PM says record high net migration a "vote of confidence" in NZ; says housing issues "can take care of themselves"; effect on unemployment and wages "debateable."

PM says record high net migration a "vote of confidence" in NZ; says housing issues "can take care of themselves"; effect on unemployment and wages "debateable."

By Bernard Hickey

Prime Minister John Key has defended the Government's policy settings around migration, which have allowed record high net migration into Auckland, saying the figures represented a "vote of confidence in New Zealand."

He downplayed suggestions the high migration was a factor in rising unemployment and subdued wage growth, and said pressures on house prices and infrastructure in Auckland would not be a factor in the Government's policy-making on migration.

Critics have argued the jump in net migration has been a factor pushing up Auckland house prices more than 25% in the last year and have worsened financial risks that have forced the Reserve Bank to restrict high LVR lending to landlords. Opposition politicians have also argued the high migration of lower skilled workers, particularly hospitality and tourism sector workers, aged care nurses and dairy farm workers, was also depressing wage inflation and elevated unemployment.

"There's always pluses and minuses, but on balance I reckon it's been a vote of confidence in New Zealand," Key told his weekly post-cabinet news conference after being asked about figures for August showing another record high.

Statistics New Zealand reported net migration rose to a record high 60,300 in the year to August, including 27,900 to Auckland. See Greg Ninness' article here.

Given Auckland's population per dwelling ratio of around 3, that means the migration soaked up all 9,300 new houses consented over the last year. That means the current shortage of around 25,000 houses has not been reduced, and is likely to be worsened by natural population growth of around 15,000 per year.

Migrant arrivals rose 13% or 13,991 over the year to 117,900, driven largely by student and work visa migration from India (12,700), China (8,400) and the Philippines (4,500). Meanwhile, departures fell 5% or 2,726 to 57,600, driven largely by a fall of 16% or 4,110 in the number of New Zealand citizens leaving to live in Australia.

Key said the best way to look at the migration issue was whether the migrants were meeting skill shortages. 

"It's always important to manage it, and we do. We did that in 2009," Keys aid. "There's been plenty of times when we've said certain skills are no longer required. I still see it as a significant vote of confidence in New Zealand that migration is strong," he said.

"I think it's better to deal with the issue of migration on the basis of whether the economy needs the particular people that are coming in. The housing issues over time can take care of themselves."

Asked about rising unemployment and any depressing effect on wages, Key said unemployment had not risen much and it was debateble whether it had affected wages.

Asked whether migration should be restricted to reduce pressures on infrastructure such as housing and schools, Key said Auckland was in a growth phase for the next 20 years.

"It's simply in one of those phases where it's a desirable international city and the number of people who want to live there is likely to expand."

Economists see political and wage stresses

BNZ Economist Stephen Toplis said after the release of the August data said the migration figures were baking an already "hot political potato" over property prices into one around unemployment.

"With the underlying economic expansion beginning to slow (as a case in point GDP only increased a cumulative 0.7% over the first half of this year) the demand for labour will also soften (as evidenced in recent expectations surveys)," Toplis said.

"But with the migration-driven supply of labour continuing to increase there is an air of inevitability that the printed unemployment rate will continue to rise. Not only will this be a political headache, but a headache too for the RBNZ particularly if that unemployment rate is rising (alongside slowing GDP) at a time when tradables-driven CPI inflation is in the ascendancy," he said.

Westpac Senior Economist Felix Delbruck pointed out the surge in temporary migrant workers and student numbers may reverse.

 "The inflow of foreign migrants is now running well above residence approval targets (90,000 - 100,000 over two years) and we expect many recent migrants on temporary visas will return home over the next couple of years," he said.

ASB highlighted the pressure on wages.

"Strong net migration inflows are helping support robust levels of consumption, but are also adding workers to the labour market, and helping keep a lid on wage inflation," said ASB's Chris Tennent Brown.

NZ First, Greens critical

NZ First Deputy Leader Ron Mark said the combination of record high migration and the ability since 2013 for foreign students to work during term time was hitting New Zealand job hunters hard.

"The lower-skilled job market is highly competitive as can be seen by the number of foreign workers in supermarkets and service stations and in the hospitality industry," Mark said, adding the Government had always intended to use migration to keep wage inflation down.

"It is an age-old trick. It is exploiting foreign workers, particularly those from lower-waged economies, and unfair to Kiwis. Migrants will accept inferior working terms and conditions, and unscrupulous employers, both Kiwi and new employers from overseas, know this," he said.

