Former Economics Editor of the NZ Herald

Brian Fallow: Migration about the trend, not the ups downs

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Border control at Auckland International Airport. Photo / File
Border control at Auckland International Airport. Photo / File

Readers of a certain age might remember when there was a degree of prejudice against the post-war wave of immigrants from the Netherlands.

"Tulip-munchers! Coming down here with their work ethic!" I haven't heard that term in 50 years. It was probably supplanted in the nativist lexicon by "whingeing Poms".

It seems to be an ineradicable feature of immigration that each wave of migrants encounters some degree of hostility. But it is never more than a minority of Kiwis who feel like that, and the focus of their animus appears to shift over time.

The New Zealand Initiative's report on immigration, out this week, concludes that New Zealand is pretty good at integrating immigrants.

The authors cite, for example, Statistics New Zealand's general social surveys which have found that around 87 per cent of migrants feel they belong (in contrast to Germany, where half feel like second class citizens) and no significant differences in economic living standards compared with the native-born population.

It is important that successful integration continues to be true.

After all, one in four of the people who live in New Zealand, according to the latest census, was born in another country - a high proportion by international standards. And you do not have to climb very far up the family trees of the other three to find an immigrant.

Integration requires the right attitudes on both sides.

The problems some European countries have with immigration seem to reflect a tendency towards spatial concentration of migrants - ghettoes, in short - marked by high unemployment and some sense of alienation, and a belief among the host population that their values and norms are being rejected by the immigrant community.

New Zealand does better on these terms, the NZ Initiative report concludes.

"Migrants overall do not tend to live in ethnic clusters. Even where ethnicity is concentrated, this is correlated with lower levels of unemployment. Migrants are also less likely to claim a benefit than native-born New Zealanders."

As for the numbers, migration is an area where it is easy to get lost in the statistical weeds.

Statistics NZ's permanent and long-term (PLT) migration data only provide a quick and dirty indicator of the cyclical position.

This week we learnt that in calendar 2016 there was a net migration gain of 70,600 - a record. It reflects a cyclically low net loss of 1800 New Zealand citizens (37,000 fewer than four years ago) and net gain of 72,400 non-New Zealanders.

The net inflow has been strong over the past three years, thanks to both an unusually small net loss of New Zealand citizens - reflecting the state of the Australian economy - and an unusually strong net gain of non-New Zealanders. Clearly, only the latter factor is amenable to a policy response, should one be desired.

But these numbers are based on what people say on the arrival and departure cards they fill in at airports. If you say you expect to be in New Zealand for at least a year, you count as permanent migrant, regardless of how long you actually stay. And you count as an emigrant if you expect to be out of the country for at least a year. That is not really what people understand by "permanent".

The average net gain of PLT migrants over the previous 10 years was 19,000. That is probably a more realistic estimate of the structural position and it does not look like an indigestible number for a country of this size.

More detail on the various classes of visa, and movement between them, can be gleaned from MBIE's annual reports on migration trends.

Perhaps the simplest way of gauging the longer-term trend is to look at the census headcounts. On census night in 2013, just over 1 million people living here were born in another country, or 25 per cent of the population. That was up by just over 300,000 from the 2001 census. Over the 12 years in between, it represents an average increase of a bit more than 25,000 a year.

And it is worth remembering the Kiwi diaspora is usually estimated to be about 1 million.

The flows of people are large in both directions and they tend to be procyclical - amplifying, not dampening, the economic cycle. The result is a net population gain that is highly volatile, swinging between a net loss of 1800 to a net gain of 70,600 in just the past five years.

Given the time lags and uncontrollable variables involved, immigration policy should be based on the longer-term trends, not try to lean against cyclical pressures.

If migration policy is generally fit for purpose, that does not mean it cannot be improved, to address some of the complaints people have. The New Zealand Initiative report makes a couple for suggestions, one sensible, the other less so.

In light of business concerns about a mismatch between the skills they need and what is being delivered by the points system used in allocating work visas, the report suggests adjusting the system to assign points to the salary ranges of job offers, rather than the industries migrants are qualified in.

"Rather than let government decide what types of skills the market needs, let the market reveal it through the price system."

On the pressure on infrastructure, it proposes a levy on immigrants. "If the levy proves a disincentive, businesses could pay it to attract the skilled workers they need." But trying to calculate a fair rate for such a people tariff and how to allocate it between local and central government would be challenging, to say the least.

And it might not be wise to give the Australians any bright ideas along these lines.

A better approach might be what Act's leader David Seymour has proposed for dealing with bottlenecks to housing development.

He suggests central government should pass on a portion, say half, of the GST it collects on construction activity to the councils where the activity occurs.

- NZ Herald

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Former Economics Editor of the NZ Herald

Brian Fallow is a former economics editor for the New Zealand Herald. A Southlander happily transplanted to Wellington, he has been a journalist since 1984 and has covered the economy and related areas of public policy for the Herald since 1995. Why the economy? Because it is where we all live and because the forces at work in it can really mess up people's lives if we are not careful.

Read more by Brian Fallow

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