On our disappearing migration data

Having written here earlier in the week about the reckless and irresponsible way in which the government and Statistics New Zealand are degrading the quality of our very timely net immigration data (itself a major, and quite cyclically variable, economic indicator), I noticed a couple of comments that prompted me to dig out some numbers for this post.

The first, in a comment here, was that the self-reported intentions-based PLT measure probably couldn’t be counted on as very accurate anyway.  And the second, in someone else’s commentary, was that at least we will still (I hope) have monthly reporting of total passenger movements (tourists, business travellers etc as well as the permanent and long-term movements) from which a reasonable steer might be gleaned.

The best way of looking at whether the PLT measures are reasonable is to compare them with the new 12/16 method numbers –  available with a long lag, but which involve looking back, using passport records, and checking which people actually came (or went) for more than 12 months ((the threshold for the PLT definition).   Unfortunately, SNZ is still not publishing seasonally adjusted estimates for the 12/16 method numbers, so one can only really do the comparisons using rolling annual totals.   On this chart, I’ve shown the rolling 12 month totals for (a) the 12/16 method, (b) the PLT series, and (c) total net passenger movements for almost 30 years (although the 12/16 method data are only available this century).

migration 31 Aug

All the cycles are pretty similar, at least if one takes a broad sweep of the data.  That isn’t surprising, as most short-term visitors go home again pretty quickly, leaving something like an underlying trend of permanent and long-term movements.   And it confirms that the PLT numbers have been a useful –  although not perfect –  indicator of the actual permanent and long-term movements (captured in the 12/16 numbers).  Importantly, the turning points tend to be very similar.

One wouldn’t expect those two series to be the same, as they measure different things: the PLT numbers are about intentions, and if plans change so will behaviour.  If lots of people come to New Zealand (or leave for Australia) and things don’t work out and they change their mind, ideally we would want to know.    The divergence that looks to have opened up between the grey and orange lines at the end of the (grey) series might prove to have been something like that.  But in future we won’t know because (a) we won’t have the PLT data at all, and (b) the grey line will only be available with a reasonable degree of certainty with quite a long lag.   As a reminder, here is the new SNZ chart I included in the post the other day, illustrating the huge error margins around the timely estimates SNZ proposes publishing using their new (unpublished and untested) methodology.

Provisional-and-final-net-migration-estimates2

But the other thing worth noticing is how noisy the blue line is.  There is a great deal of volatility, which makes distilling any signals (about permanent and long-term movements) very hard on a timely basis. That was why the PLT numbers have been so useful.  The blue line is thrown around in particular by big sporting events: eg the Lions tours in 2005 and 2017, and the Rugby World Cup in 2011.    There are big additional net arrivals, and then big additional net departures a month or two later, with mirror effects in the annual numbers a year later as well.  I have found the total net passenger arrivals data useful in the past –  in both 2002 and 2011 they pointed to something larger in the permanent and long-term movements than the PLT numbers themselves were reflecting, and that sense was later reflected in the 12/16 numbers (much larger net inflows in 2002/03, and somewhat larger net outflows in 2010/11).

What of the monthly seasonally adjusted data (the stuff designed for high frequency timely monitoring)?  Here is a chart of the PLT and total series, with scales set so as not to allow the flows associated with the Rugby World Cup (in particular) to dominate the chart.

migration mthyl sa

At a monthly frequency, the noise in the total passenger (orange) line totally dominates any signal, while the volatility in the monthly PLT series (that we are soon to lose altogether is very small).    What should perhaps be more concerning –  and is a bit perplexing –  is why the volatility of the total passenger series is itself quite variable across time, even outside the months associated with major sporting events.   Right now, for example, the volatility in the monthly series is quite extreme.    Here is the same chart for just the last four years or so.

migration mthly

The Lions Tour is very evident in mid-2017, but the heightened volatility goes well beyond that.

All of which leaves me not quite sure what to make of the very first chart.   The blue line (annual net inflows of all passengers) has fallen back a long way already (down from around 80000 to around 40000), and similarly-sized falls in the past have often been coincident with, or perhaps a little ahead of, large falls in the PLT numbers (and the 12/16 numbers).  There are some reasons to think we might see something similar now.  Fortunately, for the next couple of months we will still have the PLT data

PLT mthly

But after that –  thanks to government and SNZ choices –  we will be flying blind.    We’ll have good information eventually on what actually happened, but it will be available with such a lag as to be more use to economic historians than to people trying to make sense of, and respond to, contemporaneous economic developments.  And the net total passenger movements data is sufficiently noisy that it probably won’t give us much of a steer (and even then with big error margins) before the lagging 12/16 data do.

This is simply reckless behaviour around a major set of timely economic data.

Orr off the record on major policy matters

A reader mentions news that Reserve Bank Governor Adrian Orr was in typically loquacious form at a finance industry “networking event” held in Wellington last night.

