David Hargreaves says National is putting short term expediency ahead of the country's future

David Hargreaves says National is putting short term expediency ahead of the country's future

By David Hargreaves

Another month, another record number of immigrants...and another deafening silence from the Government.

As was reported by Statistics New Zealand late last month, this country had a net gain of 65,911 permanent and long term immigrants in the 12 months to January. To put it another way, in the past year we added another Napier, which according to Stats NZ is the 14th largest of NZ's 67 districts.

To put it another way again we added around 1.4% to the population over the last 12 months - just through immigration. Now, as an immigrant myself in this fair land, and of UK origins, I take an interest in the considerable wailing and breast-beating that goes on in Britain over the rate of immigration there. The official UK stats show that net migration has been running at record levels of about 330,000 a year. That's 0.5% of the existing population.

Yes, that's right. The UK is adding migrants at the rate of 0.5% of its population per year, and various people are screaming about it, and yet we are adding 1.4% - and doing what exactly?

Of course, with a population already within touching distance of 65 million, the UK would be in many people's definitions overcrowded. New Zealand with its 4.65 million bouncing around in an area bigger than the UK would definitely not be seen that way. Therefore some might not see validity in comparing our rates of immigration with those of a much more populated country.

But I still think the comparison is well worth making. The UK with an infrastructure already set up for a lot of people, is adding 0.5% of its population in a 12 month period. NZ with very much a small country, small population infrastructure, is bombing another 1.4% on top of its population in a 12 month period. One country is arguably geared up to take people, the other isn't. Adding 1.4% of the population sounds like a lot to me from a small base. And if there are no bad signs of indigestion yet (though house prices are clearly one very uncomfortable rumble), surely you can't keep adding people at that rate without something having to give, sooner rather than later.

At the moment the strong levels of immigration seem to be giving the economy quite a lift (though what detailed statistics there are on that impact might be quite interesting to see - if there are any). In addition the inbound migration surge is also keeping the lid on wage pressures.

Student and work visas

It's quite clear therefore why the Government's very happy with the current situation. Indeed this Government's changes to the rules in 2013 making it more attractive for international students to come here - and which have seen student visa numbers nearly double in the past two years to just under 28,000 in 2015 - have been a big contributor to the surge.

Then there's people coming here on work visas. Nearly 38,000 people came into the country on work visas last year. This is about 7500 more than came into New Zealand on work visas two years ago and is in fact close to double the number that came in just five years ago.

These rising numbers have been largely explained as being about the Christchurch rebuild. But isn't that now starting to wind down? If the rebuild is indeed winding down, why were as many as 3638 people allowed into New Zealand on work visas in January 2016 - the most for a January since Stats NZ started publishing this information in 2003? Go back just to September and October and we saw record numbers of people allowed in for work visas - with over 4300 in each month. If the Christchurch rebuild is starting to wind down - where are all these new people going?

In fact you have to go back before August 2012 to find a month in which the number of work visa arrivals was fewer than for the same month 12 months previously. Up and up the figures have gone.

We don't have zero unemployment in this country. The official rate is 5.3%. Why are we pumping up the workforce with people coming from outside? Don't we need to be making bigger efforts to make sure some of those 5.3% are imbued with the types of skill-sets that are presumably possessed by those being granted work visas?

Dangerous assumptions

The Government is clearly making assumptions. Because in recent history large numbers of Kiwis have emigrated, the assumption is that we will see that resume in earnest again soon. Therefore the Government's happy to keep letting a lot of people in and enjoying the short-term boost to the economy it is deriving, thinking that eventually things will turn and that once again large numbers of outbound Kiwis will start to balance out those coming in. But it's real dangerous to make future assumptions based on what has happened in the past.

Stats NZ seasonally-adjusted monthly figures show us that back in 2011 and 2012 around 7000 and upwards people were leaving NZ every month long-term. Those figures have more recently been running at around only 4500 or slightly higher a month. There was a very slight uptick in the figures in January, which would be worth watching to see if it suggests any sort of trend.

