Last week the government announced the reopening applications for parent residence visas.
For a couple of decades, parent visas made up a pretty large chunk – around 10 per cent – of total residence visas issued. From 1997/98 to 2015/16, 75000 parent visas were issued. These were, almost certainly, all people who could not have obtained residence under the more-demanding skills-based segments of the immigration programme. Most probably, given the overall target/guidance for the number of residence approvals to be issued, issuing parent visas lowered the average quality of those given residence. Perhaps the effect wasn’t large – since the marginal approvals under the skilled streams often weren’t that skilled at all – but the direction of effect was pretty clear.
Parent visas weren’t the only such questionable streams, although it was the largest. Over the same period, for example, almost 20000 people got residence under “sibling and adult child” provisions.
All this in an immigration programme that was avowedly primarily about the potential economic gains to New Zealanders. Of course, the programme has never been all about economics – there are refugees for example, a strand almost entirely about humanitarianism – but the rhetoric of successive governments has been that the focus is economic benefit (and given how poor our productivity record, don’t we need better outcomes). And it has never been obvious how the parent visa (and related family strands) help on that count.
Late in their term, the previous government suspended the parent visa programme and MBIE data suggests there have been very few approvals since then. But no one had been sure what the future regime would be. Now we are.
The positive aspect of the announcement last week is that there will only be 1000 places per annum. By contrast, under the previous rules often in excess of 4000 parent residence visas were being granted each year (although there is an uncapped – but more demanding – parent retirement residence visa on top of that).
Perhaps, then, one shouldn’t be unduly bothered about the new system. But if we are going to have an economics-focused immigration system, operating on a very scale by global standards, we should be aiming to get the very best from it. And it is hard to see how the parent visa policy fits that bill.
The fiscal dimensions of the equation are perhaps most obvious. Sure, these new parent visa residents won’t be eligible for New Zealand Superannuation straightaway. But the median age of people getting parent visas used to be about 60, and you only need to live here for 10 years to get full NZS. Average remaining life expectancy at age 60 in New Zealand is almost another 25 years. If these new residents work and pay income tax at all, very few are likely to even come close to making a fiscal contribution approximating the NZS cost. From some countries, any NZS entitlements have to be offset against pensions from home countries, but not all significant source countries have such systems. Perhaps as importantly, new residents are entitled to full access to the public health system. No doubt you have to pass a medical test to get your parent visa, but as for natives so for immigrants, health expenses tend to be materially higher in the last few years of life than in, say, your 20s or 30s. Health spending is a large and rising share of government spending and, over time, GDP. There are reasonable arguments – also open to some debate – that migration generally may be fiscally positive. For these elderly migrants it is almost inevitably not so.
The government doesn’t even try to pretend otherwise – although it certainly does nothing to highlight, or limit, the fiscal cost (eg greatly extending the residency requirement for full NZS). Instead, their argument for parent visas is a convoluted quasi-economic one. According to the Minister
As part of its work to ensure businesses can get the skilled workers they need, the Coalition Government is re-opening and re-setting the Parent Category visa programme, Immigration Minister Iain Lees-Galloway says.
The move will:
- support skilled migrants who help fill New Zealand’s skills gaps by providing a pathway for their parents to join them
- Help New Zealand businesses find the skilled labour they need
- Further strengthen the economy by helping businesses thrive.
You can probably ignore the pure spin in the last line (the economy not being strong, businesses as a whole not thriving, productivity growth being atrocious etc).
As for the rest, recall that the average skill level of the “skilled migrants” just isn’t very high at all (all those retail and cafe managers, aged care workers and so on). But also that the Minister and his department have never been able to produce remotely conclusive empirical evidence of the economic benefits of migration, and if we can only atract the people Lees-Galloway thinks “we need” by also taking on a big fiscal impost (see above) the gains must have been pretty thin and insubstantial to start with. Especially when every non-working migrant (ie probably most of the parent visa arrivals) will add to the demand for labour (derived demand from their consumption) without adding to the supply of it.
