NZ ramps immigration to deal with immigration fallout

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By Leith van Onselen

New Zealand Prime Minister, Bill English, has ruled-out changing the country’s immigration settings to bring in more construction workers to help alleviate Auckland’s chronic housing shortage. From Interest.co.nz:

The government has not seen any reason to loosen migration settings to allow for more house building in Auckland, despite the construction industry hitting its buffers, Prime Minister Bill English says.

English backed comments made by Housing NZ Minister Amy Adams last week that the government felt unable to announce a larger state-led house building programme over the next decade than it had done, due primarily to constrains faced by the construction industry.

Constraints were led by skills shortages, English told media at his post-cabinet press conference on Monday afternoon. Asked whether the government should then loosen settings to allow for greater levels of building, he said migration levels for the industry were “about right,” as employers were able to tap migrant labour, but that the shortages also meant locals were being trained.

“We’re going to build for growth and get the skills in where there’s gaps, and New Zealanders are getting trained,” English said. “It’s the best opportunity in a generation – two generations – for anyone who’s interested in a trade”…

English admitted shortages were a constraint. He said he was “pleased that the National Party has defended, and will continue to defend, migration policy that allows for the skills to come in to build our infrastructure and our houses”…

And at the same time, talking about cutting migration numbers by the tens of thousands [as Labour has proposed] was “just dumb,” he said.

Back in February, Statistics New Zealand released demographic data showing that Auckland’s population had grown by around 200,000 (over 13%) in just four years, with the region’s population also projected to grow by 833,000 (+56%) to 1113,600 (+75%) people over the next 30 years:

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Of course, the underlying driver of Auckland’s break-neck population growth is the New Zealand Government’s mass immigration program, which has set a target of around 45,000 permanent migrants a year (not including Australians) – most of which flock to Auckland:

In the meantime, the latest dwelling consents data revealed that Auckland consented just 10,199 homes in the year to March 2017 – well below the 15,000 required to keep up with the city’s ballooning population growth:

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Accordingly, Auckland’s housing shortage continues to grow, adding to the estimated existing shortfall of at least 30,000 homes in the region.

Blind Freddy can see that it is the Government’s mass immigration program that is primarily responsible for causing Auckland’s chronic housing shortage in the first place. So the first best solution is not to ramp-up immigration even further, but to cut New Zealand’s immigration program back to more sustainable levels.

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About the author
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.