The Morgan immigration policy: appealing to MBIE and Treasury?

Gareth Morgan’s The Opportunities Party last week released their immigration policy, in a reasonably substantial eight page document, long on words and light on pictures.  I’m a classic floating voter, with absolutely no idea who I might vote for at next year’s election, and a nerd too, so I like the idea of a party coming out with some serious discussion of important issues perhaps nine months before the election.  On immigration policy in particular, it is more than we have seen from any other party.

The TOP immigration policy strikes me as one that the bureaucrats in MBIE and Treasury might quite like.  Perhaps some of the more thoughtful ministers might be inclined to agree (quietly) as well, but it is an approach that is in quite striking contrast to the gung-ho assertions that the current system is working just fine, and benefiting all New Zealanders, often heard from the new Minister of Finance.

TOP’s policy document begins

“We are strongly pro-immigration as another tool in the box to improve the prosperity of New Zealanders”

Which seems to fit very nicely with MBIE’s claims that New Zealand’s non-citizen immigration is a “critical economic enabler“.    TOP go on to note/claim that

“Migration enlarges our economy and has a small but real positive impact on our living standards”

and

Net immigration puts a small upward bias to economic growth which is good for keeping confidence and encourages investors to take the risks necessary to underpin growth in per capita incomes.

There are certainly plenty of claims along those lines, and it has been easy enough for academics to generate models showing how such gains to living standards might arise, in principle.    But there is no evidence advanced by TOP –  or by MBIE, Treasury, Steven Joyce, Michael Woodhouse, Business New Zealand or the New Zealand Initiative –  to demonstrate that in the specific circumstances of New Zealand large scale non-citizen immigration has actually improved the living standards of New Zealanders.

The focus of the TOP immigration policy document is on some of the specifics of what is wrong with the current policy approach.  In many respects, there has been a lot of continuity in policy whatever party has been in government over the last 20 years.  But the current government has gone further than its predecessors in debauching the system, a point made in the TOP document with Gareth’s customary vigour:

“The Government’s craven desire for economic growth at any cost – even if incomes of New Zealanders aren’t rising –  has seen it make Permanent Residency far too easy for migrants who add nothing.”

And here I can agree with a lot of the TOP specifics.  The way the student visas policy has been run is a disgrace, and should be an embarrassment to any New Zealander –  at least perhaps other than those running private training enterprises.  As TOP put it

“There have been numerous instances of dishonest behaviour by NZ providers and their foreign and local agents. There are many sotries about conflicts all along the supply chain from the finders in India, right through to shonky qualifications being granted in New Zealand.  The real issue is that too many involved in the supply chain don’t care much about the education anymore, it’s become an Underground Railroad for aspiring but modestly skilled folk of modest means to gain permanent residency in New Zealand.

The Government, with its obsession in seeing foreign education as a winning growth sector has sold the integrity of our immigration policy down the river.”

Probably no one would argue against an approach that gave points towards residency to people completing, say, a Master’s degree in a core academic subject from a well-regarded New Zealand university.  New Zealand PTE qualifications are quite  another matter.

They go on to criticise the plethora of new working holiday visa schemes –  themselves often put in place more for foreign policy reasons than based on a hardheaded analysis of the economic impact on New Zealanders (especially perhaps less skilled and lower income New Zealanders) –  and the clearly inadequate way in which the points scheme is working.

As TOP note, in dealing with economic immigration

“we only desire people who make us more prosperous.”

There is little sign of that in how current policy rules are working.

Among the specifics on the TOP list of policy proposals there are ones I can agree with:

  • “remove the need for highly-skilled migrants to have a job to come to”.  If we are serious about bringing in highly-skilled migrants, we shouldn’t be putting them through the hoop of compelling them to find a job here from offshore, and potentially move their families to the other side of the world unsure if they will eventually get residency.  Yes, language tests probably have an important role, and there is no point bringing in people with qualifications that simply won’t be recognised here, but if there are long-term gains from immigration they almost certainly arise from the quality of the people we attract, not from the ability to match up with a specific job from the first moment they arrive in  New Zealand. The policy change to favour, in granting residency, people already in New Zealand on temporary visas, was well-intentioned but hasn’t worked to benefit New Zealanders.
  • “reform the study-to-work-to residency regime for foreign students so that only jobs that meet a genuine skill criteria are recognised for residency points”.  I’d go further than that –  removing the right of students to work here while studying, and granting points only for recognised post-graduate qualifications –  but what TOP proposes would be an improvement on where we are now.
  • “reform the points system to reflect the importance of salary level, English language skills, and the ability of migrants to contribute to the economy”.  That last provision worries me a little –  it can cover a multitude of sins –  but the direction seems right.  Again, I would go further and remove the additional points available for job offers in the provinces –  that scheme simply reduces further the average skills level of the migrants we do get.

