Day: September 7, 2015

What New Zealanders thought of immigration and population issues

Michael Reddell Immigration

I got onto the New Zealand Election Survey when I was going through some old files and found a hard copy of a blog post Eric Crampton had run in 2011 on some earlier polling questions (including from previous NZES surveys) about immigration.  That prompted me to look up the 2014 survey to see if it had anything on immigration.

There is only a single question this time:

The number of immigrants allowed into New Zealand should be

Increased                                            10.7 per cent

About the same as now:                     37.4 per cent

Reduced                                              45.1 per cent

That seemed consistent with some other polling I’d seen.  Plenty of people seem to be happy with the current level of immigration, but a large number would prefer a lower level.

The 2011 survey, by contrast, had a variety of questions about population and immigration.  NZES uses many of the same respondents from survey to survey, and there was a very similar question to the 2014 question, producing very similar results.

Should the number of immigrants allowed into New Zealand be changed?

Increased                            13.1 per cent

Left about the same            34.1 per cent

Reduced                              44.5 per cent

But the 2011 survey also had four other questions about population and immigration.  The first was about the economy.

New Zealand needs more people to grow its economy

Agree                                    41.7 per cent

Neither/don’t know               26.1 per cent

Disagree                              29.2 per cent

The next was about skilled migration.

New Zealand needs to import more skilled workers

Agree                                  40.2 per cent

Neither/don’t know              18.3 per cent

Disagree                              38.3 per cent

Respondents were then asked about wider impacts

Immigration threatens the uniqueness of our culture and society

Agree                                   37.7 per cent

Neither/don’t know              21.3 per cent

Disagree                              37.8 per cent

And finally

A bigger New Zealand population would overstress our environment

Agree                                    55.4 per cent

Neither/don’t know               19.0 per cent

Disagree                              22.6 per cent

The first three 2011 questions seem broadly consistent.  People think that a rising population is good for the economy, and so don’t support (say) closing off immigration.  In fact, many think the current level of immigration is just fine.  The skilled worker question is potentially ambiguous –  do the people saying we need to import more skilled workers mean increasing the stock (which any immigration of skilled workers does) or increasing the flow (ie increasing the rate of skilled immigration beyond current levels)?

On the “uniqueness of our culture and society” question, opinion is evenly split.  In principle, and for some, losing “uniqueness” might be a good thing –  those emphasising the benefits of so-called “super-diversity” might have answered “agree” and still favour current or higher levels of immigration.

But, in some ways, the question I found most interesting was the environmental one, in which a huge majority think that a bigger New Zealand population would “overstress” our environmental.  Perhaps it is worded in a loaded way, but the margin is so large that can’t be the whole story.  It was a surprise to me –  personally I’m very fond of England’s green and pleasant land, even with 50m+ people.

Overall, there seems to be quite a tension among these respondents.  They believe a story that a larger population would be good for the economy, while worrying that it would “overstress” the environment.

The 2014 survey asked respondents about where they stand between protecting the environment and promoting economic development (thus skewing choices even in the way the question was posed).  22 per cent of respondents put themselves in the middle of the 7 step scale.  24.1 per cent leant towards “do more to encourage economic development” while 46.3 per cent leant towards “do more to protect the environment”.

Perhaps consistent with all this is the ambivalence about the current level of immigration.  A plurality want to reduce it somewhat, but perhaps mostly for environmental reasons.   A large proportion of people are comfortable enough at current levels, and a small proportion –  perhaps the strong believers in the potential gains (or libertarians simply focused on the likely benefits to the migrants  – favour a higher level of immigration.

There hasn’t been much of a public debate around immigration, but these sorts of results provide some small insights into what is shaping public attitudes to immigration.

Constitutional monarchs of economic policy

Michael Reddell Reserve Bank

I don’t subscribe to the NBR but in their newsletter this morning I noticed one of the odder description of the role of Governor of the Reserve Bank I’ve ever seen.

 Paid content  •  Rob Hosking
RBNZ: Wheeler to cut, to advise, to encourage, and to warn
Mon 07 Sep

Central bank governors are kind of the constitutional monarchs of economic policy.