Typically loquacious but, so the report suggests, perhaps going rather beyond the Bank’s public lines on monetary policy as articulated in the August Monetary Policy Statement, in a very dovish direction.     And weighing in on what sort of person he wanted (and did not want –  economists apparently not wanted) on the new Monetary Policy Committee –  the one where the Minister supposedly makes the appointment, the one where the legislation has not yet been dealt with by the relevant select committee.

Central bankers need to be very cautious in their communications around monetary policy.  The standard approach has been to communicate primarily via Monetary Policy Statements, where everyone has access to the same information (although I gather the Bank still holds confidential debriefs for bank economists as a group after each release, and if that isn’t potentially market sensitive it is hard to imagine what would be).  That approach is sometimes supplemented with speeches: on-the-record ones where there is anything at all interesting, important, or potentially sensitive being said, and off-the-record ones where it is just repeating the same lines previously made public.

The speeches themselves are not without their problems as the Reserve Bank of New Zealand handles things.  For instance, although the Governor has been in the role for five months now, there has been no on-the-record speech at all.  And even when Governors have spoken in the past, there is often considerable potential for nuance or shades of information in the Q&A sessions afterwards.  At the Reserve Bank of Australia, it is common practice for those Q&A sessions to be recorded and made available on the RBA website.  There is nothing comparable here, and the Bank has often refused to allow media access to events where the Governor –  a senior public official – is speaking.  If you are lucky enough to be there you get information that the market as a whole doesn’t have.  That simply shouldn’t be acceptable.

Perhaps some journalists might like to find out from participants, or from the Governor, what he actually said last night, complete with (potentially market-moving) nuances.  Any other readers who were there who want to flesh out the account I’ve heard feel free to get in touch or comment (anonymously if you like) below.

But as it was relayed to me, it doesn’t sound like the sort of approach we should expect from any serious person holding a major public role.

Work visas for shop managers

We learned yesterday that the firm that owns Burger King in New Zealand has been banned from using migrant labour (ie people on work visas, not resident non-citizens) for a year.

The penalty was imposed on Burger King not, it is reported, because of a migration-related offence, but because the company was founding guilty of breaches of the minimum wage laws in respect of someone (reportedly not on a work visa) working as a store manager.  A company that can’t be relied on to follow some aspects of labour law probably isn’t the sort of firm that should be counted on to treat short-term migrant labour well.  So even though I think our minimum wage is (relative to nationwide productivity and median earnings) too high, I’m not bothered at all by the ban.

But surely the bigger question that should be addressed to the government is why companies are able to use “migrant labour” in such modestly-skilled low-paying roles at all.   As a reminder (and complaining again about the inordinate delays in MBIE releasing timely data), in 2016/17 these were the top four occupations for the principal applicants in the Skilled Migrant category of our residence approvals programme  (in other words, the cream of the crop).

Main occupations for Skilled Migrant Category principal applicants, 2016/17  
Occupation 2016/17
Number %
Chef 684 5.7%
Registered Nurse (Aged Care) 559 4.6%
Retail Manager (General) 503 4.2%
Cafe or Restaurant Manager 452 3.7%

 

And among those who got (so-called) Essential Skills work visas

Number of people granted Essential Skills work visas by main occupations, 2016/17
Occupation Number %
Chef 2,178 6.6%
Dairy Cattle Farm Worker 1,617 4.9%
Carpenter 1,478 4.5%
Retail Supervisor 961 2.9%
Cafe or Restaurant Manager 942 2.9%
Retail Manager (General) 767 2.3%
Aged or Disabled Carer 748 2.3%

Large numbers of people who appear to have no particular qualifications or specialist expertise, doing jobs that often don’t seem to pay much more than the minimum wage (when the law is being followed at all –  and it is widely known that there are much more egregious cases than the Burger King example, where migrant workers are required to pay back, under the table, much of any salary as a ‘fee’ for getting them into New Zealand.)

There is an argument that some economists make that we can gain economically by letting in lots of quite unskilled people.  Even economists think such an approach is likely to leave lower-skilled natives worse off.

igm lowskilled

As I noted last year, commenting on one UK academic who celebrated the possibilities of lots of low-skilled migrants (lowering the costs of cleaning, childcare and so on)

What Bateman is in fact arguing for is a policy designed to explicitly help people like her, at the expense of poorer less highly-skilled Britons (in fact, in the roles she talks of typically poorer relatively unskilled British women).  No one person is ever an exact substitute for another, but there is a great deal of overlap.    Even though she never says it, what Bateman is arguing for is a policy designed to increase the differences in incomes between the highly-skilled and the less-skilled –  for the comfort of the highly-skilled (women and their spouses).

