People from poorer countries will come if we let them

The Herald business columnist Liam Dann had a curious column out yesterday.  When I first saw it online it had a more right-on headline [UPDATE: “Woke wonderland – how a new narrative has changed NZ”] (I didn’t read the article until my wife started quoting bits to me) but it now has the headline “NZ’s population prediction was out by 30 years – the price we are paying”.

Dann had been prompted to write the article by stumbling on a 2004 SNZ release from 2004 which apparently “forecast” (more likely, it was the medium “projection”) New Zealand’s population to get to five million in about 2050.  As it is, it appears that milestone will be reached within the next few months.

The bit that the current headline deals refers to was this

Now I can’t get past the notion that this miscalculation holds the key to many of our social infrastructure problems in 2019.

If that was the population assumption policy makers were using, then of course we have a housing shortage … of course our roads, our hospitals and our schools are crowded.

I’m a bit ambivalent on that point.  After all, it isn’t as if the projections haven’t been updated, regularly, since 2004.    And one could quite reasonably make the point that this specific issue isn’t primarily about surprisingly rapid population growth, as about successive waves of central and local governments (including the current ones) that have made too much of the system not responsive to population surprises.  Planners control where houses can (mostly can’t) be built and most of them have a deeply-held aversion to an increased physical footprint for cities, let alone competitive market processes to determine where and when development occurs.   We still don’t have congestion charging in our major cities.  And so on.  And so the pressures fall on house/land prices and in various forms of congestion or queuing.

All that said, if we were to take as more-or-less given the RMA and associated development constraints then Dann does have a point.  After all, it was the same political leaders who have repeatedly refused to act to free-up land supply etc (and in doing so were, just possibly, reflecting public preferences) who also oversaw the immigration system which has resulted in such a rapid rate of population growth.  The immigration system is much easier to tweak, to manage trend inflows of non-New Zealand citizens, than the entrenched land use issues are to fix.   In that sense blame a series of active (and, more often, passive) choices by our political leaders.

Using official SNZ data, here is how our population has changed since September 2004 (September years are the latest annual data).

population since 04

Over the full period, the population has risen by (an estimated) 842000.   Take natural increase (births less deaths) and the large net outflow of New Zealand citizens (another 315000) and you’d have been left with a pretty small rise in the population  (less than 4 per cent in total, over 15 years).

That is simply an illustrative scenario.  In the absence of large non-citizen immigration, the rate of natural increase would have been lower (immigrants, once here, have children too).  Whether the outflow of New Zealanders would have been any different is hard to know.  My own view is that there would have been a slightly smaller outflow of New Zealanders (consistent with my model, in which economic prospects here would have been improved), but there are alternative hypotheses in which some more New Zealanders might have left (wanting the brighter lights a NZ of five million could offer, but one of four million could not).

But to a first approximation, if you regard the land regulation situation as largely frozen, then almost all the subsequent pressures can be ascribed to the choice to keep on with large scale non-citizen migration regardless.  Even if you thought it really could be quite readily changed and it was just venal politicians who refused to do the right thing, then knowing that and still supporting large scale immigration (and recall that ours is among the very largest in the world per capita) is akin to knowingly inflicting the resulting house prices, congestion, queues etc on New Zealand.   It isn’t as if other countries have been so good at fixing those land (related issues).   And officials and outside observers knew these issues were a problem 15 years ago.

Of course, having raising the issue Liam Dann –  pillar of the establishment –  is keen to assure his readers that he does not, not for a minute, oppose immigration.  Thus his claim

in my lifetime this country has been vastly improved by more people and more cultural diversity.

I get the impression he must be almost 50 so presumably he is talking about immigration since about 1970.   In reality though, between about 1974 and the end iof the 1980s there wasn’t much immigration, so we are mostly talking about the last 30 years.    I can’t share his optimism, particularly about the raw numbers, in a country that has continued to drift further behind economically over that period, and whose firms have failed –  in aggregate –  to find new products/markets abroad (even though external trade is a key element in any prospective improvement in our relative prosperity).

