The leaders of our government are still, apparently, believers in the twin fallacies of (a) “big New Zealand”, which has been failing through decades of large scale non-citizen immigration, and (b) that somehow an increased supply of people in New Zealand eases (rather than accentuates) overall labour market pressures. People generate demand as well as supply, and the New Zealand empirical evidence has long suggested that – as one would expect, from the increased capital stock requirements – those short-term demand effects outweigh the supply effects. Consistent with those beliefs, today’s changes are at the margins only. In general, they look like baby steps in the right direction, but since even they – with all the analytical resource at their command – won’t or can’t tell us how large an impact they expect, it is difficult to believe the effects will be large.
When I read the Minister’s speech I was briefly encouraged to find these words
“Today, I want to look at the benefits migrants bring to New Zealand”.
But I turned the page and found…..well…..nothing. Still no empirical evidence – narrative or more formal – for the claims of benefits to New Zealanders. And really not much more than the same old implication that more people expand the economy in total (well yes they do but that is hardly the point), no mention of productivity, and the same old firm-level stuff (that ignores overall economy perspectives) about easing labour market constraints.
I concluded my Stuff piece this way
Rapid population growth – without great new economic opportunities – simply skews the economy inwards. Successfully making it in global markets is the only reliable path for a small country to get and stay rich, and yet the relative size of our export sector is shrinking. It is time to give up the “big New Zealand” or “big Auckland” ambitions that seem to have appealed to our political leaders for generations. Focus instead on maximising what we can achieve with our own limited natural resources and our own abundantly talented skilled hardworking people.
As ever, in election year, the question is whether the main opposition parties will be prepared to offer something materially different.