But any thoughts of cruising over the holiday season have been quickly doused, with voter angst over housing and immigration starting to boil over.
A new poll from Roy Morgan Research has suggested that Prime Minister English needs to find a solution to New Zealand’s growing “housing crisis”, with 27% of respondents citing housing affordability (17%) and homelessness/housing shortages (10%) as the key problem facing the nation – well ahead of the other issues.
The concerns are loudest in New Zealand’s biggest and most expensive city – Auckland – where housing ranked as the key concern among 37% of residents, namely housing affordability (25%) and homelessness/housing shortages (12%).
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Indeed, rising housing costs combined with low wages growth have caused workers to take a spate of industrial action across New Zealand, with First Union claiming that workers across Auckland are spending more than half of their income on housing costs, causing them to take industrial action against their employers to “provide a wage they can afford to live on”.
Underpinning the struggles is New Zealand’s break-neck immigration, most of which is flowing into Auckland and placing acute pressures on both housing and infrastructure.
As shown in the next chart, net permanent and long-term migration into New Zealand hit all all-time high 70,300 in the year to October, representing roughly 1.5% of New Zealand’s annual population growth:
Migration remains by far the main driver of demand for housing in Auckland…
Statistics NZ estimates that Auckland’s population increased by 44,300 people in the year to June, with 69.5% of the increase (30,800 people) coming from migration…
As the table shows, the biggest surge in migration occurred from 2013/14 onwards as the Government encouraged immigration on a number of fronts to try and spur economic growth.
That included creating what became known as a “pathway to residency” for overseas students studying here, which resulted in a huge influx of overseas students applying for residency at the end of their studies, a scheme that has since run into numerous problems…
Such rapid population growth has had an obvious effect on Auckland’s housing market… although the problem is not new, it has been exacerbated over the last three years by the rapid increase in migration…
And if they did see the problems and proceeded anyway, it reeks of recklessness.
So take your pick. Reckless or incompetent?
These concerns have not been lost on New Zealand’s opposition parties, with Labour, The Greens, and New Zealand First all calling for restraints on immigration.
Gareth Morgan’s new Opportunities Party has also released its immigration policy, which calls for a smaller, smarter immigration intake:
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Immigration should not be driven by student visas, nor reciprocal visitor working visas it should only be about whether the immigrant benefits us. Of course migrants accepted for humanitarian reasons are a separate issue…
There’s a big downside from too many migrants, particularly if they are working in low-skilled jobs. Establishment parties have wrecked New Zealand’s immigration policy by making it a tool of what they believed was a lucrative foreign education industry. But we’ve ended up selling low quality education packages to desperate economic refugees from India and China. Foreign students have been granted the right to work here while studying and they then stay on in jobs (any jobs that is – glorified dishwashers is a favourite) to get more points to qualify for residency.
Whichever way you cut it, Prime Minister English appears to have his work cut out for him either defending or unwinding the housing/population ponzi economy.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
