This time really is different
History is one thing, but times are clearly far from normal. One obvious deterrent to travel is that people could get stuck on the wrong side of the ditch, which could be extremely costly.
It’s impossible to know in advance how willing people will be to take this risk. Another consideration is that there will be a lot of Australians rushing over to visit family and friends in New Zealand that they have not seen in a year.
Even in the years before COVID, such visitors consistently made up a bit over 40% of Australians coming. They are less likely to splash out on expensive tourist activities or hotels, and thereby will make a smaller contribution to GDP during their stay.
And they are likely to make up the majority of early arrivals, being the most impatient to get here. Of course, providing an offset in GDP terms, similar characteristics are likely to be true of Kiwis heading to Australia.
Departure-card data shows that historically the mix of visitors is very similar, and it’s just as likely that the first rush of Kiwis heading to Australia will be those reconnecting with loved ones, rather than those splashing out on Gold Coast holidays.
There’s one other important point to bear in mind – the Australians have nowhere else to go.
There are 25 million of them who haven’t been able to travel internationally for a year, and right now the only option is New Zealand.
In recent years, New Zealand saw around 1.3 million Australian visitors each year, versus around 11 million outbound international trips by Australian residents in 2019.
What proportion of would-be travellers will impatiently head to New Zealand versus those who prefer to wait for their world to get bigger is impossible to predict, but will have a huge say in how things turn out.
If even 20% of the usual number of overseas trips by Australian citizens were directed to New Zealand, that would be 2 million people visiting our shores.
New Zealand couldn’t possibly match that, given the relative sizes of the two populations. Yet another source of uncertainty is whether the New Zealand tourism industry could sustain a large influx of overseas visitors.
Businesses need staff to operate, and many businesses in the tourism industry hire staff from overseas.
With this pool of labour still largely cut off, there’s a question of whether there will be enough workers to be able to bring the tourism industry back to full capacity, even if the demand is there.
And finally, it seems unlikely to remain a two-country bubble for long. Once Pacific Islands are included, we’ll have more choice of places to go – and so will the Australians.
And unlike trans-Tasman travel, those flows will be heavily lopsided (ie boosting services imports).