Finance Minister Grant Robertson admits lack of faith in Treasury's immigration projections; Treasury Secretary Gabriel Makhlouf a no-show at Budget briefing

Finance Minister Grant Robertson admits lack of faith in Treasury's immigration projections; Treasury Secretary Gabriel Makhlouf a no-show at Budget briefing
Finance Minister Grant Robertson & Treasury Deputy Secretary Struan Little

Finance Minister Grant Robertson doesn’t believe immigration numbers will fall by as much as Treasury’s projections suggest.

A key assumption in Budget 2019 was that net immigration would fall from 50,000 people in the 2017/18 year to 25,000 in 2021/22.

Asked by interest.co.nz whether any government policies around migration would need to change for this forecast to be met, Finance Minister Grant Robertson said: “I’ve long held the view that the Treasury’s model on this is - depending on your view - optimistic or pessimistic, and I don’t necessarily believe we will reach 25,000 in this forecast period.”

National's Finance Spokesperson Amy Adams said that when she was Associate Finance Minister she too considered Treasury's migration forecasts to be "a bit of a nonsense", largely because they were based on lower historical averages.

Robertson said the policy changes the Government had made around attracting the right sorts of immigrants to fill skills shortages “may well lead to a reduction” in immigrant numbers, but he had “some scepticism” around Treasury’s projections.

He wouldn’t be drawn on exactly where he believed annual net migration would fall to.

He also pointed out the fact Statistics New Zealand is using a new method to collect its migration data, which is causing volatility in the figures.

Pressed on the significance of the fact that not only is there ambiguity around current and historic migration data, but now the Finance Minister doesn’t trust the advice he has received about future trends on a matter so integral to economic growth, and thus government revenue and expenditure, Robertson said the risk to the economy was an upside not a downside one.

In other words, if it turned out Treasury was wrong and net migration remained above 25,000 come 2021/22, the effect on the economy would be positive.

The added pinch in the matter from a political perspective is that Labour before the election said it expected its policies to see annual net migration fall by 20,000 to 30,000 people. Meanwhile its coalition partner, New Zealand First, drew a more definitive line in the sand, campaigning on reducing annual net migration to 10,000 people.

The awkward empty chair

In another political tangent, Treasury Secretary Gabriel Makhlouf was expected to appear at the Committee, but Treasury on Monday informed it he would be represented by Treasury's Deputy Secretary for Budget and Public Services Struan Little, Chief Economic Adviser Tim Ng and Deputy Secretary for Macroeconomics and Growth Bryan Chapple.

Little explained the call was made because Makhlouf's term was ending next week, and the meeting was about forecasts looking ahead to 2023.

Grilled by Adams on Makhlouf’s absence, amidst controversy around Treasury’s Budget “leak”, Robertson said this was a matter for the Treasury, but he had “absolute confidence” in the representatives present.

Treasury's rationale

Little earlier gave some insight into Treasury's migration modelling. He said the vast bulk of Treasury's assessment was derived from movements of New Zealand citizens, rather than foreigners. 

So Treasury paid more attention to factors like how the Australian economy was performing relative to the New Zealand economy, and what was happening in Europe, to determine whether kiwis would be leaving New Zealand, or returning from overseas sooner than they might otherwise have. 

He said changes in government policy around migration didn't have a huge impact on Treasury's modelling, as these policy decisions largely affect movements of foreigners. 

However, a scan through recent historic migration data shows there are more foreigners than there are New Zealand citizens moving in and out of the country.

This is how Treasury characterised possible variances in its migration projections in the "Risks to the economic outlook" section of its Budget Economic Fiscal Update: 

Net migration outflows to Australia tend to increase when Australia’s labour market strengthens relative to New Zealand’s. The prospect of relatively faster wage growth in New Zealand may lead to less people migrating to Australia than assumed in the main forecast. Equally, tight domestic labour markets may encourage employers to look offshore for workers. In addition, uncertainty around policy changes to residency requirements or visa conditions may deter potential migrants, widening the uncertainty around the outlook for net migration. Large revisions between the most recent releases of Stats NZ’s new official measure of net migration also make the outlook uncertain.

