There is an interesting column on interest.co.nz today by David Hargreaves calling for the government to act to reduce the rate of immigration. I’m generally quite sympathetic to his call, although much of his argument is focused on the shorter-term pressures that arise from large (and large fluctuations in) immigration flows, whereas my interest is primarily in the longer-term economic implications of high trend levels of non-citizen immigration. But the column is headed “National is putting short-term expediency ahead of the country’s future”, and there I’m inclined to part company.
Yes, the National Party dominates the current government, and has supplied all the Ministers of Immigration since 2008. But, by and large, they are following the same policy, apparently with same implicit beliefs about the benefits of immigration and of a larger population, that the Labour Party led government before them followed, and the National Party-led government before that. Elite opinion in New Zealand has been strongly pro-immigration, presumably believing that it is in the interests of New Zealanders, for a long time. What is at issue isn’t really “short-term expediency”, but long-term economic strategy and beliefs.
Elite opinion approves strongly of immigration, and is resistant even to any questioning of the approach, and yet those same people and institutions struggle to produce any evidence of the benefits.
The Secretary to the Treasury is very keen on immigration, and yet The Treasury doesn’t seem to have been able to find any evidence of benefits from New Zealand’s large scale immigration programme, and has been rather cautious about the extension of working holiday schemes.
MBIE and the Minister of Immigration continually runs the line that immigration in New Zealand is an “economic lever”, and yet when I asked for copies of their advice and analysis there wasn’t anything of substance there either. There are assertions about possible benefits, and various theoretical arguments, but no evidence that New Zealanders have actually benefited from the evolving programme New Zealand has actually run.
The New Zealand Initiative think-tank seems keen on immigration, and yet when the chairman recently put out a piece on immigration, he subsequently acknowledged (see his comment in response to my piece) that there are no New Zealand studies that demonstrate the benefits to New Zealanders of New Zealand’s immigration programme.
Late last year, Mai Chen published a lengthy Superdiversity Stocktake report, some mix of immigration advocacy and marketing around how best to cope with the greater ethnic diversity that has developed in New Zealand over the last few years. And yet, in the hundreds of pages, there was no evidence advanced that New Zealanders have been, or will be, made better off by the large scale immigration programme. Chen referred to various papers supposedly showing benefits from diversity, but few adequately distinguished causal links and correlations, and several were not even dealing with ethnic diversity. The one New Zealand paper cited – a Department of Labour modelling exercise from a few years ago – is generally accepted to be of the sort which generates benefits from immigration if first ones assumes benefits from immigration. In other words, it simply does not shed light on the bigger question. Here is a link to a recent commentary on the some of the articles Chen refers to.
So neither our leading government economic agencies, nor our academics, nor our think-tanks, nor immigration-advocacy groups have been able to show any material benefits from the large scale immigration programme, even after 25 years. And yet the leading political parties for some reason continue to recite the mantras – it is “critical economic enabler” we are told, but enabling what?
And while National and Labour are largely responsible, since they have led all governments in New Zealand for decades, most of the other parties don’t really seem that different.
Here is the Green Party policy. It doesn’t get very specific, but also evinces no real discontent with the thrust of the immigration policy New Zealand has been running for 25 years.
New Zealand First often gets coverage for its comments on immigration. They raise some concerns, some of which I think have merit, and others not. But read the policy and it certainly doesn’t feel like a party advocating a far-reaching change of approach.
The Maori Party apparently no longer has any references to immigration on its website (and there was nothing in the 2014 manifesto), but when I looked previously there was nothing suggesting any discontent (which has always puzzled me because, whatever the economic merits of immigration there is no doubt that each new wave weakens the relative political position of Maori in New Zealand).
United Future has an updated online manifesto, and its immigration policy (page 84) suggests no real discontent, and just suggests various tweaks at the margins.
And the final party in Parliament is ACT. You might presume that they’d have been dead keen on immigration – open markets in people as well as goods. In fact, their website offers a curious mix. On the one hand, the say
ACT is and always has been the pro-immigration party
But they must have had someone reading Reddell because a few sentences later they qualify this with
ACT is also committed to monitoring the emerging literature that suggests immigration may make the domestic population poorer through a process of capital widening
They have a whole page, which is fairly uniformly positive, but with that caveat.
It is quite remarkable that we’ve gone for 25 years with one of the largest scale planned migration programmes in the world, have no actual evidence of the benefits to New Zealanders of this programme, and all the time have continued our slow relative economic decline, and yet not one of the p0litical parties appears seriously uneasy about what is going on. On the one hand, it is a testimony perhaps to the moderation of New Zealanders, and to the fact that we haven’t had lots of illegal immigration or Muslim immigration, But as David Hargreaves notes in his interest.co.nz piece, our rate of immigration has been much more rapid than that of the United Kingdom, where it has become a major issue for debate (and over recent decades the UK economy has been materially more success than our own).
I was interested to see the generally left-leaning Bridget Williams Books has a new book out shortly, presumably next week, in their BWB Texts series, on New Zealand’s immigration policy and practice.
Here is the publisher’s blurb.
Migration and the movement of people is one of the critical issues confronting the world’s nations in the twenty-first-century.
This book is about the economic contribution of migration to and from New Zealand, one of the most frequently discussed aspects of the debate. Can immigration, in economic terms, be more than a gap filler for the labour market and help as well with national economic transformation? And what is the evidence on the effect of migration not just on house prices but also on jobs, trade or broader economic performance?
Building on Sir Paul Callaghan’s vision of New Zealand as a place ‘where talent wants to live’, this book explores how we can attract skilled, creative and entrepreneurial people born in other countries, and whether our ‘seventeenth region’ – the more than 600,000 New Zealanders living abroad – can be a greater national asset.