Many advocates of a fairly liberal approach to immigration like to downplay the possibility of any costs to low-skilled natives of the recipient country, but Bateman’s argument relies almost entirely on those costs.  Reasonable people can debate how large the actual adverse effects are, but Bateman clearly believes they are large –  that is why, in her view, immigration makes things so much easier for people like her.     And she can’t even be arguing  –  as some might –  that it is just a transitional effect, or otherwise the possibility of outsourcing domestic duties cheaply would soon go away again.  So it seems to be a vision of society that involves repeatedly importing new waves of lowly-skilled immigrants to keep the relative returns to low-skilled labour sufficiently low to make life comfortable for the professional classes.

Whatever the other arguments for and against immigration, it is hardly surprising that citizens might rebel against a proposal to bring in lots of foreigners to widen the income gaps in society –  not just those between nationals and non-citizen foreigners, but those between skilled and unskilled nationals.   Sceptics of other economic reforms will argue that some of those changes also had that effect, but even if so (which I mostly dispute) it was never the intention, or the envisaged long-term effect.  By contrast, Bateman’s argument is in effect for using immigration to maintain a permanent class of helots –  not always the same specific people, but a constantly refreshed pool of people able to earn relatively little, because of the direct competition fron unskilled new arrivals.

Of course, this isn’t the (avowed) approach of the New Zealand immigration programme, which is supposedly mostly about skills –  highly able and talented people, building on what is already here (inadequate as the advocates believe that is) to lift the productivity and incomes of us all.

But that story has long been threadbare.  The evidence for the productivity gains is non-existent (in a country whose productivity continues to drift further behind that of other advanced countries) and instead we import large numbers people with few very obvious skills, too often doing jobs which appear to pay not a lot more than the minimum wage.  It is a rort against New Zealanders.

Now that the government is falling over itself to pander to business interests on anything not central to its own (mostly economically damaging) agenda, there is clearly no chance of any sensible immigration reform under this government (any more than under its predecessor). If anything, talk of regionalising immigration policy would make things even worse.  But for what it is worth I repeat my suggestion around short-term work visas, which would get bureaucrats out of the rationing business, and rely more heavily on the market.

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).

If it is really worth it to a firm to pay a $20000 annual fee on top of a salary to have someone on a work visa, well and good.  But that doesn’t seem likely for very many of the sorts of jobs that top the work visa occupational list.

And recall that markets can and will adjust.  The Canadian federal Minister of Immigration spoke at Victoria University the other day (I hope to come back to his address in greater length later): Canada is in the process of over-leaping New Zealand to claim the dubious crown of largest (per capita) planned migration programme in the advanced world.  The Minister told us lots of stories about skills shortages, and “desperate” needs for workers (in a country with an unemployment rate of 5.8 per cent) –  we heard several times about an apparently desperate need for “50000 truck drivers right now”, and yet never once did the Minister address or even mention the typical market adjustment mechanism: when demand for a resource is scarce, the price will tend to rise to encourage resources to move to meet the demand.      If it is hard to staff fast-food restaurants, or dairy farms, or rest homes, it is a sign –  in an economy that is, at best, only sitting around the NAIRU – that workers in those roles aren’t being paid enough.  It really is (almost) as simple as that.

A country is not a company

That was the title of an article by Paul Krugman, published more than 20 years ago now, in the Harvard Business Review.  The Prime Minister might perhaps consider reading it, and reflecting on it.

Yesterday morning the Prime Minister gave her promised speech on the economy.  It was, frankly, astonishing how little there was there.   There was some mention of the problems

Our overall objective is to build a productive, sustainable and inclusive economy.

On each score we have some way to go. When it comes to productivity, the OECD has said we are “well below leading OECD countries, restraining living standards and well-being”

and

We need to transition from growth dominated by population increase and housing speculation, to build an economy, that as I said, is genuinely productive, sustainable and inclusive.

and

First we want to grow and share more fairly New Zealand’s prosperity.

That means the gap between the highest and lowest income and wealth deciles reduces, real per capita income increases; the value and diversity of our exports grows and home ownership increases.

In particular we want to build our exports and have export led growth.

Which is all well and good, but there is nothing –   nothing –  in the speech about what the government proposes to do, and how it believes that the modest measures it does propose will deliver such better outcomes.   And, of course, no mention of the government initiative which, on the government’s own consultative document modelling, would severely undermine the competitiveness of core parts of our tradables sector, and reduce GDP by perhaps as much as 10 to 22 per cent.

And this from a Prime Minister who has now been in office for almost a year.  It is extraordinary.

But in this post I wanted to focus on the new Business Advisory Council the Prime Minister announced yesterday.  Perhaps it is all just window-dressing, intended to get some favourable headlines for a day or two, and perhaps placate the odd sceptic in the business community (although one might wonder how many sceptics will be invited onto the Council).    If so, I guess no real harm done.