Net long term migration

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16
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a class act for sure, "hey, treasury numbers are wrong and mine are right but I won't be drawn on what they are....that way I can't be wrong.....surely you can just believe me, I'm right and the magic will all just balance and work".......ahhhh a lovely day dream...perfect photo as well.....looks like they are all in a lovely day dream

The guy pictured behind Robertson appears to be the only one who grasps the situation

17
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I take it the NZF MPs will be resigning on principle then.

Psst: your mates ACT are the most pro-immigration party there is. Damned if ya do, damned if ya don't.

ACT is another basket case in the immigration argument. Aggressively pro-immigration, the party wants to disband the residency point system, which they believe isn't "free market" in the sense that it restricts labour movement into certain occupations.
Clearly such policies have worked for the US - unskilled migrants living in isolated communities having entered the country on a a lucky-draw while highly-talented migrants working as data scientists and software developers remain in queue for decades waiting for their permanent residence.

10
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And the problem is ACT is completely hypocritical re immigration. Only recently they tried to stop the movement of the wrong type of people into Epsom. No place for libertarian ideals in that instance.

17
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ACT is a joke, Their great former leader was the 'genius' behind the great centralised, bureaucratic monster that is Auckland Council

Heartily agree ACT & it’s free taxpayer funded international air travel forever former leader are hypocrites
I know I left that party long ago
True libertarians don’t continue to fly forever more for free on the taxpayer dime$

Ah yes, by virtue of asking the parties in Government if it plans on keeping any of their campaign promises, I must be an ACT voter. Can't fault the logic there.

Yeah, cos i couldn't have possibly noticed your right wing position over the months you have been posting here..

NZ economy is running into significant trouble despite soaring net migration numbers.
If leading employment indicators, like MBIE's vacancy index from earlier today pointing towards a shrinking job creation trend across all skill levels, were to be believed, a significant portion of migrants on temporary visas could struggle to find qualified jobs over the next couple of years.
So we might see net migration figures fall as more long-term migrants leave the country.

Good point

16
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As a long-term skilled migrant, I think you're right.

Our thoughts have turned more towards departing. Our incomes, which once felt high, have become normal against NZ's rising costs. Those costs have made family life (the main advantage of NZ compared to Aus, UK, or Canada in our case) unrealistic. In that case, why wouldn't we take our skills elsewhere?

Personally I think those in the past 5 years that we're rubbing their hands in glee at that foreign money coming over may have been shooting themselves in the foot. Our very own (unskilled) landlord commenting on how much money they make from us, for one.

So Vancouver & Toronto are better ? Drive the 401 lately ?
The UK is better ? Brexit will increase living costs exponentially
Come on now Mr Skilled migrant you know it’s not perfect anywhere as people evacuated from Sydney poorly built apartments found out Life is fraught with problems

Those places you mention have been popular skilled migrant destination status for generations and have gone through decades of population growth and economic development.
The same cannot be said about NZ, which caught global attention less than a decade ago but, shortly after, has descended into development stagnation.
To your point on Toronto, the city is going through a full-blown public transport revamp with nearly 30km of light rail lines to be commissioned in parts over the next 3 years and another 13km in the planning pipeline.

I'm talking about countries where the industry I work in is booming, with still relatively more income against cost. London is also our home. Of course it's not perfect anywhere.

Dairy, tourism,international students, and immigrants are bringing external wealth into NZ.

NZ itself is hardly generating enough wealth to sustain the current ways of life.

Without immigrants and emigrants, NZ is like a dead pond in the middle of no where.

And, we all know what happens to a dead pond -- it will stink and die.

Xing, you haven't gone over to the Gloomier side and rented a 'The End is Nigh' sign from our resident Doomster, have you? I speak only partly in jest.....