There has been some criticism that the new income threshold sponsors (the adult children) will have to meet mean that parent visas will be an option only for “the rich”. And there are some anomalies there, including the fact that a couple in which both are working part-time are treated much more onerously than a single fulltime income earner, but in the end if you are going to offer only a few places, they need to be rationed somehow, and given the likely financial cost to the taxpayer, it makes some sense to focus on the migrants who are actually earning a fair amount (although a household income of $159000 across two earners – while well above median – is hardly “rich). If there are any encouragement effects for really able younger migrants, they are going to be greatly attentuated if parent visas were handed out by lottery.
All that said, the new rules look rather weak, and look as though they will reward those who are prepared to game the system, pushing the boundaries (perhaps beyond breaking point)) and/or who have the capacity to rearrange their declared income across time. Work in a salaried position in a government department or big corporate and you probably have few options, but for others I’m sure smart accountants and lawyers will soon be advising on how to game the system. As you’ll see above, the sponsors do need a reasonably high income, but they only need it until the parent gets their visa, and then only for two of the three years previously. I guess that is supposed to allow for natural variability in eg business income, but it means you only have to find some way of inflating your declared income for a couple of years and your parent can get in, with no ongoing support or minimum income requirements.
I guess parent visas issue looks and feels a lot different to people (like me) whose parents and grandparents were all born in New Zealand than they do to people who’ve migrated, including to couples where a native New Zealander married someone abroad and settled here. I can even see how someone who migrated here at 25 when their parents were 45 might not have given much thought then to how a widowed parent abroad might cope at age 80. But the bit I really don’t get, at all, is why there should be any presumption that if you migrate to another country, leaving home and family, that should in short order (and you only need to have been resident here for three years to sponsor a parent) create some expectation that if aged parents have issues they should be able to come here, rather than that you return home. Migration – especially that to New Zealand (where the overall productivity gains are so questionable) – has always mostly benefited the migrant. We are doing them a favour much more than they, by coming, have done us a favour. But if you have family responsibilities at home, go back and meet them. Don’t expect the New Zealand taxpayer to support those who’ve never been a part of us, coming only at the end of life.
It would be different if any parent visas were provided only to those with guarantees of income and health support, and thus a rock-solid assurances that these individuals would not be a financial burden on the New Zealand taxpayer. I’d have no particular problem with an uncapped scheme of that sort – and the existing uncapped scheme doesn’t have those protections, especially as regards health spending. But it would require, say, evidence that an annuity had been purchased from a rock solid provider, and that rock-solid provision had been made for the purchase of lifelong comprehensive health insurance. The number of people who could meet that sort of standard would be really small (especially with real interest rates at record low levels). But in a sense that just demonstrates the difficulty of justifying parent visas on any reasonable economic test.
Perhaps there is a grounds for a weaker compassionate standard, but make that subject to a 20 year residence/citizenship test for the sponsoring child. But if you’ve been here for only three years, or haven’t bothered to become a citizen, if your parent needs you, go to them (we could even hold open the child’s residence visa for, say, five years while they did). I saw a a somewhat gung-ho columnist in the Dominion-Post on Saturday championing parent visas on the grounds that
Their children have become economically valuable New Zealanders. They deserve to have an avenue that responds to family need.
But in many cases (a) the children have not become New Zealanders, and (b) the evidence for the economic benefit to New Zealanders from migration is thin, at best. When and if, as a relatively new migrant, family needs you, go to them. They are your responsibility, not ours. It is a bit like the argument that it somehow isn’t fair that kids grow up without their grandparents – not only can grandparents visit relatively easily (in most cases), but surely you should have thought about that before leaving home and hearth, and grandparents, and settling in the most remote corner of the earth.
As I say, at 1000 visas a year this isn’t the biggest issue there is around temporary or permanent migration policy. But that doesn’t mean it shouldn’t be scrutinised and challenged. If we are to be serious about lifting overal productivity, we need a hard-headed approach to policy, and one that prioritises the interests of New Zealanders.
(On another matter, I see that Stuff’s Kate MacNamara has returned to the fray with another column on the problem that is Adrian Orr. As I have to spend this afternoon in a meeting with the Deputy Governor and a Board member, I will save my comments on the article and the issues it raises until later.)