You’ve probaby heard of, applied for, or got the working holiday visa for New Zealand.

Before you arrive here’s a little bit of background about New Zealand’s working holiday visas to give you some perspective.

Background of the working holiday visa

New Zealand wasn’t the first country to create a working holiday visa scheme with another country, but it certainly has become the country that has the most agreements with other countries (over 40). How did it get that way?

That requires a bit of background into New Zealand’s economy & immigration policies.

New Zealand context

New Zealand’s economy is built on raw materials, food products (dairy, meat & fish), and tourism. To be competitive in these fields, they all require low cost labour.

From the 1950s NZ’s the immigration policy was about ensuring there was a cheap labour force. In the last few decades immigration policy has been reformed. It has been tweaked to favour skilled labour, but it’s roots still remain.

But immigration isn’t the only factor. There are a few other factors involved, including:

  1. International negotiations
  2. Political
  3. Tourism income
  4. Government income
  5. Immigration & labour management

I’ll expand more on each below.

The bartering chip

Because New Zealand is small, and doesn’t export much. The Ministry of Foriegn Affairs and Trade (MFAT), has used the Working holiday schemes as a bartering chip when negotiating deals with other countries.

A great example of this is the New Zealand WHV for [mainland] Chinese. New Zealand was the first country to sign a fair trade agreement with China (PRC). Included in the China-NZ free trade agreement signed in 2008, is a non-reciprocal working holiday scheme which allows mainland Chinese to come to New Zealand (but no New Zealanders to visit China).

Politicians

Politicians love to show off what they have done, to ensure they are remembered for doing good (so they can get re-elected.

New Zealand has over 40 working holiday agreements, so that is 40+ opportunities politicians have had to issue a press release and show they are doing something.

Interestingly, the politician that has signed the most working holiday agreements is now the deputy Prime Minister of New Zealand (2nd in command).

Tourism income

Tourisim earns a lot of money for New Zealand. This is by design of government policies to encourage growth in the market.

Arguably, it is a bad idea as it is a low wage earner. (E.g. how much does a tour guide get paid vs a banker?) However that’s how things are. So, the New Zealand government wants visitors (especially working holiday visitors) to come here to spend all your money. Think of it like Los Vegas, but instead of gambling there’s expensive food & with nature .

Government income

The government has done studies that show that visitors to New New Zealand on WHVs will bring money to New Zealand and spend it. Some of them will work, and most of the people that work, will spend the money that they earnt in New Zealand too. Then they leave with less than they arrived with.

That is fantastic for the government who gets tax income when you are paid (PAYE), and when you spend money (GST). A person who comes to NZ on a WHV and works then spends most of their $$ is worth thousands to the government.

Note that some people on working holidays in New Zealand may claim a tax rebate when they leave. But they wont get all the tax back, and they are not around long enough to cost the state much money (education, social security, health care etc).

Immigration

Immigration New Zealand has lots of different visa types to help manage the amount of labour available to businesses in New Zealand.

For low skilled work some employers prefer to recruit a whole temporary workforce, bring them to New Zealand. These are usually Filipinos, Brazilian, or Chinese.

New Zealand also uses temporary immigration to encourage development in other countries. This is mainly applied to pacific nations such as Nuie, Kiribati, & Vanuatu. Villagers from these nations come to New Zealand to do seasonal low skilled work such as on orchards.

International students studying in New Zealand, as also allowed to work part-time jobs to help support some of their expenses while living in New Zealand.

So there’s WHV people, International students, and local New Zealanders all vying for entry level jobs.

Summary

So to recap, here are some of the parts of government which are involved in working holiday agreements, and how the benefit.

Ministry of Foriegn affairs and trade (MFAT) likes WHVs because

  • WHVs generate tourism income for NZ
  • WHVs can be used in negotiations to be seen as giving the other country something, but internally are seen as an export (generates income for New Zealand)
  • WHVs make them look like they are giving young New Zealanders more opportunities (but in reality with a small eligible population in NZ only a fraction of the schemes are used)

Inland revenue department (IRD) likes WHVs because

  • they can get more tax income

Immigration NZ (which is part of the Ministry of Business, Innovation and Employment (MBIE)) likes WHVs because:

  • WHV bring in cheap labour, 90% of whom aren’t going try to stay (yep, they did a study on that too).

Final thoughts

One of the best pieces of financial advice I have got in my life, is that you should operate your finances the way a business would – You should be making a profit! You wouldn’t start a company to make no money, or make a loss, each year. So you shouldn’t do that with your own life.

So when I first heard the NZ government had done a study and found that people who worked in NZ on WHVs spent the money they earnt in NZ, I was a little disheartened.

There are certainly ways to have a great time in New Zealand on a WHV and come out with about the same amount of money you arrived with or more!

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