No monarch in New Zealand’s history has had anything like the power that Graeme Wheeler has (or that his two predecessors  had).  And unlike the powers and responsibilities of the monarch (or Governor General) the powers of the Governor have been increasing not diminishing.

The monarch has a handful of reserve powers, and other than that has only the responsibility to do good, to be seen, and to do as her ministers tell her.    As Bagehot put it 150 years ago, she has a right to advise, encourage, and warn ministers, but in private. It is not clear that there are any material cases in New Zealand’s history in which the monarch, or Governor General, has had any material influence on the choices made by governments and ministers.  And that is probably as it should be (he says as an instinctive monarchist).

Compare that to the position of the Governor of the Reserve Bank.  Like the Queen (or Governor General) he also holds a position established by Parliament, and is an unelected holder of that office.  He is not required to act on advice, and in fact the main argument for our current governance structure was to focus accountability –  the Governor, ultimately, can blame no one but himself for any mistakes that he makes.  We don’t hold the monarch, or the Governor General, responsible for whatever bad bits of legislation they sign over the years.

And what does the Governor get to decide:

  • He sets the short-term interest rate for New Zealand, and can do so in ways where, if he makes mistakes, we end up with inappropriately large booms or persistently high unemployment and recessions.
  • He gets to decide who can and can’t borrow money from our banks
  • He gets to decide the designs of the only lawful bank notes in the country
  • He has (legally unfettered) capacity to commit taxpayers’ money to speculate in foreign exchange or other financial markets.
  • He gets to decide who can operate as a bank, or non-bank deposit-taker, or insurer, in New Zealand.
  • And so on.

Oh, and he has some statutory duties that might be compared to “advise, encourage, warn”

Section 10 of the Reserve Bank Act says

10 Formulation and implementation of monetary policy

  • In formulating and implementing monetary policy the Bank shall—
    • (a) have regard to the efficiency and soundness of the financial system:
    • (b) consult with, and give advice to, the Government and such persons or organisations as the Bank considers can assist it to achieve and maintain the economic objective of monetary policy.

And section 33 says

33 Policy advice
• (1) On request by the Minister, the Bank must provide advice to the Minister on any matter specified in the request that is connected with the functions of the Bank.
(2) A request may not be made under subsection (1) that may limit the Bank in exercising its primary function in section 8.
(3) The Bank may also provide advice to the Minister, at any time, on any matters or subjects within the responsibility of the Bank.

Central bank Governors also prone to lecturing the public on how we should behave. Such advice is mostly harmless – since we can ignore it – and ineffective, although if done badly (as it often is, here and abroad – by Graeme Wheeler, Don Brash, or Alan Greenspan) it risks damaging the standing of the institution.

Some people will be quite happy with the powers the Governor of the Reserve Bank. But don’t pretend his powers are remotely comparable to those of the modern monarch.

Both the monarch and Governor of the Reserve Bank are unelected creatures of Parliament. One now has almost no power, and one has huge powers. It is the Governor’s powers that look anomalous in modern times. Reforms are needed, to markedly reduce the powers of the Reserve Bank as a whole, and to largely eliminate the ability of the Governor to make key policy decisions on his own. Few Governors in other countries have ever had as much power as Graeme Wheeler does.  No modern monarchs do.

More please (or “What New Zealanders think of public spending”)

Michael Reddell Fiscal policy

The New Zealand Election Survey (NZES) has been running since 1990

NZES’s main source of data are questionnaires which are posted to randomly selected registered electors across the country immediately following each election.

Some of the questions stay the same but others reflect some mix of the issues of the day and researchers’ interests. There usually seem to be quite a range of economic and social policy questions.   They achieve quite a large sample (in the 2014 survey they had 2835 responses) and the reported responses are weighted to, as far as possible, reflect the demographic characteristics of the population (age, sex, race, qualifications and party support)..

I haven’t seen any media coverage of the results of the 2014 survey, but reading through the responses to the policy questions over the weekend I thought some were worth highlighting.

