Chapter 9. IMMIGRATION – DID NZ GET IT WRONG?

New Zealand has seen record high immigration in recent years, much of it from Asia. In any discussion of a sensitive subject it is always best to start with facts.

New Zealand’s population stood at 3.5million in 1991. It took another 12 years to reach 4 million. It took slightly less time, 11 years, to reach 4.5 million in June, 2014, but by December, 2020, it will have hit 5million, adding another half a million people in just 6.5 years. If there is an advantage in having a low population, New Zealand has been dissipating that advantage quickly.

Over the same period there has been a striking change in the ethnic composition of the population. Here are the figures:

Ethnicity	2001 Census	Percentage	2018 Census	Percentage
European	2,871,432	80.1%	3,297,864	70.2%
Maori	526,281	14.7%	775,836	16.5%
Pacific	231,798	6.5%	381,642	8.1%
Asian	238,179	6.6%	707,598	15.11%
Chinese	100,680		231,387
Indian	60,213		221,916
Filipino	72,612		72,612
Korean	9,026		35,664

In the 17 years between these two census results (there were others in the intervening period) New Zealand added 469,419 Asians, more than the additional 426,432 Europeans over that period. This is partly explained by the fact that between the 2001 census and 2006 census there was an exodus of New Zealand Europeans to Australia and the European population dropped. But it is also a measure of how high immigration levels have been, especially since 2013.

Indians and Filipinos have had the highest percentage growth among the rapidly growing Asian component of the population. Asians are expected to outnumber Maori within the next couple of years.

Looking back over the years, permanent long term net annual migration has risen in three steps. From 1980 to 1992, migration was generally around 10,000 people per annum. Between 1993 and 2013 it was approximately 30,000 people per annum. From 2014 migration has been running at approximately 60,000 people per annum. When you recall our population increased by half a million between June 2014, and December 2020 (i.e. in 6.5 years) and assume immigration was 60,000 per annum – a total of around 350,000 over that period- then it is clear permanent new immigration has accounted for more than half of the increase in our population of the period.

Of those permanent migrants, approximately 60% settled in Auckland. Big numbers of people coming from outside the country put pressure on local communities through infrastructure, housing and cultural differences. Because such a high percentage of immigrants settle in Auckland, those pressures have been particularly noticeable in that city. Auckland’s streets are a mass of red cones with roadworks everywhere. Auckland house prices have reached approximately eight times the average income, making Auckland one of the least affordable cities in the world.

HEADLINE ECONOMIC GROWTH NOT FULL STORY

High migration produces initially impressive economic growth. Between 2012 and 2018 the New Zealand economy grew by 9.23% (in constant 2010 US dollars). Over the same period the Japanese economy grew 8.04%. But while the New Zealand population increased by 17.15% over that period, the Japanese population decreased by 0.58%. Averaged across the respective populations, New Zealand’s economy performed significantly less well per citizen than the Japanese economy over that six year period even although our nominal growth rate was higher.

BEHIND THE ‘NET MIGRATION’ NUMBERS

‘Net permanent migration’ figures per annum are the result of a multitude of much larger movements of people. New citizens arrive in the country, New Zealand citizens leave the country. And there are even larger numbers of students, temporary workers, tourists and travellers for other purposes. Net permanent migration is a figure that attracts great attention but it is difficult to measure and it is dwarfed by the numbers in the other flows. In 2017/18, 6.8million people entered New Zealand. Immigration NZ received 850,000 visa applications (for work, student or visitors’ visas) involving 1.1 million people. If one took the combined numbers of tourists, students, temporary workers and other non-residents in New Zealand at any given moment, there are (depending on the season) roughly 10% more people in the country than its recorded population. After Auckland, our largest urban centres are Christchurch and Wellington, both with fewer than 500,000 people. But we don’t ever note that our second biggest population group (especially during the tourist season) is actually an ever-rotating ‘city’ of overseas visitors.

These figures show migration – of students, visitors, tourists – amount to big numbers, with major impacts on New Zealand society. The first and obvious question that arises: did New Zealand plan the major increase in immigration numbers which has occurred? Do we have any idea what we regard as an optimum level of population in the country? Do we have any idea what is an optimum level of long term immigration for the country each year? Or have we (as I suspect) just stumbled into high levels of immigration in the last six years, without proper planning and forethought?