But such councils can be a path towards cronyism.  On the one hand, attracting sycophants who like to be able to tell their mates they have the ear of the Prime Minister.  And on the other, more concerningly, enabling selected business heads to bend the ear of ministers and put pressure on them to make decisions favourable to the specific economic interests of those involved and their employers.  That might not be direct subsidies –  although we have had all too many of them in recent years –  but might involve making the case for regulatory changes which skew the playing field against new entrants, in favour of incumbents.

But by far the bigger issue, if the Prime Minister and the government are at all serious about the lines they ran yesterday, is “what do chief executives of businesses know about overall economic management, and the challenges of New Zealand’s longstanding productivity underperformance?”.  In Krugman’s words, a country is not a company.

Here are a few extracts from his article

What people learn from running a business won’t help them formulate economic policy. A country is not a big corporation. The habits of mind that make a great business leader are not, in general, those that make a great economic analyst; an executive who has made $1 billion is rarely the right person to turn to for advice about a $6 trillion economy.

Why should that be pointed out? After all, neither businesspeople nor economists are usually very good poets, but so what? Yet many people (not least successful business executives themselves) believe that someone who has made a personal fortune will know how to make an entire nation more prosperous. In fact, his or her advice is often disastrously misguided.

and

I am not claiming that business-people are stupid or that economists are particularly smart. On the contrary, if the 100 top U.S. business executives got together with the 100 leading economists, the least impressive of the former group would probably outshine the most impressive of the latter. My point is that the style of thinking necessary for economic analysis is very different from that which leads to success in business. By understanding that difference, we can begin to understand what it means to do good economic analysis and perhaps even help some businesspeople become the great economists they surely have the intellect to be.

and

Keynes was right: Economics is a difficult and technical subject. It is no harder to be a good economist than it is to be a good business executive. (In fact, it is probably easier, because the competition is less intense.) However, economics and business are not the same subject, and mastery of one does not ensure comprehension, let alone mastery, of the other. A successful business leader is no more likely to be an expert on economics than on military strategy.

And yet here was our Prime Minister yesterday (emphasis added).

The role of the Council will be to build closer relationships between Government and business, provide high-level free and frank advice to the Prime Minister on key economic issues and to create a vehicle to harness expertise from the private sector to inform the development of the Government’s economic policies.

….

“The Council will provide a forum for business leaders to advise me and the Government and to join us in taking the lead on some of the important areas of reform the Government is undertaking,” said Jacinda Ardern.

“The Council will report to me on opportunities it sees and identify emerging challenges. It will bring new ideas to the table on how we can scale up New Zealand businesses and grow our export led wealth.

“I want to work closely with, and be advised by, senior business leaders who take a helicopter view of our economy, who are long term strategic thinkers who have the time and energy to lead key aspects of our economic agenda.

Expertise on economic management, and the particular confounding challenges the New Zealand economy faces, just aren’t the sort of thing that tends to be fostered in the course of a corporate career.   Many of these people might have been superb marketers, exceptional operations managers, corporate finance whizzes, smooth operators around the edges of regulation and the tax system, and have risen to assume overall responsibility for (by New Zealand standards) fairly large organisations. They are absolutely vital skills, and business roles done well are a big part of how, in pursuing the interests of shareholders, society is also made better off.   But those skills bear no resemblance to the issues involved in addressing long-term economic underperformance.  For a start, the things businesses have to take as given are precisely the sorts of things governments often can vary, and (as Krugman eloquently notes) the sorts of constraints even a large business faces are very different from those an entire economy faces.   And so on.

There can be exceptions of course.  Sometimes people with a strong background in economics end up in top corporate roles.  Back in the day, for example, Don Brash as as private sector CEO was able to provide a valuable contribution in leading advisory groups around things like the introduction of GST.  More recently, Kerry McDonald –  former director of NZIER and later chief executive of Comalco and chair of the BNZ –  has continued to bring valuable contributions (eg here) to policy discussions and debates (although probably not ones likely to see him invited to join the Business Advisory Council).

But I don’t see many (any?) such people in the top tier of New Zealand business today. The head of Air New Zealand –  chair of the new council –  is reported to be obsessed with politics, but I don’t think we’ve ever heard his ideas on New Zealand’s longer-term economic underperformance.    Fonterra doesn’t have a permanent CEO, and Xero’s head is an Australian based in Australia.    The film industry and the export education industry survive on explicit or implicit subsidies.  And so on.  But even if there were a range of hugely successful outward-oriented businesses led by stellar CEOs lauded by their peers around the world……..it is simply a totally different skill set.

In her column in this morning’s Herald Fran O’Sullivan, who tends to articulate the perspectives of (in the Australian term) the “big end of town”, is pretty keen on the new Council.

Luxon positioned himself well to take a leadership role.

He recently hosted Finance Minister Grant Robertson to a private dinner in Auckland attended by a number of CEOs.

