- 1. Why do we have immigration at all?
- 2. How well can we fine tune immigration?
- 3. Are we trying to achieve the population density of Asia or Europe via Immigration?
- 4. Have we lost control of the quality of our foreign migrants lately?
- 5. What about the strains big migration puts on infrastructure?
- 6. How big then should the inflow of foreigners be?
- 7. Are these working holiday types stealing jobs from our own youth and lower skilled labour?
- 8. Don’t we take too many refugees?
- 9. Shouldn’t we give priority to immigrants from cultures most similar to ours?
- 10. Should there be restrictions on foreigners buying property?
- 11. Why the Obsession with Skilled Migrants Only?
- 12. Aren't there too many foreigners arriving, bidding up house prices and clogging the roads?
Historically New Zealand has welcomed immigration. These days 20-25% of our workforce was not born in New Zealand (similar levels to Australia and Canada). Our natural rate of population increase is around 0.5% pa and that is falling away as the population ages. Net migration adds 1-1.5% pa to population growth.
Net immigration puts a small upward bias to economic growth which is good for keeping confidence and encourages investors to take the risks necessary to underpin growth in per capita incomes.
Migrants tend to be younger than the average age of the population and so add to our productive capacity, which of course is what funds social services like pensions and public healthcare. And of course we will need migrants to provide services to an ageing population also.
So there are plenty of arguments for it, but these need to be tempered by our ability to host more people, and the quality of our migrants in terms of their ability to boost the per capita incomes of the existing population. It is on these issues that immigration policy is often criticised.
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.
There is no evidence that any government has had this in mind, despite the occasional pleas from business lobbyists that New Zealand needs 5 or 10 million people in order to be a more dynamic economy. At 2% pa population growth it would take another 40 years for us to reach 10 million. The UK, which is of similar land mass has 64 million. That would take us 130 years or more to reach.
We do not accept that it even makes sense for our migration policy to ultimately lift the population density in New Zealand to anything like that of Europe or Asia. Maintaining our low population and enhancing the quality of our natural capital is the key to raising the well-being and incomes of New Zealanders. We’re not aware of any political party proposing that it’s even remotely sensible for New Zealand to replicate the type of infrastructure that is found in places like Singapore, Tokyo or London and to do so we need to lift our population density to similar levels. Such an economic and social model is not the New Zealand that New Zealanders identify with and cherish.
A more realistic model of how to lift New Zealanders’ prosperity is one which relies on New Zealand’s unique endowment of natural and human capital. The quality of foreign immigration is the over-riding priority – which immigrants can provide the best value to us?
Answering this is tricky given that we have opened the gates to a flow of temporary migrants who are able to work. They include:
• International students – around 50,000 pa, the highest per capita in the OECD
• Essential Skills – roughly halved in numbers from their peak
• Working Holiday Schemes – around 60,000 pa
• Family Reunion – where the issue is our readiness to accept extended family of quite recently arrived migrants
• Recognised Seasonal Employer, RSE – around 11,000 pa
It used to be that the UK and Ireland provided most temporary working migrants to New Zealand. That has changed dramatically over recent decades and now China, India and the Pacific Islands are the main sources. In part this is because we have halved the number coming in under the essential skills category (and traditionally they filled the bulk of permanent immigrant numbers) and instead have boosted the working holiday schemes (as a result of bilateral arrangements with other countries) and turned to the supply of international students to provide a further chunk of the resident migrant inflow. One problem that has been identified with these folk as a source of residents is that their English proficiency is not high and that is a problem in the labour market.
Given the inherent volatility of net migration flows it’s pretty difficult to predict when population pressures will strain infrastructural capacity. The only time you restrict or choke off these inflows is when infrastructural bottlenecks from high population can’t be cleared, so it makes sense to throttle back until they can. Right now for instance NZ population growth has lifted from 1-1.5% pa to 2% which is one of highest in developed world and which our own history tells us causes supply bottlenecks. The main reason is a surge in the number of returning Kiwis and fewer Kiwis leaving.
Population growth in the OECD averages 1% and amongst the wealthier nations is less than that. So at 2% pa New Zealand is an outlier for similar countries. That does suggest we need to be sure that at these rates New Zealanders are benefitting. That assurance is difficult to give.
Ideally we should cut back on our discretionary categories in response until the bottlenecks are cleared. But given there’s significant investment made in attracting immigrants, particularly the high value ones, such a response is difficult to manage.
The simple answer is the levels beyond which migration ceases to contribute to raising per capita income of Kiwis.
So outside of humanitarian quota, that should be the first question asked when setting quotas by category. Temporary workers relieve seasonal bottlenecks, alleviate temporary skill shortages, and now, via the visitor working visas apparently are a source of better quality labour in the casual and low paid areas. So all of those are helpful, though we need to accelerate the skill acquisition rate for more of our own youth if we are going to make them resilient to the competition from working foreign students and visitors.
