NZ: Productivity commission report reveals immigration is both good and bad

“On the one hand…”

Some interesting observations. Canada does not have the same degree of mismatch between temporary and permanent residents given the large number of the more highly skilled (IMP, students) who transition, but with some similar issues in relation to lower skilled:

You can now add our own Productivity Commission’s work to the global pantheon of studies looking at immigration. Like many of its predecessors it seems to conclude immigration can be both slightly good and slightly bad.

The public will have until December 24 to provide feedback on its conclusions and suggestions.

As far as these studies go, the political context around them often matters. The Productivity Commission report was initiated at a time when anti-immigrant sentiment was running high, and is coming out while the Government is trying to encourage skilled migrants to stay.

Institutions like hospitals are chronically understaffed. One Filipino nurse told Stuff recently that the renal ward she works in is more understaffed than any hospital ward she has worked at in the Philippines.

“I was so shocked, I never thought it would be this worse compared to the Philippines to be honest,” she says.

“Even if I’m on my day off my unit will call me, even if I don’t want to pick up the shift.”

Successive reports into immigration have concluded that immigration is either good for productivity, or bad for it, that it has a negative impact on wages, or enables higher wages to be paid, and this report has not come to any strong conclusions either way on most of these issues.

The Productivity Commission also adopts a better late than never approach to the Treaty of Waitangi, saying Māori should be given more of a say on immigration, decades after the country’s most significant waves of immigration have ended.

As it happens, the report notes “overall, New Zealand studies find very minor and mostly positive impacts on the average earnings and employment of local workers”. However, the report covers a much wider range of topics than wage levels.

The commission finds public sentiment is not nearly as negative towards immigration as politicians might suggest. Since 2011 less than 10 per cent of the country has harboured negative attitudes towards migrants, with support predictably lowest amongst New Zealanders “who had no friends born outside New Zealand”.

Australia has had, and is having, a similar debate. The core problem in both countries has been an almost wilful mismatch between the number of temporary migrants and the number of permanent residency places available for them.

The reasons for this have been political. Immigrants make a convenient political scapegoat, but both countries need them. As such, politicians in both Australia and New Zealand have capped permanent residency places while leaving temporary migrant visas (student and work visas) uncapped.

Noel Ballantyne moved to New Zealand in 2018 when his skills as a truck driver were in high demand. After a fruitless fight to become a resident, he has decided to leave.

Frustratingly, for politicians wanting to have it both ways, most people are only willing to up-end their lives and move countries if they think there is a realistic prospect of them being able to settle.

So, in a bid to keep the migration tap flowing Governments have had to be less than up-front with temporary migrants about their prospects of actually being able to live here long-term.

The Productivity Commission’s report, puts it this way: “This broad flexibility appears to have created expectations among some migrants of achieving residence that cannot realistically be met.”

The commission is suggesting the Government publish its intentions for temporary and long-term migration in a Waka Kotahi-esque Government Policy Statement (GPS) to avoid a similar mismatch in future. It would be revised every three years, and the public would also be able to feed into this process.

However, if the aim of the GPS is to avoid large unfair shifts in policy, between governments, it would seem an imperfect mechanism for it. Planning for the immigration GPS would presumably be separate to the infrastructure-planning process.

In the area of transport, the GPS has seen a re-allocation of funding away from roads and towards public transport, which caught the civil contracting industry off-guard. It would be significantly more unfair if the GPS were to cause similarly sudden shifts in the prospects of human beings who moved here in good faith.

The Productivity Commission also wants the Government to de-link visas from employers, which could cause problems when it comes to an incoming Government policy to strengthen the link between employers and migrant workers through an “employer-led” accreditation system.

The commission also wants better prioritisation of people in the “points” queue for residency, and to not let any immigrants through unless there is enough infrastructure for them, which includes people to staff the schools and hospitals needed for all the people we have already let in.

A change in the number of New Zealanders staying here has impacted migration flows.
A change in the number of New Zealanders staying here has impacted migration flows.