Anyway, at this point Dann launches into a paean to the better New Zealand we now are that, to me anyway, seems more than a little detached from reality.  We are told that

Something structural has changed.

New Zealand just isn’t a place people want to leave any more.

Except of course (see above) a net 300000+ people have: just imagine if a net 7.5 per cent of the American population had left the US in 15 years.

Now a little later on, Dann does concede that any reduction in net outflows isn’t entirely good news

Australia becoming a lot less friendly to New Zealanders has influenced our net migration rates. It’s not nearly as easy to enjoy the easy life across the Tasman as “Bondi bludgers”.

In other words, poeople may still want to leave, but it is harder to do so.  And it isn’t just about the caricatured “Bondi bludger” but about the difficulty of your kids getting established and ever getting citizenship etc.  New Zealanders are worse off as a result of those tougher Australian policies.

It is also worth pointing out that New Zealanders go to Australia when the Australian labour market is strong.  It hasn’t been that strong in the last few years, after commodity prices peak and the mining investment boom began to pass.  That isn’t good for Australians, and it certainly isn’t good for New Zealanders who might want to take advantage of the higher productivity and higher material living standards abroad.

And, as it happens, the outflow has been picking up again.  Here is the net outflow of New Zealand citizens from the new SNZ migration data.

outlfow to AUs

It certainly isn’t a record outflow, but the increase is now becoming quite pronounced.  Not exactly a tale consistent with a wonderful New Zealand.

But when he talks about the migration choices of New Zealand citizens, Dann is just warming up.    The real story on his telling is

New Zealand finds itself being cast as the “woke” capital of the world.

and

We failed to see what a desirable place New Zealand has become in the eyes of the world.

Complete with all manner of gushy references to the idea that, for example

the UK and US media simply can’t get enough of the notion that this country is a liberal paradise.

Now I’m not going to deny that there are sections of the world media who seem particularly enamoured (for reasons that largely escape me) with our Prime Minister.

But….the surge in net migration this decade mostly happened on the watch of the previous lot, that outflow of New Zealanders has (and it is almost entirely coincidental) increased in the couple of years the current government has been in office, and in case Dann hasn’t noticed, the residence approvals targets haven’t changed much in 20 years now, and actual approvals have been undershooting target in the last couple of years (probably less because of lack of interest than because of processing delays by MBIE).   Because the headline target hasn’t changed much in 20 years, while the population has grown quite a bit, residence approvals for non-citizens are quite a bit less now, in per capita terms, than they were in, say, 2004 (Dann’s reference point).

And why might we doubt that Stephen Colbert (or, on the other side, Donald Trump) or the Guardian really have anything much to do with our population growth?  Well, try this chart from the new MBIE immigration dashboard, showing the top five countries for residence approvals.

R1 Residence Decisions by Nationality (1)

Four of these five countries are materially poorer than New Zealand is (and the UK, once the leading individual source country, while richer and more productive is now down to equal 4th).  Mostly people migrate when (a) the options are better for them abroad, and (b) the potential recipient country allows them to do so.  That seems pretty consistent with the New Zealand story not just now, but throughout history (think of the UK migration from say 1870 to 1970, a period when wages here were typically higher than those in UK, or of Pacific migration in the 60s and 70s).

And if there has been an increase in the (typically small) net number of US migrants since Trump, well there has been a fall in the net inflow of Brits since the Brexit vote.

trump migration.png

In combination, net arrivals from the UK and US are now about one-third of what we were experiencing from 2004 to 2007.   So much for the pulling power of the “woke paradise” rhetoric.

As just another area where our rules matter quite a lot, the MIBE data says that we now have about 200000 people here at any one time on temporary work visas.    In 2012 that number was about 100000.   That’s non-trivial share of the roughly 500000 growth in population (all needing accommodation etc) in that period.

Towards the end of his article, Dann’s sunlit uplands narrative continues

Now more than ever New Zealand has some control over that destiny.

We can choose to turn the immigration tap up or down with policy settings.