It will be interesting to see what material, and arguments, the authors have to offer. If it isn’t offering the evidence itself, perhaps it least it might contribute to a greater appetite for serious debate and analysis as to whether we, as New Zealanders, are benefiting from the evolving immigration programme in the way in which the elites seem to take for granted that we are.
croaking cassandra 
David Hargreaves and yourself scaremongering and playing the migrant card again. There is nothing much the government can do when real permanent migrants is only 14,133. You do not want to get rid of the international students, you do not want to get rid of these long staying tourists and you can’t get rid of returning kiwis.
Arrivals 122,963
Departures 57,052
Net PLT gain 65,911
Arrivals made up of:
Permanent Residence 14,133
International Student 27,864
Work 38,185
Tourists 5,779
Returning Kiwis 36,230
Other 772
Total 122,963
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http://www.stats.govt.nz/browse_for_stats/population/Migration/IntTravelAndMigration_HOTPJan16.aspx
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We’ve discussed this before. As you know, I favour cutting the residence approvals target – which is set, and can readily be adjusted, by the government. The residence approvals target is for 45000 to 50000 approvals per annum. As you know, it does not map to the PLT numbers, so most residence approvals are granted to people who have arrived in the country on work or student visas.
I do not – as you know – favour cutting foreign student numbers, although I do think that allowing NZ work rights to foreign students is questionable at best.
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Real permanent migrant only numbers 14,333 against a target of 50,000. My personal experience is that only 1 in 20 international students or foreign worker would stay for more than a few years. Once they have sufficient work experience they return to their home countries as NZ is more a branch office and not a hub for corporate head offices. We have to aim for more just to catch a few. You do want to train them because they do develop a enduring relationship with NZ and are our future trade links and future tourists as they return with their future families for visits.
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Your first sentence is incorrect. Permanent migrants are people granted residence visas. Some of them get such visas offshore (your 14K), others get them onshore (people who entered the country on work permits and some on student visas). Residence approvals in total are around 45000 pa. Lets debate whether that total is too high, too low, or about right.
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Correction: only 1 in 20 would stay as a permanent migrant. The rest would stay no more than a few years.
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I guess theory points to ‘long run’ economic growth being driven by (working age) population and productivity growth so continuation of a relatively pro immigration policy seems understandable – especially given NZ demographic trends. Whether long run benefits arrive is perhaps less of an issue for the government of the day: if ‘short run’ demand is boosted by a inflow of people, this is no doubt considered a handy outcome when the next election is just around the corner. Per capita growth is really the poor cousin of absolute growth and the latter is much easier to digest during the days news cycle….
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Yes, altho the question (longer term) is whether there is a connection between (immigration influenced) population growth and productivity growth. The elite-consensus view is that there is, and the link is positive. My argument is that, if anything in the specifics of NZ, it is negative. The answer might perhaps be near zero (which is what Julie fry implied in her Treasury paper) but we really don’t know
Don’t forget the other side of the immigration story: in the presence of regulatory/legislative supply restrictions rapid population growth is just a recipe for high house prices; basically a way of making those who already have a bit better off (and perhaps feel a lot better off) and those who are without even worse off.
Peggy Noonan had a nice piece in the WSJ the other day on the protected vs the unprotected as part of the explanation for the rise of Trump. It seems quite a reasonable story in the US context, but the distinction is one that now exists in many advanced countries.
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The short term demand is more likely driven by the 110,000 foreign fee paying students and the 3 million plus tourists that have seen a 31% increase in GDP activity over the last 12 months rather than the real permanent migrants of 14,333 that mainly affect Auckland.
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…..that might be a tricky connection to prove given the many variables that contribute to productivity growth. On house prices, tend to think the flow of foreign cash via our open capital account has had as much of an impact as the flow of people. Then again, proving that ‘gut feel’ is near impossible (and also noting people’s right to sell to the highest bidder even if this reduces possible social externalities of home ownership).
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QC, the impact of 3 million and 110k growing at a annual rate of 31% would have a more significant impact than the 14k new migrant arrivals. Surely 3.1 million tourists and students spending up to $12.85 billion in economic activity would take up more accomodation space and more resources than 14k from migrant arrivals over the last 12 months. So how tricky is that to figure out?
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Tricky indeed. Which is partly why I argue that the onus should be on the advocates of this unusually large immigration programme, running now for 25 years, to show that there are such benefits. If we can’t show them, why bother with the programme?
Of course, a libertarian could reverse the argument and say ‘unless you can show there are negative productivity effects we should allow many – perhaps more – people in”.
Re open capital accounts, there is open capital mobility into the US too, and the vast swathes of middle American cities with house price to income ratios under 3 suggest that it isn’t the main problem.
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Got to admit up front that this isn’t my core area – and also that I must be one of those elites with their distressing open-economy open-society viewpoints – but that said, I was pretty sure I’d come across some research that had demonstrated immigration benefits. What about this, for example? http://researchcommons.waikato.ac.nz/handle/10289/5555
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That is, essentially, the work I was referring to – the CGE modelling from 2009 (http://www.mbie.govt.nz/publications-research/research/migrants—economic-impacts/cgm-nz-economy.pdf )
First, it showed a lift in per capita incomes but only because immigrants were assumed to be younger and have higher labour force participation – ie no spillovers to the rest of us – and they assumed no additional productivity growth. The work illustrated how immigration might affect the economy (incl sectorally), on certain assumptions about its aggregate effects, rather than demonstrating that such benefits (especially the spillover benefits that the govt agencies claim) have actually occurred.
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But the base assumption is replacement so you should not expect any spillover effect from a zero impact of migration as it is replacement.
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[…] policies of previous governments since at least the start of the 1990s. A couple of weeks ago, I linked to the 2014 immigration policies of the various smaller parties, not one of which suggested any […]
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