Perhaps the most significant question to ask should be: was the New Zealand population ever asked if it wanted such a large influx of immigrants? Undoubtedly it was not asked. What would have been the result if a referendum was held on immigration levels? Answer: almost certainly the referendum would have shown that these levels were much higher than the populace as a whole wanted.

I have already written in Chapter 2 about increasing economic disparity in our society, and how damaging that can become. Now on immigration – a topic that may well rank as second in importance behind economic disparity in the minds of many mainstream citizens, New Zealand policy has again failed to reflect these people’s views. When we look around the world and wonder why significant sections of populations are turning off conventional politics, immigration usually features prominently among the reasons mentioned. The views of all New Zealanders need to be reflected much more carefully in its immigration policy.

Does the country benefit from a points based system of immigration which theoretically allows the most talented people to immigrate, irrespective of their race or origin? Yes, we have benefited from increased diversity since we adopted the system in the 1980’s. But not all highly skilled immigrants are able successfully to apply their skills after they arrive. Trade associations especially can impede this happening. The points based system may work better in theory than in practice.

Further, I suggest social and racial diversity provides diminishing benefits for an existing population. Having 5% of your population from a particular ethnicity may be fine, doubling the percentage to 10% of the population from that ethnicity doesn’t double the social benefit. At a certain point, adding a particular ethnicity can become a negative. A nation feels it is starting to lose its identity. Social cohesion and buy-in among citizens as to where the country is heading, begins to weaken and may be lost if immigration is pushed too far. Opposition grows if social diversity with increasing numbers of different ethnicities is not suitably and sensibly limited.

There is another consideration. Perhaps the optimum diversity is not the same for all ethnicities. If you take in an ethnicity with the same language, religion and cultural background to the host society, they assimilate more easily than one with a totally different language religion, and social background. The number of those people the country can comfortably accommodate is surely higher than it may be for people of very different ethnicity.

So what I am arguing is, yes, immigrants are important for New Zealand’s economy. They generate major income through tourism and study here. They provide seasonal workers for picking crops and similar tasks in the economy. Permanent immigration can be a significant benefit for the country. In our law office on Auckland’s North Shore we employed several immigrants who had settled here. They had come to New Zealand to build new lives and their net impact on the country in my assessment was generally strongly positive. SOME immigration works for the country but the volume we have had in the last five years, and the major increase in Asian ethnicities and the smaller but nevertheless significant increase in Pacifica peoples we have introduced, have been in my assessment more than the country could reasonably assimilate. They have (in my assessment) exceeded the number of immigrants a majority of New Zealanders wanted to see admitted.

So, no, unfortunately New Zealand did not get our immigration policy right over the last five years (and even before that).

WHAT SHOULD BE DONE TO CORRECT THE POSITION?

New Zealand was in my view, unwise in the way it opened its borders prior to Covid. In Switzerland, approximately 25% of the population are foreign nationals, living there with limited protections. Swiss law permits naturalisation only after TWELVE years. Swiss don’t give away the benefits of their citizenship easily. The plight of New Zealanders working in Australia is another example. Australia is slow to extend the benefits of citizenship, including welfare, to New Zealanders working there. USA constantly battles to minimise immigration within its borders. A significant factor behind the vote for Brexit was unhappiness with the movement of EU citizens into the UK.

New Zealand needs to be far more guarded in the future, in the way it opens its borders to the rest of the world. Reopening after the Covid restrictions provides a unique opportunity for effective controls to be introduced. The world has experienced major population growth over the last 20 years. New Zealand and Australia (and possibly Canada) are some of the last underpopulated parts of the world. Low populations mean smaller problems, less pollution, less pressure on infrastructure and resources. Once you let numbers in, you can’t send the people back again. Population growth is irreversible. We increase our population forever, once we allow people in.

My own view, is that a population of 5 million is already more than enough people in this country, especially when there are reputably up to 1million more people with a Kiwi passport living outside the country who can return as of right at any time (and are beginning to exercise that right in numbers as New Zealand does better than most countries in the battle against Covid). If the major economic policy changes advocated in this book were to be implemented, and the NZ economy put on a permanently higher growth trajectory, it is likely a good number of those expat Kiwis presently living overseas, will decide to return here after all. So we have a large pool of potentially another 20% of our present population, which can already return to this country as of right, before we admit one further immigrant. In my assessment we should for the future limit significantly the numbers of people coming to this country across all categories. Like tourism, we need quality not quantity in our immigration.

