At least 60 per cent

Dating back to before they took office in 2017, Labour’s stance on New Zealand immigration policy hasn’t been particularly clear. There was the 2017 policy, announced under then-leader Andrew Little, that was sold as being likely to make a big difference, but once one looked into the details (see link earlier in the sentence) it was clear it was designed not to do so. But then the leader changed, and little was heard of the policy on the campaign trail (people close to Labour told me that Ardern had made clear that she wasn’t that keen on the policy). Labour and New Zealand First then became government, explicitly agreeing to operate on Labour’s immigration policy, but apparently – so a NZ First minister told me – with an agreement to revisit the policy mid-term. If so, not that much of substance ever seemed to flow from that, although in early 2019 there was (ill-advertised) agreement in principle to changes down the track in how the residence programme was designed and run.

Then, of course, Covid intervened. There hasn’t been much non-citizen immigration at all since then, but no one envisaged that as a permanent model. And, of course, Labour secured an absolute majority at the last election, and selected a new Minister of Immigration.

Last month, the government finally got round to asking the Productivity Commission to do an inquiry into immigration policy. (I say “finally” because whether or not one approves of something like the current approach to immigration policy, that policy has clearly been one of the largest government economic policy interventions over several decades now, and the evidence-base around the economic effects of this large intervention, in the specific circumstances of the New Zealand economy, is disconcertingly light.) But then we are given to understand that the government has made up its mind anyway (which is, of course, their right as the elected government, but seems an odd ordering, when you’ve been in government for getting on for four years).

Here was the Prime Minister in her speech last week (emphasis added)

In terms of immigration going forward, last week we announced that the Productivity Commission will hold an inquiry into New Zealand’s immigration settings.

The inquiry will focus on immigration policy as a means of improving productivity in a way that better supports the overall well-being of New Zealanders.

The inquiry will enable us to optimise our immigration settings by taking a system-wide view, including the impact of immigration on the labour market, housing and associated infrastructure, and the natural environment.

This will sit aside existing work being led by the Immigration Minister around reforms to temporary work visas and a review of the Skilled Migrant Category visa.

In fact this Monday Minister Faafoi will be outlining the case for change in New Zealand’s immigration policy in a speech in Wellington.

But let me be clear. The Government is looking to shift the balance away from low-skilled work, towards attracting high-skilled migrants and addressing genuine skills shortages in order to improve productivity.

So I looked forward to reading the Faafoi speech, with interest tinged with scepticism. Specially invited guests, some from out of town, must have looked forward to it too – even if for some their interest might have been tinged with apprehension. There are a lot of champions of large-scale non-citizen immigration out there – from the Green Party (who seem keen on importing supermarket workers) to much of the “big end” of town.

As it happens, Mr Faafoi was apparently sick yesterday, and so the Minister for Economic Development Stuart Nash got the job of reading Faafoi’s speech, and was reportedly then unable to answer most questions.

The speech itself seemed to have been downgraded – the PM had trailed it as making the “case for change”, but the minister’s heading was simply “Setting the Scene”. But it was barely even that. I guess we came away with the message that “we are determined not to return to the pre-Covid status quo”, but there was almost nothing of the how – no specifics at all – and very little, in any sustained sense, about the why. There was no evidence in the speech of any rigorous thinking, analysis or research from officials – the sort of work one might normally hope for (especially for a government four years in) in advance of policy decisions and announcements. Particularly unkind observers suggested that the speech was more in the nature of “an announcement about an announcement”, of the sort that has become all too familiar. In fact, we were told that “we’ll be engaging with you [who?] over the coming months to test our thinking”, suggesting there just isn’t much there yet.

And I say all this as someone who might, possibly, be somewhat sympathetic to some elements of the broad direction the government might be heading in around immigration (even while being highly sceptical of Stuart Nash’s statist centralised approach to business and the economy, and prone to scoff every time I read another reference to the vaunted Industry Transformation Plans, in which bureaucrats take the lead in (purporting to) shaping the future of one industry after another (a tourism one got a mention last night)).

