Finance Minister says Treasury looking at whether annual net migration may have lifted from long-run average of 12,000 to around 30,000; says will have implications for infrastructure, Govt spending outlooks

Finance Minister says Treasury looking at whether annual net migration may have lifted from long-run average of 12,000 to around 30,000; says will have implications for infrastructure, Govt spending outlooks
Finance Minister Bill English speaking to reporters in Parliament on Sept 15, 2015. Photo by Lynn Grieveson for Hive News.

By Bernard Hickey

Net migration may have increased in a structural way that forces the Government to rethink its long-term plans for infrastructure and other spending, Finance Minister Bill English says.

The long run level of annual permanent net migration, which hit a record high 70,000 in the year to September, may have more than doubled from around 12,000 to 30,000, English said in an interview.

He was speaking after surprisingly strong figures for September and after a visit to Australia, where he said he was puzzled by weaker than expected employment growth that was a factor in turning around persistent outward migration of New Zealand citizens to Australia.

Treasury is re-doing its forecasts for migration ahead of its Half Year Economic and Fiscal Update due on December 8.

English agreed Treasury was looking at whether there had been a structural lift in Permanent Net Long Term (PLT) migration from its long-run average of 12,000.

Treasury forecast a fall in the May Budget to that level of 12,000 by 2019.

English said there were growing signs that structural migration levels may have lifted to around 30,000 a year from 12,000 a year.

"The normal pattern is for it to drop fairly sharply back towards the long run average for PLT of around 12,000. There seems to be accumulating evidence that the normal pattern isn't applying, but because we haven't been here before, no one knows quite what the pattern might be," English said.

"The possibilities range from a significant structural shift where you would expect that, in the next five or six years, to come back to some other number -- 20 or 30 thousand -- or even coming to 15,000 would be higher than the long-run average -- or there's some sort of structural shift in the way the world works and we're going to have 30 to 40 thousand levels for a while," he said.

Asked about what that would mean for the Government's infrastructure and growth plans, he said: "We've been thinking about that for a while -- that we've been building infrastructure for growth. It's just a matter of how much it is."

English pointed to recent investments in roading and education.

"It's just a question of how much that growth pressure is likely to be more than it has been in the past, and that's why the spend is picking up pretty quickly," he said.

Structural increase?

A variety of factors may have increased the structural level of net migration.

An extra 650 million people are set to join the middle class in China and India over the next decade, which is expected to increase the number of people looking to go on holiday to New Zealand and to educate their children at English language institutions. Both student visas and working holiday visas have been big factors driving net migration in the last two years.

Secondly, the easy movement and demand for New Zealanders to work in Australia and Britain is becoming more difficult.

Brexit and the continued refusal to allow New Zealanders to be first-class citizens in Australia has reduced some of the pull factor for New Zealanders to migrate to Australia or Britain. They are also forcing or encouraging many to return home to an economy where jobs growth is strong. Both flows sharply reduced net emigration of New Zealand citizens, which has been the biggest driving factor in the rise of net migration.

The relative economic performances of Europe, the UK, Australia and New Zealand are also a factor. New Zealand's economy is currently growing at around 4% per annum with the prospects for significant construction and tourism revenues for years to come, while Europe appears to be in politically-driven perma-recession and Britain's outlook is uncertain for at least 3 years because of Brexit.

Australia's future over the next couple of years is also uncertain because of the end of the mining investment boom, the death of its car manufacturing sector and further clampdowns on bank lending into housing. Australia has not had a recession in 25 years, which suggests one is due. These factors could reduce net emigration of New Zealanders to Australia in a structural way.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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28 Comments

15 years ago it was the brain drain and what can we do to keep people. Now it's the opposite. Everyone's coming home, everyone wants to come here and now we don't quite like it so much. I'm sure in another 10 years or so NZ won't be so rosey and people will be buggering off once more.

To where? I suspect this is the last best place...everywhere else is somewhat much more buggered

14
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If there has been a structural shift upwards, as I suspect there is, then maybe the answer is a much lower PR approval target and higher points needed, thus increasing quality due to higher demand through restricted supply. We could keep running at a high population growth level, however, I for one think that the costs outweigh the benefits and would rather live with a stable population.

15
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Agree! I feel most New Zealanders feel the same. Not everything need to be measured by economic success. NZ needs to begin with a open discussion about it's overall population target.

11
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watch Q & A on indian student immigrant, very frank on reason for coming here, and knowledge of how to get in
http://tvnz.co.nz/q-and-a-news/indian-student-immigration-saga-video-649...

21
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We know that no students from Asian country are coming for education but only because it is easy to come to NZ on student Visa and get Residency. This is universal truth (like day and night) and if the government or any other agency says that they are not aware of it are either stupid or lying or not fit to be in the position.

First preference is USA, UK, Canada followed by Australia and than if no where to go, it is NZ for students and for Rich Foreigners NZ is the Tax heaven to park their money (Money Laundering).

The way education provider market it will also give an idea.

