ANZ chief economist Cameron Bagrie is questioning whether New Zealand's current migration policy settings have got the 'mix' right.
"There are numerous questions within the story (composition of visa approvals, skills of applicants etc) that suggest the migration framework, and the application of the rules, could be in need of adjustment," Bagrie said.
In the ANZ's latest monthly Property Focus, Bagrie said New Zealand's economic and political credentials currently looked "pretty good", so the ANZ economists didn't believe net migrant inflows, (which are currently running at around 69,000 a year),were going to cool aggressively any time soon, in the absence of policy intervention.
"Skill shortages will worsen as the population ages, so New Zealand needs to import labour.
"However, it is questionable whether current policy settings have got the ‘mix’ right and are achieving the desired outcomes."
Bagrie said GDP per capita growth was "lacklustre". In the March quarter, annual per capita real GDP growth was just 0.7%.
"Timing and measurement issues might be at play, but clearly this is a less-than-desirable rate of growth for what is ultimately the most widely followed measure of living standards. So we’re not seeing “value creation” right now from this population boom," he said.
"Sub-par GDP per capita growth is telling, as is the mismatch between reported skill shortages and the skill sets of arrivals. It is also odd that more foreign students are heading into Private Training Institutes as opposed to Universities.
"In short, there are aspects that suggest the migration framework, and the application of the rules, could be in need of adjustment," he said.
Bagrie said the "rhetoric" was that migrants are needed to fill skill shortages.
"We certainly concur. But that is not necessarily backed up by what skills end up coming through the system. While we know that the tourism sector is doing well, and long may that continue, three of the top four occupations of principal skilled migrants approved for residency are chefs, retail managers and café/restaurant managers.
"Retail spending on food and beverage services is up 10% on a year ago, which is clearly strong growth, so perhaps it is little wonder we are seeing strong demand for these types of workers as a result.
"But the dominance in approvals for chefs is still eye-watering (699 in 2014/2015) and it is certainly a surprise that it is the top occupation."
Bagrie said it was a "broadly similar story" when looking at temporary visa approvals. There seemed to be a mismatch between the skills of those coming in and what is actually needed.
"Some sectors appear fully clothed (food services); some don’t (construction). Most of the people with essential skills work visas are going into cafés, restaurants, dairy and retail.
"Some make more sense than others – dairy has had definite staff shortages (although there are anecdotes of staff redundancies now), while retailing generally remains a tough industry
"Most of the occupations of those coming in on essential skills (temporary) and the principal skilled migrant category (permanent) are very similar. Either that’s consistency at work or we are being hoodwinked on both levels."
And looking at the education figures, Bagrie said the number of international student visas granted increased 17% from 2010 to 2015. Education exports were up 21% over the same period (28% to June 2016).
"However, we are seeing a massive surge in students heading to polytechnics and private training institutes (52%) without the same growth in those going to universities (10%). Is that the right mix?
"Around half of these international students are from China and India. Most of the Chinese students are attending university while well over half of the Indian students are attending private training establishments. That looks a little odd, and we can’t think of good reasons why this should be the case."
47 Comments
Bagrie: "or we are being hoodwinked"
How much more obvious does it have to get. There are two major crises developing in this country that should have been easy to spot and prevent and both have their roots in high levels of poor quality immigration.
The other thing Bagrie mentions (also worsened by our dripping wet immigration "policy") is incredibly weak GDP/capita growth. We have credit/debt growth around 10% of GDP per annum, that should be like putting a rocket in the arse of the economy. What's going on with this less than 1% GDP/capita growth with that sort of a tail wind?
Real GDP per capita growth may not necessarily highlight the real income growth. It's just based on a plain mathematical formula. If you combine that with a socioeconomic indicator such as the Gini Coefficient (worsening since the GFC for New Zealand) the wealth and income pyramid in NZ is increasingly becoming a top heavy one.
According to latest news headlines, most Kiwi businesses are witnessing their best profit run in decades with double-digit percentage growth in net incomes. But the inflation-adjusted income growth is evidently marginal (don't get me started on housing inflation adjusted income). Businesses are the only beneficiaries of the open immigration policy that brings them an ever-increasing consumer base and no motivation to raise wages due to an overly-competitive labor market.
Everyone always seems to miss the point around immigration. It's all about the elephant in the room - NZ Super.
Our demographics are about to blow up and make NZ Super totally unsustainable. There just isn't enough workers to support the retired. The easiest fix is to just import the workers to do that and there's no doubt in my mind that's exactly what we are trying to do. We need to import probably 600k odd people in the current 15-44 range over the next 10 years or so, or around 60k a year (not including people outside that age range). Our current 'record' immigration is probably not even enough to solve this issue for the country. And with this type of change you need to frontload it as much as you can. We are falling behind.