We have choices because we can rest assured that the demand is there.

Except that for most of the last 150 years it has been so.  When you are a relatively rich country –  and one that is not given to coups or civil wars and speaks the global language  – of course people will want to come.  In what we often think of as the dark years of the late 70s and early 80s plenty of people would happily have come, it was just that we chose not to let them (and reasonable people can debate that economic or social merits of that choice).    We could elect the antithesis of Jacinda Ardern and while Colbert, the Guardian and the Washington Post might not like it, it wouldn’t materially alter the broad level of interest in moving from a much poorer country (eg India, South Africa, Philippines) to quite a rich (if remote) one.

I remain convinced that we would be better off economically, and probably politically/socially as well, to be targeting a much lower rate of non-citizen immigration (perhaps 10000 to 15000 residence approvals per annum).  If we did, the population would probably level out near five million.   Without compelling evidence of incipient rapid productivity growth –  of the sort missing for at  least 70 years –  that would play better to the limited economic opportunities in this remote corner of the world.  And, as it happens, it would leave us not far below the size of the median country globally.

As it is, the existing planning ranges for residence approvals expire at the end of this year.  As I highlighted earlier in the year, the government is apparently looking at quite an overhaul of the system (although no hint they were looking at lower numbers).  The number of Cabinet meetings before the end of the year must now be dropping away quite fast.

33 thoughts on “People from poorer countries will come if we let them

  1. Your comments on immigration have been spot on Michael.

    Thing is, we live in an antebellum economy. The objective of the political elite is to drive up asset prices – which they benefit from – and down wages. To that end, mass immigration has been a boon; and for those outside of the disaster called Auckland, they benefit from increased tax receipts without having to experience the negative externalities.

    Liked by 3 people

    • Auckland is ranked 12 on the Most livable cities in the world. Not quite a disaster. But with 52 Volcanos in its centre it is a geographically difficult city to build infrastructure.

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  2. It always surprises me that the most obvious question relating to immigration is never asked, particularly given the scale and cultural diversity of our immigrant population. Stated simply: “What kind of country do we want to become?”

    To quote author and commentator Mark Steyn who wrote in 2006, a decade prior to Merkel’s million migrants into Germany:

    “Most people reading this have strong stomachs, so let me lay it out as baldly as I can: Much of what we loosely call the Western world will not survive this century, and much of it will effectively disappear within our lifetimes, including many if not most Western European countries. There’ll probably still be a geographical area on the map marked as Italy or the Netherlands–probably–just as in Istanbul there’s still a building called St. Sophia’s Cathedral. But it’s not a cathedral; it’s merely a designation for a piece of real estate. Likewise, Italy and the Netherlands will merely be designations for real estate. The challenge for those who reckon Western civilization is on balance better than the alternatives is to figure out a way to save at least some parts of the West.”

    https://www.steynonline.com/7428/it-still-the-demography-stupid

    He might just as easily have included New Zealand in that list of countries that before the end of this century will be defined solely by their geography, rather than their social, religious and cultural heritage, which is to say Western Civilisation.

    You could be forgiven for thinking that is the whole point of the exercise.

    Do we understand what are we trading away for the presumed ‘benefits’ of immigrant led population growth, or are we little more than 21st century Easu’s trading our birthright for a bowel of porridge?

    I’m no fan of Shane Jones, or any of our current political parties for that matter, but if he is successful in opening this question for public discussion then he may well have justified his political career. However, I’m doubtful that it is it still possible to have this conversation in New Zealand without being condemned as a racist, a bigot, a hater. Yet if we don’t allow reasonable politicians to raise this question without immediate condemnation, then it gets pushed to the margins of polite society and left to Shane Jones, or others less endearing to take it forward.

    It is probable that we will embrace by default the problems of Europe, incapable as we have become of confronting any difficult questions.

    Liked by 3 people

    • The first problem is the Treaty of Waitangi. It is a racist colonial document of which the only party left to the agreement is Maori. The other party the British Crown does not give any legal recognition in England. Over here in NZ the NZ government calls itself a fictional Crown but there is no Queen that takes legal ownership in NZ or in England so where is the Crown entity? A complete fiction.

