Matt Cowley: New Zealand's great immigration reset

Tauranga Chamber of Commerce chief executive Matt Cowley. Photo / George Novak

COMMENT:

The Bay's labour shortages are getting worse. This is across all industries, both public and private sectors. Business growth is constrained because businesses are short-staffed.

On the back of border closures after the pandemic, the Government said when our borders re-open it won't return to how it was pre-pandemic. We're about to go through New Zealand's great immigration reset.

Some of the Government's reasons for being more selective with immigration are to lift wages for New Zealanders, and to decrease the pressure on our housing supply and public services, such as schools and healthcare.

The two main political party leaders have said they want to increase New Zealand's productivity, but we're still waiting to see their strategies.

The Government has been upfront in saying it wants businesses to invest in capital and speed up the job automation process to be less reliant on cheap overseas labour, which they believe is keeping Kiwi wages low. But the Government cannot just turn off the immigration tap without having a transitional strategy.

I've been speaking to industry leaders to find out why Kiwi businesses are not more productive. There are generally three key constraints to business productivity.

Firstly, technology and capital are not always financially viable for businesses. For example, there are purpose-specific robots for picking fruits, such as kiwifruit. Picking season is restricted to a concentrated few months per year, meaning you need a lot of expensive robots to pick a lot of fruit over a few months each year, but they will be unused for the rest of the year.

One day we may well see multi-purpose robots working all-year round that are capable of harvesting across apple, citrus, avocado and kiwifruit orchards - but that's a few years away.

Secondly, in a globalised economy, the major Kiwi manufacturing firms make themselves more competitive by setting up factories overseas where they can access the right expertise in supply chain-friendly regions.

It is for reasons like this that New Zealand often lacks the expertise to implement mass automation and assembly plants of the necessary scale required by our large exporters.

The final constraint is our number-eight wire mentality. While ingenuity got many businesses started, this mindset often needs to change as a business grows.

Productivity experts believe the typical New Zealand business only operates at 20-30 per cent efficiency. They say businesses who are vulnerable to staff shortages should prioritise making their business more efficient so that they can achieve more with fewer people.

Most Kiwis are guilty of this mindset. I look at my own workflow, where I thought I'd be saving money by doing tasks myself - but it's very inefficient for the CEO to be doing administrative tasks when my time is better spent on other strategic projects.

Increasing New Zealand's productivity is a complex issue and the current climate isn't making it any easier. There are key things that businesses need to invest in, but we also need greater transparency of our Government's political strategies – you cannot just shut our borders and hope for the best.