Yes it's making the housing situation worse, yes our infrastructure is struggling to keep up, yes we need to look at which immigrants we are taking. But the underlying issue isn't going away and not importing enough people will have much more serious issues for the country than the ones we are seeing now.
No one with half a brain is going to turn immigration down any time soon.
This is where, done right, technology could come in to allow us to prosper in a world with a shrinking population, something we are going to have to get our heads around, one way or another. One solution is all out war, the other way is not, but has to deal with an ageing population.
It would indeed be heartening to think the Government were thinking that far ahead, more likely they're just trying to goose the economy and fool us all that debt is wealth and rising house prices will make us all rich.
John Key says there is no problem with super and on this I think he is correct. Our dependency/worker ratios will still be healthy - certainly far better than the 1960's when we had far fewer people in paid employment and a bunch of boomers to raise.
If recent court cases are anything to go by don't be counting on our recent immigrants to be helping much with the tax take. Many of them seem to have a cultural and possibly genetic aversion to tax paying.
Mathclub - suspicous newbie - several recently appeared from spin central as Nats realise they need to polish it and put lipstick on it but eventually as you push it up hill with a pointy stick it starts falling back on the populace howvever you spin it.
Laughable - forex speculators only look fwd to Friday, often closing out positions then to avoid any disasters over the break. To say jk is looking a decade down the road is taking it big time. His total focus is on late 2017.
Long term? As far as I can see his leadership consists of carefully considering all the options but at "the end of the day" won't be making any changes - let the Ponzi run free.
I am still waiting for someone to list his political achievements. His non achievements are well documented.
@ mathclub. The babyboomers built this countries infrastructure and had we not artificially raised the countries population the smaller workforce would have had no trouble supporting them, thanks to industrialization and technology.
The problem now is that we have raised our population and need new infrastructure to support the enlarged population. Our productive industries also now have more people to support.
A large % of the new population of immigrants are competing directly with working class kiwis for jobs and have removed the need for employers to train young NZ'ers. This is a great cost saving for the employers but a disaster for our young people.
My son did a year at polytech doing a pretrade coarse. The participants stack up a student loan and 9 months after the coarse was finished my son was only the second one of them to get an apprenticeship.
Had we kept a stable population and invested in training our own young people we would now have a happy functional society with our young people gainfully employed with every chance of owning their own home and contributing to society.
Instead we have a generation of young NZ'ers who have little hope of earning an income better than a social welfare benefit and no hope of owning their own home. We had better build more prisons and put Policeman on our desired immigrants list.
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National Government is not with NZ but against NZ otherwise why would they be facing peoples anger day in and day out (except rich Kiwi and overseas speculator whom they are working for)
Only if they were with NZ, will not have to deny and lie on everything.
Overseas buyer data : It is the responsibility and duty of any government to place the correct factual data in front of the people of NewZealand.
Act or not to act is up to them (Can argue on that and may have different perspective) but they have lost when they try to manipulate and lie with the data. For me that is more shameful than not acting.
If the government was right, their would be no need to manipulate and lie. People only lie and manipulate when they are in wrong. Can any experts deny this.
Why is so many of us here surprised by the GDP/Capita numbers??
Actually it is looking very good given the amount of immigration and tourism we had in the last 2-3 years .... because they actually compensated for the effect of stagnation in the world markets and the over supply of everything !! main contributors to GDP are our primary products which have really tanked in recent years .... Not saying bring in more immigrants ... but be careful what you wish for !! and don't just mince numbers and curve trends without detailing the underlying causes....
Immigration will subside when our 70,000 unemployed young guys get off their butts and start working instead of roaming the streets or playing games while on some sort of benefit -- there is work there for everyone who wants to work .... we would import less people if our own covered the shortage ....
http://www.stuff.co.nz/business/83329544/duncan-garner-hard-working-us-…
So, How is the income of NZs going to increase by 50% ?? are you for real?? or on a very high quality weed that hasn't hit the market yet ....
Waiting for a clever dude to show us HOW ??
Totally agree with Duncan Garner. If our immigration policy is wet (it is) our welfare policy is positively dripping. If someone is not prepared, even if they some health issues, to show up and put in a decent days work then that's their problem not mine. No work - no money.
The trouble is that forcing down wages with poor quality immigration exacerbates the problem so that there is even less incentive to get off your arse. Did anyone seriously expect a different result when we started with this nonsense. We've now got a multigenerational issue where entire families and even communities are completely useless and can barely even look after their own personal needs if you catch my drift. The survival instinct is universal - the work ethic isn't and if your friends, family and community don't have it then it's unlikely you will either.
True ... I have seen examples of that - Once I had 3 generations of a family as tenants, all lived together and all fully capable of working, yet none of them did, with the second and third generation popping out babies like clock work ... ( because that is their pay rise) ... lying down in the sun all day !!.... they needed a second recycle bin as one was not enough for the empty bottles and cans ....!!
and True, some cannot even look after themselves because all the tree huggers have spoiled them rot ... and they keep doing that by exploring any emotional case to move public sentiments ....these people just do not realise the long term damage they are doing to the country ...