It is also good to see that TOP endorses the increasingly popular view – even the Retirement Commissioner has belatedly come out in favour  of it – that the residential qualifying period for obtaining New Zealand Superannuation should be extended from the current 10 years to (in their case) 25 years.

I’m less sure I could be enthusiastic about “applicants for Permanent Residency must demonstrate an understanding of our Constitution and the status of the Treaty of Waitangi”.  I sympathise with the apparent intent, but would “uncertain” be an acceptable answer –  in one of the few countries without a formal written constitution and where the status of the Treaty is more a matter of political debate than of law?

Thus far, I think the TOP policies, if adopted, would represent quite an improvement on what we have now.  But, as I noted earlier, I suspect that Treasury and MBIE officials might well agree.

I’m less convinced that the points system itself is a bad way to ration whatever quantity of non-citizen migrants we want to allow in.  Gareth argues

And at the heart of this question [who should we allow in] is – who should decide?  Some bureaucrat adding up eligibility points in a dark room at the back of an earthquake-prone building in Wellington? Or the market?  Obviously the market needs to.  There needs to be either a job offer at a wage that reflects the skill shortage or a track record of the employee having what it takes to add value.”

But it sounds a lot like a points system to me.    The real question is what we should issue points for, not whether to have something like that sort of scheme.  If one is an open-borders libertarian, or even someone who thinks that almost our migrants should come on refugee or family reunification grounds, things might seem different.  But TOP –  rightly in my view –  argues for an explicit economic orientation for most of our immigrant inflow, and if that is the framework someone needs to devise a rationing device.  We could auction places subject to various minimum criteria but, to my knowledge, no one has proposed such a scheme (and no other country with a substantial immigration programme has operated an auction scheme).

Many of these points are about detail.  The big area in which I disagree with TOP is around the overall level of non-citizen immigration we should be aiming for.  They observe

“our immigration policy then, is all about improving the levers.  A 1% contribution to annual population growth from net immigration is a good ceiling”.

As I noted a few months ago in writing about the Green Party’s new immigration policy, an annual ceiling on net immigration is all but impossible to manage.   The flows of New Zealand citizens into and out of the country are large, variable and very hard to forecast.  By contrast, we have fairly tight control on the flows of non-New Zealand immigrants.

I’m not entirely sure how to read the TOP target, but given that for the last 40 years of so there has been a net outflow of New Zealand citizens almost very single year, presumably TOP would be aiming at a net inflow of non-New Zealand citizens of around –  or perhaps slightly more than –  1 per cent of the population per annum.    At present, that would be a net inflow of non-citizens of around 47000 per annum.  By contrast, the gross residence approvals target now is centred on 45000 per annum, and the typical net inflow of non-citizens over the last couple of decades has been a bit lower than that (some of those granted residency don’t end up staying long).     In other words, in terms of overall numbers TOP seems to proposing inflows a bit less than those of the last year or two, but something quite similar to the average outcomes of the last 15 years.

That makes some sense on their own terms.  As I quoted earlier, they believe that high levels of immigration can improve the long-term prosperity of New Zealanders.   And I’m with them (at least most of the way) when in their FAQs they say

Question

How big then should the inflow of foreigners be?

Answer

The simple answer is the levels beyond which migration ceases to contribute to raising per capita income of Kiwis.

But where is evidence that anything like the sort of inflows of non-citizens we’ve had in recent decades –  or most of the time since World War Two – is contributing to “raising per capita income of Kiwis”?

It all seems to rest on the same underlying belief –  without evidence specific to the circumstances of New Zealand –  that now guides Treasury and MBIE: the current rules aren’t working very well, but if only we reorient them we can bring in at least as many people and we’ll finally –  decades on –  start seeing the gains of the large scale immigration programme.  Tui’s “Yeah right” springs to mind.

One of the real problems we face is that, attractive as New Zealand is to poor people and people of middling skills in poor countries, we just aren’t that attractive to many really able people.   By advanced country standards, we aren’t that wealthy or productive.  We are a long way from anywhere, including from the cultural and economic centres of the world.  And for all the talk about New Zealand’s wonderful lifestyle, I doubt there is an advanced economy that doesn’t offer very attractive lifestyles in one form or another.  Really ambitious and able people will typically aim for other countries first if they can get in there.  I’m a New Zealander and am at home here, but why as an able ambitious skilled foreigner would you come to New Zealand if you could get into the UK, the US, Canada, Australia, Ireland, or even –  so long as you are happy to learn another non-English language –  most of Europe?  All those countries have problems.  So does New Zealand.

