By Jenée Tibshraeny
New Zealand First, and to some extent Labour, should be given some kudos for quietly turning their backs on their 2017 election campaigns around immigration.
Yes, you heard right. They’re not doing what they said they would, and I believe that in the current environment, this is a good thing.
The Government has stuck to its word and tweaked immigration settings to make it harder for international students who have graduated with lower level qualifications to stay on in New Zealand.
It’s also changed the rules so they’ll no longer need to be sponsored by an employer to stay under a post-study work visa – the idea being for this to reduce the likelihood of employers exploiting them.
While these changes are expected to reduce migration numbers, any drops won't be near the 20,000 to 30,000 people mark Labour estimated its policies would result in before the election.
What’s more they definitely won’t see annual net migration fall from the 61,751 people it’s at now to the 10,000 New Zealand First campaigned on.
Sure, we should take a moment to throw some punches at New Zealand First for campaigning on what was always a populist, yet unworkable, line on immigration.
But if we put politics aside and look at what’s going on in the economy, we’d see that annual net migration is continuing to fall off its 72,000 person peak hit in 2017.
Massive immigration cuts would be detrimental and only exacerbate the capacity constraints hamstringing the economy.
The National-led Government bolstered the economy after the 2008 global financial crisis by simply adding more people to it.
It went overboard and didn’t up the ante on immigration in a targeted way to attract the skills needed to grow the economy sustainably.
But the reality is, we are now sitting in a country with more people that we can’t house, transport, educate, and so on, so seemingly counter-productively we need to bring in even more people to ease the pressure.
I’m sure we can all agree the main thing is that we need to bring in the right mix of people.
But here are some figures that show why the Government shouldn’t introduce policies to turn the tap off too much:
The unemployment rate is the lowest it’s been in a decade at 3.9%. The share of the population participating in the labour force is near a historical high.
The Reserve Bank believes that over the next few years, employment will grow faster than the labour force. The labour market is projected to tighten, with the unemployment rate dropping further over 2019 and 2020.
The Reserve Bank’s indicators of capacity pressures suggest the output gap is at zero. In other words, there is no difference between what the economy is producing and what it’s capable of producing without generating above-trend inflation.
It expects fiscal and monetary stimulus (that is, more government spending and low interest rates that make borrowing cheap), and higher net exports to support growth and increase capacity pressure over the medium term.
This is expected to affect residential construction activity, including the Government’s flagship KiwiBuild scheme, and business investment growth.
In fact, part of reason why the Crown reported a whopping $5.5 billion surplus in the year to June was because it wasn't able to spend its money as quickly as Treasury had forecast.
As Westpac senior economist Michael Gordon argues: “Bottlenecks and capacity constraints have for some time been the main hindrance to a lift in infrastructure spending, not the Government’s self-imposed borrowing limits.”
Putting an anecdote to the data, National’s South Island Regional Development spokesperson, Andrew Falloon, says towns like Ashburton are bearing the brunt of the country’s skills shortage.
He claims there are 500 vacancies in the district and employers have stopped advertising because of a lack of applicants.
I put the economic figures quoted above to Regional Economic Development Minister Shane Jones a couple of weeks ago, asking him whether he still stood by his party's pre-election line to reduce annual net migration to 10,000.
Jones didn't say yes. Rather he said: "We are most certainly a party of doubting Thomas’ in terms of un-feted immigration policy that brings in too many low value, unskilled workers into the country. Our approach is never going to change from that.
"I think though that it's incorrect to characterise NZ First as antagonistic to immigration.
"On the question of those firms in those sectors who can't get enough workers, I think over time we're going to have to see a growth in productivity where we rely more on technology and less on low skilled labour.
"But in the short to medium term, in the transition, I think your point is well made... and that is, we're going to need an infusion of Melanesians, or the Recognised Seasonal Employer scheme.”
A toned back rhetoric from a New Zealand First Minister – thankfully.
While the Government’s approach to focus on improving the quality of migrants, rather than reducing the quantity is a good one in the current environment, its challenge now is getting its messaging right to avoid uncertainty, which feeds into low business confidence.
93 Comments
We have 70 years of almost consistent high immigration with varying governments and sources of immigrants and varying emigration to Australia. So we have plenty of data.