As someone in the same website has commented that it is the Legacy of national Government : Denial , Manipulation and Lie - Question now is for how long as now they stand exposed

Reena, yeah everyone knows but not the government as they are making money by selling land, houses, businesses, residency and whatever the government can sell but for how long and who cares about the long term consequence as they too know that they will be gone in a year time and will be upto next government to clear the mess. They are only hoping that nothing burst before nect election.

13
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Haha yeah, now let us think why they would want to come to a country that a) gives them residency and

b) Once you get that, you get paid money when you don't work, free schooling, free healthcare and then when you get older, free money to live on.

None of which you get in India.

I love that photo of BE.
I imagine it is the exact look he had on his face the first time he realised that there wasn't even a cabinet in the Cabinet Meeting Room.
A smug look of genuine confusion.

13
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Well spotted, I think he is wondering how to admit there is an immigration problem when there wasn't one not too long ago; and wondering how to do nothing and still stay in power.

22
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That is the face of a man who has absolutely no idea what he's doing, and who may have put his underpants on backwards.

You made my day with that comment

Aaaaagh - the tranquility
A perfect example of the "JF" look

You mean the photo from last September?

Please correct the typo in headline ....infrastructure ?

10
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This could be a lesson in how to lose an election .

How did they get the numbers of such an important issue , so wrong ?

Does anyone actually have a clue whats really happening with migration ?

What is the NZIS actually doing about correcting its record keeping systems ?

Surely they keep proper statistics of who is coming , going, staying , student , visitor , temp worker , etc ?

When I heard that the US did not know how many illegal migrants there were there, I took some comfort in thinking we had robust systems here , and this could not happen to us

Now it turns out we don't really have a clue whats really going on , do we ?

we all knew this day was coming where the increased costs to the taxpayer for infrastructure and services has to be sold as a good problem to have.
how are we going to stay in surplus if the costs are not deferred for a later time

We are so lucky, we can actually skim some of that Laundry Money to pay for all the extra white washing costs of importing problems, not resolution.

Maybe we should charge a premium rate for all visitors, over stayers, free loaders and imported affluent people, to provide for the effluent systems and other crap we have to be over rated for to bring em to bear on our economy.

Did I say economy, I mean, debt.

17
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"Structural change" is a nice way of saying that Government have actually lost control of migration and are unable to enforce any particular policy. In light of the mind blowing September numbers Nick Smith's big recent 'hoo ha' about the 100 home development Government is expecting to fast track made me chuckle! Byy my calculations that is enough to provide homes for ~1.6 days worth of migrants. Rough maths (in round) numbers, below:

* 70,000 annual net migration, or 192 per day
* 100 homes (x) 3 (average density per dwelling) = 300
* 300 / 192 = 1.6 days worth of houses of migrants.

That's a lot of back slapping for piss poor management! Shows you how completely out of touch National are from the detail.

English says migration levels may be structurally higher .

What does Structurally Higher means ?

It means higher on a long-term basis because of real change in the world vs cyclical which goes up and down over time and repeats itself

Structurally Higher, is a derivative of the Italian word for a safe earthquake zone.

Mr English has studied the art of the use of strange languages, just like all financial geniuses.

A bit like god willing, it cannot happen to us. A prayer of the religious right.

The higher the structure, the harder the fall.

The evidence of my dissertation is unfortunately buried under the 1400 year old basilica. in Norcia, as warnings were not heeded, there either.

The rebuilding will make all Italians rich., is another prayer.

All Christchurch citizens will perhaps get my drift.

Structurally Higher, is a derivative of the Italian word for a safe earthquake zone.

Mr English has studied the art of the use of strange languages, just like all financial geniuses.

A bit like god willing, it cannot happen to us. A prayer of the religious right.

The higher the structure, the harder the fall.

The evidence of my dissertation is unfortunately buried under the 1400 year old basilica. in Norcia, as warnings were not heeded, there either.

The rebuilding will make all Italians rich., is another prayer.

All Christchurch citizens will perhaps get my drift.

http://edition.cnn.com/2016/10/30/europe/italy-earthquake/

Bill is the man to watch, nothing happens without his saying so. This is a smoke signal clearing the ground for an incremental shifting of the goalposts. Look for Woodhouse to offer more tweaks to settings over coming weeks.

Sort of false economy to allow so many migrants into NZ, and then needing to spend billions on additional infrastructure, which could take many years to put in place. While that is done, existing infrastructure is stretched.

exactly right - but then this is the world economy in a nutshell.
Breed more people to add to the Ponzi , to consume more stuff and create more demand for infrastructure, which keeps debt growth going ... and all is sweet.

That is, until you realise the planet isnt actually growing.

Exactly right
That very point has been made time and time again here on interest.co.nz
For the past 6 years
It seems the lever pullers in Wellington don't read Interest.co.nz
Or
Tthey don't read the comments

11
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English is being completely disingenuous. There is no such thing as "structurally higher" immigration - it is one thing that is entirely under the control of the government for an island nation like NZ. He could turn up tomorrow and cut it to zero if he wanted.

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