      Treaty of Waitangi settlements are purely a form of racist social Welfare payments benefitting only one race ie Maori and no other New Zealander. How more racist can you get? Our so called founding document is a racist document.

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  3. Hi Michael

    I guess as one of the immigrants I’ll have a different take on some of your assessment… but some more general thoughts:

    – The hundreds of thousands of people coming to NZ are a small fraction of the world’s migrant population (according to the UN 272 million, though that looks like it includes refugees https://news.un.org/en/story/2019/09/1046562). NZ is a small country, so wobbles in the intentions of a small fraction of 1% of those people looks large relative to the NZ population.
    – The obvious change since the late 1990s was the Lord of The Rings films. In effect they were a 9 hour advert for New Zealand that hundreds of millions of people across the world paid to see. It’s not that people come to NZ because of the films, it’s that more people think about NZ because of the films and so more people end up seeing it as a place they want to come. That’s the kind of minuscule wobble that would explain why people like me think twice about NZ when we might not otherwise have done so.
    – The Liam Dann article is highlighting an important issue. Its surprised how little proper NZ analysis of migration flows there are given its importance to NZ over the last couple of decades. Stats is not very good at predicting, or at adjusting its predictions with new evidence. This feeds into the way Treasury underestimated GDP growth and, I suspect, others underestimated downward pressure on wages and inflation. It’s a symptom of an endemic problem that NZ academia is not very good at dealing with NZ specific issues. (Migration is international, but having both high immigration and emigration is unusual and not properly modeled in a way that is policy useful.)

    Tony

    Liked by 1 person

    • THanks Tony. Your v last sentence is a key consideration for me. The main official NZ response to it as has been “our people are leaving so we need to replace them”, which in isolation makes little sense either economically or socially.

      And now I must get on with reading Kinley Salmon (as you recommended), currently sitting on top of my pile.

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      • Our people are leaving because our institutions train them with high level skills where are are no jobs in NZ. Unfortunately we do not have our people trained for the jobs we need people for and thats why we need to bring people into the country. It is not a replacement issue, it is a training issue and available employment.

        Liked by 1 person

  4. I’ve got no solutions – but consider this, the population of Nigeria has gone from 56mil to 200mil in the past 50 years – what price over half a billion in another 50 years. Combined pops of Turkey Syria and Iraq from 50mil to 138mil since 1970. Ethiopia from 28 to 105mil – India from 553mil to 1.34bil – Philippines 35 to 105 mil. How many would like to live in NZ?

    If it was possible the population issue poses even more intractable problems than climate change. Both issues are confronted by the short-term interests of individuals and pressure groups – both carry the possibility of worldwide catastrophe – not one day in the distant future but within the lifetimes of our grandkids.

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    • Interesting angle. Of course, in many of those places birth rates have now fallen v rapidly, so populations are likely to stabilise in time. Longer-term the key question is probably whether those countries can put in place policy frameworks that generate pretty good living stds (even if not 1st world). Turkey has – productivity there now more or less matches NZ. India is on a path that may well get there. In middle income countries, with reasonable freedom and political stability, not that many people really want to migrate esp not to a quite alien culture/society.

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  5. Liam Dann appears to have sensed there is a problem about our absurdly high non-citizen immigration rate but then tries to dress it up as a symbol of our hyper-woke virtuousness. Thank you for taking apart his “sunlit uplands” narrative. There are certainly vested interests involved which is why anyone who challenges the purported benefits of mass immigration is immediately shouted down as a “racist” by the media and metropolitan elites. Some people have done very well from hiring immigrants who will work for the minimum wage or less instead of New Zealanders. Others have made millions from the relentless escalation of property prices. Meanwhile our infrastructure and services are failing, our cities are increasingly congested and the environment is degraded, while fulfilling our insane zero carbon target now enshrined in law becomes that much more difficult every time a new immigrant lands. But hey, let’s privatize the profits while socializing the costs.

