Day: July 18, 2015

How not to have a “reasoned and deliberate discussion” of housing and immigration

Michael Reddell Housing

I noted in my post yesterday that I was a little surprised at how NBR had characterised differences between Shamubeel Eaqub and me around how to think about the contribution of immigration policy to housing demand. The description was “war of words”, something I didn’t recognise. But I hadn’t seen the article then.

As I noted yesterday, the difference is simply about how to interpret net PLT migration figures. Shamubeel uses them to conclude that immigration policy has not been a major influence on housing demand over 50 years. I pointed out, in response, that immigration policy is about how many non-New Zealanders we let in, and how long we let them stay. It does not affect the movement of New Zealanders at all. Accordingly, if we want to understand the role of immigration policy, we should focus mainly on data on the movement of non-New Zealand citizens. I have used the net inflow of non-New Zealand citizens as a proxy, while noting that it is not a perfect proxy.  On that measure, most of the trend increase in household numbers is now down to immigration policy choices.

So far I thought we just had the sort of difference that crops up all the time in analysing data. Someone proposes a hypothesis, with some numbers, and others respond questioning whether, for example, the data cited are showing quite what the first analyst thought they were. That sort of debate is how we advance our understanding. I didn’t (and don’t) challenge the accuracy of Shamubeel’s numbers (and I’m sure he isn’t challenging mine). The only issue should be what light each set of numbers sheds on the issue (and which issues they each shed light on). As I put it yesterday, if people prefer I’m quite happy to say that (given land use and housing supply restrictions) the large net outflow of New Zealanders has greatly eased pressure on house and urban land prices, and the (even larger) policy-facilitated net inflow of non-New Zealanders has greatly exacerbated pressures.    But only one is a immigration policy matter.

To the extent I had given it any thought, I assumed Shamubeel was approaching the discussion in the same dispassionate way.   In his book (page 129) he notes:

Economist Paul Collier, in his book Exodus argues that we need to talk openly about immigration. Not through the lenses of envy and racism, but in the context of a reasoned and deliberate discussion of why we want immigration, how many people we want, and what kind of people we want.

I nodded, largely agreeing, when I read that passage. Collier’s book is also worth reading.

But this morning I picked up a copy of the print edition of NBR and understood immediately Jenny Ruth’s “war of words” description. Instead of “reasoned and deliberate discussion” my argument is simply dismissed by Shamubeel as “That’s racist”, and “he’s always had this thing about non-New Zealanders. That’s pretty much been the tenor of his work over the last three years”, and “he’s taken a biased approach”.

And there is nothing more than that. There is no sense as to why, as a descriptive exercise, he disagrees with my interpretation of the role of immigration policy in explaining medium-term demand for housing.

Perhaps he provided a more substantive response to the journalist and she didn’t report it, preferring only to report the slurs?  (With apologies to Jenny Ruth) I rather hope so, because Shamubeel is someone whose contributions to economic analysis I have had some time for (indeed on this blog, I encouraged people to read his book) . I think he is much better than is suggested by simply falling back on labels like “racist”, or even “he has this thing about non-New Zealanders”, when someone challenges his framing of the numbers.

I’ve been posing some questions around New Zealand’s immigration policy and the implications for understanding economic performance for five years now. When one is discussing, or researching, the implications of immigration policy, inevitably one is focusing on non-New Zealanders. That is who immigration policy affects. As Shamubeel notes, we (and every country probably) need “reasoned and deliberate discussion of why we want migration, how many people we want, and what kind of people we want”.

In that time I’ve debated the issues and analysis with many people- here and abroad, New Zealand born and foreign born – and I’m pretty sure no one has ever previously accused me of racism.  These are important analytical and policy questions, and the prospects for reasoned and deliberate discussion recede further when people contributing to it the discussion are simply labelled “racist”, rather than engaging on the substance of the issues and analysis.

I hope that Shamubeel will, on reflection, withdraw his slur. As ever, I would be very happy to engage him (or anyone) on the substantive issues (whether interpretative, analytical or policy). And I still think people will benefit from reading his book.

Welfare numbers

Michael Reddell Welfare

I noticed a piece in the newspaper this morning reporting the latest quarterly welfare benefit numbers, including enthusiastic comments from Anne Tolley, the Minister of Social Development.

The report highlighted that the number of working age benefit recipients had reached the lowest June level since June 2008 – the lowest level in the last couple of decades (even though by June 2008 New Zealand was already two quarters into a recession).

These numbers do look like mildly good news, but need to be kept in context.

First, the Minister encourages us to look at annual changes because “quarterly data was subject to seasonal influences”. So perhaps she could ask MSD to resume the practice of publishing seasonally adjusted data. Other agencies do it.

But even focusing on the annual data, these numbers suggest that the best is behind us. Here is a chart of the annual change in the number of working age people on main benefits. At best, a couple of years ago, numbers on benefits were not dropping quite as rapidly as they had been in 2007 (by which time, GDP growth rates were unspectacular). And for the last 18 months or so, the rate of decline in benefit numbers has itself been dropping away. That would be not inconsistent with signs that the unemployment rate has levelled out and, more recently, that the pace of economic growth is slowing.  A more robust recovery – not something the Minister of Social Development can do much about – could have made deeper inroads to the beneficiary numbers.

benefits

But standing further back, the MSD release notes that 10.3 per cent of the working age population is on one of these main benefits.  Repeat slowly: one in ten working age adults is primarily dependent on state welfare benefits for their income. And 74 per cent of those people have been on a main benefit for more than a year.

And how about the ethnicity of recipients. 120000 benefit recipients identified as NZ European and 99000 as Maori. 2013 Census numbers suggests there were just over 300000 people (ages 20-64) self-identifying as Maori.   How people self-identify in the Census might be different to how they identify themselves in MSD, but it looks as though almost one in three adult working age Maori are primarily dependent on state welfare benefits.  And that in an economy with an unemployment rate of under 6 per cent.  It is shameful.  I’m not suggesting it is primarily the current government’s fault. But it is not clear how seriously they, or previous governments, take it. Or whether they are really willing to ask hard questions about how this welfare dependence came to be.

Finally, while it is encouraging to see the numbers on working age benefits dropping, and the government has taken some steps that have assisted that process (which is generally dominated by the economic cycle), don’t forget that total welfare benefit numbers are rising each and every year. MSD don’t make it easy to find quarterly data on the numbers receiving New Zealand Superannuation, but they look to be rising by 20000 a year.  Working age benefit numbers are now dropping by 8000 a year.   That rise in NZS numbers is something that the government could have done something about, by gradually raising the age of eligibility, but has resolutely determined not to do so.

So, yes, there are some mildly encouraging points.  But there is, surely, so much more to do.  Can any of us be content, longer-term, with a society in which such large proportions of the population rely on state grants for their income?