“How mediocre our immigration programme has actually been”

Michael Reddell (30+ years doing economic analysis and policy advice in a range of institutions, in New Zealand and overseas) details an interesting recent history of issues) to the present.

Reddell was involved in the 2025 Taskforce, established in 2009 as part of a Confidence and Supply agreement between National and Act (a Dr Bryce Wilkonson was also a member of the task force along with Don Brash, David Caygill and Australian economist Judith Sloan).

To cut the story short, I had little interest in the issues until I was involved with the 2025 Taskforce, set up to advise the government on why the large income and productivity gaps to Australia had opened up, and to recommend a policy programme that might close the gaps over the following 15 years.   I was seconded to Treasury at the time, and there was also quite a bit of interest there in why New Zealand’s interest rates were so high (relative to those abroad).

The 2025 Taskforce did not –  as readers might expect –  come out in favour of high rates of immigration.

I came away from involvement with the Taskforce pretty supportive of the list of measures, and way of thinking about things, that they proposed.     But the more I reflected on the issues, the more it started to seem like a list of measures that, while useful, was unlikely to make a large enough difference to close the gap.

It was only out of all that experience –  mostly down to the good fortune of the secondment to Treasury –  that my current way of thinking started to develop.

Through this period, my focus was very high-level and macroeconomic in nature.  I kept being told –  by Treasury and MBIE – that our immigration programme was one of the best in the world (and there were papers to prove it).

I didn’t have any reason to disagree (I didn’t have the detailed knowledge and my background was macroeconomics), but as I always stressed, if my argument/analysis was valid, it was so broadly speaking regardless of the quality of the individual immigrants.

The last couple of years, outside the public sector, have certainly been an eye-opener for me, on just how mediocre our immigration programme has actually been.  It may well be that our average non-native born worker has among the highest skills of any of those in the OECD.

It may even be that our immigration programme is better than those of most  –  in many ways it should be, as we have full effective control of our own borders.  But it simply isn’t very good.

Even on those OECD numbers, the average non-native born worker (immigrants past and present) has skill levels below those of natives (the latter being among the most skilled in the OECD).

There have been many very able migrants, but averages are averages, encompassing the excellent and the poor.  The average isn’t impressive.

And the disillusionment –  stripping away of the old illusions and official stories –  has continued even in the last week or two.

At a broader policy level, MBIE released data last week showing that 57.5 per cent of those applying for residence under the Skilled Migrant category –  the most skilled bit of the residence approvals programme –  were earning less than $48859 per annum.  No doubt some of them would have been turned down, but the rejection rate of applications that get to this stage isn’t high.

On policy to date, a huge proportion of the so-called skilled migrants can’t even command that much income in the New Zealand labour market (and recall that 80 per cent of all residence approvals are granted to people already onshore, and I suspect that share is higher for the SMC category).

Perhaps I’m naively optimistic, but a week or so after these data came out, I’m still shocked at how low a skill level they reveal.

Our ministers and officials have repeatedly grossly misrepresented the programme and the number and sort of “skilled” people New Zealand is granting residence to.   If it were similar data on any other policy or economic topic, I suspect it would be front-page news in our media.

It looks increasingly like a costly sham.  New Zealanders have been sold the policy on one basis but –  whatever the merits of the policy they’ve been told we were running –  the actual policy looks to have been far worse than we were told.  And, I suspect, far worse than the people who first designed the more liberal immigration policy thirty years ago would have had in mind.

People will differ on how all this came to pass.  I’m not a conspiracy theorist, and suspect it mostly developed with the best of intentions all round (rather than, say, a deliberate attempt to drive up Auckland land prices and drive down lowly-skilled wages).   But good intentions don’t excuse shocking outcomes.  We simply don’t really have a skilled migration programme at all.

As I like to stress, I try to be an equal opportunity sceptic.  Immigration policy has, for 30 years, been pretty much common ground between National and Labour.     The Donghua Liu case shouldn’t be quickly forgotten.

There’s more detail from Reddell in Immigration thoughts over 40 years.

Croaking Cassandra blog (Economics, public policy, monetary policy, financial regulation, with a New Zealand perspective): About Michael Reddell:

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  1. I see we’re not discussing this … Its like a form of whistle-blowing … or the canary down the mine …?