WILL RESTRICTING IMMIGRATION RESTRICT ECONOMIC GROWTH?

The New Zealand commercial sector says a lack of skilled workers impedes economic progress. Growers can’t get labour to pick their crops. The education sector gains significant revenue from overseas students and wants more of them. More people coming into the country creates more demand. These growth arguments are circular. High immigration and rapid population growth put added pressure (especially in Auckland) on infrastructure, housing, schools. The building industry and other sectors expand to meet this demand. They call for more immigrants to supplement their labour needs. Those additional workers then add to the very infrastructure, housing and other bottlenecks they have been brought in to help solve. Yes, New Zealand with high immigration had higher headline growth than Japan between 2012 and 2018. But Japan with a falling population, ending up with a much better outcome per capita for the period.

Take an immigrant arriving. They acquire a house and a car. They send their kids to a school. Their arrival boosts the property market, adds to the need for new roads and other infrastructure. Their arrival thereby creates an initial economic impetus which I will call the Phase 1 impetus. But once they are settled the Phase 1 impetus ends. From that point, any further economic impact depends on them being employed, starting a business or progressing commercially. I will call that the Phase 2 impetus. Some immigrants definitely are successful and provide such a Phase 2 impetus after their arrival. Others do not.

So the argument that immigration will grow the economy for the benefit of all New Zealanders is simplistic. High immigration usually will expand the economy initially. Whether that momentum continues to become a Phase 2 impetus is less certain and varies from immigrant to immigrant. Even when there is a Phase 2 impetus it can dry up, as it will for a skilled building worker for example, when the building industry contracts again (as it inevitably will in a post-Covid slowdown).

The high immigration of the last 7 years, combined with high tourism numbers and growing trade with China, gave us high headline economic growth. One economist described NZ as ‘the rock star economy’. But this high headline growth was misleading. As noted it did not deliver good GDP gains per head. It was not used by us, to rebalance our economy towards saving, commercial activity, and away from housing. It made us complacent that we were doing okay, and didn’t need to look more closely at our underlying economic performance. Those economic weaknesses, masked in part by that high immigration, are liable to become much more apparent, in any post Covid downturn.

IMMIGRATION OVERLOOKS PRODUCTIVITY

New Zealand’s economic problem is that we already have too many low paid, low skill jobs (see Chapter 2 on the Economy). Our productivity growth over the last 50 years has been poor. When our companies hit a production ceiling they have hired more unskilled workers. The alternative is to invest and lift output and productivity with their existing staff numbers. There is an economic argument that restricting immigration may help drive productivity growth, which would be a significant economic gain for New Zealand, far more important than just bringing in more unskilled workers to lift headline GDP.

PROFESSIONAL BODIES PRONE TO TURF PROTECTION

Many years ago, I provided legal services to a surgeon from Denmark who had great difficulty getting registered as a medical specialist in New Zealand. The College of Surgeons appeared adroit in minimising competition for those within its existing ranks. On another occasion I acted for a chiropractor who couldn’t get registered here. A few months ago, I met a dentist from Brazil who was a dental specialist and yet was having issues getting registered here. New Zealand professional bodies obstruct some of the benefits skilled immigrants can offer. As part of an immigration review, we need to take a far more active role (through the Commerce Commission and other means, such as offshore certification, where there are no competitive pressures in play) to ensure the immigration of specialist highly skilled people into New Zealand is efficient. Skilled people who are given entry, need to be able to apply their skills promptly after arrival.

WE WILL COME, AND WE WILL TRY TO STAY, WHATEVER THE VISA CATEGORY

Another immigration development should be mentioned. The present Government has been trying to curtail immigration numbers. It has lifted the number of points to gain permanent entry. It has slowed the processing so there is a backlog of unresolved applications. Before the Covid border closure the number of new residents was the lowest since 2000, while work visas were higher than they had ever been. People were still coming to New Zealand but under different entry categories.

What happens when people come under a visa? Consider students given a visa to study here. A detailed study in 2017 found 40% of international students were employed in New Zealand a year after their study ended. And up to 25% of overseas students were still employed in New Zealand eight years after qualification. Bringing a student from overseas initially creates revenue for the educational institute they study at. It also not surprisingly generates a likelihood that the student will want to stay on in New Zealand after qualifying, turning a short term revenue gain for the education provider into a long term immigration issue for the country.