On the guest list were KiwiRail’s Peter Reidy, Spark’s Simon Moutter, Mercury’s Fraser Whineray and McKinsey and Company’s Andrew Grant. The Warehouse chair Joan Withers was also present.  …..

The chief executives at Luxon’s table are all “progressives” — interested in public policy, innovation and sustainability — and wanting to have a say and contribute to the direction of New Zealand.

Moutter led an innovation mission to Israel a couple of years ago to get a focus on the secrets to Startup Nation. Whineray led last year’s Go Swiss mission by business think tank, the New Zealand Initiative which delved into Switzerland’s focus on localism and vocational education — two contributing factors in that country’s success.

Kiwirail……that sink hole that absorbs billions of dollars of taxpayers’ money, contributing to our economic underperformance.

But it was convenient that O’Sullivan included this snippet, as before I read it I’d also been thinking of the cases of Simon Moutter and Fraser Whineray (the latter another head of a majority state-owned company).

As she notes, Moutter was dead-keen on the Israeli model.  I picked apart that idea in this post (followed later by this one).  As for Whineray and the Swiss trip (of which Fran O’Sullivan was part), they headed off to one of the very few countries to have had less productivity growth than New Zealand in the last 50 years (I wrote about some of the findings of the trip here).

It is great that these individuals care about New Zealand’s economic performance, but there is no particular reason to believe that in general they will have more useful perspectives to offer than the average moderately-educated voter chosen from the phone book at random.  Running a business no more equips you to provide useful advice on economic policy more generally (as distinct perhaps from specific bits around your industry) than it does to, in Krugman’s words, write great poetry or make military strategy.

Of course, the usual pushback against such business advisory councils –  again, at least if they are supposed to be anything more than window-dressing –  is that governments have access to a range of high quality contestible advice from….well…. economists (in particular those in key public sector agencies).    But that defence is weaker now that MBIE is run by an HR person with no policy or economics background (although apparently the CEO did previously work in Air New Zealand) and The Treasury seems to have given up on seriously addressing long-term productivity underperformance in favour of corralling a politically convenient, ideologically-driven grab bag of feel-good indicators into a forthcoming “wellbeing Budget”.

 

Do they expect to be taken seriously?

I don’t really have time for this today, but….

I wrote again yesterday about how getting rid of departure cards seems set to degrade the quality of our timely net migration data (currently some of the best available anywhere in the world, which we need since our net migration flows are large and volatile).  SNZ has previously promised that future PLT estimates

will be generated through a probabilistic predictive model of traveller type (ie short-term traveller, or long-term migrant), based on available characteristics of travellers. Such a model will provide a provisional estimate of migration, which we can then revise (if required) as sufficient time passes for us to apply the outcomes-based measure.

In media commentary yesterday, the Minister of Immigration was heard to suggest that under the new system the data will be better than what we’ve had now.

That seemed unlikely, but later yesterday morning SNZ put out a media release including this

Moving to the new methodology means it will be 17 months before final migration estimates are available. That’s because someone has to be in the country for 12 months out of 16 before they can be classified as a long-term migrant.

“A delay of that length would have been unacceptable to those who rely on migration data for planning and analysis, so we are developing a statistical model that will provide a provisional estimate of migration. A first look at provisional external migration estimates will be released tomorrow,” said Mrs Theyers.

In future, statistics for New Zealanders travelling overseas will be largely based on when they return. Some variables – including occupation and country of next residence – will no longer be available.

That statement itself confirmed one of my points –  some important data is going to be lost altogether (eg data on net outflows to Australia will in future have to be inferred, rather than available directly –  and while I’m sure that isn’t the motivation, that will be convenient for governments).  But there was a promise that they would reveal more today.  I was hopeful we might get a proper discussion paper, with details of their modelling techniques, and the results of backtesting, and (for example) the identification of key periods (especially around turning points –  a key focus of macroeconomic analysts) where the new procedure worked well and when it hadn’t.

But no.

What was released this morning was three charts and a page of text.  There is nothing about methodology, nothing about backtesting, nothing about the identification of turning points, in fact nothing that any serious analyst is likely to find useful.

We are told

To mitigate the impacts of such a delay, we are developing a statistical model that gives provisional estimates of migration to give a timelier statistic. The first provisional migration estimates are now available.

“Preliminary data presented today gives our customers their first glimpse of what migration statistics will look like once the outcomes-based approach becomes the official way we measure migration in New Zealand,” population insights senior manager Brooke Theyers said today.

But nothing at all about the model.

But here are results they are happy to show us

Provisional-and-final-net-migration-estimates2

(I presume that these numbers are not seasonally adjusted, which probably accounts for some of the jumping around in the median estimates from month to month).

