2. How well can we fine tune immigration?

2. How well can we fine tune immigration?

Answer

When it comes to the outflows and inflows of New Zealand citizens and permanent residents we can’t. And these flows are highly volatile which implies the overall flows will be volatile year to year. Policy can only focus on the quality and quantity of inflows of foreigners, and some years that bears little relation to the overall net migrant picture.

Despite recent experience, it’s an open question as to whether net immigration can be a useful economic stabiliser i.e.; an antidote against recession. Arguably NZ would have just experienced a rather harsh recession due to the commodity price downswing if it hadn’t been for the surge in net migration.  Some of that net immigration was fortuitous as fewer New Zealanders left due to the ravages of the post-2007 Global Financial Crisis, some of it was as the result of the increased demand for some categories of foreign migrant – particularly of working holiday visas.

Overall however it is a very imprecise game trying to fine-tune the overall net inflow. If we try to do so, like the Greens are suggesting, that would require massive swings in the immigration categories that can be controlled to compensate for changes that can’t be controlled elsewhere.