Immigration Reform and Business

The Wellington Club

Members of the New Zealand Institute of Management, it is a pleasure to be here this morning. I was asked to talk to you as Business Development Minister, but today I am also wearing my Immigration Minister's hat.

The two areas - business development and immigration - are closely linked.

Lately there has been a certain amount of comment about New Zealand's immigration policies - particularly their effect on immigration levels, the economy and business.

It was encouraging recently to see the Wellington City Council recognise that link and take practical steps to maximise its benefits with a programme to promote the settling and investment in Wellington by business migrants and those with business skills.

The Government's immigration policies aim to:

improve the human resources of NZ by selecting migrants with a broad range of skills
attract migrants with entrepreneurial skills and experience
help NZ develop and foster international links through well managed visitor and residence programmes
complement skills training and employment strategies through careful allocation of temporary entitlements to work in New Zealand
re-unite the families of New Zealand residents and respond to the needs of migrants with close family links to residents
meet NZ's international humanitarian objectives through well managed refugee programmes.
New Zealand's migrants can be split into two groups - economic and social. The social group covers refugees, family and humanitarian migrants.

The economic group covers business and skilled migrants - which target migrants with business experience and significant funds to invest, or with qualifications, skills and work experience.

Both socially and economically, immigration has the potential to make an immense contribution to New Zealand. It is the implications for business and the economy I want to discuss with you today.

Migrants are important investors:

Between 1992 and 1997, business and general skills migrants brought more than $2.3 billion into New Zealand. Of that amount, more than $1.8 billion came from Asian migrants.
Migrant investment peaked in 1995/96 at $808 million.
Migrants create new businesses and new jobs for New Zealanders.

Between 1994 and 1996 there were around 4400 business category approvals. Small and medium sized businesses account for around 99 percent of all New Zealand enterprises. At last count those businesses account for about 680,000 full time jobs for New Zealanders - an amount which has increased by about 65,000 jobs since 1994. That is more than two thirds of the total 95,000 increase in full time equivalent jobs during that period.
Migrants boost our resource of skilled employees and professionals

since 1992, NZ has gained more than 10,000 professional engineers, around 8300 science and health professionals, 6300 corporate managers, 5000 teaching professionals - and many thousands of skilled trade and service employees through immigration - mostly from the business and general skills categories.
Migrants are customers.

the 1995 and 1996 property boom coincided with a wave of net immigration- 30,000 in the year ended September 1995 and 27,00 in the year ended 1996. It is estimated immigrants poured $2 billion into the housing market between 1994 and 1996. In October 1995, in response to a number of local political pressures - mainly from Auckland - the immigration points system was adjusted and the target set at 35,000.
The changes included:

extending English language requirements to non principal applicants age d 16 years and over
introduction of an English language test
more weight was placed on a job offer in New Zealand
compulsory registration requirements for about 25 occupations (This was to prevent the situation for many migrant doctors and other professionals who found themselves driving taxis and working in bars after arriving in NZ to find their qualifications were not recognised by authorities here.)
In the period since the 1995, adjustments we have seen a number of changes in the pattern of immigrants to New Zealand:

a drop in overall numbers approved for residence - (but close to 35,000 target)
a sharp fall in business and general skilled categories (from around 74 % of the total migrants between 1993-1995 to about half of the total migrants)
a steady increase in family/social categories to the point where they nearly match the economic migrants.
a fall in professionals, corporate managers, skilled workers who come largely from the economic categories, as opposed to a rise in immigrants who can not identify a work skill - mostly from the social categories
a large drop in Asian immigrants since 1995/96. Numbers of Asian immigrants reached a five-year low in 1996/97, taking a dramatic tumble from the previous year.
a big drop in funds and investment from immigrants. In 1995/96 migrant investment peaked in at $808 million. One year later it had dropped to $198 million.
more than 7700 migrants are on some form of social welfare benefit which suggests there may be a relationship between job skill and market needs.
In light of these changes, it is time to ask ourselves if our immigration polices are fulfilling their aims:

is NZ getting the broad range of skilled people to improve its human resources?
is NZ attracting enough migrants with entrepreneurial skills and experience?
are we complementing skills training and employment strategies with skilled migrants? Or, are increasing numbers of migrants becoming dependent on social welfare?
As with any policy area, the Government must continually review effectiveness and results. Several major reviews of immigration policies and processes, and their impacts, are underway at the moment.

The 1995 changes to English language requirements have been criticised by some, and linked to falling numbers of Asian immigrants who have in the past brought large amounts of investment and new business into New Zealand.

English language ability is a key to successful settlement in New Zealand. Lack of language skills is a barrier to participation in the labour market.

There were good reasons for tightening the English language requirement in 1995, but it is timely to take another look at that issue. A review of English language requirements is underway.

Employment is an important indicator of successful settlement. The speed with which migrants adapt to the labour market is important from both an individual and national perspective.

The people accepted under the social categories are generally less skilled and more likely to have trouble finding a job.

In order to find out levels of migrant unemployment, the part English language skills play and the success of our immigration criteria in minimising unemployment and benefit dependency the Immigration Service has begun matching its data with Income Support.

Additional research is being undertaken into settlement services. Immigrants are valuable people - people with skills, motivation, money and children to invest in this country - and it is important that we make their transition into our country as easy as possible.

The Government is also reviewing processes for asylum seekers in order to make the system quicker, more efficient and less prone to exploitation. We can not afford to have the flow of asylum seekers doubling each year as it has since 1991.

The Government wants to make sure immigration makes the maximum positive contribution to our society and economy.

The Population Conference to be held in Wellington in November this year is an important step towards that goal.

Based on the latest research on population and immigration, the Conference will take a hard look at who we are as New Zealanders and where we are going as a country.

Among other things, the Conference will look comprehensively at the impacts of the Government's immigration policies - the mix of migrants we are getting, the relationship between social and economic migration and issues relating to migrant settlement.

We'll also be looking at the overall impacts of population on the economy, communities, the infrastructure of our cities, our culture and national identity, social services, the labour market and business development.

This will increase our understanding of population and immigration issues, and help in setting New Zealand's immigration targets for coming years.

As with any portfolio, immigration and the work we are doing in that area, is just part of a bigger picture.

The Government is working hard across the board with a deliberate growth programme designed to increase New Zealand's international competitiveness and deliver higher levels of sustained growth through to 1999-2000 and beyond.

We need growth to create more jobs, raise the living standards of all New Zealanders and pay for education and health and our other social goals.

And, if you look past each new weekly political furore, you'll see the Government is doing a good job with active reform in nearly every portfolio - tax cuts, tariff cuts, ACC reform, energy reform, the Resource Management Act review, employment law reform, compliance cost cutting, strengthening family policies, focussing business assistance, land transport reforms and immigration policy.

I urge you to try and see beyond the sensational political headlines - because as business leaders I am sure you will find the real news reassuring.