Immigration, and the evidence of things not seen

In the biblical book of Hebrews, there is a verse that reads “Now faith is the assurance of things hoped for, the evidence of things not seen”.

It seemed to be rather like that at the Pathways Conference that I attended part of in Wellington yesterday morning.  The Pathways conferences were established back in the 1990s and are held annually “to disseminate publicly funded research on international migration and demographic change”.  I hadn’t been to one before, and it looks like an excellent initiative, at least in principle.  The issues around immigration (here and abroad, past and present)  are fascinating and we (and other countries no doubt) need a “reasoned and deliberate” debate on immigration policy[1].  Funding enables the conference to be held at no cost to the participant, and enables academic and public sector researchers to discuss research results and immigration-related issues.  Given the significance of immigration in New Zealand, and the way it is seen as a significant “economic lever” (in the words of a senior MBIE official at the conference), we need scrutiny and debate.

There were around 120 attendees, but not a single member of the media.  That surprised me.   When I counted up the delegate list. almost 50 per cent were public servants (although I was a little surprised that no one from Treasury was there).

I suspect I may have been the only person present even mildly sceptical about the benefits of New Zealand’s immigration programme.  Certainly, none of the papers I heard, no comments from the floor, and none of the summaries of the remaining papers betrayed a shadow of doubt.      In fact, so certain of the direction of the argument were the organisers that they describe this year’s conference as being about “how New Zealand can better respond to these demographic changes in order to maximise the benefits associated with an increasingly diverse population”.  Perhaps there are such benefits, even net, but it would be better to demonstrate them, than simply assert them.  The tone of the conference –  supposedly about presenting publicly funded research  –  was apparent early on when the Minister of Immigration twice thanked conference attendees for all they (we?) did for “our migrant communities”.   And here I thought immigration policy was undertaken for the benefit of New Zealanders, whatever benefits there might be to the migrants themselves.

The contrast with the Australian Productivity Commission’s inquiry, which I wrote about last week, was striking.   There seemed to be no interest in questioning whether there were benefits, and if so who might be securing those benefits.  Nor much interest in innovative ideas (eg charging for migrant entry).  The Australian inquiry may well lead to no material changes in policy, but at least it should assure the Australian public of a serious and dispassionate analysis of the issues and options.

The Conference was described as being under Chatham House rules.  That seemed a little odd, at least in respect of the main presentations (as distinct from comments/questions from the floor), since the purpose was supposed to be about disseminating publicly funded research, to the public.    But the programme is on the web (see link) above.

I found the Minister’s speech rather unimpressive.  The organisers described it as a “keynote” but it was anything but.  Unfortunately, I can’t quote from it, but suffice to say he appeared unimpressed by anyone –  be it the Herald, or perhaps even stray bloggers (with long-outstanding OIA requests in for departmental advice on immigration targets) –  suggesting that waves of migrants were putting pressure on resources or infrastructure.  A keynote actually addressing some of the issues might have been interesting.  And although the Minister and MBIE seem keen to remind people of the weaknesses of the PLT immigration data, they omitted to point out that in recent decades net PLT immigration has understated (not overstated) the net number of people coming to New Zealand.

cumulative plt since 1990b

In fact, what was striking about the morning was how little there was to give a listener any confidence that the “economic lever” (New Zealand’s immigration programme) was doing New Zealand much good.  I went along to listen, and was prepared to be sceptical.  But I didn’t really need to be.  Because what I heard wasn’t very encouraging at all.  Listening to people discussing the problems of designing an entrepreneur visa, for example, I became more sympathetic to the idea of auctioning migrant places.  And anguished talk of concern about how many migrants were going into low productivity sectors, rather than “where we want them to go” had much the same effect, and a desire to reach for my copy of Hayek, on knowledge problems etc.  The central planning tone (no doubt unselfconscious) was quite disconcerting.

One of the MBIE papers is on the web.  It discusses some work on investor migrants –  who already, in effect, buy their way into New Zealand.  The aim of the programme is to import people with business expertise and entrepreneurial skills, presumably to boost productivity in New Zealand.  And yet in these surveys of people at various stages of the investor migrant process  (and  in which respondents must have been at least partly motivated to give the answers MBIE wanted to hear, even if results were anonymised), 50 per cent of the money investor migrants were bringing in was just going into bonds, and only 20 per cent was going into active investments.  We aren’t short of money, but may be of actual entrepreneurial business activity.  And 70 per cent were investing only the bare minimum required or just “a bit more”.  And these people aren’t attracted by the great business opportunities in New Zealand, but rather by our climate/landscape and lifestyle.  It doesn’t have the sense of being a basis for transformative growth.  As even a fairly pro-immigration academic observed, New Zealand isn’t exactly likely to be first choice for the sort of person who might build the next great tech company.