But what about those coming in? Go back to 2012 and we were talking 6000s and 7000s a month. Since July 2015 we've had over 10,000 every month - and January's was the second highest ever figure.

In fact if you take the seasonally adjusted net migration gains for each of the past six months this gives an annualised rate of growth of 70,000 net immigrants a year. It can be debated whether the figures are showing signs of having plateaued in recent months - but they are not, so far as I can see, showing signs of falling. But even if we were to assume the figures have plateaued (but are not necessarily dropping), are we prepared to say we would be comfortable with an ongoing net gain of immigrants in the 65,000-70,000 region? Two years of that and, forget about Napier - you've got another Hamilton.

But of course, most of those people would not go to Hamilton, or Napier. We know that. Which brings us to the biggest friction point in the whole issue.

Auckland-bound

The Stats NZ figures for the 12 months to January show that 30,369 of the 65,911 net immigrants settled here were intending to live in Auckland. That's a lot. But it's not quite the whole picture, because 15,543 of the 65,911 didn't actually say where they were going to live. This means then that just 50,368 people stated where they would be living - and of these, 30,369 (around 60%) said they were going to live in Auckland. If you apply the same 60% ratio to those 15,543 who didn't say where they were going to live - that would give another 9325 or-so people settling in Auckland. So, the real Auckland-bound figure may well be fairly close to 40,000 - which would represent about a 2.75% increase in Auckland's population. 

If you take the Auckland average of three people to a house, then you would need around 13,000+ extra houses just to accommodate these people. According to Stats NZ there were building consents issued for nearly 9300 new dwelling units in the year to January. Problem?

This of course in a city with well-documented and fractious housing issues.

I don't think the Government can keep having a bob-each way on immigration. I think we are now well past the time when it has to chop back the numbers being allowed in - at least until there is some sign that previous patterns of outbound migration may be resuming.

We can't just keep adding a good-sized provincial city to our population every year and not expect there to be consequences. We just can't.

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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24
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Its hard to find where Key can explain the reasoning here. Lots of examples where "tweaks" have been made to encourage immigration to the "regions" most of which have failed. My theory is he knows immigrants building houses for immigrants is the only game in town keeping GDP on the rise. Its a PONZI by any definition of the word but all he needs is another four years or so........

You are right smalltown , if National cuts the immigration flow , the tradies are going to have no work

Don't know about you but down here in ChChur we could do with a cull I think. Too many half assed barely qualified monkeys picking up a hammer and a paint brush trying to make a qucik buck off EQC and doing terrible half assed half finished jobs. Might bring back the days when they took pride in their work.

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Dreaming, people have had it drummed into them for too long that all immigration is good for everyone. Anyone who seems to take any rational position like the above gets labelled instantly, and for anyone who already owns a house in Aucks (or increasingly elsewhere) it's pretty hard to convince them that their values going through the roof is a bad thing, as we well know.

Not to mention the young that are missing out because of this stupidity either don't vote or are terrified of being called a racist.

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Immigration IS NOT good for everyone .

Nor is it good for anyone when our infrastructure cannot cope , Auckland roads are now a nightmare , the stranglehold on land in Auckland is creating a bubble , and young Kiwi's are being kept out of home ownership by Asians with cheap money (interest rates of 2% to 3% per annum ) while Kiwis have to pay around 6% .

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A sustainable population for England was in the range 3 million to 10 million. The 50-to-60 million population overshoot that has now been reached has been achieved entirely by extracting resources (especially food and energy) from elsewhere in the world.

Once the oil, grains, meat, fish, fruits and phosphate rock etc. stop arriving (due to global resource depletion, especially oil), and once it becomes impossible to manufacture nitrogenous fertilisers, people in England will discover what the sustainable population is, and the population will drop to that level. With Abrupt Climate Change underway, the sustainable population will likely be lower than the stable-climate 3-to-10 million., and may well be zero.