See https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita
After WW2 NZ was very near the top and now we are 31st (IMF) or 36th (CIA). But Ms Tibshraeny is arguing that we give it a little more time before making a judgement.
Says it better than I can. (H/T Roger Witherspoon on here, yesterday)
" A problem created entirely by the Clark/Cullen/Key/English quasi-religious group think that Immigration Is Good. John Key was right, we don't have a housing crisis, we just have more people than houses. I don't think there is a problem with a reasonable level of immigration, but that probably means 10,000 a year not 60,000."
https://www.interest.co.nz/property/97048/phil-twyford-progresses-nick-…
Hard to know but if we look at societies with similar land areas and topography, the UK with 50 million looks stressed and Scandinavia looks slightly uncomfortable with 10 million per country.
So let’s guess we should slow down, perhaps 20,000 new residents per annum maximum until we reach 10 million.
Forget economic strategies, they are far too short term.
Electricity sector reports are very clear in the fact that we will be facing electricity shortages in 5 years time. Very simply if you double the population you need to double the infrastructure, in the case of housing - we now have the highest homeless rates in the OECD, In the case of electricity and water we are now facing future electricity shortages and water shortages. We don't have the infrastructure to cope with the increases in population. Where are the high paying export industries these immigrants are inventing and founding like Fisher and Paykel that generate export revenue to pay for the infrastructure. The infrastructure can't be paid for by serving cups of coffee and cappuccinos or kebabs to each other? and the infrastructure should not be paid for by NZ taxpayers.
Farming with Fonterra result same as daft farming people experiment
National had no plan no strategy
All it was about was getting as many migrants into NZ with money as possible to help prop the kiwi dollar up
after GFC & ChCh earthquake
Worse is that majority of politicians on all sides had rental property investments and thus benefited from high immigration through rental demand & rising housing values
I’m unconvinced the new government is seriously doing anything when I see another 60,000 migrants in the past year
This people Ponzi will end in tears
Its about infrastructure.
Where is a new Clyde Dam? Manapouri? Wairakei?
We don't have the infrastructure to support the population and the population isn't generating the revenue to purchase the required infrastructure!
We have made some kiwis homeless so some immigrants can have a roof over their heads (which is shameful) and were on the path where Kiwis will go without electricity and water some days so some migrants can have some of our electricity and water as well.
pity the author did not look at the other side of the argument, and the long term effects, loss of productivity in our major cities for transporting goods and people or the infrastructure needed for businesses to expand without having to plan for there own power and water ( which some businesses are already doing with solar and wind on the roofs and captured water)
, the increase in government spending required to maintain services and if not the level of cuts in services rendered, will people accept greater levels of crime
a more uneven society and the problems that come with that
the loss of the best productive land for housing
no one is arguing immigration is not needed but the agreement is the level and the LONG term planning needed to make sure its set so we get the right people needed in the right places needed.
immigration has been used to lower cost for business hence the lack of wage growth in a low employment environment and the problems that will create long term
ie we are importing drivers left and right but technology will mean in twenty years we wont need many of them and those jobs will reduce , example most cities are already trialing driverless buses.
overseas companies are trialing driverless trucks from depot to depot
do we just send them back? do we try to retrain them? do we just pay them to sit at home.
Too good for a thumbs up ""immigration has been used to lower cost for business hence the lack of wage growth"". That is why NZ spirals down the OECD GDP per Capita table from near first to about 36th and sinking - too many low paid immigrants.
As all the other contributors have said - it depends on the immigrant - more doctors and IT project leaders may be OK but I meet immigrants working in local shops - are they adding value to NZ?
Hard to define low paid but I would suggest an average immigrant ought to be earning well above an average wage. Judging by this article https://www.bbc.com/news/uk-45145339 in the UK the salary to obtain permanent residency is over $200,000.
But witness the squeals of indignation that came out of the hospitality sector the last time a government looked to set a residency threshold at only $49,000. They're consistently claiming we have a shortage of hospitality workers...when we actually have a distinct shortage of willingness to pay viable wages sufficient to attract workers.
It's outrageous that the taxpayer then has to end up shouldering all the associated costs that come with this importing of cheap, exploitable labour to prop up these businesses.