There isn’t much point trying to unpick Faafoi/Nash’s speech bullet point by bullet point (for some unaccountable reason it appears on the Beehive website with every sentence a bullet point). But in this post I just wanted to address a claim made in the speech.

High levels of migration have contributed to 30 per cent of New Zealand’s total population growth since the early 1990s.

The “early 90s” is not only when the current broad approach to immigration was being introduced, but it is also when the current official population series begins.

Now I’m sure that one of the first things MBIE officials tell each Minister of Immigration is that to talk of “migration” isn’t very helpful in a policy context. There are inflows and outflows of New Zealanders and non-New Zealanders and the only bit policy controls is about the movement of non-citizens (arrivals, and departures for those on limited term visas). So in a speech on immigration policy, one might expect that the Minister of Immigration would focus his analysis on the movement of non-citizens. And that offers a quite different picture than the one Faafoi/Nash painted in the speech.

Here is a chart showing net non-citizen migration as a percentage of New Zealand’s population growth for each calendar year from 1991 to 2019 (I left off 2020 because the net migration numbers for that year are still estimates and the SNZ model for estimating these things for very recent periods isn’t great in normal times, yet alone Covid times)

non-citizen contrib

Not even in 1991 was the contribution of non-citizen net migration quite as low as 30 per cent, and 1993 was the last time the contribution (to a first approximation, the contribution of immigration policy) was below 60 per cent. Of the year to year variation, some represents variation in the number of non-New Zealand migrants, but much represents variability in the (net) out-migration choices of New Zealanders (mostly to Australia).

There are plenty of people who will think the numbers in the chart are a good thing. I don’t, given what we know about the continuing long-run bleak underperformance of the New Zealand economy. But whether or not you welcome these trends, they are the (relatively) hard data. For decades now – well, prior to Covid – New Zealand’s pace of population growth, which is among the highest of the OECD countries, has been largely an immigration-policy-driven phenomenon. No OECD country envisages a larger share of population growth coming from non-citizen immigration, and most envisage a far smaller share. And if anything, these data are likely to understate the true population consequences of immigration, since the median migrant tends to be relatively younger, and the children of those migrants – themselves New Zealand citizens – will have further contributed to the growth of the population.

Rapid (policy-led) population growth in such a remote location appears to have impeded the prospects for any reversal of the decades of productivity underperformance. It has skewed the economy inwards, persistently overvaluing the real exchange rate and thus crowding out potential export industries. Wage growth in New Zealand has been weak, but that isn’t directly some immigration phenomenon – such discussions, including the Minister’s, consistently ignore the demand effects of high immigration – and the data show that, for the economy as a whole, wage growth has tended to run quite a bit ahead of growth in the economy’s earnings capacity (nominal GDP per hour worked).

When the government finally gets round to specifics one can only hope their policy decisions are based on better analysis, including the some robust economic analysis of the specific New Zealand experience, than was evident in the speech last night.

And when the champions of mass-migration splutter at the general thrust of the government’s aspirations, perhaps they might offer some thoughts on what it is about New Zealand that means that – in their view – we need to be uniquely heavily dependent on large scale non-citizen immigration.

27 thoughts on “At least 60 per cent

  1. “”High levels of migration have contributed to 30 per cent of New Zealand’s total population growth since the early 1990s.””. Was Mr Nash simply saying 30% of NZ’s population were foreign born and arrived after 1990? Or is he including the children and grandchildren of immigrants?

    Does your chart include non-citizens leaving NZ? Does it look so bad because Kiwi citizens are emigrating or dying and certainly not averaging 2.1 children?

    Even if you and Mr Nash can produce a percentage of immigrants -v- NZ population that I can grasp will it still be misleading simply because of age differentials. With a visible immigrant family I chose to live in Auckland North Shore (most immigrants tend to end up in the big cities – just about the only piece of sociology I know, first noticed in the 1920s). In my daily life at U3A I meet a few fellow POMs but it is over whelming Kiwis; at the leisure centre and the library it is about fifty-fifty but when I pick up the grandchildren from pre-school half the toddlers and all the staff are clearly immigrants. But the statistics would have my Melanesian grandchildren recorded quite correctly as New Zealanders. And it does matter since defenders of the current system explain how immigrants save the NZ govt the cost of their education and pay for our super.