    Liked by 2 people

      • Yes hilarytee. I don’t deny the benefits to South Pacific economies, to New Zealand growers and to the pickers themselves and their families that come from seasonal migrant labour. It’s a win-win as long as the pickers are paid and treated fairly. But I do question how many immigrants we need to staff petrol stations, liquor stores, of which we seem to have an epidemic, and wash dishes etc.

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      • NZ immigration has a open door policy towards the South Pacific island nations. In fact we have also declared that some island nations can have freedom of access to the NZ Universal Super whilst residing in their islands. Winston Peters have thrown recently given away $900 million in taxpayer dollars to the islands for their economic development.

        But don’t forget these island nations are freely giving away passports to Chinese investors. Perhaps this is a backdoor for Chinese entry into NZ with Island passports.

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  6. Thank you for mentioning “”processing delays by MBIE””. There are quotas for the various visa types (or at least Mr Woodhouse claimed there were when he wrote to me in Jan 2017). What doesn’t make any sense is meeting these quotas by delay in processing. It means the most desperate will hang in (for example a family member still waiting for residency by partnership after a relationship of five years and with a three year old NZ child – no visa issues other than delays in processing. Pity it was not a ‘traditional marriage’). Meanwhile the most talented potential immigrants possessing skills needed throughout the world will be going elsewhere.

    It is too much to ask INZ to set its quotas; set its price for visas so they can employ adequate staff; set the point counts appropriate to the quotas and then process visa applications promptly. The comparison with the friendly efficiency of our passport office is stunning. Being employed by INZ must be deeply embarassing.

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    • Delighted to say my son-in-law received news that his permanent residency visa on grounds of partnership was verbally approved a couple of hours ago. And I ought to mention I was bending the truth – my granddaughter is not three next month.
      My family is very happy and celebrating. However the issue of delays in just starting the processing of visitor, work and residence visas remains a major embarrassment to NZ and a source of legitimate complaint by the unfortunate applicants trapped by the unkind bureaucracy.

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      • Shane Jones would say, you can’t expect to bring your entire village with you. If you don’t like it go home.

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    • Points, fees and quotas are set by the government, not INZ, although obviously based on whatever information government requests from INZ. Having an overall range for residence visas but only a few small quotas within that makes it hard to find a way to manage other than to stop processing visas when the cap is reached which would no doubt be highly popular… Also, the SMC points don’t make a lot of difference to volumes because people apply based on what they think they have which presumably does not always match with the INZ assessment.

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  7. “”People from poorer countries will come if we let them””. The elite who make the decisions about NZ immigration policy behind closed doors are cosmopolitan; they know other countries both by OE and by holidays. For example our Prime Minister was employed in London. They understand how OECD countries work but they are far less aware of the pressures on and the attitudes of inhabitants of poor countries. On holiday the natives tell you what they think you want to hear not what you need to know – that is true for PNG and it was also true of the West Coast of Scotland. It takes time and maybe even inter-marriage to learn about a third world culture; any place without a welfare state is deeply different.

    There are many aspects of NZ that I really like; I doubt I would ever leave unless I had to return to Britain because their health service provided a life saving drug not funded by Pharmac. For immigrants from third world countries the following keep them in NZ even when they would be happier back home: pension, safety and education of children, jobs for school leavers, any serious medical conditions.
    I support immigration – well I would if the numbers were more rational which for me would mean matching UK & USA per capita. I enjoy meeting Indians, Chinese, Koreans, Africans, Pacific Islanders, etc when they are clearly helping NZ and are as strongly attached to their new country as I am.

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    • This year is the first time that I have seen 3 tables taken up by cantonese dialect Hong Kong Chinese at the Ascot tents on the grounds of the Ellerslie race course during the Melbourne Cup race day. I have attended many of these race days over 15 years and not even 1 table has ever been taken up any Asian group.. Looks like the 6 months unrest in Hong Kong has pushed these poorer people to NZ. However at $3,500 per table or $350 per person, perhaps not so poor people arriving at our doorstep.