Recall that under the 12/16 methodology, the numbers from 17 months ago become final (and are, in many –  but not all – respects better quality than the current PLT numbers).  But the latest monthly data has huge margins of errors –  even a 50 per cent confidence interval looks to be about 3000 people wide (on a monthly basis –  and bearing in mind that the average monthly inflow in recent years has been about 6000 people).

But to repeat:

  • no model,
  • no series as to how the estimates have evolved over time with the addition more data,
  • no backtesting,
  • no analysis of turning point information

Almost nothing at all.  And none of this is being consulted on, instead the government and SNZ are simply junking one of our best high frequency sets of economic data, about a variable which adds considerable volatility to the New Zealand economy.   We should expect a lot more, especially from a notionally independent national statistics agency.

 

The China Council surveys New Zealanders

Late last week the New Zealand China Council released its first Perceptions of China survey.  The China Council, you will recall, was established by the previous government, largely paid for with taxpayer money, with boards and advisory committees stuffed full of retired and current politicians, heads of government agencies, even an active journalist, and business people with interests in China to try to keep public opinion on side, and not worry their heads about the way successive governments cosy up to a heinous regime in pursuit of another dollar, another deal.  They have a hired gun –  a former MFAT diplomat – as Executive Director, who is never shy of articulating a pro- (People’s Republic of) China story, or of downplaying or attempting to trivialise any concerns about the nature of the regime, or its activities in countries like New Zealand.  I attempted to unpick one of his speeches a few months ago.   The PRC embassy in Wellington must regard him as a considerable asset, speaking in a New Zealand idiom to normalise the abnormal, downplay the risks, ignore the evil, and so on.

But survey data are usually interesting, and if the China Council is going to have a claim on our taxes, a decent survey is less bad than some of things they could spend money on.  There were a few interesting snippets in this one.    The first question asked “Would you say your general opinion of New Zealand’s relationship with these countries is positive, negative, or neutral”

china survey 1

The China Council was, of course, keen to highlight that 43 per cent of respondents answered “positive” and only 14 per cent “negative”.    But I’m not at all sure what to make of the results, partly because I’m not sure what to make of the question (I’m not sure how I’d answer it) and partly because of the cross-country comparisons.

For example, who is “New Zealand” here –  the government or individual citizens?  And, on the same note, who is “China”?  And is one being asked to describe or evaluate?  From what we see and hear, the New Zealand government and the People’s Republic of China have a generally good relationship (Comprehensive Strategic Partnership and all that), but that is something that I think is inappropriate and not in the interests of New Zealanders.

But I also found it striking that the results for China were so similar to those for Japan and for Fiji.  Japan is now a stable democratic prosperous First World country, no longer any threat to anyone.  Fiji is a semi-free small state, perhaps a nice place for a holiday, but poor and also no real threat to anyone other than its own people.   And then there is the People’s Republic of China – expansionist, aggressive, brutally suppressing the freedoms (political, religious or whatever) of their own people, without the rule of law,  engaged in economic coercion of any country that gets offside with them, and so on.  But, I suppose, there is a fair amount of trade between New Zealand firms and PRC ones.      Survey responses are what they are, and readers can only try to make sense of them, but on this occasion I suspect they can’t mean much.   Perhaps much of it is just about trade.  Perhaps the China Council has just been doing its propaganda job very effectively.

These were the results of the second question

china survey 2

I found these results interesting, and more than a little surprising (in fact, they go against the idea that trade explains the China answers in previous question).  But again, how would I answer?   Since trade is usually (not always) mutually beneficial, that would incline me towards “equally”.  And I put no weight on the spin, beloved of the previous government, that China had somehow “saved us” during the last recession.  I suppose I would answer “China”, but that is because I think New Zealand governments are excessively deferential, scared of their own shadows when it comes to China, and are selling out the interests of New Zealanders as a whole (around the integrity of our system, and the sort of values most New Zealanders espouse) for the business interests of a handful of firms (that somehow convince governments that what is good for them is good for us).  That’s my view, but it is a bit puzzling why the survey respondents both think China does best from the relationship, and that the relationship is positive.

There are some questions about trade, in which it turns out that people are aware that, for the moment anyway, China is our largest trading partner (well, Chinese firms and New Zealand firms –  trade isn’t government to government), and know that dairy is the largest export from New Zealand to China.  More New Zealanders want trade with China to increase than want it to decrease (and I’d probably be one of them – if China were to finally remove restrictions on services exports etc it would be particularly welcome).  But then there was this surprising (to me) result, in which respondents were asked about individual export sectors.

china survey 3

My own view would be almost exactly the opposite of this.  Export education is substantially a rort, cross-subsidised by access to work rights and immigration points, and it and tourism are two types of exports particularly vulnerable to the sort of economic coercion the PRC is now establishing a track record for.  By contrast, if firms can sell more fruit or fish to China, good luck to them (so long as they aren’t bending the ear of government – to go quiet on the PRC –  to do so).  Slightly off-topic, it is perhaps a telling reflection on New Zealand’s overall economic underperformance, what sorts of products aren’t on the list at all (eg advanced manufacturing).