    It is a subject fraught with confusing numbers. I would challenge any immigration minister with “do you want an open border?” and once they say no the follow up question is “what criteria should be used when selecting immigrants to reside in NZ?” and the answer to that can only be that in some definable way the immigrant improves NZ.

    I find your arguments on the issue persuasive – high levels of immigration for 75 years under all types of govt has not produced economic success (although NZ has been able to avoid most of the social conflict problems seen in the UK, France and some other European countries; so existing policy has one merit).

    Liked by 1 person

    • I can replicate something like the 30% number just using total net migration, so I’m pretty sure that is what he meant (it is, or used to be, a fairly common stat to cite – one thing I encouraged over 10 yrs on this topic was to distinguish NZers from the policy-driven non NZers.)

      We still have natural increase even though the total fertility rate has been below 2.1 for some decades.

      On your final point about divisions etc I suspect that is mostly down to v low levels of Muslim migration (something that differentiates us from the UK, France , Belgium etc) and of course to being a long way from anywhere so that illegal immigration is a fairly minor issue.

      Liked by 1 person

      • Obviously the small number of European Muslim terrorists are effective in terrorising most of the population but putting terrorism to one side (I lived in London during the IRA bombings and the Baltic exchange bomb was only 30 seconds away from dropping broken glass on my two young boys) the problem with Muslim immigration in the UK and France is mainly poverty and lack of integration. On most of the socio-economic measures the Bengalis in London do very badly (I used to live in Spitalfields with its 95% Bengali schools) but the most successful immigrants in the USA on the same measures (incidence of poverty, average income, average educational attainment, drugs use, criminal convictions, mental health, etc) are female Muslim Indian immigrants.
        Income is what matters. Whatever rate of immigration NZ is to have should be settled by income not a spurious assessment of ‘skill’.
        I’m happy the discussion in NZ is about legal immigration – that is quite frustrating enough.

        Liked by 1 person

      • I don’t see any easy way to avoid some mix of income and skill since we are partly making decisions on potential ( particular for relatively young people).

        Altho I don’t tout it some days I’m sympathetic to a model in which we take refugees and the spouses of NZers and anyone else can come only short term on a work visa of up to, say, three years. People would still do that short term thing – I did it three times in the course of my career, never expecting to stay in any of those countries – but it says something like “becoming a member of our society is about either compassion or love, not economics”.

        (No offence here to you or other immigrant readers: it is a thought experiment, rather than a policy proposal.)

        Like

  2. Questions – does fafaoi know these graphs are available, if yes does he understand them, if no why is he a govt minister, if he does understand does he agree he has lied or just been too definitive. The paucity of ministerial understanding or ability to tell the truth per facts is very disturbing but does explain why NZ continues to trend down the list of countries that are growing their economy, I hope voter regret ensures a better govt now and definitely come 2022.

    Liked by 1 person

    • I’m sure ministers have seen charts like mine (they appear sometimes in official agency documents), and the choice to use the 30% number – conflating NZers leaving with non-NZ immigrants – will have been entirely political. The govt won’t want to address the questions the 60%+ number might raise (consistent with my expectation that whatever changes they finally announce won’t make v much difference to the average inflow).

      Liked by 1 person

      • We take in around 100,000 foreign students a year. Foreign students are counted as migrants in our NZ statistics infinite wisdom. Most of these students have been mostly depleted and either unable to complete their courses or stuck outside of the country. Watch our Net migration gains jump up to 90,000 the minute the borders reopen.