As for NZ, the government will do nothing to limit immigration because it is dependent on immigration to maintain the façade of success.

Just what population can be sustained in NZ is open to debate. Maori never exceeded 1 million, and they managed to exterminate the only large source of protein on the land and became largely dependent on seashore life for protein. Most sea shores have been thoroughly messed up, and the seas have been stripped of fish, so NZ should be developing nutrient recycling systems and planning very carefully for the crash.

However, factual analysis does not come into government thinking, and all policy is geared to attempting to sustain the unsustainable, thereby exacerbating every predicament.

Since NZ is seen as one of the few 'lifeboats' in an increasingly messed up world, the stampede to perceived safety is likely to accelerate.

As a NZ'er who's lineage is all 1840 and prior I find it rather funny when an immigrant complains about immigrant numbers....It is like I got in the door now shut it quick.......having the freedom to come here also gives you the freedom to leave.......What you are really complaining about is the uncertainties that are present in having a revolving door policy.....

I would have thought that stopping people coming was the wrong tactic.....don't let them back out would have more effect ;-)

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I think the last thing our immigration policy should take into account is wether it is "pulling up the ladder" for other potential immigrants! What a joke, and I really get sick of hearing this type of very popular pro high immigration argument. The level of immigration must be set so that it benefits the host country's population. I am seeing no such benefit. Over the last few years of rampant immigration, i have observed the following. My wages are flat. House prices have doubled. Commute times have increased. Beaches and other scenic land (long bay etc) built over. High immigration has surely partly contributed to these things. Also, where can a 5th generation NZer move to these days? And obtain residency these days? Unless you're a memberof the global elite, pretty much nowhere.

There is no fairness in this world doublehelix and the sooner one accepts this the better. I can tell you right now the level of immigration is set open and will stay open.....and the reason it is open is that NZ'ers demand socialism.....demanding a champagne lifestyle on a beer budget will cause blowouts in many directions........someone has got to pay for all the social demands and our population was too small to match those demands......these bureaucrats do not come cheap and can write their costs higher at any given time.....so it is a choice between socialism vs individualism.

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You are wrong "notaneconomist " we are all pretty much immigrants or descendants of migrants

It has nothing to do with past immigration ..............we must focus on the present scenario , we are now at a crisis point , bubbles are being created , and we have lost direction with this immigration policy , Auckland cannot cope , and there is simply not enough land to develop for such numbers of newcomers

Boatman I stand by my comments !!! If people don't want immigration then stop wanting the expensive socialist champagne lifestyle at the expense of productive business.......simple as that.

Auckland cannot cope or is it really that Aucklanders cannot cope? If Auckland has a crisis then that crisis is of its own making. What a load of bollocks that there is not enough land to develop there is a lack of will to allow land to develop and that is a completely different story........Looks like the Super City model is a failure from where I am sitting!! All that trying to condense services so they can look like they deliver them efficiently is bollocks and propaganda at its best.....take the boundaries away and deregulate and then see the differences in the not so smart city......

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This Government and Labour are hell-bent on continuing an open door immigration policy. More people does not equal more wealth and a better standard of living.
If you are wealthy and have many rental properties, then you will want more people here.
You sound as though you are making money with rental properties to have a view like you have, to the detriment of others

and that's the view of many many of our MPs that are feeding from the trough that they created and are supporting

"The UK is adding migrants at the rate of 0.5% of its population per year, and various people are screaming about it, and yet we are adding 1.4%"
Maybe that's why the UK economy is in the poo and ours is going great. Its obviously not dairy driving our economy any more...

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Seven years ago there were 10,000 farmers in NZ

Today, 7 years later there are 10,000 farmers in NZ

If all the added migrants spend 50% of their consumption dollar on imported goods one wonders how we will cope with a deteriorating terms of trade Balance of Payments

Is only going to get worse

Assuming farming is our only export

First rule of business . don't throw good money after bad.

