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Revealed: Cost of no NZ KBE? Billions!

Just yesterday I read a news story that indicated the cost to the nation of those who leave the country with their skills is around $12K-$14K per year in lost taxation and other value.

At an individual level, that's a fairly trifling amount one might think - but there's something that's costing us a whole lot more.

This morning we're told that there are now billions of dollars in outstanding student loans which are owed by those who have fled to pastures-green.

According to this RNZ report, things are now so bad that the government is considering the use of professional debt collectors to round up some of this money owed by Kiwi expats who aren't repaying their loans.

Now we're talking big money!

Revenue Minister Peter Dunne also says the loan debt attributable to expats could rise to as much as $15bn within the next few years.

This kind of puts paid to the government's claim that the cost of NZ's brain drain is offset by the arrival of skilled workers from overseas doesn't it?

It also upsets the claims that skilled Kiwis who disappear overseas will eventually return and we'll all be the richer for it. Apparently what's now happening is that while some of these people are away and not servicing their loans, the interest compounds to the extent that it represents a huge barrier to their return.

Nobody is going to return to NZ if it means they'll be facing bill for hundreds of thousands of dollars which has grown from an unserviced student loan. I fear that these people, their skills and the money they owe, will be lost to NZ forever.

So how do we repair this situation and avoid this horrible mistake from being continued?

Well I've suggested bonding graduates before -- offering to write off a percentage of their outstanding loan every year they remain in paid employment in NZ after leaving their tertiary studies.

The only problem with this is of course, that there just aren't always the jobs here for engineers, scientists and technicians with great qualifications.

Why not?

Because (as I've lamented too many times before) we have no knowledge based economy -- and that's because we have an economic environment and tax regime that actively discourages knowledge-based industries.

So what's the true cost of not walking the walk in respect to a KBE?

Well, in light of these latest reports, it seems that it can be measured in billions of dollars -- and that's not billions we might be earning, it's billions we've actually paid out and may never see again. It's not forgone income, it's a big fat and very real loss.

Another very good read this morning is this Stuff story.

I think this quote is something our politicians ought to pay close attention to:

"The greatest danger would be to allow China's demand for commodities to push New Zealand business to concentrate too heavily on these, when the need is for diversification into value-added products such as technology and services vital to New Zealand's long-term prosperity".

How many times does government need to be told that it really is time to start focusing on more than meat and dairy, timber and wool?

Is this complete contempt for the necessity of fostering a KBE in this country going to come back and bite us on the bum much sooner than we might think?

Now where's my Suri Stress Reliever, I really think I need it today.

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