The constant desire, repeated in the TOP document, to bring in lots of foreigners seems fated to be an approach that constantly disappoints.  We  could attract some really able people, and rule changes could help to attract more than the low number we get now.    But we shouldn’t fool ourselves about how desirable New Zealand is –  especially its long-term underperforming economy.  TOP associates itself with the recent strange call from Richard Dawkins for New Zealand to invite the world’s top academics to settle here.  I wouldn’t really have a problem with us doing so, but people need to stop and ask how likely it is to succeed.  When your country is remote, not that well-resourced economically, and when your universities are no better than middling, it simply isn’t very likely that many ‘top academics” would want to come, and in doing so cut themselves off from the funding, the networks etc that help make top tier research possible on a long-term basis.

Perhaps it does no harm to try, but in a way the real problem with the constant focus on trying to get lots of really skilled migrants is that it risks turning into a cargo cult.  Instead of looking to our own people, skills, institutions and energies to produce and sustain prosperity, we constantly look abroad. Other people aren’t the answer to our economic underperformance –  exchanging our people for some mythical superior group from abroad.  It is past time that New Zealand political parties, including TOP, started recognising this.

 

21 thoughts on “The Morgan immigration policy: appealing to MBIE and Treasury?

  1. Michael I really like your conclusion. I think NZ’s immigration policy is a crutch -an ineffective coping strategy which allows us to pretend we are addressing the difficult questions in our society -such as how will nearly 5 million people will be productive in the modern global economy -when we are not. Not enough people in NZ’s government or the business community are doing the hard yards solving the real problems we have. We seem addicted to taking the easy option -such as supporting an immigration and housing ponzi…. When will NZ grow-up?

    Liked by 1 person

    • I think words like Housing Ponzi is rather childish and does not add to solving the housing issue. It is important that we understand that it is land regulation and height restrictions that cause a lack of supply and therefore ultimately leads to more expensive houses.

      Like

    • Immigration only really became an issue after the Christchurch earthquake when 40,000 constructions workers were needed for the Christchurch rebuild. Prior to that NZ was running a net loss in immigration. Subsequently the drive for international students bringing in 115,000 to now become our 4th largest export eaner at $4.5 billion. Of course accompanying that drive was that students become cheap casual labour and subsequently it also made sense to keep some of those skills we helped train but paid for by overseas funding. But without those high skilled jobs to keep them in NZ, at best we are just a branch office with better career options overseas and so they leave.

      With tourism now our top export earner generating $14 billion with a target of $25 billion you can guess which job will continue to top the skilled migrant list. Chefs, waiters, cleaners and prostitutes. Industry drives the type of migrants that are required. Don’t expect kiwis to be apprenticed as curry chefs, foreign speaking waiters, cleaners and prostitutes. I realise Andrew Little will expect businesses to train locals but I do not believe that there would be too many kiwi takers.

      Like

  2. Michael, I agree with you 100%!
    Reducing the size of our education ‘tail’ would be a good place to start.
    And from the evidence so far, charter schools are not the answer.

    Liked by 1 person

  3. I too totally agree with the concluding paragraph, Michael.

    From the stats on current immigration by job-type, I think we also need to accept that much of our present economic activity is plainly low-wage – in fact if the ‘market’ is telling us anything it is that wages need to be lower than even our minimum wage in order for our ‘nation of shopkeepers’ to turn a profit. This leads to the black market/cash employment – with likely more of it than MBIE cares to properly investigate and expose.

    And although I sound like a broken record, again I think the social transformation needed to get existing un and under employed NZers back to work is a UBI, perhaps accompanied by a removal of the minimum wage. If there are no abatements and no onerous reporting requirements to WINZ for every “extra” dollar earned on a weekly basis, people will likely come out of the woodwork in droves to pick apples during the season or to wash a few dishes on busy weekend nights in the hospitality sector. Part time and casual employment at the moment is I believe disincentivised by the welfare system.

    At the same time, perhaps a change in labour laws such that non-union employees cannot get the same benefits that the workplace unions negotiate for their members (i.e., no more free-riding). That way membership in unions who perform well will flourish, and perhaps become the lever on labour markets that they were designed to be by way of lifting wages overall. The old strength in numbers adage.

    I just think that developing and releasing policy in topical silos gets us nowhere – social behaviour is more complex than that.