I thought the first rule was preservation of capital...

AJ:

That Stuff article was all smooth glib statements - no detail

On the issue of increasing agriculture investment I question what form he has in mind - if an overseas investor wanted to drop say $30 million into NZ agriculture they would want some control over their investment - probably in the form of direct ownership - in other words he advocates increased overseas ownership of our principal export activity - and that's where the benefit stops - from that point on all the benefits flow overseas.

Not to worry - "growth will be assured" and our pollies will claim success

No JJ - you are definitely right. Its the building PONZI keeping us going. It would be political suicide for National to change tack now but it WILL end in tears. How does anyone with a mortgage sleep?

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By looking for NZ in PONZI, one will rightly find it in the very middle of it

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Of course our immigration is a massive PONZI scheme , and it will bring the National Government down in the next election

Only if the boomers start to be concerned about high rises taking over their little Garden of Edens via planning changes.
Those people that are affected now (Youth, FHB, students, ethnics, unemployed, minorities etc) I would suspect make up a large portion of the non voters. Someone wrote on this web site that Key only requires 50.1% of Kiwis to vote for him. Last election only 77.9% voted so in fact he only required 39% of Kiwis to vote for him. The wrinklies are organized, methodical voters and thus hold the balance of power in their hands- democracy anyone? Watch the political parties focus on them coming up to the next election.

Very well in the knowledge that at the age of 36 my mortgage is less than %30 of the value of equity I hold in my property and rapidly dropping.

I take it you mean that the equity you hold in your property is rapidly dropping. You are correct if you live in Auckland.

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Great article. National won't do anything.

Australia should be cutting immigration by half & put in a population cap from everywhere including from New Zealand. Australia is growing faster than Indonesia population wise. 28% of the Australian population is foreign-born which is the highest in the developed world.

Australia went from 23 million to 24 million people in just 2 years & 9 months. Australia grew by the population of New Zealand in just 12 years.

NZ needs immigration right now with low birth rates, tens of thousands of NZers leaving to live in other countries & a aging population.

New Zealand has more than 25% of its population foreign born, Should we not also be cutting immigration in half?

> NZ needs immigration right now with low birth rates

Low birth rates because the cost of housing is too expensive...because of immigration.

No, NZ does not, that is a flat earth policy.

There somebody said it ! About time...

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Great article. Two comments - there are two issues here. First, what is a comfortable rate of immigration. Second, what population are we targeting? For the second, my gut says around 5 million is about right (given the population of various Nordic countries). Would be good to see a consensus around that, but it is the first issue that needs the spotlight shone on it. This pace is just way too fast and yet we hear absolutely zippo from the government about it. Given we have a points system etc., there is absolutely no need to accept the status quo - adjust the thresholds and ease the flow rate. Why is this not being done or even talked about? I don't get it. It's per person GDP not absolute GDP that matters.

Ask any economist what optimal migration rates should be - It needs to be a rate at which social welfare is going to be optimised.
The case of New Zealand doesn't quite represent this. We have strained public infrastructure that isn't being upgraded accordingly along with a dwindling effective wealth per capita. This is never not going to be the case when you have a flood of migrants who fall into the "Ethnic Chef" category and come from nations not too conducive to the capital flight of their citizens.
In business no one wants to be a bottom feeder. Once you go down that road, everyone knows it's hard to be seen as anything different. Perhaps there is a lesson in that for NZ.

You cant grow for ever on a finite planet, ergo we need zero immigration.

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I bet Winston Peters plays the race card against immigrants next election. National knows he will, so they will turn off the immigration tap, later this year in preparation. Watch the GDP go south shortly after.

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As a paid up card -carrying member of the National Party , who has never voted for anyone else (EVER) , I will vote in the next election for the party that slows down this rate of migration until we can cope with the influx.

This immigration policy is just crazy under the present circumstances

No wonder - it's all your fault - you have revealed yourself

One simple question - what took you so long to wake up?

NZF....no one else will I suspect.

