Do more people make NZ more productive?

The Australian blogger Leith van Onselen today ran a piece prompted by a new Ross Gittins article in the Australian papers about how high immigration could impede productivity growth.  Van Onselen took the opportunity to draw readers’ attention (again) to my own 2013 paper on how New Zealand’s large scale inward migration programme may have exacerbated imbalances in the New Zealand economy, and frustrated any aspirations to close the gaps between New Zealand’s productivity level and those of the more successful OECD countries.  He also linked to the Treasury Working Paper Julie Fry did last year which looked at various aspect of New Zealand immigration, including the “Reddell hypothesis”.

There will be more on these issues on this blog over the coming year.  I started thinking on these issues while I was working at Treasury from 2008 to 2010, and those early notes influenced the material in the report of the Savings Working Group.  My hypothesis is, of course, controversial.  I think that is a good thing, in such a challenging and important area as New Zealand’s long-term underperformance. And the hypothesis is not easily (dis)proved.  We need to have a more substantial debate around the New Zealand immigration programme, which has grown over the last 25 years with little advance public discussion.  No political party ever campaigned for the cause of much-increased immigration.    The debate shouldn’t be about year-to-year fluctuations –  most of those are about the comings and goings of New Zealand citizens –  but about just what a country with low savings, few obvious positive productivity shocks, and an exodus of its own people, is gaining from such large trend inflows of non-citizens, many from countries and economic cultures much poorer than our own (underperforming) one.

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