How has our population grown?

New Zealand’s population is estimated to have risen by 11.8 per cent in the last decade (much of it in the last three years). The starting point for that estimate is reasonably well-anchored: I used the population numbers for the March quarter of 2006, and the 2006 Census happened in that month. The end-point (March 2016) is only an SNZ estimate, which will be recalibrated after the next census.  But for now it is what we have.

Here is the high-level breakdown of where the population growth came from.

population decomposition

Net migration accounts for about 35 per cent of the total increase.

But even at very high level, this chart somewhat misrepresents the picture.  Many migrants are of child-bearing age, and some of the natural increase will itself have resulted from the net migration flows of New Zealanders and foreigners (both those during this period, and those from earlier periods).

I’ve found it useful to think about the contribution of immigration policy to New Zealand’s population.  At the extreme, almost the entire non-Maori population of New Zealand ultimately exists as a result of  post-1840 immigration policy.

But even over more recent periods, one can distinguish –  at least conceptually – between the choices of New Zealand citizens to come and go (mostly go), and those of foreign citizens.  The choices of New Zealanders aren’t a matter of immigration policy at all.  We shouldn’t, and don’t, try to impede those flows.    By contrast, any foreign citizen living here requires the explicit permission of the New Zealand government.  Some will be permanent residents, others will have work visas, and some will be students.

Statistics New Zealand has data on permanent and long-term migration flows by citizenship.  But, as I’ve noted before, it is only indicative.  People change their minds and their plans.  New Zealanders planning to leave for a few months end up staying away for decades, and vice versa.  And the same happens for foreigners coming here –  some came intending to stay forever, but it just doesn’t work out and they leave.  Others come thinking it might just be something short-term, and they end up getting permission to stay longer.

Over the last decade, these statistics show a net 233000 New Zealand citizens leaving, and a net 440000 foreign citizens arriving.   That inflow of foreign citizens is equal to 89 per cent of the increase in the total population over that decade.

Actually, the contribution of non-citizen migration (the policy-controlled bit) might not be quite that large.  The net migration inflow in the chart above is 177000 people over the decade, and the gap between the citizen and non-citizen net PLT data over the same period is 207000 people.  We know the natural increase, and we have a reasonable fix on the population.  So maybe somewhat fewer New Zealanders actually stayed away than said they were intending too, and perhaps some of the non-citizens who intended to stay went home.    My hunch –  no more –  is that over this period more of the mismeasurement is around the NZ citizen flow (the Australian labour market has been tougher than most expected).   But if the mismeasurement is split evenly between the NZ citizen and foreign citizen data, the direct contribution of immigration policy to population growth over this period would still be around 85 per cent.  And the contribution to the birth rate of those non-citizen migrants is on top of that.

Then again, according to the arrival and departure cards, a net 228000 more people arrived in New Zealand in total than left between March 2006 and March 2016.  That is rather more than the 177000 net migrants implicit in the SNZ population estimates.  So perhaps we’ll find that the population has been growing even faster than SNZ thinks.  If so, the contribution of immigration policy might drop back to around 80 per cent over the decade.

There is plenty of imprecision in all of this. But what is fairly clear is that (a) New Zealand’s population has been growing much faster than the population of most OECD countries, and (b) that the overwhelming bulk of that growth is resulting from immigration policy choices (the scale of the influx of non-citizens).  Reasonable people can differ on the economic implications of those high rates of non-citizen immigration, but that the population would not have been growing rapidly at all without our unusually large non-citizen immigration programme shouldn’t really be in question.

Internationally, there is a variety of experiences of course.  Among advanced countries, one has relatively successful countries with sharply falling populations (Latvia and Lithuania are down more than 20 per cent in the last 25 years) and sharply rising populations (Singapore’s population is up over 80 per cent in that period), and both good and mediocre performers with quite rapid population growth (New Zealand and Australian population growth rates have been similar over 25 years, and Israel has also had about 80 per cent population growth and a productivity performance about as disappointing as New Zealand’s.  Population changes, even those directly associated with immigration, can be a response to domestic opportunities or available foreign ones. In some circumstances they might help strengthen per capita growth, and in other cases they might impede.  One needs to take a country by country approach.

Taking a longer view, this chart is one I’ve used before.  It compares New Zealand’s population growth rate with those of advanced countries and the world as a whole (using UN data).

world population growth

Typically, our population growth rate has far-outstripped those of the advanced countries as a whole.  The exception was the period I referred to in my post on Saturday, between the mid 1970s and the late 1980s, when the large net outflow of New Zealanders was already well-established, but immigration policy was not aggressively pursuing a large inflow of foreign citizens, unlike the situation in the decades before and since.

13 thoughts on “How has our population grown?