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      • At $350 a head at the Ascot tents at the Ellerslie Race course, I can never understand why their buffet lunch is usually so bad. I could not believe they would serve up badly burnt beef as a casserole main dish and hot food served cold. Have they not heard that there is such a technology called serving plate warmers?

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  8. I think it is disgusting that people from India and China have as much claim to this country as people from our ancestor country. That’s ethnocentrism. Europeans are less ethnocentric than other ethnic groups.

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    • Had to look it up. Ethnocentric: evaluating other cultures according to preconceptions originating in the standards and customs of one’s own culture.

      I don’t think your assertion is true. Whoever we are we ought to have values that we measure others by; being aware that other cultures have different values merely requires experience of other cultures. So Europe is diverse with my French family eating horses and my English family especially the pony owners horrified by the idea. New Zealanders are well traveled so are reasonable culturally aware but there are other countries where having an education almost certainly brings you into contact while still young and impressionable with other cultures. India and Papua New Guinea spring to mind. I rather like the way both Indians and Papuans can be dismissive of their own fellow citizens in a way that would have us dismissed at racists.

      My worry is not New Zealanders having more openness to other standards and customs but our losing awareness that we have such standards. So we have current values being imposed on historic figures – I expect some academic is criticising Captain Cook for not have gender neutral toilets on board the Endevour. The debate about Indian traditional marriage has focused on race and culture but avoided the fact that every year twice as many females as males arrive in NZ on family visas. Our current values seem to have a hierarchy: race, gender and religion and I would prefer that order reversed.

      It is certainly not disgusting that some New Zealanders of Indian and Chinese ethnicity have a better claim to New Zealand than say myself. My acquaintance Nancy may be totally Chinese in appearance and blood but was born here 75 years ago and has all the best virtues of any proud Kiwi; surely that is a better claim than my mere 17 years in New Zealand. If as I expect you are referring to people from poor countries who are escaping poverty but without any love of New Zealand and have little intention of assimilating into New Zealand life and chose to live in an ethnic enclave then I agree with you.

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    • This is about ethnocentrism Bob. It shows it is a biological phenomena. Jacinda Adern told the UN that people can be trained not to be xenophobic. If she can convince the public that large numbers of foreign people from unlike cultures are an asset- good luck.

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  9. The bond with Australia was only based on a handshake . Our weakening bond is being driven by immigration from China and India into Eastern Australia. According to an interview on RNZ.

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    • Unfortunately the Australians have forgotten that NZ exists as a State of Australia in their founding constitution and practically wrote most of their constitution. These days they treat the SCV-Special Category Visa as a pariah Not so special Visa category.

      Liked by 1 person

  10. Keep up the good work Michael, another great post.

    I feel that a majority of NZers are opposed to mass immigration, but many people consider it a necessary evil because industry, politicians and media would like us to believe that our economic health depends on a high level of immigration. Your blog shows otherwise.

    Liked by 3 people

    • We are not opposed to having 10 million cows delivering GDP of a measly $17 billion. Why would we be opposed to 10 million monkeys delivering GDP of $600 billion?

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  11. We are witnessing the rise of a new oligarchy of wealth and education. And not surprisingly, the leaders of this country’s government, its press, its corporations and most of its popular culture most all belong to this same class.

    But this oligarchy is not sustainable. Not only because it is unjust that the global economy should work for so few, that so many should be shut out of America’s front row, left without a voice.
    …………
    We must forge in this century a new politics of family and neighborhood—a new politics of love and belonging—a new politics of home.

    That will mean rethinking old positions and revisiting old orthodoxies. It will mean challenging the old priorities of the political class. But we cannot wait any longer. Our life of liberty, our life together, cannot wait.

    So let us strengthen the hands that are feeble and steady the knees that give way.

    Let us renew our hope in what might be.

    Let us begin.

    Thank you and goodnight.

    https://www.hawley.senate.gov/senator-josh-hawleys-speech-6th-annual-american-principles-project-gala
    Celebrate Diversity?

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