In much of the debate around immigration in New Zealand it seems that people can’t quite make up their minds what sort of immigration we want.  On the one hand there is considerable emphasis on highly-skilled migrants. I can see the logic of that argument, even if I’m sceptical of what difference it might make.  But on the other, there was repeated discussion of the role immigrants play in the aged care sector and in the dairy sector.  Such migration is no doubt good for the migrant (migration usually is) but the basis on which it assists in lifting per capita incomes, and medium-term productivity, for New Zealanders is much less apparent.  As one senior official put it to me recently, the logic of bringing in large numbers of people to work cheaply on dairy farms isn’t obvious.  It may just allow farmers to bid land prices higher, or perhaps compensate for the self-inflicted problem of an overly high real exchange rate.

So there wasn’t much to go on if one wasn’t sure of the benefits of immigration in New Zealand.  But if you went along already convinced then no doubt faith carried you through the accounts of the practical limitations of how our immigration programmes actually work.

And, of course, I know that this was just one conference, and there are lots and lots of papers on immigration.  But few or none of them show, with any confidence, that New Zealanders are securing economic gains from this substantial economic lever that successive governments have sought to deploy.  We need a reasoned and deliberate debate, perhaps with our own Productivity Commission inquiry.

[1] Readers may recall that that was Shamubeel Eaqub’s description of the sort of debate he wanted about immigration, at least before he responded to my analysis with the label “racist”, a slur he has still not withdrawn.

12 thoughts on “Immigration, and the evidence of things not seen

  1. “As one senior official put it to me recently, the logic of bringing in large numbers of people to work cheaply on dairy farms isn’t obvious. It may just allow farmers to bid land prices higher, or perhaps compensate for the self-inflicted problem of an overly high real exchange rate.”

    Farm land represents the net present value of the profits from farming. The fact that farm land increases in value surely represents the fact that cheaper labour has increased the profitability of farming. The benefit to New Zealanders is that it is New Zealanders who (to an overwhelming extent) own the farms. Right?

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  2. One other point:

    “50 per cent of the money investor migrants were bringing in was just going into bonds, and only 20 per cent was going into active investments. We aren’t short of money…”

    But isn’t your position that we have had far too high real interest rates a comment about the fact that we are “short of money”.

    If migrants are investing in bonds (and lowering their yields) then surely real interest rates are falling – a solution to your (as I understand) diagnosis of the immigration problem?

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    • Fair enough to some extent, in that there is a wealth gain for the land holders (altho not a productivity one). But even there, it is an open question (needing more analysis) of how much of the gain is at the expense of lower (than otherwise) wages for NZ farm workers (still the majority of NZ farm workers). But I think what was driving the comment was a sense that the dairy prices, and the stock of dairy debt, was disconcertingly high (perhaps dangerously so, if one were the RB) already.

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    • No. My argument is about real resources (savings vs investment). We have a near-infinite supply of money at the world interest rate (ie the high NZ interest rate, offset by the implied/expected exchange rate depreciation.

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  3. It is a great to see someone trying to bring a reasoned debate about immigration. It is such a sensitive and politicised area. There is a widespread idea that immigration is A Good Thing but not a lot of reasoned discussion or evidence.

    I worry when I see apple pickers and grape pruners from Fiji and hear about dairy workers from the Philippines in Southland. Surely these are evidence that we are encouraging investment in low productivity business endeavours. This is usually a really bad idea. Now I know the artificially high exchange rate may be to blame but something is clearly rotten in the state of New Zealand. Businesses should be profitable enough to pay a decent wage.

    On the cultural front my guess is that immigration is like tourism, a little is a good thing and a lot is highly toxic. Everyone gets along ok until times get tough. Then people turn on each other. Anger gets directed at those who are different. The centre ceases to hold and people move to the extreme left (International Socialism it used to be called) and then, when they fail, to the extreme right (National Socialism). Greece is the current poster child for this process and it is deeply shocking.

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  4. David Goodhart’s book on immigration in a UK context deals with the sort of issues you raise. He worries, for example, that too much immigration will undermine support for a decent welfare state.

    Of course, the concerns I’m raising – more economic in nature – are relevant whether the bulk of immigration is from the UK, China, Ireland, South Africa, or wherever.

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    • Michael, are you aware of any analysis done on the possible impacts of immigrants bringing in elderly relatives under family reunification rules on National Superannuation costs and Health costs. Seen a bit of “angst” expressed on this in the odd blog comment and wondered if there is any fact based on this topic…. cheers

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  5. I’m not sure if you follow Macrobusiness but Leith van O an interesting article today. If true, it might explain partly why Ministers are so keen to run immigration quotas so high above public preferences. Slightly different rules in NZ obviously but with the net effect being similar.

    :

    Is a lack of ethics Australia’s major advantage in education exports?
    By Unconventional Economist in Australian Economyat 10:26 am on August 6, 2015 | 13 comments

    By Leith van Onselen

    Over the past few years, several people working at universities have expressed concern to me that education standards are being eroded by the influx of foreign students, which have turned universities into ‘factories’ selling degrees, often as a pathway to future permanent residency.

    Those that I have met involved in teaching/lecturing have complained that they often feel unable to fail foreign students for fear that it will lead to a backlash, resulting in less ‘sales’ of degrees to foreigners in the future. In turn, they believe that education standards and the value of university degrees are getting watered down, with obvious repercussions for future productivity.