        Like

  3. 1) The carbon targets are absolute not per capita. If they are to be met the population growth rate will need to be much lower than previously

    2) It would be nice to see the government get smart with a population strategy and target maximising marginal wellbeing per capita growth,

    i.e: effectively maximise (gdp per capita growth – externalities per capita),

    where the externalities are all the adverse wellbeing effects

    Liked by 2 people

    • On your 1) note that with the ETS a much lower population growth rate would lower the carbon price – itself a good thing – rather than directly affect whether or not the emissions reduction target is achieved.

      Liked by 1 person

  4. New Zealand’s population growth has been rapid in recent years compared with small European countries.
    For example, Denmark’s population was in 1990 was 5.1 million and in 2020 was 5.8 million.
    Finland had a population in 1990 of 4.9 million and in 2020 had risen to 5.5 million. For both countries a gain of a mere 12-13% from 1990.
    In New Zealand we had in 1990 a population of 3.3 million and by 2020, 5 million. I suspect the Danes and Finns are not currently facing demand driven housing inflation any thing like we have or the infrastructure pressures. What is interesting is that the 3 million level was reached in 1973 in New Zealand and nearly 20 years later had only increased to 3.3 million.
    I’m surprised the population issue has not been seized upon by those concerned by sustainability and climate change emissions. What is a sustainable population level for NZ? Should we be talking about population reduction, or a population target or cap? I recall in the 1980’s and 1990’s the news was often about low birth rates and aging populations in developed countries and the effect this would have in the future. Presumably this was the reason the immigration doors were flung open. But the time is well overdue for a brake to be applied to immigration. I think a net gain target of less than 30,000 people per year is in the ball park of sustainability. Perhaps the Greens will take that one up? No?

    Liked by 2 people

    • The only reason we are talking about population cap at only a meagre 5 million people simply because our land resources have been completely used up full with 10 million cows that eat and drink and require land to the tune of 200million people.

      Like

    • The Greens wouldn’t take a measured stance on immigration, as in their view more immigrants increase their strength against the farming sector.

      Like

  5. Apparently the empirical evidence shows that an influx of ‘low skill’ immigrants doesn’t usually depress wages because they usually take the jobs that the locals don’t want to do. And often these jobs are vital to the economy.

    An influx of more educated immigrants is more likely to have a depressing effect on wages because they are more likely to take jobs from locals. There is anecdotal evidence that public servant wages in Wellington may have been held down by a ready supply of immigrants filling many of these jobs in recent years. These are generalist jobs that for the most part probably could have been filled by less qualified or more junior locals, who might have needed a little more training.

    Specialist roles like engineers are more difficult to fill locally so recruiting foreigners to fill these is probably necessary.

    This suggests to me that a points based immigration system based on the general level of qualifications is not a good idea.

    Like

    • With the missing migrants and still rampant house prices and traffic jams, clearly migrants are not the cause of our traffic jams and lack of houses with the correspondent rampant house prices.

      Like

      • According to Te Putea Matua, formerly known as The Reserve Bank of New Zealand, “(…)the Auckland’s construction shortfall between 1996 and 2016 was between 40,000 and 55,000 dwellings, or approximately 10 percent of Auckland’s housing stock(…).”. The population of this fair city increased by 499K in the said period.

        Further details can be found here:

        Click to access dp18-02.pdf

        Like

      • Clearly you can’t follow the logic that there was a shortfall in housing before Covid – and that the decrease in interest rates increased demand for that limited supply! Want to bet that if low immigration persists then house prices will rise by a lot less than 20% in the coming year?

        Like

      • Barry, unfortunately cows do eat and drink and need land to as many as 200million people. That is why our country is rather full of people with only 5 million population and 1% urban use.

        Like

      • Anthony, sure 20% is a large rise and of course the 100% non deductibility of interest costs on existing property will discourage investors from buying existing property. Draconian measures by the government will see a fall in demand by investors that need to borrow to buy.

        Anyway the average increase is 10% a year with a doubling every 7 to 10 years so a large 20% rise would see smaller rises over the next few years as a historical trend. Pretty much expected.