What of foreign investment from the PRC in New Zealand?

china survey 4

Most respondents are only happy with foreign investment from the PRC with “strict vetting or controls”, and an overwhelming majority want restrictions to prevent majority ownership from the PRC.   I’m generally much more open to foreign investment than the median New Zealander, but regard PRC-sourced investment (where all firms have to be treated as, in effect, arms of a hostile state) as different.   But even so, I can’t see a case for (say) preventing majority PRC ownership of an office block in Queen St or The Terrace, or a hotel in Queenstown, or even a milk powder plant in Canterbury. On the other hand, allowing Huawei a role in New Zealand telecoms infrastructure seems reckless.

And then, presumably in the cause of defending Confucius Institutes in New Zealand (something the Executive Director has previously championed), there was a question about languages in schools.

china survey 5

I was mostly surprised that Japanese still scored so highly (a language spoken in only one, large but shrinking, country).  Whether Mandarin is really more “useful” than French or Spanish is anyone’s guess –  and how one defines “useful” is surely wholly in the eye of the respondent –  but learning a foreign language, whatever it is, is generally a useful discipline.  On the other hand, very few people who do several years of language study at high school ever emerge with much more than the ability to read a menu.  But the bigger point remains the one I made in a recent post on Confucius Institutes: when we teach foreign languages in our schools we should pay for, and resource, that ourselves, just as we do with maths and science teaching, not rely for support on foreign aid from a considerably poorer country, pursuing its foreign policy agenda.

Overall, some interesting data, with a few surprises and quite a few questions. It will be interesting to see how responses change, if at all, over coming years.

As for the China Council itself, the full prostration seemed to be on display late last week when they (a body largely funded by New Zealand taxpayers) held a “Gala dinner” to welcome the new PRC Ambassador to New Zealand.   I’m sure our authorities need to have formal, but distant, diplomatic relations with the PRC, but the “gala dinner” (not even just a “dinner”) is sickening to contemplate: people apparently so willing to set aside any values, any decent morality, any hardheaded assessment of the nature of the regime, to celebrate the arrival of today’s equivalent of the ambassador from the Soviet Union, Nazi Germany, late 1930s imperial Japan, Mussolini’s Italy (or a host of smaller, more modern, examples).    New Zealand once had the decency and moral sense to take some sort of stand against these regimes and their activities.  But…there is a dollar to be earned no doubt.

As often, one turns to the Chinese Embassy website for more information than one gets from the China Council.  There is no record of the speeches of the China’s Council Executive Director (or any other “worthy”), but the Embassy published the Ambassador’s speech.   Here is part of it

While we celebrate our achievements, we should also be sober-minded that the world is undergoing profound and complex changes. We need to deal with the economic and social divide in many countries, address the international divide between the existing powers and the emerging countries, and to handle the divide between 21st century realities and outdated policies. How do we respond to these profound challenges we face? What kind of vision should we have for our two countries and for our relationship? The choices we make today will not only influence our own development, but also have an impact on the long-term development of our relations and even the evolution of the world order.

China has made its own choice. The 19th Party Congress held last October drew a new blueprint for China’s development for the decades to come. China will continue to follow the path of socialism with Chinese characteristics. China’s development has entered a new era with the main task of addressing imbalances and inadequacies of our development, in order to meet growing needs of our people for a better life. China will continue to maintain a strong economic growth, guided by the new vision with greater emphasis on innovation, coordination, green growth, openness and inclusiveness.

This year marks the 40th anniversary of China’s reform and opening up. Tremendous achievements have been made over the past 40 years. As put in his keynote speech at the annual conference of the Boao Forum for Asia last April, President Xi Jinping reaffirmed that China would adhere to its fundamental national policy of opening-up, and pursue development with its door wide open. President Xi also announced a series of major measures for further opening up.

A stronger and more confident China will be able to make even greater contribution to the international community. China will stay as determined as ever to build world peace, contribute to global prosperity and uphold the international order. China will continue to follow the path of peaceful development, implement a strategy of opening for mutual benefit and win-win outcome. What China seeks is global partnership, instead of global dominance. Our aim is to build a new model of international relations and a community of shared future for mankind.

(That last phrase is apparently one of Xi Jinping’s specials.)

Presumably the audience lapped it up or (if ever inclined to a little scepticism about this rose-tinted, not to say tendentious, description of the world as seen from Beijing) said nothing.  This the regime that is today’s Soviet Union, today’s Nazi Germany –  whether in the way it treats its own people at home, lays claim on the loyalties of ethnic Chinese in other countries, pursues expansionist agendas abroad, seeks to silence critics and so on.