27
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You, ACT, the Nationals and our government believe an average foreigner is superior to an average Kiwi. As an immigrant to NZ I disagree; on average Kiwis really are as good as anyone and better than most.
I'm happy to meet immigrants who are exceptional - they boost NZ. However the majority of the really talented ending up in California or the UK's Silicon Fen.
If immigrants brings wealth to NZ why are so many working at my local supermarket checkout? The true answer to why the NZ establishment encourages exceptionally high immigration: they want third world wages and conditions.

I think that is probably because that supermarket is the only place you go out to when not at home.

Just a guess.

Agreed, just go into any big corporate office in Auckland or Wellington and you'll find many talented young grads who themselves or their parents immigrated to NZ from Asia or the Middle East.

And they're coming into these corporations with honours degrees and in many cases are continuing their studying towards higher qualifications.

Collectively these immigrants are raising the bar in NZ and that can only be a good thing.

I've little problem with honours graduates in useful subjects. I held a reasonable (but not exceptional) job myself until I retired and met experienced professionals I would recommend from UK, SA, India, Sri lanka and China for example. Is North Shore unique - supermarkets, fast food, most retail, Uber drivers etc. To be fair the Indian women working at my nearest supermarket are very good at their job, better than most checkout operators with good english and pleasant helpful attitude. My point is checkout operators do not rescue the NZ economy whereas maybe your honours graduates do. What is the ratio? Apparently the most popular 'skills' are chef, baker, tourist guide. Listening to the Treasury & Grant Robinson they don't differentiate between those who help and those who hinder - just every immigrant is a bonus.

As a long-term migrant myself, I agree that some exceptionally skilled workers, who happen to be recently arrived migrants, are certainly contributing a great deal to our prosperity as a nation.
Unfortunately, as you said it, they make up but a small proportion of our total intake. The only highly-skilled occupation appearing in the top 20 by number of visas issued is software engineer at number 13.

Listening to the Treasury & Grant Robinson they don't differentiate between those who help and those who hinder - just every immigrant is a bonus.
I believe Robertson is well-aware of the damage to our well-being and productivity from low-skilled migration, his party largely campaigned on it. The alternative would take a lot more decisiveness and political will; qualities most politicians in NZ lack.

I arrived as a computer professional 16 years ago. It was clear INZ hadn't a clue what are the attributes of a good IY programmer/analyst/technician. In the UK 'engineer' means anything from mega-genius to a man in overalls carrying a hammer. Unless things have changed since I retired computer engineer is similar. Same applies to a employing a 2-star Michelin chef or the guy in charge at my local chippy. The only reliable guide is how much an employer will pay.
If you believed Grant Robinson's assertion that immigrants are good for the economy (and NZ wellbeing?) then all we have to do is swap a million people with any other country to boost GDP. It is that dumb.

Without immigrants and emigrants, NZ is like a dead pond in the middle of no where.

That is a rather strange analogy. I think it reflects your culture perhaps. I would imagine a pond in the middle of nowhere as being full of unique life, like a Garden of Eden, untainted and pure and really rather precious.

I'm also thinking of places like Iceland.

Except if that pond is in China, where it is lifeless, toxic to life, filled with rubbish and the stench can be smelled a mile away.

When I was a boy I lived with my family deep in the forest and I used to spend my spare time walking the tracks and sometimes going off track. Once I found a quiet pond in an area that otherwise seemed fairly unremarkable. I threw a piece of bread in the water wondering if an eel might take it and to my surprise a fairly large fish grabbed it. I threw some more in and many fish started to emerge. They were large native mud fish. Exploring the small creek that fed the pond I later found small native frogs, ones that have no tadpole stage and other ponds that had large freshwater crayfish. It was pretty special.

Used to love my dead pond in the middle of nowhere! I was a stinky kiwi... it was a great place.