It is ludicrous. We have destroyed the concept of training staff.
Importing low priced goods from overseas is good capitalism - good for the people of NZ. Importing low wages to provide services in a country of ever increasing inequality is bad capitalism - destructive to low paid Kiwis and pulling wages down for middle class jobs such as teaching, care-givers, nurses..
Hamster wheel.. go little hamster go... Now that our economy is based on population growth, migrants selling/building houses and migrants buying whiteware, furniture and cars.
The hamster cannot stop or the economy will crash...
So we allowed excessive immigration of poorly skilled migrants. And the answer is.. more migrants
When the hamster has a heart attack, this will get ugly
The article and comments make sense if we agree what we mean by an immigrant. For NZ stats it is anyone staying over a year so Shane Jones ""Melanesians in the Recognised Seasonal Employer scheme"" will not be immigrants. That scheme is good for NZ orchard owners and also good for poor Melanesians.
So the 60k annual immigrants means work-visas plus permanent residency minus emigres. The 60k impact our infrastructure and make demands on services but work-visas are not a long term issue. Now permanent residency is below 40k; a significant improvement even if still way higher than other OECD countries.
Delay in tackling a tricky problem like immigration is almost acceptable and not unusual in politics. Delay in getting low paid immigration under control is probably costing us economically or as the writer says may on balance be OK.
However my objection is not to the numbers but to the endemic corruption. The most recent I remember being the Christchurch worker doing 92 hours per week.
Severely mistreating and exploiting immigrants is evil and the way our govt is generally ignoring the issue is disgusting. Usually the racist comment is 'they are being exploited by their own ethnic group'! Everyone in NZ should be subject to our law and the law should be enforced.
Prof Stringer identified the widespread exploitation in 2016 and so far no action unless you can call the ministers promise to ask for more financing for the Labour inspectorate at the next budget an action.
Meanwhile NZ reputation is getting worse overseas and our honest businesses are being destroyed by the businesses that exploit the low paid immigrants. God it makes me angry.
These immigrants need to be sent home. They brought alot of problems with them, NZ has a homeless population due to a housing crisis due to excessive immigration.
Australia passed a law to increase the power of the state to deport people who are residents but are causing problems. NZ should be considering increasing its power to remove people.
One needs to be realistic, people from the third world naturally want to come to a place like NZ but NZ can't afford to have them and doesn't have to resources to accommodate them and to fix the problems caused by these people, they must be made to go back to where they came from.
This all sounds like 'bank' funded news again. Got to keep the credit bubble building up... Can't have it slow or the banks go pop along with the economy. And we as a nation were foolish enough to let the last government put all our deposits into 'bail in' regulation. How did that ever get passed into law? Who in their right mind would let that happen, surely only a banker? Why does New Zealand have no depositor guarantee? Why would we want to bail-in the Aussie banks if they go bust because of reckless 'credit creation'... All very serious questions given what is happening over the ditch in Australia.
The author of this article, to me is saying:
"Keep immigration high or else the housing market will crash! We need immigrants to drive housing demand! If we import enough low paid workers, they can all band together (in RENTALS) and pay the bank loans speculators have taken out. Prices are cooling so for the love of God, don't reduce immigration - I don't care that NZ probably has the highest immigration rate in the OECD! I WANT HOUSE PRICES TO INCREASE!"
That is what I'm hearing.
If that’s what you’re hearing you have schizophrenia. There are labour shortages in many industries that can’t be filled with the current population base. It would stifle economic growth if these roles went filled. You can disagree with this stance, but don’t totally misrepresent the argument.
Which industries? I heard of care-giving, teachers and restaurants. Go back 150 years you can see immigration and economic growth going hand in hand with new resources (wool and meat and gold) being exploited and exported. Where are the new industries in NZ - I can think of new vineyards and Weta studios but only tourism seems to be creating jobs in genuine numbers. Too much immigration and not enough profitable jobs - the economy has to be more than people cooking pizzas for one another. Please correct me because I would like to be wrong.
