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).



Remoteness….occasionally a benefit

I’ve been a little unclear what to make of the Rocket Lab story.   Don’t get me wrong, I liked the idea that our regulatory systems can, on occasion, be sufficiently adaptive to cope with new and innovative industries –  even if it is far from generally true.  And I wish all the best to any New Zealander with innovations they succeed in taking to the world market, and if that includes rocket launches that’s fine.

But there was the nagging question of why such an activity would be taking place in New Zealand at all.  We aren’t exactly close to anywhere, let alone home to great centres of expertise.  But there were those government subsidies –  up to $25 million of taxpayers’ money to Rocket Lab, as well as the cost of the regulatory regime (15 to 20 bureaucrats in the “New Zealand Space Agency”).  And I recalled that the French launch their satellites from French Guiana without –  as far as I’m aware –  much else happening in French Guiana.

But there was an interesting article on Newsroom built around an interview with head of the agency, a mid-senior level MBIE official.   It answered some questions, and not in a terribly encouraging way.

There was the disarmingly frank acknowledgement of how little expertise MBIE has

The biggest challenge, Crabtree says, has been the “classic small government thing” of lacking expertise.

“We didn’t have the experience or technological depth, but the focus is on picking things up quickly but also working with international partners who can bring that to you…

“I set the challenge which was, can we move as fast as Rocket Lab?”

Where are the incentives to get things right, when the hype is all around accommodating –  and keeping pace with – Rocket Lab?  You can pick up lots of things quickly, but often you don’t know what you don’t know.    (And, to be clear, I’m not asserting a need for regulation for its own sake, and have no idea what specific regulation might –  or might not – be needed in this industry, but the general point holds.)

And then there was the answer to what New Zealand had going for it, aside from the cheque book of the put-upon taxpayer.

New Zealand has what Crabtree deems “a natural resource endowment” when it comes to space-related activities, such as a range of launch angles.

“You want to launch a rocket to the east, and you want to launch a rocket over the ocean, and you want that ocean to be relatively clear of ships, and you want the sky to be relatively clear of planes…

“There are very few places in the world that tick all the boxes.”

So that would be New Zealand, Madagascar, the Falkland Islands, and maybe Uruguay/Argentina?  Those great centres of economic activity, innovation and so on.   We have political stability going for us over each of those other places, but it scarcely sounds like the makings of  –  or even a marker of – a transformed economy, when the business has to operate in a place where nothing much else is.

Ah, but then there are the kids

Beyond the economic calculations, Crabtree hopes a booming space industry can encourage children to develop an interest in space and technology.

“Kids get interested in science either through dinosaurs or space, and we’ve had lots of dinosaur kids, but space hasn’t really had a fair go.”

The agency has been providing educational materials for schools to use, while universities also want to attract those keen on making a future contribution to the space race.

I guess at least the government is symmetrical –  we also subsidise the film industry which provides the most-frequent encounters with dinosaurs these days.

In my day, the Apollo programme, moon landings and all, was great for exciting interest in space, around the world.  Count me just a little sceptical that some rockets launching from remote sites on our east coast are going to make a material difference to the career choices of many New Zealand kids. Or that, if they did, many of the resulting –  higher value – jobs would end up in New Zealand for long.

Perhaps the industry can succeed here, standing on its own feet.  If so, I wish it well. But I’m a little uneasy about politicians and officials talking up, and then being pursued by, the hype.  Corporate welfare dollars all add up after a while.