As the new government prepares to throw the Productivity Commission into the dustbin of history, perhaps they could at least pause to give one of its suggestions to their predecessors some serious consideration.
The suggestion is that New Zealand ought to move from an ad hoc immigration policy, disconnected from other public policy settings, to a long-term government policy statement on immigration to assist with infrastructure and other planning.
This came after the Productivity Commission's inquiry into NZ's long-term immigration settings, which I discussed with Ganesh Nana, the Productivity Commission's Chairman, in an episode of our Of Interest podcast last year.
The National-ACT coalition agreement outlines plans for "disestablishing the Productivity Commission" to fund ACT Leader David Seymour's new plaything, a government department to "assess the quality of new and existing legislation and regulation."
Nana's key point was the level of immigration influences the overall population, and thus demand for infrastructure including roads, public transport, hospitals, schools, energy needs, early childhood needs, and regional development. Currently there's a "disconnect" between immigration settings and these other areas, and a "disconnect" between workforce training, skills development and labour market policy.
Nana suggested a longer-term focus for immigration, of at least 10 years, rather than the "ad hoc adjustments" currently made every few months or years which contribute to a roller coaster ride for inward migration numbers, as demonstrated in the chart below.
Call for a Government Policy Statement
As the Productivity Commission puts it, commitments to increasing productivity require long-term thinking by both government and businesses. Such long-term thinking is, however, at odds with how the immigration system is currently run given it's "reactive to short-term and sometimes conflicting priorities."
"A Government Policy Statement (GPS) [on immigration] would improve transparency, clarify the Government’s objectives within the immigration system and its link to other Government objectives, improve the Government’s accountability for achieving the objectives, and promote a longer-term focus, the Productivity Commission's report, Immigration fit for the future says.
"A GPS should require governments to state how the demand for temporary and residence visas will be managed taking account of significant pressures (if any) on New Zealand’s absorptive capacity over the period of the GPS including: – specification of a planning range for the intake of new residents over the period covered by the GPS; and – the criteria for managing access to temporary work visas and projections of migrant flows based on these criteria, over the period covered by the GPS."
"A GPS would promote longer-term credibility about population projections and planning ranges for migrant volumes. It would increase certainty for the general public, businesses, communities and other stakeholders such as local government. This in turn would help these parties to plan and implement long-term investments," the Productivity Commission said.
"By requiring Ministers to make clear policy choices about migration, including fiscal and regulatory choices, a GPS would inform the public about how the Government will adjust migration and/or absorptive capacity should net population growth threaten to put damaging pressure on the latter."
In its response to the Productivity Commission's inquiry, the Labour government said it supported the intent of a GPS. The then-Immigration Minister Michael Wood said in April he had asked officials to provide advice on what a GPS for the immigration system would look like.
New Minister of Immigration Erica Stanford ought to continue this work. Confidence around immigration numbers could help enable more planning certainly for central government, local government and the private sector in the need for and provision of key infrastructure such as housing, transport, hospitals, school and energy requirements.
Findings from the Productivity Commission's inquiry include; the immigration system currently uses a range of tools that may suppress wages, job creation, and productivity; and the supply of infrastructure is less responsive to population growth now than in the past.
237,100 arrivals
According to Statistics NZ's provisional estimates, in the September year NZ received 237,100 migrant arrivals from overseas. That's 237,100 people who need somewhere to live, will want to travel around by car and public transport, need water and create waste. Some of them will be children who'll go to school, while others will need healthcare.
Because another 118,200 people migrated from NZ to somewhere overseas, there was a net annual migration gain of 118,800. So those departing will have created some space for those arriving.
However, for a country with an estimated resident population of 5,269,200, recent migrant inflows are very big numbers. In fact Statistics NZ says the 237,100 migrant arrivals, 118,200 migrant departures, and net migration gain of 118,800 in the September year are all the highest figures on record for an annual period.
That's in stark contrast to the unique pandemic closed border period when NZ had a migration loss and its slowest population growth rate since the late 1980s, with an increase of just 0.2% in the June 2022 year. This, of course, led to businesses across a range of industries crying out for staff in a very tight labour market with historically low unemployment.
Infrastructure deficit
Even before the recent population surge Sense Partners, in a 2021 report commissioned by the Infrastructure Commission, estimated NZ had a historical infrastructure deficit of $104 billion. This, it said, was made up of a shortfall in public investment relative to the private sector and an estimated need for 115,000 additional homes to eliminate overcrowding.