Construction industry is an example - Quantity Surveyor etc. ICT, Electronics and Telecommunications is another. Most skill shortages are in long-standing but growing industries.
http://skillshortages.immigration.govt.nz/long-term-skill-shortage-list…
Construction and telecommunications are both sectors that have ruined their public image to potential employees, no one wants to work in them. Construction is totally unstable and you can be out of a job in a second if your employer messes up the contract, which happens far too freqently from what I hear otherwise you have to become a subcontractor yourself and that can become a nightmare of risk and entanglement, so people are staying clear! Telecommunications is another dead zone, who wants to work for one of chorus's subcontractors who force all the costs and risk back onto you?
you mean companies like chorus that laid off all its workers made them subbies, then have only just found out that the decrease in cost has led to people not being paid properly for their work for chorus.
this is what high immigration is doing, stopped companies paying to train people, down graded working conditions and have increased profits.
but at least we have cheap goods and services
https://www.newsroom.co.nz/2018/11/05/306076/chorus-speaks-out-on-migra…
@ BuyLowSellHigh
With 60,000+ net immigrants coming per year, there should be NO labor-shortages and NO skill-shortages! Any labor-shortage is due to underemployment, poor allocation of labor and mass immigration of students/wealthy individuals that don't work, work part-time or are speculators.
As for the skill shortage:
Employers DO NOT want to pay more.
Employers DO NOT want to train staff.
Employers DO NOT want offer better working conditions.
Employers DO NOT want to face the past and future brain drain of their making.
ALSO, there are too many poorly preforming education monopolies in NZ. Secondary schooling in NZ should be replaced largely with trade schools and internships. Secondary teachers should be facing mass firings! Replaced traditional schooling with an apprenticeship model - both for trades and IT. The idea of giving these teachers more money is a joke! Cull their numbers I say, it's almost 2019, get with the times!
All valid points worthy of debate that you could’ve raised in your original comment. Instead, you said that all you hear is "Keep immigration high or else the housing market will crash!” As I said, you can disagree with the stance that immigration is required due to skill/labour shortages, but don’t totally misrepresent the argument.
@ BuyLowSellHigh
You said concerning my points:
"All valid points worthy of debate that you could’ve raised in your original comment."
I TOTALLY disagree, my points aren't "worthy of debate" - they are obvious to anyone on interest.co.nz who wants to be honest with themselves and has half-a-brain. Most people on here are pretty darn smart! My points are so obvious they are banal!
The only reason to omit my points from the above article is because the author is acting as a shill for the property lobby!?
The author made various arguments not to dramatically cut back immigration at the moment, none of which had anything to do with house prices. You then went on to claim, incorrectly, baselessly and bizarrely, that the author was suggesting that immigration shouldn’t be curbed in order to keep house prices up.
You think Jenée Tibshraeny is a “shill for the property lobby”? Ludicrous. The same Jenée Tibshraeny that has written an entire series for The Spinofff (a garbage website BTW) called “Generation Rent Investment Guide” in which she explains and advocates for investment alternatives to property?
That explains it then, The Spinoff, LMFAO - anybody contributing to OR reading that garbage site (un-ironically) needs their head examined. Thank you for discrediting Jenée Tibshraeny.
The Spinoff, oh we laughed - pahahahahahahahahahah ha ha har. Dear Lord, give me strength! What a bunch on Non Playable Characters (NPCs) they are. No internal dialog of their own.
Oh yup, you put up a good defense, I'll give you that BuyLowSellHigh .. I actually just googled who she was! I'm differently a fan of her Double Shot interviews. She's a very reasoned and balanced young lady. The above article is well written and convincing, I can't take that away from her - it could differently have been more well rounded though, given its implications.
I find her 'Double Shot' interview skills/style to be reasoned and balanced. Just because something is well written and like I said, "convincing" - that does NOT mean it is the best depiction of reality. Like I said previously; her article could have been more well rounded given its implications AND she has omitted some important points ..
These 'omitted points' when raised by me, you referred to as, "All valid points worthy of debate .." !!
hang on a sec, Zach... albeit I don't disagree with your points
It's not Jenee's fault... Everyone, in every industry out there has to act in their employers best interests. It's how they pay the bills... It's only when you don't have to worry about the bills, that you can question the source of the narrative you're peddling. The trouble we have in NZ is that it is the banks 'creating money out of nothing' that pays all our bills control the entire narrative.... That's the issue have, it's not the people we have telling the stories, the issue lies with who is it that pays the people that write the stories.
