Don’t just avoid the politically awkward issues

When in late April the Productivity Commission released its draft report on a transition to a low emissions economy, I took them to task for completely (and presumably consciously and deliberately) ignoring the role of New Zealand’s immigration policy in driving up New Zealand’s emissions –  albeit they acknowledged that “population growth” was a factor.  Perhaps more importantly, they didn’t address at all the possibility that –  however we got to where we are today – cuts to the target rate of non-citizen immigration might offer a more cost-effective way –  less damaging to productivity and the living standards of New Zealand –  of meeting the sort of carbon reduction targets governments commit themselves to.    I suggested that they were playing politics, trying to keep onside with a new government.

That still seems the most plausible explanation for the complete silence.   If they thought my argument was wrong, or had some modelling suggesting that other abatement strategies offered lower-cost adjustment, they could readily have reported those arguments and any such evidence.   But they just stayed silent.

The only real justification for having a body like the Productivity Commission –  funded by your taxes and mine –  is that they are at sufficient arms-length from ministers, and don’t just play political games, to say the uncomfortable, or to address the politically unpalatable issues and options.  Having a longer-term focus, if they don’t get traction today, they might tomorrow.

We should hope that even government departments would do that –  offering the sort of free and frank advice that Chris Hipkins was calling for yesterday – but too often they just won’t (and as I saw that last year when I OIAed MfE and MBIE and found that they’d offered no advice or analysis at all on the immigration/emissions/low-cost abatement nexus).  But it is inexcusable when an independent body like the Productivity Commission just rolls over and takes the path of least resistance.  As I noted in a post when the draft report was released

In the short run that might make it more likely they get a hearing from the government. In the long run, that sort of approach to issues won’t stand them  –  or the cause of good policymaking and analysis in New Zealand, already enfeebled enough – in good stead.

As I’ve said before, convinced as I am of my own arguments, I’m not complaining that the Productivity Commission doesn’t reach the same conclusion I do.  My complaint is that they haven’t even been willing to address the issue, when they know that it makes a real difference.    Confront the issue, look at the evidence and arguments, analyse and test them, and reach your (well-supported) conclusions (and leave the goverment to decide policy, sensible or otherwise).    But don’t just pretend there is no issue: that is a betrayal of your mandate from Parliament.

Submissions on the draft low emissions report close tomorrow.  I put in a brief submission this afternoon.

Submission to Productivity Commission climate inquiry draft report

There isn’t much new in it, but I ended this way

There probably won’t be off-the-shelf modelling exercises from other countries you can simply look to in evaluating such options  [low target immigration options] (and you are now under self-imposed time constraints, having failed to consider the issue in your draft report).    But in a sense that is the point of this submission.  The issues facing New Zealand in meeting emissions reduction objectives are different from those facing many other countries and we need analysis that takes specific accounts of the issues, options, and constraints that New Zealand itself faces.

 In conclusion, I would urge the Commission to begin to take seriously the role that rapid immigration policy led population growth has played in explaining the growth in New Zealand emissions since 1990, and the possible role that modifications to our immigration policy could play in facilitating a reduction in emissions, consistent with current or possible alternative official targets.   No doubt technological advances will offer options for relatively painlessly reducing emissions to some extent.  But those options will be available to all countries.  As official agencies already recognise, New Zealand faces some specific challenges that are quite different to those other advanced countries will be dealing with.  We make it much harder for ourselves to meet the emissions targets our governments have committed to if we persist with such an unusually large non-citizen immigration programme.    The aim of a successful adjustment to a low-emissions economy is not to don a hair shirt and “feel the pain”.  The aim should be to make the adjustment with as small a net economic cost to New Zealanders – as small a drain on our future material living standards – as possible.  Lowering the immigration target looks like an instrument that needs to be seriously considered if that goal is to be successfully pursued.   In particular, you cannot legitimately ignore the issue –  in what looks disconcertingly like a reluctance to tackle controversial or politically awkward options –  and still lay claim to being the source of independent fearless advice and analysis that is really the only good argument for having the Productivity Commission in the first place.

Leaving them with the visual reminder of the cross-country correlation between population growth and growth in total emissions (which relationship exists even just for agricultural emissions)

total emissions

and that, in New Zealand, with birth rates well below replacement for several decades, immigration is increasingly the main reason why the population is still growing much at all.

