The Economic Impact of Immigration

  • Jonathan Coleman

Mr Chairman, Ladies and Gentlemen,

First, I would like to thank the organisers of this significant conference, Professor Richard Bedford of the University of Waikato, Professor John Nieuwenhuysen of Monash University, Professor Paul Spoonley of Massey University and the Department of Labour for inviting me to speak here today.

This conference provides a rare opportunity to draw together professional expertise from across the globe and to share the latest research on many important aspects of international immigration and the economy.

I realise that I do not have to convince this audience of how important immigration is to the New Zealand economy. Quite simply, it is vital to the functioning of our economy and our future national development.

However, it is not always easy to illustrate this in a way that is immediate and compelling. That's where the Department of Labour's latest report on The Economic Impacts of Immigration comes in. The report which is published today illustrates just how important immigration is to our economy and society. Positing a sort of zero-sum game, the report looks not just at the current impact of immigration but, more tellingly, what the situation would be like if we ended immigration tomorrow.

The results are striking.

If we closed off immigration entirely the consequences for our economy would be profound. Without current levels of inward migration, within 15 years, both our population base and economy would shrink dramatically. The statistics speak for themselves.

By 2021, our population would drop by 9.6 per cent.

Our GDP would drop by 11.3 per cent.

There would be a 10.9 per cent drop in the available labour force.

The export sector would be savaged with volumes dropping by 12.9 per cent.

And to complete the picture, GDP per capita would fall by 1.8 percent - $1,000 for every man woman and child in New Zealand.

That is a frightening picture of a blighted future that illustrates in the starkest terms why immigration matters. If any doubts about this still persist, they must surely be extinguished by the findings of this very important report.

Of course no one would suggest that we should close the gates and shut up shop.  Immigration is just too important.

This is why this Government came to office with a specific immigration agenda. We have now been in Government for almost a full year and we have already made a number of important policy changes.

In spite of the global economic downturn, skill shortages persist in a range of occupations, such as engineering, teaching, and healthcare. Furthermore, temporary workers play a vital role in New Zealand's seasonal industries. Migration will continue to be an important means of alleviating shortages, and we have maintained the New Zealand Residence Programme at 45,000-50,000 migrants for 2009/10.

We have achieved this while protecting the interests of workers through applying the ‘New Zealanders first' principle. This approach has been possible because Immigration New Zealand's temporary work policy settings are sensitive to changing labour market conditions. We have, consequently, not had to resort to more rigorous interventions.

By comparison, most developed economies have imposed far stronger labour market tests, changed permanent migration policies and reduced immigration targets. Some of the countries affected more severely by the recession, such as Spain, Japan and the Czech Republic, have even introduced voluntary return policies. New Zealand's restrictions have, however, been modest and our labour market remains relatively open.

The need for us to remain competitive in the international market for skilled migrants is critical. We operate in a global environment and the international flow of skills across the globe is a permanent feature of modern society.

The global recession has not changed these fundamentals and New Zealand can benefit from this global market if we have in place the right policies and supporting systems. We need to provide both skilled New Zealanders and prospective skilled migrants with the right economic incentives and the right encouragement to come to New Zealand.

This Government has put in place policies that will see New Zealand improve its competitiveness in the international labour market without compromising the job prospects and security of New Zealanders at home.

Increased unemployment means that our immigration policies have to be very carefully balanced.  On the one hand, we have to maintain our commitment to protecting New Zealand workers.  On the other hand, it is now more important than ever that we ensure that businesses have access to the skills and talent they need.

We will continue to actively address these skill shortages by marketing New Zealand directly to prospective migrants through outreach programmes such as our Skilled Migrant Marketing Programmes and through an astute mix of policy incentives. We are also committed to maintaining a presence in key markets. These programmes form an integral part of this Government's "New Zealand Incorporated" initiative. We aim to extend and deepen New Zealand's international reach by building overseas networks and supporting export and tourism programmes with targeted "in market" activities.