    With this in mind, I was surprised to read this morning that Sydney University had failed hundreds of international students studying post-graduate business programs:

    About 37 per cent of the more than 1,200 students studying the Critical Thinking in Business (BUSS5000) course at the university’s business school were given a fail grade after the first semester.

    About 12 per cent of students in the Succeeding in Business (BUSS6000) course also failed.

    Both courses are core units required to complete a Master of Commerce…

    Foreign students, many of them Chinese, made up the majority of students who failed.

    The common reason for failing these students is that their work was not up to scratch:

    Professor Shields acknowledged some Chinese students struggled with the course.

    “We do have a large number of students coming to us from bachelor degrees undertaken elsewhere, including in mainland China, where the dominant mode of learning is what we would describe as passive learning rather than critical thinking and engaged learning,” he said.

    “What we’ve been seeking to do is transition students coming into our programs from that very different learning system or education values system to … the critical thinking approach.

    However, the failure of the students has led to howls of protests from those affected, along with negative news coverage in China, possibly leading to reduced enrollments in the future:

    Second-year student Jinyuan Li, who failed the BUSS6000 unit, said the course was too subjective.

    “In the exam, all the questions were open-ended, but they had very limited marking criteria on their marking guide,” he said…

    Mr Li said many students sought informal appeals against their results, with most having the original fail grade upheld. Those students now plan to submit formal appeals…

    “We will not give up,” he said.

    “We will not make mistakes.”

    Mr Li accused the university of missing deadlines in issuing responses to informal appeals, making it difficult for students starting the new semester…

    Mr Li said the issue had been given media coverage in China, and it could lead to a reduction in Chinese students choosing to study in Australia…

    Professor Shields said the appeals could take time because they needed to be conducted “carefully and judiciously”.

    He said the university was focused on upholding academic integrity and ensuring procedural fairness for students, including those who passed the courses.

    “Well over 400 [passed], most of them mainland Chinese students.”

    The above case study reveals an inherent conflict with Australia’s tertiary education system: how to maintain education standards at the same time as maximising profits via education exports?

    Producing ‘degree factories’ obviously will maximise profits, at least in the short-term, but will lead to the dilution of standards and the value of university education, negatively impacting on productivity. However, by enforcing standards, as Sydney University did above, you risk reduced sales of degrees to foreigners, thus negatively impacting profits.

    Another issue is that Australia’s education system has become an integral part of the immigration industry – effectively a way for foreigners to gain backdoor permanent residency to Australia.

    The RBA’s submission to the parliamentary inquiry into home ownership revealed as much when it noted that “recent rule changes have made it easier for students to remain in Australia after graduation, including by becoming permanent residents”, and then forecast a huge increase in net migration from international students, particularly into Melbourne and Sydney:

    ScreenHunter_8658 Aug. 06 08.06
    ScreenHunter_8659 Aug. 06 08.11
    One wonders whether Australia’s education exports would be anywhere near as high if the carrot of permanent migration was not attached. That is, if Australia’s universities had to compete solely on quality, would they be able to stand on their own two feet? And would education standards, therefore, improve without the focus on immigration?

    This throws up a rather sticky question for the nation given the education export sector appears to run on combination of compromised rules:

    allowing laundering of money through the Australian property market, as revealed by FATF and AUSTRAC;
    allowing backdoor entry into citizenship; and
    selling dodgy degrees?
    Is Australia’s number one tradeable services advantage a lack of ethics?

    unconventionaleconomist@hotmail.com

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  6. Mai Chen is claiming we need population growth to make us wealthy

    Also
    wikipedia author claims super diversity is a social science term. I haven’t seen it in any glossary (only looked at two)

    B: Is ‘diversity’ just a Zeitgeist term – a post-multiculturalism policy catch phrase (as in ‘integration and diversity’ policy), a corporate tool (as in ‘diversity management’), or can it be a concept that can help structure and advance social scientific analysis?
    K: I think that depends. It’s a bit like in Alice in Wonderland when Alice in Wonderland confronts Humpty Dumpty and Humpty Dumpty uses the term ‘glory’. And Alice says to Humpty Dumpty “Well, you’re using that term wrongly”, and Humpty Dumpty says “Well, I can use it when and where I like”. It means whatever I chose it to mean. It is who rules that counts. The point is that I think at it’s worst it displaces a set of unclear concepts with another set of unclear concepts and I think there is a danger to that. Having said that, I mean as with all social scientific concepts it’s contestable and the contest is always as important as the empirical representational accuracy of the term itself. So I think it’s provocative and intellectually provocative in a largely useful way but I think we need to be cautious about issues as well. ”
    http://www.mmg.mpg.de/online-media/diversity-interviews/

    I think Mai’s superdiversity roadshow is a response to the shut out public’s disquiet about very rapid demographic change and unequal benefits? Super diversity creates an imagined reality designed to channel the public mind from what is really going on (I think).

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