Gala dinner indeed…..

 

Tossing away valuable emigration data

We had confirmation yesterday that departure cards are to be scrapped.    This was flagged by the Prime Minister a few months ago, and I wrote about the issue here.   Since then it appears that there has been no proper public consultative process.

As I noted in March

I’m sure airlines and airport operators hate the cards.  There have been prevous efforts to get rid of them.  They are, nonetheless, a core element of the data collections (in conjunction with arrivals cards) that give us some of the very best immigration data anywhere.  In a country with –  year in, year out – some of the very largest immigration, and emigration, flows anywhere in the advanced world.

We are told by the government that this brings us more into line with other countries

On Sunday, Lees-Galloway said the move would bring New Zealand into line with other countries, few of which had departure cards with the level of detail required by the New Zealand card.

(although even then we appear to overshooting in scrapping the cards completely).

But the statistical and related policy issues New Zealand grapples with are different from those in many other countries, most of whom don’t have big outflows of their own citizens, or big cyclical fluctuations in those flows.     Immigration of non-citizens is managed through the administrative approvals required to get a visa.  But people don’t need government approval to leave again and New Zealanders (of course) are free to come and go without any prior approval from the New Zealand government.

So departure cards captured the intentions of people coming and going.  Those stating that they intend to have changed countries for 12 months or more make up the permanent and long-term migration data that, for decades, has been a major and very timely indicator of what is going on, in a country with some of the largest swings in net migration of any country in the world.   It isn’t as perfect indicator by any means –  very timely ones rarely are – but it has consistently contained valuable information, especially around turning points.   And now the government proposes to scrap this data collection.

The Minister of Customs reckons the cards aren’t necessary

Customs Minister Meka Whaitiri said the cards were no longer needed for their original purpose – to account for all passengers crossing the New Zealand border.

“We have smarter systems now that capture passenger identity information and travel movement records electronically,” she said.

“Information captured by the departure cards is now mainly used for statistical purposes.

“Statistics NZ has developed an alternative way to produce migration and tourism statistics, based on actual movements rather than passengers’ stated intentions on the departure cards.”

I certainly agree that departure cards aren’t needed to capture the total flows, but it is the timely breakdown of that data that has been extensively used for decades.   And the operative word there is “timely”.  The new 12/16 method data –  looking back and seeing how long people were actually here/away – is better for long-term analytical purposes, but it is available only with a 17 month lag, whereas the departure card based data is available within weeks.  That difference matters, and it is worth bearing in mind that 17 months is almost half a parliamentary term.

We are told that Statistics New Zealand has “developed an alternative way to produce” the data, but we’ve seen no details of this, and there has been no consultative document made available for comment.  In  my earlier post I included this quote from SNZ claiming that in future estimates of the PLT breakdown

will be generated through a probabilistic predictive model of traveller type (ie short-term traveller, or long-term migrant), based on available characteristics of travellers. Such a model will provide a provisional estimate of migration, which we can then revise (if required) as sufficient time passes for us to apply the outcomes-based measure.

I commented then

I hope that they plan to rigorously evaluate the accuracy of such models, including when they’ve worked well and when they haven’t, and how well they capture the effects of policy changes, and that they expose their models and evaluation to external scrutiny before scrapping such a valuable source of hard data as the departure card.

But we have seen no sign of such an evaluation at all, and yet in a few months that data that have been used for decades will be discontinued, with  no ability to recreate it in future if the new models that are talked about prove not to have been very good.

Without seeing the models it is hard to comment on where they might go wrong.  But the key point is that statistical models often work fine when past behavioural patterns keep on as they were in the past, and they often fail when behaviour changes.   It is the behavioural changes that are often of most interest to the analyst, and it looks as though there will now be very long lags before we have the data to enable any such changes to be recognised.

I just heard Iain Lees-Galloway claiming on Radio NZ that future statistical information will be improved by scrapping the departure cards.  That seems very unlikely – essentially impossible, because you cannot really know the intentions of travellers other than by asking them, and intentions actually matter in this business.

I could add to the lament around official immigration statistics that there has still been very little progress in making available regular, timely, seasonally adjusted, accessible data from MBIE on visa approvals.  These are major economic and social data for New Zealand, which should be readily available almost instantly, including through SNZ’s Infoshare site.  There is no reason why immigration approvals data should not be at least as readily useable as, say, building approvals data. I know MBIE has a project underway to improve the situation, and make available an immigration data dashboard, but it seems to be moving very slowly –  it must be a year now since MBIE first told me about it, and it is months since the person doing the work invited me to provide comments on a prototype.  It is encouraging that something appears to be in the works, but in the meantime we limp on with inadequate, not user-friendly, administrative data, while the government simply abandons the best timely data we have on what people leaving New Zealand are planning to do.