  1. Michael what would the situation be if our population had increased by the same amount but instead through a massive baby boom? Would this have had the same dilution on GDP per capita and the same drag on the NZ economy? I accept it would have been different – more schools, lower female labour participation etc but where I am going with this is – if this doesnt concern you, why has the immigration been so bad? Or is it just a rapid increase in population that the country/infrastructure has had difficulty in absorbing more than immigration per se?

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  2. Andrea

    To a first approximation the long term effects of a higher birth rate would, over time, be much the same (there are some offsetting arguments – if your migrants are really high quality, there might be real spillover gains, but if the migrants are less impressively skilled, even those effects might work in the opposite direction).. The difference is simply that one is a matter of policy and the other is a matter of private preferences. Having a third child lowered our family GDP per capita, but that is a cost we get to internalize (yes, I know that at the low end there is WFF, and generally a state education system), but…it is about private choice of NZers. I’m not a libertarian, but I think there is a real difference between a fairly intensely private choice, and something (immigration policy) on which govts must, of necessity take a view.

    Michael

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  3. Was the current migration policy a response to the large net outflows of the late 70s and early 80s? If so then the current policy certainly needs reviewing, as apart from the brief negative dip after Christchurch EQ, NZ has not experienced such extreme outflows since the 1980s. On the contrary we have only experienced extreme inflows such as what is currently occurring. Therefore to not review policy is negligent.

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    • The problem with Statistics NZ is that international students are included as Permanent and Long Term Migrants due to their students visas extending beyond 12 months. This creates a larger and larger distortion as time passes as international students do not stay for more than 3 to 5 years before they decide to return to their home countries. There is a high churn rate in our migrants due to the 120,000 international students each year. But we do create an enduring future business relationship and they are part our future 4 million plus tourists.

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  4. My impression is that it was a gradually evolving response to a bunch of things. Partly the scale of the outflow, partly a belief in the possibilities of really good quality migrants, partly a sense that if free trade in goods and services was good, so was freer movement of people. But I don’t think the significance of the overall change (over a period of years) was ever widely appreciated. As one illustration of that, a while ago I checked all the memoirs and biographies of the key political figures in the late 80s and early 90s, and immigration policy either doesn’t get mentioned at all, or gets no more than passing mention.

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  5. I see the Herald has picked up on that Treasury report with the headline:
    Treasury warns of risk to jobs from immigration

    “Migrants were increasingly working in low-wage industries where there is no strong evidence of a skills shortage, Treasury noted in a briefing, released under the Official Information Act.

    “There is a concern that recently there has been a relative decline in the skill level of our labour migration. The increasing flows of younger and lower-skilled migrants may be contributing to a lack of employment opportunities for local workers with whom they compete.”

    The current approach “may have encouraged reliance over time on lower-skilled labour in some parts of the economy”, and that could discourage increased wages or training.”
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11648304

    Where are the high and rising wages for farm and orchard workers, petrol pumpers, restaurant workers and burger flippers that could possibly justify their immigration en masse.

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    • Yes. Of course, while I agree with Treasury on this, they favour replacing the low-skilled migrants with high skilled ones. Which sounds fine, except that (a) they don’t look at how hard it is to get really highly-skilled people to want to come here, and (b) simply seem to take as an article of faith that high levels of immigration are good for NZers, if only we get the right people.

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  6. “Skilled migration” is simply a slogan

    I know what it means in a broad sense, but, surely, we should be able to precisely define what skills are “needed” and seek to encourage only migrants with those skills

    One has great difficulty accepting the need for 600+ new chefs plus 300 retail managers every year. Over 5 years that’s 3000 new chefs. Do we have 3000 restaurants in NZ? or is it simply a transition path to taxi-driving

    Yesterday there was a discussion by a newscaster about the slow death and decay of shopping-malls in NZ which seriously indicates a move to Amazon style on-line shopping which suggests the retail environment is in contraction mode not expansion.

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    • Commercial Bay is just starting development with the closing of Downtown Shopping mall on 28 May 2016. We will see 100 new retail stores in the next few years.

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    • The top World premier retailers, Prada, Louis Vuitton, Coach, Swarovski, Christian Dior have opened new stores on Queen Street in the last 2 years.

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      • Ah yes, Auckland: a good source of demand, but sadly a less good source of new supply (stuff the rest of the world might want to buy). (And yes, I know that the Queen St shops will partly be tapping a tourist market)

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  7. The last 3 years of Statistics NZ is usually badly distorted. You have to wait for the next Census night to get any accuracy with population numbers. Statistics NZ includes Foreign workers, International Students, Tourists in their definition of Permanent and Long Term Migrant. Even foreign migration at 14k is a gross number. Statistics NZ as usual being lazy does not even bother to report the actual net foreign migrants.

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