Someone yesterday sent me a link to a column from a Canadian newspaper in which a prominent Canadia academic was calling for a five-year pause in Canada’s high target rate of non-citizen immigration, to let housing (and other infrastructure) catch up to the population-driven increase in demand. I can see the case when it comes to infrastructure, but I suspect that in Vancouver as in New Zealand the housing issues are mostly about land. If the land use regulations aren’t fixed then a temporary pause in immigration for just a few years won’t make more than a temporary difference. And in New Zealand, at least, the real economic problems associated with rapid immigration – plenty of jobs, but few good economic opportunities to enable us all to really prosper – have to do with the average level of immigration we target over time, not with the peaks and troughs in individual years.
But in reading that column, my eye lit on another article on the same site, “How to debate immigration without distorting facts and foes” . It began
Canada is one of the few advanced countries that can’t seem to hold an authentic public discussion about immigration policy.
Canadian boosters of high immigration and those who oppose it are mutually contemptuous. Their verbal boxing matches are dominated by sloganeering and name-calling.
If Ottawa is ever going to take seriously public opinion to fine-tune its immigration policies, the combatants need to follow a few rules. They may need a referee, who acts fairly when others are losing their heads.
I’m not so sure that Canada is that different than other countries, including New Zealand and Australia. But the article was about a new column by Andrew Griffith, a former senior official in Canada’s immigration bureacracy, who took early retirement, to undergo cancer treatment, and now has a interesting-looking blog Multicultural Meanderings which touches on issues of culture, immigration, identity and so on. I get the impression that he is generally rather sympathetic to Canada’s fairly liberal approach to immigration. But what interested the journalist, and me, was the piece Griffith had written recently for a public policy forum on “How to debate immigration issues in Canada” .
Given the polarization between those who advocate for more immigration and those who advocate for less, we need guidelines to facilitate more respectful and informative debates. I also suggest some alternative language for both viewpoints, to provoke reflection.
And he summarises his suggestions in two tables, one for those favouring more immigration – apparently a live option in Canada at present – but presumably also applicable to those defending the quite high rates of non-citizen immigration Canada already promotes.
and one for immigration critics
Not all of it is directly relevant to New Zealand debates, but much of it probably is. I’d add, for both sides, “focus on the specifics of your own country’s experiences and constraints, even when informed – as you should be – by overseas experiences”. These are important issues – about economic performance, but also about culture and society – and if all sorts of important issues often excite emotion (on both sides of any issue), it is likely to be more productive if the emotions and the analysis can be separated, to allow civil reflection on the arguments and evidence various people bring to the debates. On the other hand, of course, political discourse and popular debate are never likely to proceed like some idealised academic seminar (and I stress the word “idealised” here).
On a more immediate note, Newsroom has a piece this morning on concerns in some industries about how they will/would cope if immigration to New Zealand was to be cut back. The focus is particularly on a few industries that have made themselves very heavily reliant on immigrant labour. If the rules make it relatively easy to recruit labour to particular occupations, and such labour is available from relatively poor countries, it is hardly surprising that the industry concerned will gravitate to a production model in which (a) wages in that sector are pretty low by New Zealand standards, and (b) a large proportion of the workforce is foreign. New Zealanders become reluctant to seek work in the sector because there are better opportunities in other sectors. It isn’t a state of nature, or something inevitable, just a product of the regulatory environment – the rules.
The aged care/rest-home sector seems to be a prime example of this sort of phenomenon. It is a growing sector – ageing population and all that – heavily reliant on government subsidies (and thus cost-restraint pressures), and is a totally domestically-focused sector.
As I’ve noted here previously, if overall immigration flows were sharply cut back, there would be short-term adverse effects on some sectors that have become particularly reliant on immigrant labour. But there would also be a reallocation of labour within the economy: demand for labour would fall markedly in sectors (often not particularly reliant on immigrant labour, like construction) that depend heavily on population growth, and those workers would need to find work elsewhere. In sectors like dairy farming and tourism – previously heavy employers of immigrant labour – employers would be looking for locals to replace the immigrant labour they could no longer hire. People might be reluctant to take those jobs, in which case employers might have to offer higher wages. But because the exchange rate would fall – probably quite a lot – if immigration was cut back substantially, those employers could afford to pay higher wages. Business activities in the tradables sector would be more profitable, and in relatively short-order the labour market would adjust (it would take time, and I’ve never suggested changing the rules overnight).