Our Skilled Migrant Marketing Programme uses a combination of search engine optimisation techniques and online advertising to target skilled migrants in the United States and the UK. To date it has built up a database of over 67,000 prospective migrants. They are serious registrants, eager to move here - 52% want to move within 12 months - and are available to fill positions in key skill shortage areas. Over 55% are tertiary qualified and their average age is 35. Over 50% have skills included in the Skill Shortage list and over 15,000 have been linked to prospective New Zealand employers already.

Immigration New Zealand is working closely with industry to ensure it makes the most of what it has to offer. It has recently put in place a new agreement with the Tourism Industry Association that will improve the renewal process for temporary work permits.

Immigration New Zealand is also looking at ways to better use Working Holiday Schemes to help plug seasonal labour gaps.  It plans to target potential working holidaymakers with previous hospitality or tourism experience and then direct respondents to the employers who need them.  Given that these visitors can be onshore within a matter of weeks, this approach will help build a ready short-term labour resource that is flexible enough to meet the hospitality sector's needs.

To capitalise on the Government's new investor policies, Immigration New Zealand is working with the Ministry of Economic Development to better link small investor migrants with the New Zealand market.

These are all sound initiatives and reflect the sort of private sector and cross-Government cooperation that needs to be adopted if state sector productivity is to improve. But marketing programmes need to be underpinned by the right policies and this Government has made significant changes over the past year.

The most comprehensive and far reaching review of immigration legislation since 1987 has been completed and a new Immigration Act passed. This provides a modern legislative framework that will both enhance boarder security and improve the efficiency of our immigration services.

New Business Migration policies have been introduced. The new package reduces red tape and makes it easier for a wider range of valuable business migrants to invest here.

These new policies streamline immigration processes and ensure that talented business migrants are smoothly and effectively connected to our own entrepreneur and investment networks. It is this business connection that is important because that is what translates investor interest into real business that creates real jobs for New Zealanders.

With more realistic investment expectations and English language requirements, we are already seeing significant interest from overseas investors. 

For entrepreneurial migrants, this month also sees the launch of the new "Entrepreneur Plus" category, which complements our existing Entrepreneur category. Entrepreneur Plus offers a faster path to residence for applicants who create at least three fulltime jobs and invest $500,000 in their business

 These new policies create a win-win situation, supporting our economic growth while providing migrants with appropriate investment options.

Recognised Seasonal Employer policy

The Government has made several improvements to the Recognised Seasonal Employer policy.

A new type of work permit, the Supplementary Seasonal Employment Permit has been introduced to provide extra labour at peak harvest times if New Zealanders are not available.

Policy was also amended to ensure that the rules for deductions from workers' wages are the same as those for New Zealanders.

A requirement for foreign workers, employed under the RSE scheme, to hold health insurance while in New Zealand will be in place shortly.

This improved policy is specifically designed to meet the high seasonal needs of the horticulture and viticulture industries, while bearing in mind that Kiwis are first in line for jobs.

Retirement visas

The Government has undertaken to establish a retirement visa for high net-worth migrants who are able to live in New Zealand at no cost to the taxpayer.

The policy will ensure Retirement Visa holders indemnify New Zealand from any health, welfare, or superannuation costs. 

Silver Fern visas

The Government is introducing a Silver Fern Visa. This will allow prospective migrants with recognised tertiary qualifications to look for work in New Zealand.

To protect employment opportunities for New Zealanders, there will be an annual quota for applications.  Given the current economic cycle, the quota will initially be set at a relatively low level.

Silver Fern Visa holders who find a skilled job here will be able to get a longer work permit, and then apply for permanent residence.

This is, I believe, a not inconsiderable achievement for a first year in office and augurs well for the future. We have put in new policies that are working and laid the research foundations for further sound policy development in the future. 

 This conference has a significant part to play in ensuring that the best evidence-based research continues to be made available to both the government and the private sectors. Through this we can not only begin to realise the full potential migrants hold for New Zealand but also ensure that our migrants realise the personal expectations that justify and drive their desire to build new lives in a new land. I wish you well for a productive and rewarding conference.