On the housing front, interest.co.nz's Greg Ninness recently reported Auckland could be on the verge of another housing crisis as the recent surge of immigration-driven population growth outstrips the supply of new homes being built in the region. Ninness estimates Auckland's population growth of 47,000 in the 12 months to June requires an additional 15,667 homes. However, Auckland Council figures show the number of new dwellings completed in the 12 months to June came in at 15,263, leaving a shortfall of 404 homes for the year.
And according to the Ministry of Social Development, there were 25,284 applicants on their register seeking public housing as of September 30. The register provides the number of applicants assessed as eligible for social housing who are ready to be matched to a suitable property.
Plenty of infrastructure in NZ is already struggling to cope. For example, witness the tales of woe over recent years from ageing Wellington pipes spewing sewage and water on to city streets and into the harbour. They've have been joined this year by disruption, mess and bad smells caused by three sinkholes appearing in Auckland, featuring a collapsed sewer line in Parnell, and problems with stormwater pipes in College Hill and Ōtāhuhu.
Inflation concerns
The word "immigration" appears 43 times in last Wednesday's 58-page Reserve Bank Monetary Policy Statement. Primarily that's because the Reserve Bank, battling the highest inflation in 30 years, has become concerned high immigration could make its job harder.
In an episode of our Of Interest podcast this week, Reserve Bank Governor Adrian Orr noted inward migration numbers were currently historically significant. While strong migration has " been very useful" by helping ease pressures in the labour market, the impact on the demand rather than supply side is now "becoming more and more evident," Orr said.
In its Monetary Policy Statement the Reserve Bank said: "[Monetary Policy Committee] members noted that net immigration has been higher than previously assumed. This has increased the supply of workers into a tight labour market. However, the demand side effects are becoming apparent. Strong population growth has contributed to an increase in housing rents. Rent increases, and any increases in construction costs in response to greater housing requirements, affect inflation directly, as rental prices and construction costs are accounted for in the consumer price index."
"Immigrants need to establish new homes in New Zealand, which increases demand for housing and housing-related goods and services. Over recent months the inflationary impacts from high net immigration have become more evident...High net immigration is a significant contributor to the recent recovery in house prices."
They're not alone
The Productivity Commission and Nana aren't the only ones raising questions about our ad-hoc immigration stance. On this website alone, Massey University's Paul Spoonley described immigration as "the missing election issue" earlier this year. Economist Brian Easton has also aired concerns, Keith Woodford called for a resource-based perspective on immigration, and in 2020 David Hargreaves suggested that, with the border closed, it was a good time for a national discussion on migration and population.
Indeed, in a broader discussion on migration, is there a certain level where we want our population to be over the longer-term?
Given existing pressures on the environment, housing, transport and other infrastructure, it would be a shame if at least one strand of the Productivity Commission's work wasn't given serious consideration by the new government before it makes way for Seymour's shiny new toy.
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36 Comments
The easiest way to increase net tax take is to import more workers and grossly underinvest in infrastructure, education or any other public service.
John Key began this rort and Cindy doubled down on it.
Now Luxon will look to find opportunities to further shove more people into our crammed cities to pay for the generous tax cuts that he has promised his voters.
Hospitals, public housing, schools, public transport (especially rail). We also had a lack of investment in training across a range of sectors, which is contributing to our current shortage of nurses, doctors, teachers etc. 9 years of under investment has a long tail.
Some time back I listened to an interview with a well recognised immigration consultant who declared that up until 2017 NZ’s policy and systems were fit for purpose and working well. However the Labour government had then mostly dismantled all of that. Now obviously there would likely be some personal reasoning going on there but guess the real test will be if National elects to reinstall their old policy and measures, and then see if things improve accordingly.
An immigration consultant I'd trust about as much as a real estate agent, and National's policies were disastrous - a flood of low-skill migrants through those PTE's and when checked out half the applications were fraudulent. And they had to do a massive back track on letting them bring their elderly parents with them (and in many cases dumping them here while moving on to greener pastures).
The Labour/NZF coalition had some excellent migration policies, the problem was Covid upended everything then they caved in to the bleating from vested interests and abandoned them.