"Many foreign students, particularly from China and India, intend seeking permanent residence, and their student visa is the pathway, which Immigration Minister Michael Woodhouse admitted recently. We are not doing them any favours by increasing the numbers each month as many will now be struggling to get work."

Green Finance Spokeswoman Julie Anne Genter said economic growth powered by migration and house price inflation was not sustainable.

"If we take away the economic activity caused by migration, Auckland’s dangerous house price inflation, and the Christchurch rebuild, there’s no real substance to National’s economy,” Genter said.

“GDP might still be growing, albeit slowly, but hundreds of thousands of New Zealanders aren’t seeing any net positive effect on their lives – including the 148,000 people who are out of work," she said.

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57 Comments

19
up

This PM is unbelievable.
When you hear bad is good, & vice-versa, you realise the state of the politico-social climate.

15
up

Didn't you get the memo?

War is Peace; Freedom is Slavery; Ignorance is Strength; Division is unity.

When has he ever been believable?

It is called arrogance.- like those Microsoft callers that say there is a problem with my computer......

Also known as lying.

34
up

The biggest skill shortage in New Zealand is competent politicians.

Good one :)

This is the best comment

18
up

"There's always pluses and minuses, but on balance I reckon it's been a vote of confidence in New Zealand,"

A level of confidence that is not shared by the financial community. The NZD/USD currency pair is down ~22.0% since this time last year. Maybe the immigrants think they are getting a cheap deal. I doubt it when it comes to non-discretionary purchases.

and still they come

12
up

Well you would too if you lived in a country with no or little welfare or health system, where wages were ridiculously low and was packed to the gunnels with people living in fairly poor quality housing.

So the only question is why more aren't coming? Well they are, as quick as they can. You see car loads of them driving around, in clangers still with the Turners auction labels stuck on the back window. Almost all males. Come here earn a few bob, convert the student visa to residency, bring out the Sheila, the parents and the in laws in due course.

In 10 years time it starts to look the same as the place they left.

Auckland already does.

The big attraction is free welfare, free sitting down money, free walking around money

Australia has recognised and experienced that for many years - one of the reasons it has developed a hard-line attitude towards supposed refugees and assylum seekers - who pay people-smugglers enormous sums of money to get on leaky boats and take their chances

The government had to zip the purse closed when the annual increment to welfare costs rose above $3 billion pa - the cumulative total cost - this years intake plus prior years was running well above $10 billion pa - that was just cash hand-outs

I read the first sentence and thought you were talking about NZ...

10
up

So peak net migration in the Republic of Ireland was circa 2007 - eerily close to the top of the corresponding Housing Bubble

http://www.thejournal.ie/irish-attitudes-towards-migrants-2076772-Apr2015/

You know what happens next ....

I might come back and review this comment in 5 years but I think its about right (purely fictional Crystal ball gazing at this stage):

The Auckland housing market peaked in 2016 after strict migration controls and foreign buyer rules were introduced by the Key government in an attempt to stem falling popularity as the public backlash against rising unemployment and unaffordable housing rose.

Since then house prices in some parts of Auckland have fallen by over 30% to levels last seen in 2010.

The recent decline in unemployment from the record 30 year high is largely due to the government investment in housing according to Prime Minister Andrew Little.

Opposition leader Paula Bennett defended her party's record during its time in office but admitted there were things they could have done better...

.... and ex PM of Parnell commented from his posting in Beijing as ambassador to China and also Hatchet Man Vice President at the Beijing Auckland Happy Savings Bank" at the end of the day it wasn't my fault that things got out of hand, we just did not have the data collection systems that was required. By the way have you seen all the ponytails here in Beijing"

This is more likely. . .

John Key and his National party storm to yet another term in power. And once again the fractured, loony left self destruct and blame each other for their latest failure.

I believe migration is good for the economy. The students coming from India and China bring money, pay their fees, accommodation, transport, food and furniture. I don't know how many of them get succeed to get Permanent Resident. May be 5%? I think these students must think twice before coming to NZ. Neither NZ economy is strong as America nor NZ universities!!!!

26
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And I believe migration is bad for the economy. Or put it another way - population growth is bad. Costs of growth etc. Look at the problem Auckland has, where they can't afford a reasonable infrastructure. Imagine how that would be with a stable population, and the money could be spent on improvment, rather than a hopeless chase to catch up.
I think the nation would be great with a population of less than one million, with reduced pressure on all of our resources.