Apparently, the government elected by you does not share with your view.

15
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Apparently that is correct, but hey, at least I get a vote.. not like somewhere... China for example.

Soon not in Hong Kong either.

But unfortunately, your and many others' votes can only elect governments that have become more and more incompetent election by election.

So...why leave paradise?

More chance of being a big fish in a small pond.

We may have varying degrees of competence but at least we are free. You can always return to your beloved homeland if you don't value our competence. China's government may generally be quite competent but it's also oppressive and possibly quite nasty.

xingmowang,

You are entitled to have that opinion and express it freely,though I would like to see the evidence for your assertion. However,I rather doubt you would feel like making the same statement in mainland China.
Would you care to comment on the 're-education camps' for Uighurs and others?

Is Taiwan stinking and dying? Small isolated island not famed for its immigrant intake.

Taiwan is certainly becoming stink and dying with its current government focusing on `Taiwan independence`.

Taiwan's GDP was around 20% of China's in 1996. But now, it has GDP less than ShenZhen - a first tier city in China with population of 12.5 million (Taiwan's population is 24 million).

Has less of a problem with debt too.

What is the GDP per capita of taiwan and the GDP per capita of China? Last I heard Taiwan was twice as wealthy per person and with the money spread more evenly. If China could just dump the communist party and its centralised control then China could surge forward and might catch up Taiwan, Japan, Singapore.

Decided to check the figures myself: Taiwan's Nominal GDP Per Capita is forecasted to be $25,447 USD in Dec 2019 as reported by International Monetary Fund. China is $10,200 USD. Maybe everyone should move to ShenZhen.

Shenzhen actually has more than 20 million. It's just chinese government rules hiding truth as usual... a lot of them have to remain off the books.
December 2015) stats (according to Shenzhen secretary Ma Xingrui) were: population with Shenzhen hukou =3.67 million; population with long-term residency = 10.77 million, and; administrative population = 20 million. It's grown since then.

Shenzhen is also home to the electronics industry, and boasts best brains from all over China and highest wages. Rest of china is very poor in comparison.

They’re still hand pumping water out of wells in most of China

Maybe they value their freedom more

Need to be extremely careful so that immigration doesn't turn into a (bigger) ponzi scheme

Immigration was desperately needed in aging population NZ ( as in Australia )
There was a brain drain & thankfully South African migrants filled a lot of skilled positions
The Chinese politely lifted the value of the Auckland family home
The Indian students graciously took up petrol station positions nobody wanted anymore
So yes mass immigration has kept NZ alive & vibrant albeit too much change too fast for me
NZ today is not NZ 1990 but neither is anywhere else the same anymore
Governments on both sides know a little country far away at the bottom of the world needs immigration especially as Australia will happily take skilled migrants from it

Treasury numbers 'not believed' (are they Moonbeams?), Stats NZ in a failed census, RBNZ disinviting critics and more generally a rudderless ship.

What Gubmint advisory entity - that we can trust - is left standing?

Oranga Tamariki of course... No wait... Housing NZ.. maybe not... Does Winston count as an advisory entity? Helen Clark maybe?

I think that is the issue... the left is standing!

11
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So... We the government have absolutely no clue how many people are coming into New Zealand. And we are powerless to stop them even if we wanted to.. which we don't, because we need rents higher.

He says "" if it turned out Treasury was wrong and net migration remained above 25,000 come 2021/22, the effect on the economy would be a positive one"". So after about decade of virtually no productivity growth and exports as a fraction of GDP declining he believes without adding half a million new residents we would have been even worse off?
Strange how Taiwan, South Korea, Switzerland, Norway etc do well economically without have our good fortune with the highest consistent rate of legal immigration.
Note even the Treasury's 'low' projection is higher than the UK and the USA per capita.

I have no choice to agree with Roberston on the validity of treasury's numbers.

