NZ Government balks at immigration reform

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By Leith van Onselen

Back in April, New Zealand’s National Government announced modest “tweaks” to the country’s immigration program, which including a $48,000 income threshold for a skilled migrant, as well as only allowing employers to tap lower-skilled migrants for three years, with these people facing an annual review of their visas.

The announcement of immigration curbs came after the Labour opposition took aim at New Zealand’s mass immigration program, which it claimed is choking housing, infrastructure and public services in Auckland, and undercutting working conditions, as well as similar concerns raised by New Zealand First.

The Salvation Army, the Treasury, the RBNZ, and former RBNZ special adviser Mike Reddell had also raised concern that New Zealand’s immigration program does not take sufficient account of whether their are genuine labour shortages, and may be depriving incumbent residents of employment opportunities.

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Meanwhile, dwelling construction in New Zealand has failed dismally to keep up with population growth, with only 30,645 new dwellings consented across New Zealand in the year to May 2017, and just 10,379 consented in Auckland – way below the 15,000 homes required to keep pace with Auckland’s population growth.

Today, Interest.co.nz reports that the National Government is looking to backtrack from its immigration “tweaks” announced in April:

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Bill English’s responses to questions about potential changes to new immigration policy floated just months ago indicate he and Immigration Minister Michael Woodhouse are looking to row back particularly on a previous planned crack-down on lower-skilled migrants.

English was holding his cards close to his chest at Monday’s post-Cabinet press conference, encouraging journalists to “wait and see” how April’s proposals might be tweaked in the next few weeks after feedback from employers included what he said were some straightforward concerns.

Tweaks would ensure “real services” continue to be provided as the demand for skills in the construction, hospitality, horticulture, trucking and aged care industries heats up further, English said.

“These are real services that have to be provided…next week, the week after, next year. So, we do have to take into account those issues,” he said. “It’s a matter of making sure that we’ve got the people to do the work that has to be done. Like, you have to service the tourists, you have to build the houses, you have to look after the old people – there’s no choice about that”…

Interest.co.nz’s David Hargreaves is unimpressed, describing the back down as symptomatic of “lazy” policy formulation, while selling-out unemployed locals:

There’s two ways of viewing this climb-down; the policy wasn’t right and after hearing views it should have heard before announcing it in the first place, the Government’s now changing the proposals, or, maybe the policy was okay, but it just didn’t suit some fairly influential voters in an election year – so, the Government caved…

In general, I still don’t like the idea of filling jobs with people from offshore when there are people in New Zealand unemployed…

The reality is this country has got to properly tackle the whole issue of just why reasonably significant numbers of young people are not being given the right skills and motivation to get them into the workforce and to fill jobs that need filling.

And I do wonder whether certainly some employers have just got rather used to the idea and more comfortable with the idea of simply reaching into the overseas market for employees because that’s just easier.

But in terms of the long-term health of the country, it is not good.

So, what we’ve had here effectively is a Government issuing an original proposal that is a kneejerk response to polling, followed by a kneejerk reaction from employers and then a kneejerk reaction to that reaction from the Government.

This is not the way good sustainable policies are made.

Behind the headline record high latest migration figures is the very telling statistic that in the 12 months to June, an all-time high 45,000 people arrived here on work visas. That’s an increase of 15.2% in the past year. And the Christchurch rebuild is no longer an excuse. The numbers of people coming in on work visas have more than doubled since 2011.

If we are serious about keeping checks on migration, then this is the place we need to start.

But what we don’t need is hastily scrambled together quick fixes done by a cynical government that’s only got its eye on opinion polls and the next election.

The social penalties for an ill-thought-out policy on migration are considerable.

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Much like in Australia, where migrants gravitate to the major cities of Sydney and Melbourne, immigrants flooding into New Zealand tend to settle in the already crowded and hideously expensive city of Auckland.

While changes to work visas are justified, the Government also needs to address New Zealand’s excessively high permanent migrant intake, which is currently set at 45,000 people a year (not including Australians) – or roughly 1% of New Zealand’s current population:

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This is the long-term driver of New Zealand’s overall mass immigration program, given temporary migrants are by definition temporary. As long as it remains at such high levels, the country will continue to suffer from chronic population pressures, especially in Auckland.

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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.