    Liked by 2 people

    • Thanks Katharine

      I’m still rather sceptical of UBI proposals, both in terms of workability and of “morality”. I don’t worry about the bulk of people who have a pretty strong work ethic, but there is an “underclass” that has become accustomed to life on welfare benefits, and UBI seems like a proposal that would undermine the chances of getting the able-bodied of those people (and their children in time) into the paid workforce.

      As a stay-at-home parent, voluntarily chosing to do very little paid work, I’d also feel slightly uncomfortable about taking such a universal payment. I’m not going to minimise the importance of raising children, but I do that for our family, not as a service to the state.

      And I’m no doubt shaped by the teaching of St Paul (2 Thessalonians 3:10)

      For even when we were with you, we gave you this rule: “The one who is unwilling to work shall not eat.”

      Like

      • I’ve seen no evidence of that “underclass” you refer to – although like you my observation is totally anecdotal, every person I’ve known that cannot find a job genuinely wants a job – but not one that will effectively take their hourly wage down to some ridiculous level due to abatements and/or to accept a total loss of benefit for some administrative stand-down period for a position that has no prospect of ongoing employment.

        And for your own personal situation, like the universal super benefit, I’ve always advocated setting up a public register for those persons who choose not to collect the universal benefit because they simply do not need it. We could even ring-fence the monies that would have been paid and distribute that to women’s refuge and other organisations within the voluntary sector. In other words, provide public recognition to those who have contributed their universal benefit in a caring, unselfish way.

        Liked by 1 person

      • For even when we were with you, we gave you this rule: “The one who is unwilling to work shall not eat.”

        Of course this only applies to the poor who are unwilling to work. The rich and privileged of our society living off unearned and inherited wealth who are unwilling to work not only eat but they eat very well indeed.

        Like

    • Michael believes all that is needed is for the government to reduce the part time and casual employment targets so that wages would rise and as a result get people out of the welfare system and into those $80 an hour fruit picking jobs. It does not matter that industry fail as a result of having to pay higher $80 an hour wages to locals when migrant labour would do it for $15 an hour.

      Like

  4. A somewhat gross caricature. As you know, my emphasis is in fact on the (long-term) residence approvals target, and if (say) aged-care home workers could no longer be imported from cheap labour countries I doubt that wages would move up terribly much (perhaps from $15 per hour to say $20 per hour, which is material but hardly transformative.

    But there is no doubt that major changes in immigration policy would change the economic structure of the country and leave some industries shrinking even as others grow. There would be less demand for builders, for example. On the other hand, if the exchange rate fell materially demand for staff in tradables sectors would tend to rise.

    There is also no doubt that simply cutting back access to immigrant labour in a single sector will adversely affect firms in that sector. That is partly why we need generalised changes in policy, not officials and ministers trying to identify specific sub-sectors to subsidise or penalise.

    Liked by 2 people

    • If you look at a city like Goldcoast where the permanent residents only number 500k, the actual physical size of that city suggests that it caters for a much larger population due to its tourists. Therefore it matters not if you reset your permanent migration downwards to 15k a month and even if you drop Auckland’s permanent population to 500k from 1.5 million as long as the tourist numbers, casual workers and international students continue to rise ever upwards it makes no difference to the construction industry as the shortages and homelessness is not driven by the immigration target but by the sheer number of tourists visiting and international students gaining an education.

      Like

      • In fact it is the foreign workers, likely construction workers that now top the current arrival list at 40,184 a year. You forget the effect of recent Kaikoura earthquake that has now demolished 16 commercial buildings in Wellington. Rebuild will likely cost $8 billion.

        Like

  5. Yikes – sounds like low level eugenics – the master race
    “exchanging our people for some mythical superior group from abroad”
    That’s the overtone or the undertone

    Like

    • Not too sure why you would consider chefs of a mythical superior group. Industry drives the type of migrants and therefore expect more foreign chefs otherwise face the wrath of incoming tourists that now continue to break record numbers topping 3.45 million this current 12 months.

      Like

  6. It is the implicit story behind the large scale immigration strategy pursued by successive govts as a “critical economic enabler”.

    To be fair to the open borders people, it isn’t implicit in their view – they simply believe that everyone should be free to move and (I think) that the benefits to the movers are more important than any mplications for the natives of the recipient countries.

    Liked by 1 person

    • That goal of a critical economic enabler fell over when we had highly qualified scientists and nuclear power station engineers coming in and working as cab drivers. The government found that hiring the best skills does not translate because there are really no jobs for these highly skilled migrants. Now it is is very much industry driven and our top 4 industries, Tourism, Milking cows, butchering meat and international students just needs lots of servicing, feeding and cleaning. So the migrants we now bring in reflect that industry need, low skilled but have jobs for which kiwis just won’t do or cannot do.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s