And immigration doesn’t appear to be making New Zealanders better off (higher productivity) just…..more congested, with higher house prices, and with more emissions that other (themselves costly) tools have to be adopted to offset or abate.

23 thoughts on “Don’t just avoid the politically awkward issues

  1. It took me awhile but I have come around to understanding the lack of productivity growth in NZ is actually an issue. But superficial cutting of targets and superficial raising of the wages of the skilled migrant category is not going to deliver productivity. No point treating the symptoms when you have to target the cause.

    And the cause is because we subsidise by the billions, our primary industries and tourism/International students to generate our export GDP. Until we change our focus and get back to pouring our billions of dollars of subsidies into incubating our Industrial and manufacturing industries our productivity will continue to languish and cutting immigration in the face of an aging population and rising tourism/international student market just won’t happen. It is just not a viable option for businesses nor the government to face up to declining treasury coffers as people stop work due to old age.

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    • It is naive to think that businesses would ever volunteer to stop demanding market forces while sucking on the taxpayer teat. The coffers may be getting empty but they will continue to suck until it is dry then deal with the outcome. They, like the scorpion in the tales, cannot help themselves. Therefore either the government steps up and deals with it or we are all on a ride to nowhere.

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    • and cutting immigration in the face of an aging population and rising tourism/international student market just won’t happen. It is just not a viable option for businesses nor the government to face up to declining treasury coffers as people stop work due to old age.
      …………..
      low paying jobs won’t pay much tax. You don’t think those Chinese tour bus drivers are paying much tax do you?

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      • Well, the minimum wage for skilled migrants is now $50k. So I would guess if they want migrants to drive buses, the pay scale would now be $50k. I have an assistant accountant that is now demanding $50k and lo and behold, I told her to step up her job responsibilities and I would pay it. Unfortunately it comes out of my New Zealand born business owners profits.

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  2. “” We make it much harder for ourselves to meet the emissions targets our governments have committed to if we persist with such an unusually large non-citizen immigration programme.””

    I would rewrite this as “” We make it much harder for ourselves to meet the emissions targets our governments have committed to if we persist with no population planning policy.”” It amounts to much the same but it encompasses all the forces that persuade NZ inhabitants of whatever nationality emigrating and the attractiveness of NZ to citizens living abroad.

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    • I think it is easier to cut down from the peak 10 million cows ie you just cull and kill off for pet food than to try and cut down from 4.5 million aging people who you are duty bound ethically to keep alive as long as possible unless you adopt Japan’s tough high productivity practices of 1 nurse to 48 dementia patients. It was shocking to hear on RNZ 101.4 one morning, that this is a standard best practice to pump a dementia patient a cocktail of drugs and also of tying them immobile on beds for months.

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      • What fraction of our immigrants care for elderly dementia patients? Come to that what percentage of immigrants are not themselves aging? Without immigrants (such as myself) arriving there might only be 3.5 million aging people in NZ so fewer dementia nurses and no problem with our emissions target.

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      • Increasingly more in the future as the population ages. But with the Tourism industry and international student industry marching towards a $20 billion industry expect to pay migrant cleaners $50,000 a year.

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  3. Is it a straightforward actuarial task to calculate the cost and the risk of missing emission target and distribute the cost to the various immigration visas? Immigration already involves costs for police reports, health checks and Z-Rays so an extra charge covering this risk seems fine.

    Optionally if by some unanticipated technical solutions NZ meets its challenging targets then we could refund this charge to each immigrant.

    Fixing emissions is fraught with difficulties. Today I heard of a Canadian city that invested heavily in electric buses but has discovered the batteries cannot manage to power the bus and heat it so they have been forced to add gas powered heaters.

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    • It is also quite easy to calculate the emmissions of the 10 million cows but unfortunately the science gets blurred by Federated Farmers propaganda that methane gas levels is now stable. Of course the methane gas emmissions is now stable, we have reached peak cow numbers at 10 million. We just can’t physically fit any more than 10 million cows anyway.

      I also could not believe the naive reply from the youth green group that it is ok to recognise that Methane is shortlived but forget that it is extremely potent as a green house gas.

