, to invest in "high tech". For years NZ has talked of and tried these things. Yet we still thrive on very basic dairy produce.

Agriculture as a sector contributes to just 4.7% of GDP and only 7% of total employment.

This means 93% of the economy is not based on agriculture employment and 95.3% is not based on agricultural GDP.

New Zealand is 26% export-reliant on some of the least educated students at school in dairy farmers, pulling tits for a living in a low labour intensive industry and sending the basic product overseas. Is it any wonder NZ is where it is when some of least educated and qualified people are loaned $47 billion in finance (two thirds to dairy) with historically poor returns on that borrowing? Many farmers would have been better off sticking the money in the bank on time deposit without the capital appreciation over the years.

74% of exports are not from dairy. Federated Farmers will not tell you this statistic readily.

And is it any wonder that the brightest and more creative people seek a pond that doesn't have such restrictions or bias towards the sacred cow?

And is it any wonder that low skilled New Zealanders go overseas in search of jobs that the dairy sector just does not provide. Farm workers are notoriously underpaid and treated badly while the chosen few in the industry who will become owners not through real skill but by birth or bank, complain they cannot find staff. I do not blame low-skilled workers for choosing mines and Gina Rinehart over the NZ dairy industry. "Meaner" Gina treats her workers better.

Loaning a scientist a million dollars for an idea has to be better for the NZ economy than an uneducated sharemilker or farmer to buy overpriced land to milk cows on?

If education really is valued then so should those educated over those who are not. Governments have to stop treating the rest of New Zealand outside the land owners in the rural community as the spare to the farm's heir.

When I was in Germany I visited BMW which employs tens of thousands of people in Munich alone. The story is inspiring and the showpiece being the cars and the history behind the business. It is a real tourist attraction.

Fonterra I hasten to add would not pull the same crowd despite its one sided domination of New Zealand media and PR.

New Zealand isn't losing its best and brightest it is simply letting them go and be even better somewhere else. The trick is to keep them entertained long enough to take their offshore capital and set up a business or part of their global business in New Zealand or at least employ other New Zealanders from overseas. Statistically we have more capital than our contemporaries and every dollar we bring back to NZ is valuable.

New Zealand does thought have to look beyond blaming population migration and movements in an increasingly borderless world as an excuse for its dairy obsessed and therefore very limited economy.

You don't have to live in New Zealand to contribute to New Zealand.

Cathy Odgers is a tax lawyer based in Hong Kong. She blogs as Cactus Kate.

Cathy Odgers
Mon, 18 Jun 2012
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OPINION: Leaving the farm that is New Zealand