Immigrants who come here with very high degree of motivation ( let alone qualification and experience) are satisfied with lower wages ... and are becoming more desirable for employers, not only because they pay them less, but they work harder and overall are more productive because of their work ethics and culture ...
If we remain complacent until someone will change the labour market by starving it so wages can go up, then we are going down a very slippery slope .... Until then businesses will not close down waiting for a local to be bothered to join the party ! It is tough out there as it is ... A lot of people don't know that , they just want money in the account !! and of course that is the Gov responsibility !!
Over the years I have watched our smart and bright guys leave the country for a better life ... and been replaced by idiots, every time the immigration door was opened you notice that the idiots are being replaced by smart or hardworking imports, less agro, less problems, and the work gets done smartly.... talk to few employers and they will tell you few stories , like Duncan did in the article above...
No easy answer in this open, interconnected, weird world we are in at the moment !
How the hell did this get to be the fault of "tree huggers" for crying out loud? If anything it is the fault of free marketeers that thought all those years ago that selling off our jobs to foreigners was a great idea that started all of this rot. I am pretty damned sick of self righteous right wingers not being able to see the truth. Those people came from people who did work and earn, perhaps in forestry, perhaps in factories, the rug was pulled out from underneath them by RIGHT WING economics.
It is true that the changes for the typical factory worker (for example) were abrupt and a huge shock for folk as they were exposed to the triple whammy of globalisation, privatisation and mechanisation in the late seventies to early nineties. I saw it at close hand and some communities have never recovered but people need to adapt. Sitting around blaming everyone else and waiting for a hand out is highly destructive to yourself, your family and community. It has got to the point where some serious "tough love" is called for. I don't think there is any other option although it has now become a huge challenge.
Filling the place up with immigrant labour while our people waste their lives as parasites is a completely gutless cop out IMHO.
Has anyone read Tony Alexander's latest on housing? I had to read it twice! He lectures non-Asian people for not turning up and bidding. Then goes on to scare the crap out of readers on how the market is going to take off again after a breather. One interesting comment was "banks cutting back on finance provided
to developers (don’t think that one has hit the media yet),".
Here it is: http://tonyalexander.co.nz/wp-content/uploads/2016/09/WO-September-1-20…
I'm not sure what to make of it...!
"If there is something you want to do then no
matter what the market or weather conditions you
will be making serious effort to do it. And as a
culture where we generally value and respect
hard work and those who put in an effort this
continuing presence yet non-bidding of Asian
buyers seems worthy of positive comment. The
rest could have been in the auction room
scanning the market looking for a bargain at a
time when few people are buying. But they didn’t
front.
Interestingly the one property I did see sell went to
a person of European descent. My message? You
buyers are once again, for the third time in three
years, presented with an opportunity to go to
auctions and make a bid against far fewer other
bidders than normal. Personally I would take up
that opportunity because the chances are that
with interest rates falling, migration staying high,
construction costs rising, developers pulling out of
projects, banks cutting back on finance provided
to developers (don’t think that one has hit the
media yet), and Auckland’s rate of growth in
dwelling consents near plateauing, come early
next year the market will once again take off."
@ macbet .... thank you for the link -- very interesting opinion and advice from Tony Alexander ...
There is no contradiction or mystery in what he is saying ... in fact all is very reasonable and sensible reporting from a man that is in the thick of it ...
He simply outlined the reasons and drivers of the Housing market and his analysis is spot on - in a rising market you need to buy at the dips of when others are less interested .... His conclusion that the market will take off again is correct and we shall see that come dec 16 or Jan17 ... so is his advice on 2-3 fixed rates ..
I guess he has also confirmed that all the misleading numbers and claims thrown around about the number of Asians or Foreigners buying out the housing market is just that ..BS
I can hear few guys shouting again 39% and students and all that crap - but that doesn't change what Tony was referring to in the IRD numbers since last year which were only 3 % .... as he said even doubling that to 6% is nothing here or there. they can argue till the cows come home .. but everyone's already sick of moaning ( well almost everyone !!)
His conclusion about buying is very sound, any buyer who is interested in a house should consider it now and talk to his broker....
As to those who are waiting for the market to crash and the bubble to burst, then rest assured brothers ...Most of us will vote National next year to make YOUR DREAMS COME TRUE and give the Nats the proper opportunity to seriously CRASH the market ... for the benefit of all NZers who cannot afford a home now.
We hope we won't be wrong !!
Tony Alexander is one of the better economists in NZ. He tells it like it is. He is not one of these people that tells everyone to rent (SE) or tells everyone to move to Wellington (our very own BH), nor is he like the current crop of chicken little journalists. If you read back his commentary from 2010 he has been spot on. Tony is not left nor right, just straight talking.
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