Are our politicians passing any laws to reduce immigration?
Will life in NZ be the equivalent of living in a Calcutta slum, living under an authoritative CCP rule, being a minority in hiding in... or dodging bullets in ...?
Are our working conditions going to reduce to the level of a Bangladeshi sweatshop? A Chinese iPhone manufacturer, or a goat herder in Kabul?

I am pretty sure the answer is no, to all of the above. So, what on earth do Treasury think is going to happen in the next 12 months to halve immigration numbers?

The theory is an Australia based comparison. Australia is entering a recession now with NZ likely to follow. Aussie may then also rebound ahead of NZ. So that by 2021/22 Australia will be growing whilst NZ is not.

Kiwis will have the choice of staying high rent Auckland whilst competing for work against many low cost immigrants. Or moving to Melbourne to pay 50% lower rent and receive 30% better pay.

And earlier migrants to NZ may have received their PR / citizenship and be able to move overseas to a more savoury mix of income and housing.

I suspect numbers will be kept quite high due to the need to form a willing workforce to pick kiwifruit and drive heavy transport for ridiculously low wages...

Yes, high levels of unskilled immigration and lower numbers of skilled immigration. Terrible for pushing NZ forward.

The comments about workers is valid. When people come here they have to work otherwise why bother. They also know how bad their own countries are which is why they leave in the first place. NZ is about number 6 or 7 on the wish list & they try them all, believe me. As a 5th generation kiwi who's been about a bit, I know how good this place is. Still! We have plenty of fresh air if not pristine drinking water. There are still so many opportunities in NZ Inc that I can't count them all. However, we also have a huge & growing bottom-end blamers who are a dead weight on the whole nation. We also have a lot of boomers coming into their later stages who have nothing, mostly because they have done nothing. We have the horror show that is children being born to children with no hope of ever living well (parental poverty) as well as a superannuation issue that is a public liability, once again, for all of us. In fact, I'm really doubtful it'll still be there in 2035. Neither will Labour. Enjoy today while the sun shines, for tomorrow....

Treasury thinks there will be 30,000 more people to leaving NZ each year by 2021/22.

Unsurprisingly Robertson thinks NZ will be a more attractive place to live than that.

12
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Has he not got the memo from John Q NZ Public? We want it to drop. A lot.

But it's driving GDP and tax revenue growth, which the Govt desperately needs, and also a fair chunk of foreign exchange with rich Chinese and others that is immediately good for our balance of trade (though will bring longer term costs). So immigration is just too damned attractive for any govt to turn off the spigot.

Unless they actually believe in their NZ wellbeing budget. Homelessness, congestion, need for more schools, hospitals, teachers & doctors, climate change targets, social cohesian.

We know the answer to that question. Judge politicians by their actions, not their words.

fortunately you do not speak for NZ public.

If they are part of NZ and vote, then you can assume that they are part of the public.

Unfortunately they are not part of the government who are not following their mandate they were voted in on.

I reckon I do

12
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Ah yes he does! Almost every single Kiwi you ask wants immigration lowered it is absolutely ruining our once pristine country. It has to stop enough is enough.

We seem to have fewer cultural icons now. People like Barry Crump, Janet Frame, Kiri Te Kanawa and so on. I'm not sure it is possible to produce them anymore.

Barry Crump, while an amazing writer, was an absolute $%#@$ in real life, drunken and abusive to his wives and not well respected by his kids, he was not, as a person, anything to be admired. Yes, I saw him first hand in some of his states.

New Zealander across the board want immigration hugely reduced. We want that, but why ain't it happening. ?

I'd like it hugely reduced because I prefer a low population. But maybe most New Zealanders are happy with immigration but just wants its rate reduced to something similar to other countries.
I can't think of any rational person living in the real world without some level of self-interest who think having the highest legal immigration in the world is doing us good. Sadly the self-interested businessmen have the ear of our political parties. So Richies will end up with migrant drivers working for near minimum wages on split shifts and yet more Kiwi families will be living in garages.