But the rest-home sector is different. Cut back their access to immigrant labour, and they might have to offer more to attract New Zealanders to do the jobs. New Zealanders will do the jobs, at a price. 30 or 40 years ago when my grandmothers were in aged-care homes, the bulk of the employers will have been New Zealanders. The question is likely to be largely one of price (ie wage rates).
But rest homes may not have a lot of pricing power. They are typically heavily reliant on fixed government subsidies, and if immigration is cut back they can’t suddenly turn themselves into an export industry. There is no more income to support higher costs.
The industry pushes back in the Newsroom article
“It’s a big issue for us because we are facing over the next 10 years a real spike in the ageing demographic and estimations from the work that we’ve done … is that we’ll need 1000 extra workers a year between now and 2027.”
The notion that the industry could just hire New Zealanders to fill the positions was unrealistic, as caregiving was now a much more highly-skilled position and there were simply not enough locals willing to do the work.
1000 new workers a year – in an industry that apparently employs 22000 people – just doesn’t seem that much (there will always be fast-growing and slow-growing industries) and people will do jobs for a price. In fact, whatever one makes of the recent pay-equity settlement – which seems to have loaded additional net costs on the rest-home sector – it is likely to increase the number of people willing to do the work.
(And while I won’t rely on anecdotes, as Griffith notes they do sometimes contain insights. And so the suggestion that care-giving was now “much more highly-skilled” rang a bit hollow when a staff member in a home a relative of mine lives in was trying recently to encourage a room full of dementia patients to vote.)
New Zealand is in rather desperate need of a lower long-term real exchange rate. That means raising the prices of tradables relative to those of non-tradables, increasing the relative attractiveness of investing in tradables sector firms. A much lower immigration target is one way to bring about such an adjustment. For many non-tradable firms, such an adjustment would mean a much lower level – or path of growth for – demand. Those sorts of firms would become relatively smaller. But there are some areas within the non-tradables part of the economy – and the aged-care sector is a prime example – where demand wouldn’t be materially affected, and costs might well rise somewhat (and, of course, the value of their extensive land holdings might fall). There is no point pretending such pressure points won’t exist, but we shouldn’t be orienting a key strand of economic policy around the needs of a highly-regulated heavily subsidised industry, even if it is one that cares for many New Zealanders (our parents or grandparents) in their declining years. An appropriate rebalancing probably would involve some increased costs for residents and families and some increased costs for the government. But over time, the stronger productivity path that would be likely to ensue from abandoning the “big New Zealand” strategy, would enable New Zealanders as a whole to be made (considerably) better off.
As Andrew Griffith noted in his tables, sometimes opponents of the status quo feel free to attack what is happening at present without advancing specific alternative approaches that can themselves be scrutinised and challenged. I’ve previously tried to meet that challenge and be relatively specific in what I’m putting forward as an alternative to our current (package of rules that make up) immigration policy.
Some specifics of how I would overhaul New Zealand’s immigration policy:
1. Cut the residence approvals planning range to an annual 10000 to 15000, perhaps phased in over two or three years.
2. Discontinue the various Pacific access categories that provide preferential access to residence approvals to people who would not otherwise qualify.
3. Allow residence approvals for parents only where the New Zealand citizen children have purchased an insurance policy from a robust insurance company that will cover future superannuation, health and rest home costs.
4. Amend the points system to:
a. Remove the additional points offered for jobs outside Auckland
b. Remove the additional points allowed for New Zealand academic qualifications
5. Remove the existing rights of foreign students to work in New Zealand while studying here. An exception might be made for Masters or PhD students doing tutoring.
6. Institute work visa provisions that are:
a. Capped in length of time (a single maximum term of three years, with at least a year overseas before any return on a subsequent work visa).
b. Subject to a fee, of perhaps $20000 per annum or 20 per cent of the employee’s annual income (whichever is greater).
More of the associated story for why such changes are needed is in this recent address.
(And as I quoted from a Newsroom story in this post, this is probably the point to disclose that I have recently entered an arrangement with Newsroom in which they will be paying me for occasional columns. Those pieces will usually be variants of material that has appeared here first. It will not change my willingness to disagree with other material they run, but in the interests of transparency, I thought I should disclose it.)