New Zealand Prime Minister, John Key, has lept to the defence of New Zealand’s high immigration intake, refusing to concede that it has placed upward pressure on house prices or interest rates. From Interest.co.nz:
Key denied the current rise in migration was responsible for higher interest rates.
“No, I don’t think it is,” Key said…
“Migration always has some impact on housing although over the long-term it can actually help with the housing issues as well because many people who come in play a part in the rebuild,” he said.
“They brings skills and other traits with them. But I think overall it is really important to understand that we do manage migration. We have for a very long period of time. What’s changed here isn’t an influx of migrants. It’s that New Zealanders aren’t leaving, and in reality these things go through cycles. And many of the people that come, well, would you really want to turn them away?”..
Key was then asked why the Government did not agree to take less than the current intake of 71,000…
He said many were skilled migrants or part of family re-unifications…
Unfortunately for Mr Key, his views do not accord with the RBNZ’s Michael Reddell, who recently released a research paper claiming that New Zealand’s high immigration program had crowded-out (through higher interest rates and a high average real exchange rate) other productive investment, lowering living standards in the process.
It is also at odds with research by the New Zealand Treasury, which questioned the merits of high immigration, and recommended a reduced immigration intake in the event that the economy is unable to adequately cope with population pressures.
Nor are Mr Key’s views consistent with those of New Zealand’s Savings Working Group, which in 2011 argued that high levels of immigration tend to put upward pressure on inflation and interest rates, which can crowd-out productive sectors of the economy.
It would be refreshing to see a political leader acknowledge that the case for a high immigration intake is anything but clear-cut, and might actually worsen living standards for the pre-existing population.