Many of the report’s suggestions would require a massive increase in the size of the immigration bureaucracy. It is unlikely many of these functions could be funded solely through the application fees paid by migrants, as was the case pre-Covid.

Prioritising applications by points filed would mean immigrants would likely file for all the points they are eligible for right from the get-go, making it easier for officers to predict how many people would be eligible for residency if a future Government wanted to cut back on residency places.

Migrants can qualify for residency through a points system where they put an application in if they meet a certain threshold – currently 160 points.

With delays piling up, a lot of migrants decided not to file for the full points they were eligible for, guided by the theory that filing for more points than needed might eat up officer time as they double-checked the authenticity of each claim.

This threw a spanner in the works when it came to Government attempts to reduce the number of people eligible for residency, because even if they increased the number of points required they couldn’t be sure it would reduce the number of people who might be eligible.

As for the report’s conclusions on the larger questions, the problem is immigration often has effects that go in both directions.

Take the report’s headline conclusions on infrastructure: immigrants place strain on housing, but they also enable better economies of scale for other types of infrastructure that would just not be very cost-efficient without large numbers of people using them.

Another problem with the whole immigration versus infrastructure debate was noted in a report from Infrastructure Australia last month: you need immigrants to build infrastructure.

The lucky country’s much-lauded infrastructure pipeline has been thrown into disarray by Covid-19 border restrictions. By mid-2023 Australia will likely be short of people for 105,000 positions needed to keep the pipeline on track: 70,000 engineers, scientists and architects, 15,000 structural and civil trades, and 19,000 project management professionals.

Annual population growth took off after 2012, far ahead of our OECD peers.
Annual population growth took off after 2012, far ahead of our OECD peers.

Like an earlier Australian Productivity Commission report into immigration, the New Zealand report focuses on the “absorptive capacity” of the economy to accommodate new arrivals, however the report notes this capacity is not fixed.

By OECD standards, a very large population increase took place between 2012 and 2020, caused by something never really forecast in many of the studies referenced in the Productivity Commission report.

In essence two things took place, more migrants came into the country and fewer New Zealanders left. The Productivity Commission says this likely caused the most recent wave of migration to exceed the country’s “absorptive capacity”.

While New Zealand lets in high numbers of migrants by international standards it also has a significant outflow of its own citizens and permanent residents, during normal times they can return at any moment.

The commission suggests restricting the unlimited right of permanent residents to return to the country could smooth out some of these flows.

“The economy could potentially accommodate more people without negative effects on housing or infrastructure if policy changes were made to ease regulatory constraints and increase investment rates … such reforms would have significant wellbeing benefits for New Zealanders and should be pursued regardless of immigration levels.”

New Zealand has a very high proportion of foreign-trained doctors and nurses.
New Zealand has a very high proportion of foreign-trained doctors and nurses.

Where productivity is concerned the report notes a number of effects. Productivity could cause firms to rely on migrant labour rather than invest in machinery. It could also stimulate non-export industries at the expense of export industries by holding up the exchange rate. However, immigration can also allow productive firms to expand.

The Productivity Commission report wants a better “feedback loop” between education and industry when it comes to skills shortages, but it is unclear whether even this will be enough to plug the gap if migration were to be cut back.

The Filipino nurse who spoke to Stuff is part of this cohort of gap-fillers. The Productivity Commission report points out that, as a percentage of our total healthcare workforce, New Zealand employs the second-highest number of foreign doctors in the OECD, and the highest number of foreign-born nurses.

The nurse wants to be anonymous, for fear it might worsen either her employment or immigration situation, and when she speaks it is clear why she thinks it might.

Her ward is chronically understaffed, filled with migrant nurses who are already overworked and have been caught in different immigration messes from MIQ capacity to residency issues.

“Every night I’m praying, is it really good that I’m here? Is this what I dreamed of before?”

Source: Productivity commission report reveals immigration is both good and bad

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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