Perhaps the government should encourage foreign investors to invest in development of a super university, such as the concept championed by David Chaston (Pine Tree Paradox), instead of vertically integrating and controlling our primary sector, and ensuing value add and profit.

Wow. 9 likes and counting for advocating population reduction for econmic progress. I thought common taters here would find it hard to get that heretical idea.

Yup KH, Japan's decades of zero growth economy and population, and trend in both, is something to be envied by all.

zero growth? Oh you mean stable.

Yes but Japan had zero growth from a pretty good base.
If we had had zero growth since the 80's we would have a terrible economy like we did then.

Japan disappoints bankers. They sure ain't poor and the inhabitants have a good life.

Welcome to the South Island.

Auckland wouldn't have a problem if:
a) The government would spend transport money more wisely instead of insisting Auckland can be the only city of size in the world that doesn't need public transport
b) The council allowed more housing to be built (through more density and greenfields and less regulation).
c) The government passed on a small amount of the increased tax take it gets from immigration to Auckland.

I heard a Chinese guy the other day say he'd like to move here because we get to vote. I don't know what difference that makes anymore, with some of the biggest changes in our history being pushed on us with no transperancy. Well at least the governement knows how these secret deals fit into the secret plan.

30
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My daughters have two friends in AKL who are leaving because they can no longer afford to live there.
Just like in the rural heartland the cost of living and doing business are exceeding the income.
Costs are now almost impossible to manage for many farmers, some of the worst offenders are in Local and central government.
This government is completely out of touch and following an agenda that the electorate was never informed of.

a lot of aucklanders are moving out, its lack of jobs in other parts of NZ that has not caused a flood.
it is also intergenerational with both ends going young and old.
Auckland has become a clogged crowded place to live with all the problems that entails

Auckland has higher unemployment than much of New Zealand

25
up

Over-migration is unsustainable Ponzi economics at best and a social disaster at worst, now all the assets are gone, the only thing left to sell is NZ land and citizenship.

"but on balance I reckon it's been a vote of confidence" - well you can take that to the bank. Who would really know? (at the end of the day JK?)
Personally I think its a vote on how easy you can gain entry to a western country, perhaps sign up for some mickey mouse course and also get a job that is relatively high paying compared to what was left behind in the home country.
You have to admire his shine, can you imagine Smitty or some of the other back room boys of national coming out with this BS? The laughter would be deafening but with JK it just gets accepted.

"There's always pluses and minuses, but on balance I reckon it's been a vote of confidence in New Zealand," Key told his weekly post-cabinet news conference after being asked about figures for August showing another record high."
What he means is - short-term it props up our universities, adds more people with spending, however we do actually know the overall medium/long term effect is negative for NZ citizens and the NZ economy.

So next thing NZ should go into direct competition with Germany and announce the abolition of all border controls so that "the world" loves us even more! God forbid that there could be stonger "vote of confidence" for Germany than New Zealand.

It is empty talk. Meaningless. Mass immigration over the past decades has clearly eroded the humble but happy New Zealand way of life. Our children will never again enjoy the material and emotional freedoms we have enjoyed. Instead they are forced to compete with Indian "students" working for the most measly of pays, with rich kids from China buying up houses etc.

I once talked to a BNZ manager who openly told me that they preferred migrants because they are scared to lose their jobs and residency and so you can do pretty much anything with them whereas Kiwis argue, demand, take sickies etc. Too troublesome, so businesses start to exchange the population.

Mass immigration is good for the greedy "elite" but poison for middle and working class New Zealand and for the little culture and identity this country has been able to establish.

[ Please keep vacuous comments off interest.co.nz. Ed]

Evidently that rule doesn't apply to the 90 at 9?

Robotics - Employment - the future - The times they have already changed
Once upon a time - 3 and 4 generations ago - you left school - got a trade and a job for life
often with the one employer
now
Many people over their lifetime will have at least 3 career changes plus any number of job-employer changes - that's the new reality

Example: John Key has had 4 career changes and how many different employers?

So, the queston is, what future can be guaranteed for all the burger-flippers, call-centre operators, taxi-drivers, petrol-station attendants that are flooding into the country at the invitation of the government

An international student can come into new Zealand, get an average education while working in a low-level occupation, hopefully graduate, get a job, not necessarily in the field of their training, then in 10 years end up on the un-employment heap - then what? - whose responsibility are they then? - WINZ

Is there a plan?