National will turn off the immigration tap later this year in preparation

Wanna bet?

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New immigrants in our area have bought dairies and fish and chip shops. Most of them are not doing very well. Is this the foreign investment our rural communities desperately needs? I think they've been sold a dog.

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Tim , that is how they get Permanent residence .

The cost of the so called "DOG" is the price they pay for getting for getting in .

Its really really cheap in the long run , you buy your dog and get your ticket into a First World country , free education , freehealthcare , superannuation for Mom and Dad , its heaven !

You see they buy a business, and get in under the investor category .

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Are New Zealanders allowed an opinion on what our optimal population size should be? Under our current system it seems impossible for the public to have this debate.

Of course,

You can have all the opinions you want

Just get out there and vote for the FLAG

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Jamin , of course its possible, just vote for Winston Peters and send a strong message to National .

Q. When is many TOO MANY?
We already know when fast is TOO FAST for Auckland housing.
Our inept Gimmint will reap the whirlwind when they get lumbered with the Auckland housing fix up.

Michael Reddell AKA Croaking Cassandra does a critique of David Hargreave's article here
http://croakingcassandra.com/

Great Link - some pieces I took from it was that very few of the parties are not fully Pro Immigration while at the same time nobody could find any real benefits arising. Incredible

"It is quite remarkable that we’ve gone for 25 years with one of the largest scale planned migration programmes in the world, have no actual evidence of the benefits to New Zealanders of this programme, and all the time have continued our slow relative economic decline, and yet not one of the political parties appears seriously uneasy about what is going on."

I would suggest the first party to really break ranks here will start a stampede for the doors by all parties. Bring it on.

Did you look at when food prices started to rise? and then maybe look at when oil prices started to rise?

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Certainly to allow/encourage the high levels of immigration we have with no plans at all for how the housing, roading, schools, medical facilities will cope is government negligence of a very high order.
My own priority is transport, which does seem to have hit gridlock in many areas. Mt Eden Rd is already nose to tail for its entire length at peak hour, and they are finishing 1500 more houses at the end of the road. Dominion Rd is a 5km car park at peak time. I'm sure the story is repeated all over Auckland.
If the City really is intended to absorb very high population growth, then it needs something like London's underground tube system by say 2030, and it needs to start building it now. The intended inner city train system is a useful start, but only scratching the surface.

Probably nobody in NZ noticed, but John Key has been making international headlines a few days ago, along the lines of "New Zealand offering to take unwanted refugees". This amateur seriously blasts around these kinds of statements during an illegal immigration crisis of biblical proportions unfolding in Europe and the US. What he actually meant was that he was willing to take 150 of Turnbull's lot of illegal migrants kept in Nauru. But imagine what kind of message Key has been sending out into the big wide world: illegal immigrants welcome in New Zealand.

Key is part of a political disease that is currently sweeping the so-called Western world. Obama is trying to reward illegal immigration by presidential decree. Merkel, arguably the most incompetent European politician since 1945, is going one better explicity inviting illegals to Germany, destabilizing Europe to its core. Key has gotten 750 Syrians into Mangere at a cost of 50 million NZD over the first 2 years alone and is making public statements that can be easily misinterpreted. In return, these hypocrites, which do not care about the underprivileged in their own countries scratch each others back at the next G20 junket and get a lot of praise in the global bleeding heart media.

Yes, what alternative to old battle horse Winston is there these days?

This is clearly playing into Winston's hands. That the govt has been in complete denial of the demand side effects of immigration on Auckland house prices and demand on infrastructure, education and health services is hard to comprehend. Especially so as the supply side planning seems to be in a state of disarray.

Also foreign investment in farmland is set to become a big political issue playing out around election time as dairy (and sheep) farmers are being liquidated around that time. I haven't been a disciple of Winston but I can see that he is becoming the best hope of sorting some of these fundamental issues.