There’s evidence that the path to Permanent Residency is too easy, that we’re not valuing it highly enough. Migrants arrive, get permanent residency after 2 years of residency and then leave with that as a lifeline. So they leave for as long as they like, knowing they can always return. Problem is when they do this in droves, they squeeze our other long-term immigration programmes. Do we really want these casuals?
A new place in Aotearoa New Zealand should only be created for someone who is really going to contribute so we need to develop criteria that ensures this – including requiring a longer time to be served before permanent residence is provided.
Those granted temporary working visas are predominantly young, very motivated on their Overseas Experience and happy to take any work as fillers to finance their stay. Kiwis love doing the same abroad so these are grounds for reciprocal bilateral arrangements.
The boom in skilled, intelligent and energetic temporary workers willing to work for low wages is sensitive because they compete with low skilled (often young) Kiwis for work and of course being higher quality in general, the foreigners succeed. That pleases employers and customers so to that extent is an economic benefit. The evidence that local workers are being displaced is patchy, there’s a counter argument that the hospitality sector especially has expanded as a result of the visitor working visa phenomenon. But even if the evidence is there, our response needs to be more training of our displaced, low skill workers so they can compete fully with this competition.
According to Amnesty International our performance here is appalling. At a quota of 1,000 pa, apparently at a cost of $100m per annum, Australia takes twice as many per capita and Canada 6 times. So in order to better meet our ethical and moral aspirations we should lift this number. One way might be to adjust the skilled migrant category to award more points to refugees.
Aotearoa New Zealand is a multicultural society founded on a bicultural treaty between tangata whenua and later arrivals. Initially those arrivals were British settlers but over the decades they now originate from all over the globe – meaning we’re one of the most culturally diverse nations on earth, a rich cultural diversity that we are proud of.
In addition New Zealand has formal obligations to the citizens of a number of Pasifika nations and migrant inflows from them have contributed to the richness of New Zealand society. Insofar as immigration policy is concerned then, and over and above these traditional commitments, New Zealand has no cultural preference in its immigration targeting apart from English proficiency being worth points for some immigrant categories. And neither it should – we are citizens of the world, and cultural tolerance and diversity is the bedrock of contemporary Aotearoa New Zealand. The Opportunities Party strongly endorses this commitment.
Having said this, provision of social services such as health, welfare assistance and education are far more effective if done in a way empathetic with the recipient’s culture. We have heard a lot of the difficulties in this area with providing Maori and Pasifika with such services effectively. It is no less of a challenge with citizens of other cultures. It’s a mere fact of life then that the greater the multiplicity of cultures in a society, the more expensive and difficult it is to provide these opportunities to everyone equitably.
In a small open economy it is difficult to prevent this happening. Currently the main driver for this is foreigners wanting to exploit the same tax loopholes that New Zealanders also exploit. The most important thing is that those foreigners pay their fair share of tax, which will be ensured by our tax reform policy.
The working visitor visa regime has seen a large number of our visitors working in casual jobs as they move around the country, alleviating labour market problems that arise from time to time for even the lowest paid jobs. In that respect it has been a successful innovation and when you talk to local employers, generally they love it.
There a couple of reasons. The quality of the visitor labour is very good generally and of course they’re flexible. Those attributes are not always that easy to find quickly from the local labour market. But there must be a couple of common sense checks put on this phenomenon. Firstly is local labour being displaced as visitor after visitor steals the jobs they would otherwise be filling and secondly are these visitor workers keeping wages down for locals? These checks are important because (a) if locals are displaced permanently that means we have to pay unemployment benefit (b) if wages are keep lower than the would otherwise be, we could well find ourselves handing more and more out through Working for Families and similar hardship allowances, and (c) we want wages to rise over time (as long as it’s not inflationary) as that’s how ordinary folk get to share in the spoils of the economy’s success. It is not simply a matter of keeping employers costs as low as possible.
So yes it’s great to have these visitor workers making the low end and casual part of our labour market more flexible and responsive. But within reason. If we get evidence of locals being displaced (as opposed to not having even these skills to do the job competitively) then we need to take action, and if there’s evidence of non-inflationary wage suppression, that’s not smart either. The last thing we want is to fool ourselves that the visitor labour is the best thing since sliced bread only to find that our welfare bills are mounting.
Migrants - especially the skilled ones - can help raise everyone's living standards. However, you can have too much of a good thing, particularly if those migrants are low-skilled. Congestion and housing are some of the downsides of excessive immigration, although really those problems stem from poor government policies and planning. Every time population growth hits 2% we seem to see these problems, which is why TOP is suggesting a target of 1% population growth through migration, at least until these infrastructure bottlenecks can be solved.
However, we must recognise that we cannot control a lot of migration, so promising any such target is illusory. Citizens and residents have freedom of movement so we can't control what they do. Fewer Kiwis leaving and more returning home have been a major source of the current problems.