What is going on with residence approvals?

Late last year I did a post using some data from the near-final version of MBIE’s new immigration statistics dashboard.   The dashboard is now on general release (here) and I should take the opportunity to commend MBIE on the initiative (even while wishing SNZ would now take the key time series and include them in their Infoshare database).  It takes a while to really work out how to make the most of the dashboard, but it means that administrative data (all the information on visa approvals –  and declines) that used to be published in readily useable form only annually and with up to an 18 month lag, is now readily available within 10 days of the end of each month.  For anyone trying to keep track of what is going on around the impact of immigration policy settings –  and recall that the late lamented PLT data was never any use for that –  it is a huge step forward.

And so lets have a look at a few charts, using data to the end of February.   Here is the number of residence visa approvals (and declines), actual monthly data and with MBIE’s “seasonally adjusted trend” (more trend than seasonal) through the data.

Res 1

Recall that the “target” rate of approvals is around 45000 a year, an average of 3750 per month.   The trend in actual approvals has been running (increasingly) below that level for the last two years.   For the current financial year, approvals are running at an annualised rate of under 35000 –  lower than at any time in the last 10 years.   Interestingly, it isn’t that more applications are being declined – in percentage terms, the fall off in declined applications has been larger than the fall in approvals.

I’m at a bit of a loss to know quite what is going on.  There was a slight reduction in the approvals “target” (they like to call it a “planning range”) late in the term of the previous government, but that was the difference only between 47500 per annum and 45000 per annum, nowhere near enough to explain the fall in actual applications and approvals.

I’d heard in several places that a big part of what was going on was shifting more residence visa processing back onshore.   Here is some relevant data on that

res 2

Clearly something has gone on, but (a) for a long time the overwhelming bulk of approvals were granted onshore, to people already in New Zealand (on other short-term visas), and if (b) offshore approvals have dropped away sharply, offshore declined applications have dropped to almost zero.  So I’m no clearer now than I was previously.

The points system is supposed to serve as a rationing device –  a quasi or shadow price. If there are lots of good applicants then, in principle, with a bit of lag the points threshold should be raised, so that we winnow out the lower quality (in terms of how the scheme is set up) applicants.  And, on the other side, if applications are dropping away sharply then, all else equal, the points threshold should in time be lowered and we’d find ourselves taking less-good quality applicants, who would otherwise not have qualified for residence.  But applications and approvals have been well down for two years now, and nothing has happened to the points threshold.

I’m mostly pleased with that –  part of my argument over the years has been that too many of the people we are bringing in (even under the skilled migrant headings) aren’t that skilled at all, and while they are benefiting themselves (and good luck to them) it isn’t doing any good for New Zealand.  Changes made late in the previous government’s term –  tightening up a bit on the one hand, and additional points for regional jobs on the other –  won’t have changed that picture.  But……..keeping the target unchanged (which is government policy, what Labour campaigned on and New Zealand First accepted in the coalition deal, looks a bit empty if the target is going to be persistently undershot (more so than, say, undershoots of the inflation target, since immigration approvals are an adminstrative act, directly under official control).  I’m a bit curious why no journalist seems to have been grilling the government about quite what is going on.  Is this the immigration equivalent of “opportunistic disinflation” –  they’ll take the cuts in immigration approvals if they come, but won’t do anything active to bring them about (or reverse them).  One can imagine there might be some blowback –  except among the handful of open borders people –  if standards for getting residence visas were lowered further.

It is noteworthy too that the fall in residence visa approvals has been concentrated in the streams (business/skilled) that were supposed to be the focus of the immigration programme.   That is so even though, for example, parent visa approvals are still suspended altogether.

res 3

I’m left puzzled about quite what is going on.  The number of people here on shorter-term work visas has still been rising strongly (and most people who get residence were already working here), and if the number of students is now flat, the numbers aren’t falling and an increasing share of the students who are here are in better quality, university, courses.  Quite possibly, a smaller proportion of those doing university study are interested in staying long-term than of those who were doing the PTE courses (often mainly as a pathway to work and possible eventual residence).

res 4

And finally, for those interested, here is what has been happening to residence approvals for our two largest source nationalities.

res 5

The next two biggest source nationalites –  UK and Philippines –  have also fallen away a lot, the former part of a long-term trend decline.

Overall, there are more questions than answered, but it is great to be able to do these sorts of charts quickly and easily.  Many fewer people who meet our quite low immigration standards now seem to be applying, or getting, residence visas, and that despite the apparently quite tight labour market.

Given announced government policy –  a continued high target – that should be a concern to them.    Some questions should be posed to Mr Lees-Galloway (although I can imagine that he would much prefer not to have to face them).