Yes indeed post Covid there were huge labour shortages and Labour were under pressure to fix the problem, which to some degree they have, but housing so many new arrivals is another story. In all fairness Jacinda did play the get locals to fill the jobs a right wing favourite until they find it doesn't. work
It wasnt just last year, 2019 was the record for the number of foreign migrants, 244,000 of them. Everyone who thinks National is the party of high immigration is clearly not paying attention. Worst of all, while National usually hands out temporary visas, Labour hands out permanent residency making high immigration a permanent problem not a temporary one. And most of those that Labour lets in are not skilled - look around, they are working at convenience stores, liquor stores, restaurants, dairies, driving Ubers. All things which the 362,000 people currently on a benefit could be doing. And whilst Labour was busy importing from the third world, the number of Maori on JobSeeker increased by 51% - that's the stuff that the Maori Party SHOULD be out protesting about. That is the true national scandal.
Why not? Unlike those from the third world, skilled professionals from Western countries are not looking to escape their country of birth. Many would be happy to spend 3-4 years living in NZ and doing the hiking trails, before moving on to somewhere else or going back home. These types of people arent looking for forever jobs, they are looking for something that is on the road to career progression. Even if you gave them PR most of them would eventually end up in Australia - now they just go straight there. Look at how many skilled Kiwi's go to Australia - we didnt get PR or citizenship either but it didnt stop any of us from going.
Secondly, the temporary tax exemption on foreign income for new migrants only lasts for 4 years, so many will be happy to leave once that expires as they do not want to pay NZ tax on their overseas derived income and assets.
The biggest impediment to importing skilled professionals on temporary visas is the fact that they cant buy a house to live in while they are here. That is likely to be the major determinant in our inability to recruit anyone at the moment. Imagine making the new CEO of Air NZ live in a crappy rental house for 4 years lol.
Thanks for bringing this up. One thing that's really important and so far has been unaddressed is how we teach new people coming in what it means to be a Kiwi, and what's important to us as a society. I recall a couple of other commentators have said this recently too.
For example, many of those from the UK bureaucracy we import (it's well-known across the public sector) don't have consideration or respect for our indigenous culture and the unique ways of working together that have developed as a result. Many do, and work hard to connect and adapt. And we appreciate those people. But there are other people who bring a closed mindset, and their way of working impacts others.
We need to find a way to build national cohesion around shared values, and that includes a people-centred approach, learning how to work well with Māori (and other cultures) and in ways that support and build up everyone (such as those espoused within co-design principles or having shared kawa and tikanga/ways of working). Right now we're going to struggle to bring people together in the mid- and longer-term if we can't find and articulate the shared values - both politically and organisationally.
From an admittedly small sample judging by what I've seen Kiwi (Maori or Pakeha) bosses are open to employing from all ethnicities (for example my wife's boss has employed immigrants from India, China, Phillipines, Pacifica, Bulgaria and England and only one Kiwi - a receptionist who was sacked. Whereas the small businesses owned by Indians employ indians and Chinese owners employ Chinese. It should be possible for MBIE to research - maybe life on North Shore is not representative of New Zealand.
Good observation. And small business owned by Vietnamese often only employ Vietnamese, etc. This is where the migrant exploitation element often kicks in. Sponsoring employees from home country using agents as cheap expendable labour. Kick-back fee is paid in home country by employee so is non-traceable. Qualifications can be faked. Employees come little or no english skills and zero understanding of their rights, so can be exploited willingly or unknowingly and cultural pressure is used to silence them. And the type of employers doing this are still given accredited employer status. Occurs in Tauranga too. Hard to trace and very difficult to investigate unless there is a whistleblower and solid documentary evidence (which usually does not exist where the employer does not record anything in writing). Immigration policy and inability to police/enforce has allowed this type of behavour to flourish.
I think you might have missed the points of my comment. What you're talking about is another anecdotally well-known problem in NZ which I'd hope is getting better, which is that many employers only want people with NZ experience. I don't have up to date research/information on that one though.
It's more that if we're getting a big influx of new people coming into NZ, that will impact our shared culture. They may need some support to understand what's important here and our unique ways of working that respect Māori values as well as Western ones. And the best way to do that is through work. Otherwise the decisions that are made (particularly in public sector, which scale big!) from people who don't have this understanding of the New Zealand context can often inadvertently harm instead of help.
Incidentally - Auckland has a very diverse population compared to other parts of NZ, including the largest Pacific population. People are more used to meeting lots of new and diverse people. Places like Wellington and Palmerston North, smaller main centres are much less diverse, and so people aren't exposed to a diverse population and ways of working so the culture is more homogenous. For example, anecdotally I hear getting employment in certain fields in Christchurch is still near- impossible if you didn't go to the right schools.