Perhaps the responses that most caught my eye were those around government spending.  These were the first set:

Should there be more or less public spending on:
More Same Less Net (more- less)
Health 66.8 26.7 1.6 65.2
Education 64.2 29 1.6 62.6
Housing 48.6 36.3 8.3 40.3
Police and law enforcement 42.8 45.3 5.2 37.6
Public Transport 41.8 43.3 7.5 34.3
Environment 40.2 45.4 6.5 33.7
Superannuation 31.8 55.4 5 26.8
Business and Industry 29.7 47.8 9.7 20
Defence 18.2 54.3 18.7 -0.5
Welfare benefits 15.4 41.6 24.6 -9.2
Unemployment benefits 12.4 38.6 40.5 -28.1

In most categories, more people favoured keeping expenditure at current levels than favoured either raising it or lowering it, but, equally, for most categories the net balance of respondents were much more in favour of raising public spending than of lowering it.  The only area in which respondents favoured cuts in public spending were “welfare benefits” and especially “unemployment benefits”  (while by similar margins they favour spending more on superannuation).

I was a little surprised.  There are areas where I would favour increased government spending (eg statistics and legal aid), but I’m pretty sure that if faced with this survey I’d not have answered “more” to any of these questions.

Despite the answer on superannuation, respondents narrowly favoured raising the NZS eligibility age to 67 (as they did when the same question was asked of an overlapping sample in 2011)

Agree Disagree
Raise NZS age to 67 between 2020 and 2033 42.2 38.3

That left me wondering why people wanted to increase public spending on superannuation.  Perhaps they want fewer people getting superannuation, but for each superannuitant to get more?  But as we have one of the lowest rates of poverty among the elderly of any OECD country that would be a surprising stance.  Perhaps it is just that people are more hard-headed faced with a more specific question?

The survey also had a few questions about whether some types of government spending is good or bad (ie not asking whether the current level should be raised or lowered).  I found those responses a bit eye-opening as well.

Should government give financial help to
Yes No
Companies for research and development 66.7 11.8
Companies to help them develop products for export markets 61.3 14.3
Sportspeople to allow them to compete internationally 56.6 19
Film makers to encourage filmmaking in NZ 50.7 18.6
Banks to help them in time of economic crisis 26.2 40.9

I’m not sure how I’d have answered the banks question –   there wasn’t an “it depends” option.  I’d like to think I’ve have answered “no”, but revealed preferences matter and in Treasury in 2008 I argued strongly for the use of guarantees and, on balance, still think that was the right advice.

In fairness to respondents, there are no questions in the survey about how they would propose that the country should pay for this spending.  The presence of a budget constraint – even a hypothetical one in a survey –  might have changed how some respondents answered.  But perhaps not by that much.

There was one tax question in the survey, in which respondents narrowly opposed a capital gains tax.  In principle the question was ambiguous  –  asked if we needed a “capital gains tax excluding the family home”, some respondents might have objected to the exclusion of the family home, but would have favoured a more textbook comprehensive CGT.  But I don’t suppose there were many such respondents.

Overall, I’m not quite sure what to make of the results.  One person I showed them to suggested that “ACT should read them and give up”.  They were suggestive of a New Zealand with attitudes perhaps not much different than similar surveys might have found 50 years ago.  There is quite a strong suspicion of (non-superannuation) welfare in these and other questions in the survey, but also a quite striking degree of belief in a role for a fairly large and active government.

Then again, for better or worse, although government spending in New Zealand is very large –  central and local government current spending totalled 37.1 per cent of GDP last year –  there were only three OECD countries where current government spending now accounts for a smaller share of GDP than in New Zealand.  And in all but a handful of countries the government spending share of GDP has risen somewhat over the last decade or so (as it has in New Zealand).  Korea is at the low end of this chart, with current government spending of 28.6 per cent of GDP last year, but as recently as 2002 that share was only 22.0 per cent.  Between rising government spending and the continuing encroachments of the regulatory state, whatever ails the world economy at present doesn’t look to have been an outbreak of small government.

gen govt spending