In May 2019, the Government made it harder for persons in arranged marriages to come to New Zealand and live with their spouse here. After objections from the New Zealand Indian community the Government reversed this policy in November the same year. There are up to 2500 such applications now being reassessed. For the future, Indians with New Zealand citizenship will apparently be able to apply to bring their arranged wives (who they may have never met) to New Zealand to live with them, as a result of a marriage arranged in India.

A report in the media on 30 July 2020 stated that June 2020 ‘..saw the largest number of approved residence applications this year- the majority from India and South Africa with 7085 people welcomed to our shores’. One would have been forgiven for thinking that with our borders closed, there was every reason to defer consideration of all new residency applications. But then the election is coming up, and perhaps the Government is shoring up its Indian vote. The high June number provides another clear example of why immigration should be taken entirely outside of political involvement.

Who said it is easy to put the brakes on the number of people trying to come and live in New Zealand?

WHAT SHOULD BE DONE TO REDUCE IMMIGRATION?

Covid and the border closure to prevent it, provides an excellent opportunity (unless politicians interfere) to reassess and reduce migration to New Zealand. Tourism is closed down and will reopen with much lower levels. The demand for unskilled workers will be significantly reduced for a time after the pandemic passes. This is a perfect time to bring in new policies with lower numbers right across the board. We need to reduce the number of low value tourists (see the separate chapter on Tourism). We need to put a ceiling on the number of foreign students; on the number of work visas; and especially on the number of permanent new residents.

BUT NOT BY A DELIBERATE DELAY OF APPLICATIONS

Governments around the world have been scared to limit the numbers of foreigners allowed to enter the country for fear of being accused of racism. So they have their immigration officials deliberately go slow and impede the issue of approvals, or use other ‘out of sight’ methods to try to limit numbers. When New Zealand’s borders closed for Covid there were allegedly 30,000 pending and unresolved applications for permanent residence waiting for consideration. Is that fair to people who apply in good faith to migrate to New Zealand, only to have Immigration NZ intentionally mess them around in the hope they will give up? What about people who forego another opportunity while they wait for their application to be considered? We are being unfair to them.

WE NEED QUOTAS FOR EACH COUNTRY AND EACH VISA CATEGORY

We should adopt quotas for all different visa types. Plenty of countries around the world have them. Switzerland, Canada and the US all appear to have them. New Zealand has a quota of 1100 Samoans and their families each year. Perhaps there are others but why only Samoa? Why not be open, up front and honest across all the visa and residency categories? Put quota numbers on individual countries. Select the best applications in each category every 3 months and issue 25% of the annual visa number for that category every quarter. Overseas applicants will know what is happening, policy will be clear and effective (especially in limiting numbers right across the board) and everything will be a lot simpler.

The other avenue which needs addressing is admission of family of a person granted citizenship. I don’t know if there are any statistics but I wouldn’t be surprised to find that for every person (say a qualified professional) granted citizenship, we ultimately end up with three immigrants on average. Yes, there has to be provision for families to be re-united, but I suggest this door has been too widely open as well, and we need stricter criteria as to when family may be admitted. It surely needs to be discussed and made clear to every applicant when they first apply, that if they come to New Zealand they will only ever be able to bring their wife and children (or whoever is discussed with them and noted at the time). Other people, such as their brother or parents, will not be able to come. If an applicant doesn’t like the limits put on them, they should withdraw their application at that point.

OTHER STEPS

Review the numbers of visas in each category every year or two. At times in the past, many New Zealanders have moved to live in Australia, at other times (such as now) many of them are returning to New Zealand. Quotas could be adjusted every year or two, to take account of population movements such as this.

Introduce measures to ensure that people who do get admitted because of their skills, are able to utilise those skills at an early date. This is important.

And finally: give more money to genuine schools and universities to compensate them for reduced overseas student numbers. If a few English language schools also go out of existence as a result of the change, that would not be a tragedy either.

Overall, in my view we need to put a significant lid on the number of people coming to New Zealand and we need to do that in a direct, straightforward, up front way. Much of the recent immigration confusion has surely arisen from politicians obfuscating and not saying what they are really wanting to achieve.

The Covid border closure provides the perfect opportunity for major and effective policy change to happen. Immigration is likely to drop off significantly in any event (at least after the election), so bringing in clear new policy with much lower absolute numbers in all visa categories may not actually restrict too many people initially, which makes the post-Covid border re-opening an ideal time to implement these changes.

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