        Like

  6. What empirical data are you referring to? Take bus drivers as an example – in Auckland North Shore most drivers seem to be fairly recent immigrants. Have bus driver wages stayed in line with public service jobs over the last fifty years? Aren’t they now being asked to work split shifts? I’ve no numbers to support me but reputedly they are earning near the living wage but they are doing a responsible job almost vital to the economy of Auckland.
    If like some other countries we capped immigration in all roles to say 50% max then I have two family members who might consider the short training course required to be a bus driver if the salary was sufficient and the working conditions suitable.
    Low paid immigration is being used to hide problems in our society. For example our children are brain washed into believing a job at a desk with a keyboard working mon-fri from 9 til 5 must be better than working shifts in a care home. That assumption is wrong – the care home worker is doing something more valuable that is harder to automate. Without continual immigration of Filipino care-givers NZ would have to pay more and improve the status of the job. Schools would reduce teaching keyboard skills and increase teaching some of the many caring skills – in the long run to the benefit of our country.
    When an area of work is dominated by low paid immigrants exploitation becomes common place; that is my main objection to high levels of low paid immigration. When kept to a moderate level immigration is fine.

    Liked by 1 person

    • Schools don’t give kids that idea from what I have seen – not sure how on earth they could? Most people don’t really relish working in an office but it is where most jobs are, and is comparatively well paid – certainly compared to carer jobs.

      Not sure how hard working fruit pickers who earn far more than the minimum wage are being exploited either?

      Like

      • OK not schools but parents (and the media). We all respond to status; we want the jobs which are high status; there are many factors that assign status but the most significant is wealth.

        By fruit pickers I suppose you mean RSE (Recognised Seasonal Employment) but that is a different subject – firstly by definition it is temporary work; then they stay less than one year so our dept of stats (and most Kiwis) do not consider them as immigrants. If the RSE scheme is managed properly it is of benefit to the economy of both our country and their country of origin and of benefit to both the foreign worker and the orchard owner. There is much to be said about that ‘managed properly’.
        Maybe North Shore Auckland is not representative of NZ but the obvious recent immigrants I meet besides my own family are cleaners, prepare fast food, coffee shop staff, petrol attendants, Uber drivers, supermarket checkout operators, pre-school teachers, run liquor store and dairies. In all these jobs they are low paid and it is rational to believe they are holding down wages and often accepting poorer conditions in those sectors than typical Kiwis. They are decent people (as is my family) but I cannot see how they benefit NZ other than providing cheaper services to our elite and in Auckland assist in propping up the house prices. There are many immigrants enhancing NZ socially and economically. Why not a policy to bring in the latter and avoid the low paid? It would help return NZ to a more equitable society.

        Like

  7. For some reason the link didn’t display; the relevant information is contained in: “Residential construction and population growth in New Zealand: 1996-2016”

    Like

    • You would have to blame the RBNZ or now called Tane Mahuta or Te Tupae Matuta or whatever, when they pushed for 10% interest rates. That hawkish interest rates decimated the entire building industry with a domino effect collapse of the entire risk financing industry with 61 finance companies and $6 billion of Ma and Pa cash savings deposits burned.

      Like

      • Being a simple man (or should it be a person nowadays?), I like simple explanations. If you increase a given population by a certain number without corresponding increase in the availability of real estate, you’ll create a shortage of the latter. Consequently, the supply no longer matches the demand and prices must increase. Of course this is only a part of the story, but never the less a very significant part.

        Liked by 1 person

      • It is actually a far simpler explanation. The old people are simply living much much longer and not dying. And the older you get the more health and dementia care requirements escalate. Old and sick people need cleaners, carers and health professionals.

        I spoke to a carer for a dementia patient and she informed me that it takes 3 hours to feed a dementia patient each meal. 3 meals a day equates to a full time younger person to care for a dementia patient. Do the maths.

        Like

  8. Ranginui Walker was revered but not enough to stand in the way of a “much larger agenda for change in this country” [Bedford].

    They are happy nevertheless to unleash He Pua pua on us.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s