Just close your eyes for a moment, and conjure up a mental picture of another 60,000 cars on Aucklands motorways at 8:00 am and 5:00 pm - that's this month, and another 60,000 next month, and the same again the month after - great for the motor vehicle business and petrol stations

...and then theres the extra crowding in schools, hospitals, prisons etc. If any reporter ever gets the urge to get off their fat behind and start investigating the student side of immigration I would suggest they get a minder as in Australia there appears to be a criminal side to it. As identified by Iconoclast yesterday
http://www.smh.com.au/national/vocational-education-the-biggest-getrich-...
http://www.smh.com.au/world/india-targets-tax-evaders-who-hide-black-mon...
Key says its a vote of confidence but I think poor little ol NZ is just the worlds patsy.

Kiwis so dumb lah!

To be fair, 60,000 a year, and not all in Auckland, but I definitely get your point. Add natural population growth and its little wonder Auckland is in gridlock.

removed, corrected myself

But if you added 60,000 a year to the train network (after the CRL is built) there wouldn't be a problem. The only real problem in Auckland is that the government thinks it can keep growing without public transport and density.

60,000 inhabitants will need to take 60,000 x 300 ( work days plus some weekends ) x 2 ( round trip ) = 36,000,000 trips per year.

New Zealand rail is a joke, CRL is tantamount to some loony left polly wanting trains, because..... because..... he likes trains ?

A dual tracked railway has the same capacity as 12 lanes of motorway. The CRL is hardly a joke it is a serious solution to aucklands traffic problems that's has been proven around the world. The only joke is our current and previous transport ministers.

Two other guys:
You must have nightmares when you close your eyes to imagine this …….you are a little bit out of correct figures, the 60.000 immigrants are per year for the year from last August to this August, not 60.000 every month.

But this is bad enough.

Just noticed ChrisJ has this corrected before me, sorry, did not see it.

Yeah I know - goofed on that - realised it as soon as I saw Chris_J's post, Thx

Its a tragedy that Kiwis on local wages have been shut out of owning a small piece of NZ that they live in and contribute to; while Keys Government lets foreign investors flood in with spurious funds.

..I'v started bombarding my local (Nat) MP with many of the questions posed here. Little response, but may i suggest that you all do same.....after all these guys rely on us for a job.

11
up

The most important thing a government can do is provide the opportuniy for school leavers to get their very first job (any job) and learn the discipline of earning their own income and getting up in the morning and going to their job. Regardless of how meaningless and dis-satisfying that job may be

Aspiration comes from wanting a better job and a better income

By allowing international students und un-skilled migrants to come in and take over the mundane and meaningless jobs, the consequences are the large numbers of locals who will never experience that early introduction to lifes disciplines and standing on their own two feet

The damage being done is enormous

I'm not sure where you get this idea that there are a fixed number of jobs in NZ. Adding more people will add more jobs. If new immigrants are supposedly doing the worst jobs, there should be better opportunity for young people to do the better jobs.

You are correct there is not a fixed number of jobs. It will be interesting what happens if jobs decline.

If?
That's a pretty small if in my opinion!

I must be missing something Jimbo
Obviously Peakeverything understands you - I don't

Are you suggesting 60,000 imports will self-create demand for 60,000 jobs which will self-create a further demand to be met by the next 60,000 which will create the next 60,000 ad-infinitum

in another context - a corresponding post from Smalltown on another thread
Immigrants building houses for immigrants building houses for immigrants building........ If that is not a Ponzi then JK has a country to sell you.
http://www.interest.co.nz/property/77729/asking-rents-homes-trade-me-pro...

NZs population has been increasing for 100+ years, often largely due to immigration, and our unemployment rate hasn't really increased; so yes I do think the new 'imports' will somehow create more jobs.

JimboJones:- did you miss Janet Yellen's memo - she doesn't trust un-employment data based on sample surveys - they are unreliable - in fact so unreliable she doesn't believe them - and NZ Statistics uses the same methodology with a population survey data sample of 15,000

Not sure where you get the "fixed number" idea from - explain

Many of the international student imports march to a different drum - a different imperative where they get themselves blackmailed into $2 per hour jobs to meet the skills requirements in order to get residency and citizenship to stay in-country which the locals don't have to do - they've already got it - and have no reason to bargain down to $2 per hour and work 60+ hour weeks - but - that's what the local's choices are - get off yer bum and compete

NZ Herald
Indian Restaurants $2 per hour
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1150...