Debating immigration

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” .

Griffith begins

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.)

20 thoughts on “Debating immigration

  1. Specifics of how you would overhaul NZ’s immigration policy

    Item 3: Insurance policy covering future costs of parents

    Question: How would you deal with the situation where the migrant in good faith establishes such a policy then after 3 or 4 years suffers a life changing event such as loss of job or accident or even deceased and the family is unable to continue the premiums – I guess such a possibility would have to be anticipated in an expensive and very comprehensive insurance scheme

    Like

    • It would probably have to be a big upfront premium, or else annual premia would have to be bundled with ‘default protection insurance” (eg the sort of – expensive – policies banks offer to pay off your credit card debt if you lose your job or the like).

      Liked by 1 person

    • Accidents with permanent disability cover and health cover for basic hospital with major surgery cover is quite cheap. It gets more expensive as you grow older. I pay around $400 a month for $500k cover with $100k major trauma insurance and that includes my 23 year old daughter. I think her share being young is only around $100 a month.

      Job losses from permanent disability can be covered by Income protection insurance. I think around $600 a month.

      Like

  2. You would have to include Auckland Hospital health care and lump it together with rest home care and aged care because I have spent the last 2 weeks visiting my mother in hospital and I would put migrants at probably 50% day time staff and night time staff at 90% of the hospital staff, doctors, nurses, orderlies, administration.

    Like

    • I think you will find it difficult to match the money and the job where that job has a 24 hour requirement. Night duty seems particularly difficult for New Zealanders used to a easier lifestyle There are many New Zealanders involved in maternity. Tough 24 hour on call type job but they can earn around $180k plus and tend to be self employed..I dont think our health /aged/rest home care can afford that level of payments to expect Kiwis to be available at night.

      Like

      • Perhaps, but there have always been plenty of NZ nurses trained – and serving in hospitals in days gone by. And I grew up in town where the major employer was 24 hour a day, fully-staffed, operation. They had to pay up, and did.

        (by the way, quite accept your point about hospitals – another govt-funding driven non-tradables operation)

        Like

      • Yes, but back then we have backbench MPs that would volunteer their time for next to no pay and have to work hard with their handshakes and vocal cords just to get elected. Nowadays backbench MPs start off at $163k per annum for just being on the list with just being mates with the leader of the party.

        Liked by 1 person

  3. The inflammatory dance has begun

    Image – Newsroom.co.nz on eldercare – portraying a billboard by the lobbyists and spin-merchants and scaremongers on behalf of aged healthcare industry – Caption – Reducing migration reduces care for kiwis – Keep the care all kiwis deserve
    ”https://www.newsroom.co.nz/2017/10/04/51557/industry-prepares-for-immigration-concessions

    Need to know how much the private aged healthcare saves on cheap migrant labour and spends on lobbyists and public relations – maybe they could spend some of it on paying unsuppressed wage to locals

    The power of the powerful
    Have a close read – its here now – BCA investigation: power of the business lobby
    https://www.michaelwest.com.au/bca-investigation-power-of-the-business-lobby-in-australia/

    Liked by 2 people

    • I share your concerns about business lobbying. What is best for a business lobby is not best for a country; in the USA the gun business lobby is immense.

      In David Goodhart’s ‘The British Dream’ there is a single line saying there was concern in the UK when the government tightened immigration making it far harder to employ Filipino care-workers but after the event wages increased and UK citizens filled the vacancies.

      If the proposed $20,000 per skilled immigrant worker was charged and the government used it to increase subsidies to care homes the problem would disappear.

      Like

  4. “”1. Cut the residence approvals planning range to an annual 10000 to 15000, perhaps phased in over two or three years.””

    The uncapped family stream is now an annual 13,000. The government is committed to 1,000 refugees. You suggest reopening the family reunion category to parents so long as it can be proved not to be a financial burden to New Zealand – this was averaging 5,000 until it was arbitrarily frozen. This gives you very little room to play with for actual skilled immigrants and some will be needed (say to replace a retiring brain surgeon or to keep the All Blacks winning).
    We need more information about the uncapped family stream because the numbers involved are higher per capita than most OECD countries entire per capita immigration. Presumably it reflects Kiwis love of travel and the famous Kiwi OE and also the cultural practices and social contacts of some recent immigrants. The problem would be alleviated if it only applied to citizens and citizenship took say 7 years not the current 5 years.

    This along with your argument about care-workers means it will be impossible to hit your target (probably roughly the average for OECD countries?). It will take years. So now would be a good time to start.

    Incidentally I agree with you about parents joining their NZ families; obviously it applies to Chinese one child families but it also applies to Scots and South Africans, Filipino and French. It would be economically neutral but socially very valuable – and families do matter more than money.

    Like

    • The uncapped family stream flow would also dry up quite quickly, as much of it looks like spouses for immigrants from (in particular) India and China.

      But if anyone was ever going to adopt my policy, I’d propose cutting the target by, say 7500 a year for four years in succession (which also gives a chance to evaluate the impact as one goes)

      Like

      • Just read your address to Mana U3A. Very clear.

        If I can get my old computer working I will check those ‘uncapped family stream’ figures. The steady increase from 9,000 to 13,000 cannot be explained by an increase in Kiwis falling in love.

        There have been studies in the UK about cultural preferences for a spouse; the only figures I can remember are in the UK 2 out of 3 Caribbean males marry out but 1 in 2 Caribbean females do. So there are gender differences too. Bengali and Kasmiri immigrants to the UK (this includes 3rd generation) rarely marry out. Without statistics the ‘uncapped family stream’ numbers cannot be predicted.