It's what's known in modern economics as a 'buggers muddle'
I have realised I need to go easier on everyone in the media... it's not their fault, we've all been duped into believing the banks' propaganda - we'll see how it plays out in the 'Australian debt steeplechase.'
Nic
Thank you Nic Johnson, I'm aware of 'Modern Money Mechanics' and 'Factional Reserve Banking' as to produce an inflationary money system which ultimately only benefits those running such a Ponzi scheme. It's crazy stuff, socially paralleling the build up to the French Revolution.
The NZ media is very controlled, even by American standards. Propaganda is absolutely rife here - it's incredible, yet VERY tragic and dangerous! The banks/property-lobby do largely control the financial narratives.
Totally agree, it's the biggest Ponzi scheme since Tulips....Australia is buggered.. We need some strong politicians to reverse the 'bail in' legislation that the Key government enacted otherwise they will drag us down with them and our savers will be the ones on the hook for it all... It's an absolute disgrace..
I only found out that bail-in applies in UK too this week , depositor guarantee exists (up to £85K) .. but what the UK public hasn't been informed of is that there is 'bail in legistlation' passed in December 2014 for anything over that in a bank account - The B of E found only found out about 'money creation by private banks in 2014.
None of this however is Jenee's fault.
Agreed. The above article is well written and interesting for sure .. I just wish it was more well rounded. I don't know anything about Jenée Tibshraeny. I actually just googled an image of her, she does 'Double Shot' interviews for interest.co.nz. I'm actually quite a fan to-be-honest. She has always come across very balanced and thoughtful.
This is what happens with too much migration and these are only the short term problems.
https://www.youtube.com/watch?v=UQw_-DRER0I
1) Agree with many of the comments above.
2) The immigration rate has to keep coming down. Yes, if we turned off the tap instantly there would be a demand shock & interest rates would probably have to go to zero to compensate, but it should be bought down as quickly as practicable to a sustainable level.
3) The immigration rate is clearly still too high (https://www.interest.co.nz/property/97023/new-figures-show-aucklands-ho…) & we still have people living in garages.
4) The immigration rate should be managed to maximize gdp per capita (& as a proxy - income per capita) growth as a policy. There is an argument for the RBNZ to be given the immigration rate to manage so the politicians don't keep stuffing it up as they have. That would give the RBNZ 2 levers, cash interest rate & immigration rate to manage price stability.
5) Employers should have to bid & pay government to get overseas labour (with legislation to ensure no direct clawback from employees - there would be indirect clawback via the wage levels offered). They can then choose the least cost option between training NZ residents, increasing wages to get other skilled NZer's or 3) importing talent. This will help reduce the increasing inequality happening in NZ where high immigration rates are suppressing bottom end wages.
I believe it was Michael Reddell who made a good point recently that instead of using 'technical' terms such as GDP per capita we need to start highlighting the issues in terms that are more understandable to a wider audience.
I.e. replace GDP per capita with a suitable plain English term that encapsulates the underlying meaning for an average Kiwi, e.g. standard of living. Rampantly high immigration reduces many Kiwis' standard of living through driving down wages and driving up housing costs.
In addition to other policy changes, the government must keep the Family Reunification visa category closed permanently. My observation is too many recent immigrants in the last 15 years (in my experience - chinese, indian, vietnamese and other asian immigrants) have taken advantage of this category to import parents and other family members. Instead of one low or semi skilled immigrant, this has lead to the country also receiving future superannuitants (parents and siblings) with no english skills, effectively unemployable except within their own ethnic group, who add no value to NZ, and with the added burden on NZ's health and welfare system.
I disagree - let them come but at their expense not ours - purchased annuities to replace our super and health insurance.
For example a chinese friend married to a Kiwi engineer with two kids - they brought her parents over a decade ago - they have low paid jobs and are in their sixties. I have no issue with them being here so long as on average they cost NZ taxpayers nothing.
I can't agree with that - I read a statistic out of Australia that each elderly person costs on average close to $400,000 dollars in pension and healthcare costs, but even if that was paid for they still add to demand for housing and all the associated infrastructure.