In short: How we welcome new people and integrate them is important to maintain social cohesion, and any immigration plans should include considerations around this.
Yes the NZ culture of old has change and is ever changing, and the larger scale of internal migration around the country over the last 3 years has helped, anecdotally, with the more closed mindsets that were traditionally found in the regions. Your mindset of focusing on a new future working in new ways is refreshing to the many around the country wishing it were still the 70's or 80's.
Perhaps this "unique way of working" that has developed is what is responsible for the non-delivery of public services that we are experiencing. All that singing and saying prayers at the start and end of meetings, people getting paid for an afternoon off work every week to go learn Maori, the endless (taxpayer funded) consultations with Maori on things that have absolutely nothing to do with ethnicity, making speaking Maori a mandatory qualification for being employed in a public sector role, only paying bonuses to staff who speak Maori ....
Perhaps listening to experienced people who have come from functioning public sector organisations overseas is what is needed to fix the dysfunctional pile of crap we currently have. Perhaps we should go back to hiring people based on their qualifications, skills, and experience in delivering outcomes rather than adherence to woke ideology.
No, it's the usual organisational dysfunction that's responsible for poor performance in lots of sectors in my observation. Keeping people who aren't performing, leadership issues at the top. There is a big difference between leadership and management, and we're sadly lacking the first in many organisations. It's just the usual human nature stuff.
We have a unique culture in NZ which comes from the marriage of two cultures and a small population. It's more than just 'woke ideology'. I've worked in other Western countries and the difference is obvious if you observe closely. I really value our ways of working here even if they're invisible to others.
No, it is not obvious, and needs challenged.
google World3 - images
See the line that S-bends from top left to bottom right?
That says we won't even be able to maintain what we have - let alone add stuff.
Sheesh.
Then identify the three inflection-curves happening about now - and be very worried.
The productivity commission ended not because it didn't perform it's role but because successive governments have substantially ignored it's recommendations. People want a shiny new Teslas now not more frequent passenger rail services in a decade.
We don't live in an era of long term thinking, certainly not intergenerational.
The key word is "population" and immigration is just a part of that.
If we had a population policy, and we really really do, we could only the work out to planning immigration. 50 to 100 year frame at least.
I think Five Million the absolute upper limit for population but Two Million would be better.
The goal being richer and happier.
The 1987 immigration act led to profound changes to New Zealand yet I never hear it talked about, nor did the government at the time campaign on it.
Those of us old enough will remember that New Zealand actually experienced a population decline in certain years prior, and the makeup of the country was overwhelmingly Pakeha and Maori.
If the net result of more immigration is higher inflation, then does that not solve the age-old chicken and egg argument regarding whether we need more immigrants to build us houses etc? If their additional supply is lower than their additional demand, then they are not helping the economy.
Not sure if you are being sarcastic? If not, then you clearly are not a fan of markets, and would prefer big government intervention in the form of immigration settings to fix the market failure as you see it. I myself think the govt should get out of the way and let the market find the true cost of labour.
According to most the accredited visa employers it is that kiwis do not want to work for illegal slave wages and pay thousands to an employer for the opportunity and thousands for a mattress on the floor in an overcrowded illegal dwelling and no basic legal employment contract.
Sadly that is rapidly becoming the norm of "NZ wages" that new immigrants experience upon taking opportunities in NZ. Even NZ's health department funds new immigrant nurses outside of hospital to below minimum wage with the difference between that and the minimum wage only possible by individual employers through vast and crisis level under staffing. Skipping the essential needs of patients while still charging the time for them. Having gone through an employment review the number of migrants applying offering to work for illegal conditions just to get the visa was staggering at a rate of 50:1 of the NZ applicants. I use outside funding to make up a living wage as Te Whatu Ora, aka Te fuk u Ora, literally did fund and advertise the wages at below minimum for the nursing staff. I see it as a point of principle that for years of experience and training that at least living wage is appropriate but Te FU Ora cannot even be bothered to meet the minimum wage in their funding.
It is a sad but true thing that it is not possible to have stable healthy housing on most NZ wages these days.
Thank you for saying much more eloquently what I wanted to as well. It's not that Kiwis don't want to work, generally, it's that they don't want to work for bad employers in slave conditions. Employers have been supported by Govt interventions such as "Working for families" and "Accommodation Supplement" which means business can offer lower wages because the Govt picks up the extra.
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