        Reducing the target by 7500 makes sense. As you say if we are wrong we will find out why, apologise to the pro-immigration lobby and easily readjust.

        For the sake of Auckland I would experiment with Winston’s extra points for regions; I agree that immigrants are less likely to stay put in a small regional town than a local because they will have fewer ties however just a short break in the population boom would be useful. [On the other hand I want to sell a property next year so please keep sending more immigrants to Auckland’s North Shore.]

        Like

  5. I belong to the slash and burn camp

    In 2010 I began advocating the closing the immigration spigot altogether and addressing what was already evident then of emerged and emerging social problems and infrastructure deficits – whether that was due to the governments austerity programs I don’t know – what is obvious is you cant run austerity programs while keeping the floodgates wide open – you could suspect one might camouflage the other – one might suspect the government was hoping one would compensate for the other – but – they cant tell you – because they don’t measure the outcomes of either

    Make no mistake – the problems were evident back in 2010 and 2011 – they are so much worse today they are now un-fixable – Auckland is completely stuffed – just like Christchurch and Edgecumbe are not yet fixed – at least they threw everything at Kaikoura

    Divide and conquer – to fix a problem you have to clear away all the interferors

    I’m completely at odds with that UK migrant Rod Oram who said on RNZ: “”Auckland is a fabulously interesting city. And obviously the key thing we need to care a lot about about are that people are moving around and are appreciating and taking more interest year round rather than just turning up at Albert Park for a lantern show or Diwhali festival. And of course there are people who just hunker down in their neighbourhood or their community. But I’d like to think there are people particularly amongst the younger generation who are strong in their own identity but are keen to appreciate other identities too””.

    Once upon a time in AKL, the Viaduct Basin a 5 minute walk from the AKL Ferry Buildings was the most tranquil unspoilt area you could ever get within the CBD precinct – you could sit on the piles of the causeway on a beautiful sunny Sunday with hardly another soul in sight – enjoy the lapping waves – turquoise waters – look at it today – ruined in the interests of tourism and high rise apartment buildings and 1000 ethnic bars and eateries and cafes – what once was, is now no longer – there was no attempt to preserve the heritage

    Liked by 1 person

    • We still do have Shed 10. A heritage marvel to look at with historical architectural merit?? Wonder if Auckland will give up the America’s Cup Challenge because we want to keep that heritage building and therefore have no venue? Grant Dalton is already rather concerned that the Cup will be raced in a Italian Harbour because we can’t give up our aged and rotting heritage buildings.

      So do we tell Grant Dalton that the these Foreign sailors and employees of each of the Foreign Challenges can only use New Zealand sailors and New Zealand chefs and boat builders??

      “Dalton estimates 30,000 square metres of space will be required to host bases for the defenders and challengers, either on existing Auckland waterfront land or at a newly-created area. Dalton wants facilities completed before the first boats arrive midway through 2019 for pre-regatta races.

      A deadline of August 31 next year has been established to confirm a venue and race course.”

      http://www.newshub.co.nz/home/sport/2017/09/america-s-cup-2021-italy-on-standby-as-host-venue-if-auckland-isn-t-up-to-scratch.html

      Like

    • I concur with your dislike of the explosive expansion of Auckland (although it has made me far wealthier) but here are many places in NZ where the population is not dramatically changing and they are magic to an immigrant. The many small towns and villages in terminal decline are as tragic as the remains of Scottish crofts in the Highlands.

      Like

    • Swimming in Auckland Harbour still looks inviting but I am unsure of the bacterial count. I walk pass cruise ships regularly for lunch and there has been numerous comments from Cruise ship tourists asking if they could jump into the waters as it looks very inviting.

      If you walk across to the ANZ convention centre where the new ASB new headoffice is there are large concrete steps leading directly into the water and regularly I catch young boys jumping in and playing in the water.

      Like

  6. “1. Cut the residence approvals planning range to an annual 10000 to 15000, perhaps phased in over two or three years.”

    What would you say to a compromise target set at the midpoint of:

    1) Target *net* inward migration of 10,000-15,000/year

    2) Target non-citizen immigration at the current 40,000-45,000/year

    In the 2000’s, when outward citizen migration was quite high, (1) would push the overall residency approvals target higher than the 40-45000 non-citizen migration target to perhaps 55,000/year. In the conditions of the last 5 years when net citizen migration is near-zero, (1) would pull the overall residency approval target down substantially to around 25,000/year. The target would then be responsive to economic demand (which seems to fluctuate quite heavily) as well as being sensitive load on housing and infrastructure (which doesn’t fluctuate).

    Like

    • To be blunt, the “compromise target” is pretty much what we’ve had on average over the last 25-30 years (we’ve had a residence approvals target centred on 47500pa) which, so I argue, is what has held us back from any catch-up with the rest of the OECD on eg productivity.

      But the other problem – and I’ve made this point in critiquing the Greens and NZF when they’ve talked about it – is that one can’t effectively target net migration on an annual basis, because the uncontrollable outflow of NZers is typically unforecastable with any degree of accuracy (there have been huge swings every few years, some of which don’t last long). I think this is a point on which I, and the advocates of high immigration, all agree.

      In addition, the years when there is a big outflow of NZers are typically times when Aus in particular is doing well. It would seem odd to increase the numbers we bring in here, when our own people reckon the effective opportunities abroad are better still. Of course, in terms of housing market pressures it might smooth things out, but the focus of my argument isn’t on the housing market (which can be fixed in other ways).

      Like

      • You could target it easily enough on a retrospective basis; for instance, net migration in 2017 is used to set a residency approvals target in 2018. But I take your point about questioning the rationale for a net migration target.

        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