      “Methane in the earth’s atmosphere is a strong greenhouse gas with a global warming potential (GWP) 104 times greater than CO2 in a 20-year time frame; methane is not as persistent a gas as CO2 and tails off to about GWP of 28 for a 100-year time frame. This means that a methane emission will have 28 times the impact on temperature of a carbon dioxide emission of the same mass ” Wikipedia.

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    • Actually it isn#t a straightforward task, because the commitment proposed is a NZ specific reduction (not buying carbon credits internationally). We don#t know the economic costs, altho see my post today for the NZIER estimates.

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  4. This is a joke, right? The Transnational Capital Party and Wageslave Labour Party are doing a stellar job of ignoring the foreign spy from the world’s largest dictatorship in our(?) parliament, while ignoring the corrosive social effects of neo-colonial ‘immigration’ levels… on recent (last 34 years) and current form.. isn’t it obvious that the overriding modus operandi of “our” politicians (who allow foreigners, i.e residents, to vote in “our” elections) is ignoring (and indeed creating) politically ‘awkward’ issues?

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    • I am more concerned with our Muslim MP, Golriz Ghahraman and her influence on the Green Party that wants to increase NZ Muslim Refugee intake to 5,000 a year. The government target is currently 1000 Muslim refugee intake a year and Labour needs the Green Party.

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  5. We also have misallocation of $ into housing based on artificial tax free returns generated by immigration and offshore buyers. Interesting article yesterday about 20% of Ak sales going to offshore buyers. Nothing to see here says the RE industry, not material enough to move prices… what a joke, marginal buyer sees the price so add 25% new marginal buyers without increasing supply, bingo!
    I say add in a whopping property tax, say 20% of property value charged annually. Rebate against NZ income tax paid. Let’s stop the free riders on our tax $ paying for schools, roads, defence etc.

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    • Are you suggesting that we keep people living on streets, garages and cars or with 30 occupants to a 3 bedroom house? They do that in Queenstown as standard acceptable practice for foreign workers when the tourism season is in peak.

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      • The answers to that have already been given by MR in numerous posts. Refocus immigration policy, free up land use planning. Serves to change both demand and supply dynamics. I’d also suggest getting ComCom to investigate the building products industry.
        My point on a property tax is that offshore investors get to free-ride on NZ taxpayers paying for all the things that support property values and get to make tax-free capital gains (largely, subject to new rule changes).
        A meaningful land tax also serves to encourage land bankers and older people to monetise and get more efficient with their usage.

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      • The answers given by MR won’t fly in any government. Those targets are exactly that, just targets. Which means that in any year, what is actually achieved can be above or below that target. No one in any government department or in government gets paid any bonus for meeting that target or not meeting that target because industry drives the actuals achieved. It is industry driven.

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      • The residence approvals are directly under the control of government (since there is a numerical target, it could be directly managed to). Work visa numbers are also under direct government control. There isn’t a numerical target, and I don’t propose one: in fact, I propose giving industry more leeway, so long as they pay the substantial annual fee for each permit (which make most low end jobs uneconomic to use short-term foreign workers).

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    • It was always around 4% in Auckland until the new Labour government told the world that a foreign buyers ban would take place soon. What do you expect? Of course a sudden rush by Foreign buyers to get into the $2 million prime areas of East Auckland suburbs which the 20% actually refers to. Total Auckland is only 7% and not 20%.

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      • It also does appear that high end luxury homes may be excluded from the Foreign Buyers Ban, perhaps there is a leak from the offices of the Labour government that this would be the case after intense lobbying by various city councils like Queenstown?

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      • When the lobbying in Queenstown for exemptions on houses above $2 million arose there was nothing expressed about high-end houses. It was simply an exemption for anything priced above $2 million.

        If accepted that would automatically create a minimum base price for every property purchased by any taxpayer of another non-NZ tax jurisdiction

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  6. I’m somewhat surprised that population changes aren’t taken into account when calculating our “share” of global emissions. Perhaps because most of the world doesn’t change that much?

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    • It is my understanding (pls correct if I am wrong) that some other countries specified a per capita target. NZ was just dumb – it could turn out to be a very expensive mistake. Since other countries have dis-avowed their targets we ought to change to a per capita target; maybe bring the Greens along by making it a tougher target say another additional 2% (is that from -15% to -17%?) but per capita. Then they can have as many immigrants as they like.

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