    Do the affiliations of members of the 2025 Taskforce matter? Wilkinson, fellow of the NZ Initiative, formerly the Business Roundtable: Brash, former ACT leader, founder of Hobson’s Pledge and ‘fellow’ of Kiwi FrontLine: Caygill … Roger’s Right T$^@@*( : and Sloan, amongst other things, “a founding member of the group Conservatives for an Australian Head of State” – Wiki.

    Hardly representative of anything other than National’s ‘Far Right’ [or ACT] echelon and ACT’s tiny 1% following who were gifted an electorate by National’s ‘Far Right’ or ACT echelon … but these people get a significant say in deciding our future.

    I wonder if National & ACT paid for it themselves, from Party funds, as part of their ‘confidence & supply’ agreement? I hope so, sincerely, but I suspect the taxpayer footed the bill …?

    ” … good intentions don’t excuse shocking outcomes”

    You got that right Mr Reddell! And that’s making a BIG assumption, namely “good intentions” or “the best of intentions”, rather than “a deliberate attempt to drive up Auckland land prices and drive down lowly-skilled wages” … as representative key elements of maintaining the FIIRE economy …

  2. Trumpenreich

     /  26th April 2017

    If you live in Auckland, you are reminded daily of the low quality Third World transplants now occupying the city.

    Dingy dilapidated looking lunch bars, hairstylists, $2 shops, grog shops, dairies, taxi drivers, bus drivers, cleaners, petrol station attendants, security guards etc etc. Nary a pale face to be seen in these areas now, and the few you do are mostly older.

    I took the car into a car electrics outfit – one old white guy and half a dozen Indians on the floor. A family member gets her car WOF at some dodgy Korean outfit with all Korean mechanics.

    I could go on and on.

    There are a lot of rich ones too, drive through New Market, LOTS of high end cars clogging the roads, the majority of them, a beady eyed Asian peering out the window screen.

    • Very selective and racist.

      • Brown

         /  26th April 2017

        No its not. Its true – imported cultures draw together and those in a position to hire hire those they know. Dunedin will catch up with the rest of NZ in time. Z stations are an example of one race being arguably over represented because ….? My wife works in IT and saw her employer at the time sign up with an overseas supplier who promptly brought a bunch of their countrymen into NZ to do the work. They weren’t that flash either and she left rather than deal with the fall out. My nephew in Auckland married a Chinese solicitor whose customer base is Chinese. She’s very nice and admits meeting a market that is culturally biased and is increasing because the new Chinese hire local Chinese.

        • YOU ASKED FOR IT … !!!

          Folks, Trumpenreich and Brown, just enjoy the neoliberal, ‘globalised’, free-market economy [nee nation] you so keenly desired and wantonly voted for … Keep firmly in mind your admiration effigies of Roger, David and Ruth … Stephen (Tindall), Helen, Michael, John (The Key) and William (Bill) … the messiahs and disciples of FIIRE …

          Many, perhaps most of these people live in your rental properties …

          Even at its worst, there’s nothing a good bit of retail therapy won’t fix … at one of the White-enclave Mega-Store Super-Centres on the fringes … Where everyone gets a bargain!

          • Brown

             /  27th April 2017

            I’m no fan of rampant globalisation so go and have another toot before you lump me with people you also know nothing about.

  3. Gezza

     /  26th April 2017

    I was just as, actually more, interested in Mr Reddell’s next post, about who is getting work visas and residence visas these days. He is doing some very good analysis & reporting on available immigration data – the government, opposition, & media are not.

    I wasn’t going to write about immigration  today at all, but a radio station rang up last night and invited me to go on their show this morning to discuss an article in today’s Herald that runs under the headline Top source countries for migrant workers are not Asian.

    Since I had to get up early anyway, and since the article gives me the chance to make two points, I thought I’d respond.

    The Herald builds an article around this opening:
    A rise in work visas has been the driving force behind record immigration numbers but the main source countries are not from Asia.
    A Herald analysis into immigration data found work visa arrivals increased from 16,787 in 2004 to 41,576 last year.
    The top five source countries for work visas last year are the United Kingdom, Germany, Australia, South Africa and the United States of America.

    They get those numbers not from data on the number of work visas issued, or outstanding [i.e current], but on the basis of PLT arrivals data.   When people arrive at the airport they complete an arrivals card, indicate whether (at that time) they intend/expect to stay 12 months or more, and the reason for their visit.    The “reason for visit” isn’t tightly mapped to the various different visa classes, and all the non-New Zealand arrivals are grouped under four main headings (Residence, Student, Visitor or Work) and a small “Other” category.