I'd accept every elderly person arriving with $400,000 that they give to the govt. The costs of infrastructure would be no different to other younger immigrants so that is no reason to treat them differently.
Note we move from young to old progressively - when I arrived aged 54 and applied for residency (skilled category) I was read the immigration point count as being asked to contribute $200,000 - which I was happy to do - imagine my delight at the naivety of the NZ govt in discovering I had to have $200,000 but could keep it!
Younger migrants are able to earn more and pay higher taxes but oldies using chain immigration earn less and pay a smaller proportion of taxes. They also have higher health care costs relative to their time spent in NZ. Its a poorer financial return and runs at a greater loss than the younger migrant that has brought them in.
Too bad if you're a member of the working populace right now - the laws of supply and demand aren't working for you - with inflated demand we just grab more people from the 3rd World.
Wage rises and investments in productivity? - nope, we just drive down wages while taxing you more for the roads and services needed to cope with even more people.
How about the true costs of having the highest % immigration in the OECD - maybe if each immigrant had to pay $20,000 upfront to build the new roads and services they wouldn't come here. Maybe that would be a win for everyone?
But many do pay more than $20,000 - it goes to foreign agents.
Judging by the NZ stats the cost of all our built infrastructure divided by the number of people is about $250,000 per person. Often another immigrant makes little difference - eg rail line from Auckland to Wellington - I'm more concerned about the 'soft' infrastructure - more staff at IRD, more teachers, more labourt inspectors, more doctors, nurses, etc - not the cost of employing them because that is paid by taxpayers which includes immigrants but the cost of training them (or in the case of teachers and nurses - cost of recruiting them from abroad).
The only indicator I care about is quality of life. At some stage the economy has to rebalance right? Two ways of doing this - add more people and hope they have the right skills (chef, dairy, retail manager). Or suck up some short term pain and learn to live without rapid population growth. For the sake of quality of life I know which one i'd choose, if I had the choice. Which evidently I do not as the government will choose to do what it wants anyway.
This is one of those analyses that uses the word "therefore" far too early. I.e., unemployment is low, and we are near our productive capacity, therefore we need more immigration.
Without of course as much as a mention of looking back in the past to see what impact immigration has on productive capacity.
The article even says that in the last decade we have turned the immigration tap on. How has that helped I wonder? Got any graphs for that?
Record low unemployment? I call BS. It's all about how you measure it:
Jenee Tibshraeny how about you look at the definitions from the govt stats website : http://datainfoplus.stats.govt.nz/Item/example.org/438dbf04-3b3f-446a-b…
Unemployed
All people in the working-age population who, during the reference week, were without a paid job, available for work, and had either actively sought work in the past four weeks ending with the reference week, or had a new job to start within the next four weeks.
So if you haven't looked for a job in the last 4 weeks, you're not unemployed.
Employed
People in the working-age population who, during the reference week, did one of the following:- worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment
- worked without pay for one hour or more in work which contributed directly to the operation of a farm, business, or professional practice owned or operated by a relative
- had a job but were not at work due to own illness or injury, personal or family responsibilities, bad weather or mechanical breakdown, direct involvement in an industrial dispute, or leave or holiday.
And if you work 1 hour a week, hey you're employed!
What is really important is the underutilisation rate: https://www.stats.govt.nz/news/unemployment-and-underutilisation-rates-…
So that's at least 300,000 people who are underutilised... and they say we need more...
Most of the people , most of the time - " In the Manawatu-Wanganui region, the unemployment rate between June and Sept 2018 dropped three whole points from 6.6 to 3.6 percent.
This should be reflected in benefit statistics, no?
It isn't. The number on Jobseeker Support rose."
https://lindsaymitchell.blogspot.com/2018/11/unemployment-numbers-that-…
Are you serious? kudos? they misled the public!
the fact that they have proven to be limp on just about every facet of government is a godsend.
Quietly I'm quite happy that they will be tied up with investigating all manner of useless decisions/ministers. This sucks up parliament time, and stops them creating further havoc in the economy.
I stand by my early comment that I wouldn't employ anyone from the current CoL rabble, except for Parker.
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