Harry Dent makes interesting assertions that consumption peaks at age 46, then we age and as an Oldie spend less. "New" consumers are needed to enable economic churn to continue. As it takes 20 years to breed a new consumer, net migration is presumably a strategy to endeavour to keep an economy ticking.

http://myartpatron.com/library1/file-884.pdf

Lack of consumption would not appear to be among our problems. We have now had forty five years of continuous current account deficits - all financed by increased debt and the sale of assets - to the point that we have lost ownership of most sectors of our productive economy and have a massive negative net debt position with the rest of the world.
Be interested to hear how adding tens of thousands of city based taxi drivers and $2 shop proprietors etc. per year will help.

Just build some more houses then, problem solved.

Problem Solver

The physical act of building houses is not the problem - so long as you don't mind living a long way up the end of a gravel road, no electricity, no phone, no internet, tank water, 50 km's to nearest school, 80 km's to nearest hospital, no diversity of ethnic takeaway food, with no power no fridge or freezer, so have to eat lots of canned food, live in hope you have a healthy family and don't require regular visits to doctors and dentists

Hello Ralph - haven't seen your comments on interest for sometime. Nice to see you are still around.....the articles and people's whinging is still the same - doesn't change too much over time as you will have noted..........I have come to the conclusion that most people on here aren't interested in solving the problem of the housing shortage.......interest is their daily moan fest.

I'd like to see balance in this discussion - on both sides.
I agree that the numbers are too high, and need to be critically reviewed.
At the same time, some of us in business are really struggling to fill skilled positions, and skilled migrants can be important in this respect.
So....I'm in favour of migration, but I would echo concerns with its present levels.

Too easy to get away with sweeping statements like that

What sort of specialist skills are you looking for that you need migrants to fill them?

Be specific - we can all look up the skilled-migrant-visa category list

it shows up the massive flaw in our educating and training of young people where we have high youth unemployment and we need to import skilled migrants.
we also have 15B in outstanding student loans, are the people getting trained for the need or is it just bums on seats to earn income

Agree

Sorry David H you should stick to property comments. Can we have six or even one example of some who has suffered due to high immigration. It is irrelevant to compare us with an old troubled country like UK. We need to be compared with Australia or Canada. My Considerable experience housing new arrivals from Asia Europe North and South America has been positive. Sure sometimes there are issues related to how they look after the property but always good re paying and work ethic. They make great Kiwis. Please send me more.

Property Leader, I can give you many examples of where immigration is toxic. In the UK there are large areas which only speak their native languages, not English, and where if white people go through them they get in trouble quite quickly, and white people could never get jobs in those areas. Wake up.

Another one: In the 2000's there was mass illegal immigration from Nicaragua across the border into Costa Rica. The country's population went up one-third in about 7 years. Crime went through the roof. The Costa Ricans hated it, but couldnt stop it.

Last example - Northcote and many other areas in Auckland. Go to Northcote shopping centre and try to read the names on the shops (most aren't in English) and try to hear an English conversation. Are they hiring kiwis and contributing to the broader economy? No. They are hiring each other and doing business with each other.

Where is our D Trump when we need him. Is it Winston? Stand up that person I'll vote for you.

Correct

So you want to vote for a narcissistic, racist, bigoted guy with an awful haircut? (and those are his good points), kind of why?

In N.Z., as in the U.K., governments are limited in their ability to halt the flow of people, capital and ideas. Immigrants tend to be attracted by the availability of capital, jobs and infrastructure in the host country. The only thing governments can really do is create economic conditions for a balance in migration flows, e.g. an outflow of people through retrenchment causing a recession and capital flight. For some strange reason, politicians are reluctant to do this. They realise that high net migration is a vote of confidence in the country, as much by Kiwis as foreigners.

Jugalug, that is thoroughly incorrect! The government sets the level of difficulty of attaining visas and PR. It it TOTALLY within their control. For example, I lived in one country once where I could stay for three years, but it was basically impossible to stay longer, regardless of my education level, unless I got married.