    But MBIE now publish the data for actual work visas issued & current [or *outstanding*] each year.  Here are the top 10 countries as at 30 June last year.
    Outstanding temporary work visas by country, as at 30 June 2016
    United Kingdom
    United States
    South Korea

    The UK is still important, but it is swamped by people from India, and China and the Philippines aren’t far behind the UK.   We only have this particular data since 2009, but back then the UK was the largest source country for people with outstanding work visas.  Since then the UK numbers have only increased a little, while the Indian numbers have more than trebled.     And all that is so even though these stock numbers include the numbers here on working holiday (work) visas, where European countries (Germany, UK, and France) dominate the annual approvals numbers.

    What about approvals data?  Here are the top 10 countries of people granted Essential Skills work visas in 2015/16.
    Essential skills visas granted, by country, 2015/16
    United Kingdom
    South Africa
    South Korea
    United States
    A decade ago, the UK was clearly the largest source country.
    And here are the top 10 countries of people granted Family work visas (note, work visas –  these aren’t the residence approvals).
    Family work visas granted, by country, 2015/16
    United Kingdom
    South Africa
    United States
    South Korea
    Sri Lanka
    Again 10 years ago the UK was the largest single source country.
    MBIE don’t provide this breakdown for those granted “study to work” visas, (even though the number of those visas granted has increased from around 6000 in 2005/06 to around 22000 last year.   And since student visa numbers are totally dominated by people from Asian countries
    Student visas granted, by country, 2015/16
    South Korea
    United States
    …we might reasonably assume that almost all of the study to work visas have gone to citizens of Asian countries.
    And finally, of course, there is the residence approvals programme.     The overwhelming bulk of these approvals are granted to people already living in New Zealand, who arrived on one or other of the temporary visas programmes and eventually qualified for residence.  Here are the top 10 countries, for 2015/16 and for 2005/06 , 10 years earlier.

    Residence approvals by source country
    United Kingdom
    South Africa
    United States
    South Korea
    Total approvals didn’t change much over that decade, but the composition (by source country) did.  One forgets I suppose, but I was a little surprised to realise that even 10 years ago the UK was still far and away the largest single source country.

    Which country our temporary or permanent migrants come from isn’t a big concern of mine, and has never been a focus of my analysis of the possible connection between immigration and economic performance.  I don’t much care where migrants come from, but about what skills and talents they bring.   That said, I was interested in the new study by Harvard researchers that I linked to a few weeks ago, suggesting that if there were economic benefits from immigration (and that particular study reckoned there were) they were most evident when the migrants were from countries that are richer than the recipient country, or from countries with a degree of cultural similarity to the recipient country.   Perhaps that result won’t stand up to close scrutiny over time, but it does make quite a lot of intuitive sense.  

    On that residence approvals list, only the UK and the US are richer than us.
    And as a final note, I repeat my plea to MBIE to markedly improve the availability of such summary data on immigration approvals (and outstanding visas).  They hold all the data, and there is no reason why these data could not be available, and easy to use, on a monthly or quarterly basis within a few days of the end of the relevant period.  Debate about immigration policy is often difficult enough, but it is made more so when the good timely data just aren’t made easily available, and people fall back on what they can find, inadequate for purpose as it often is.

  4. “rather than, a deliberate attempt to drive up Auckland land prices and drive down lowly-skilled wages”

    Are you serious? This is conspiracy thinking Sir. Pre GFC, 2008 we already had an ever expanding, near-retirement, relatively well-off baby boomer population. In our biggest and most desirable city Kiwis were already doing what they do well and buying second and third houses for investment. This was happening in our near neighbour Australia too. Along came 2008, and every developer literally stopped buying land and building houses apartments stopped in it’s tracks. Combine that with the draconian RMA and the hold up over the new district plan and nobody was able to just pick up where they left off as the playing fiend was well altered.

    There was no design, just market reaction. The upshot is that prices are high. Will they stay this way ? Not if we have another downturn. However, any downturn will play into the hands of cashed up and secure boomers and their heirs. How we manage this and provide opportunities for you get people, without Mum & Dad as bank, I’m not sure.

    It’s patently ridiculous to think the situation contrived. Poorly managed in hindsight ( a wonderful thing) yes.

  5. Gezza

     /  26th April 2017

    I’d really like to see Mr Reddell do some stats analysis & breakdowns of what occupations these Work Visa & various Residence Visa recipients are being issued for. The INS system must essentially be a huge database. They have surprisingly little analysis capacity.


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