When they stop com­ing

Im­mi­gra­tion has been a huge driver of NZ’s eco­nomic suc­cess for the past decade but the pan­demic has forced us to pull in the wel­come mat,

Weekend Herald - - Business - writes Liam Dann.

Typ­i­cally mi­grants are more en­tre­pre­neur­ial . . . It would be a bad pol­icy choice to give up on that I think.

NZ Ini­tia­tive ex­ec­u­tive di­rec­tor Oliver Hartwich

Net mi­gra­tion is set to fall sharply over the year ahead . . . We think that it could go as low as 5000. West­pac se­nior econ­o­mist Satish Ranch­hod

For bet­ter or for worse, a high rate of im­mi­gra­tion has been the magic in­gre­di­ent in New Zealand’s strong eco­nomic growth in the past decade. Now Covid-19 border clo­sures have stopped that in its tracks, leav­ing a gap­ing hole in the eco­nomic land­scape,

New Zealand’s net mi­gra­tion rate was 11.4 im­mi­grants for ev­ery 1000 peo­ple al­ready in the coun­try in the year ended June

2019 — more than triple re­cent rates in the United States and United King­dom.

That’s an av­er­age an­nual in­flow of between 50,000 and 60,000 peo­ple for the past five years, which helped the pop­u­la­tion surge past 5 mil­lion this month.

While top-line GDP growth has tracked above 3 per cent for much of this pe­riod, once you ac­count for that pop­u­la­tion growth it has been lack­lus­tre — av­er­ag­ing just half that on a per capita ba­sis.

For all the de­bate about pressure on hous­ing and in­fra­struc­ture, no one — not even strong im­mi­gra­tion op­po­nents such as Win­ston Peters — has ever sug­gested go­ing com­pletely cold turkey.

But that’s what has just hap­pened. “Net mi­gra­tion is set to fall sharply over the year ahead,” says West­pac se­nior econ­o­mist Satish Ranch­hod. “We think that it could go as low as 5000.” That is prob­a­bly go­ing to be a tem­po­rary slow­down re­lated to the clo­sure of borders, he says.

“But even as those re­stric­tions are lifted, we don’t think mi­gra­tion will go back up as high as re­cent years.”

A lot of im­mi­gra­tion is to do with jobs, and New Zealand will see a big in­crease in un­em­ploy­ment in the com­ing year — per­haps to rates of about 9.5 per cent.

“Against that back­drop, we don’t think as many peo­ple are go­ing to be look­ing to come in as there have in re­cent years,” says Ranch­hod.

Rel­a­tive to past re­ces­sions, net mi­gra­tion at 5000 might not be so bad, if it wasn’t such a rapid shift.

Tra­di­tion­ally, New Zealand has seen pe­ri­ods with a net out­flow of mi­grants — Ki­wis head­ing for greener pas­tures, mostly in Aus­tralia, dur­ing eco­nomic down­turns.

This time, though, some key things are dif­fer­ent.

Aus­tralia, like us, has the pan­demic un­der con­trol. And with a less ex­port- and tourist-fo­cused econ­omy, it will likely re­cover faster.

But mak­ing it less ap­peal­ing are tough anti-im­mi­grant mea­sures that in re­cent years have seen Kiwi res­i­dents los­ing so­cial rights, in­clud­ing un­em­ploy­ment ben­e­fits and ac­cess to pan­demic sup­port pack­ages.

And the trend for Ki­wis to come home re­mains, as the rest of the world faces an uglier look­ing pan­demic and re­cov­ery.

New Zealand also re­mains a more de­sir­able des­ti­na­tion in the eyes of the world.

Our Prime Min­is­ter is be­ing cel­e­brated around the world. In Amer­ica and Europe, this coun­try is of­ten seen as some kind of lib­eral par­adise.

Put sim­ply, our pro­file is much higher than it was in pre­vi­ous decades, so it is likely that de­mand to come here will re­main stronger.

That leaves the sup­ply side of the equa­tion in our hands.

Un­like the tourism in­dus­try, which faces a long wait for safe so­lu­tions to border con­trol, those fo­cused on longer term vis­i­tors see quar­an­tine mea­sures as pro­vid­ing a quick path back to nor­mal.

“It’s likely that net mi­gra­tion will pick up more rapidly than tourism,” says Ranch­hod. “Peo­ple are com­ing in on mi­grant visas. They are plan­ning to stay here for quite some time.” A lock­down pe­riod of two or three weeks is much less of a con­straint than it is for some­body com­ing in on a tourist visa, he says.

“But I’m not so sure that the Govern­ment is re­ally go­ing to look to loosen up mi­gra­tion set­tings in a hurry.

“The Govern­ment is fo­cused on the em­ploy­ment of the lo­cal pop­u­la­tion. We’re look­ing at a lot of chal­lenges on that front.”

But the past week has seen Auck­land mayor Phil Goff pitch­ing plans to get stu­dents back. We’ve heard that the Govern­ment has al­ready al­lowed some care­fully man­aged en­tries for spe­cial­ist health work­ers and even film in­dus­try peo­ple work­ing on key pro­duc­tions such as James Cameron’s Avatar films.

So, what should the new nor­mal look like for im­mi­gra­tion pol­icy in New Zealand’s post-Covid econ­omy?

Un­sur­pris­ingly, busi­ness groups are keen to see the Govern­ment move faster to get the pol­icy re­set and back on track. There are two key ar­gu­ments.

One is the as­pi­ra­tional view that smart im­mi­gra­tion pol­icy can help us re­build a stronger and more pro­duc­tive econ­omy — fill­ing gaps left by the loss of tourist dol­lars.

The other more press­ing is­sue is that skill short­ages still ex­ist and need to be ad­dressed de­spite higher lev­els of un­em­ploy­ment.

“That’s part of the work the Govern­ment needs to do, and quickly,” says David Cooper, di­rec­tor of client ser­vices at Mal­colm Pa­cific Im­mi­gra­tion.

“We’re hear­ing from em­ploy­ers that want to get spe­cific skilled work­ers in — and these peo­ple are not avail­able in the lo­cal mar­ket, we know that. They’re ask­ing ‘how do I get this guy here’ and the an­swer is that he’s not a doctor, so he’s not go­ing to get a border ex­emp­tion.”

There needs to be a sig­nal to em­ploy­ers, on where the Govern­ment is pre­pared to draw a line in the sand, he says.

“Most em­ploy­ers only choose a mi­grant if they can’t find a Kiwi. Is the Govern­ment go­ing to say that for lower skilled work­ers — where they have been given visas in the past — that they’re no longer pre­pared to do that?

“Pol­icy will need to be ad­justed and repri­ori­tised,” he says.

But so far the Govern­ment re­sponse has not moved out of the emer­gency phase.

In mid-May it passed leg­is­la­tion which gave it strong pow­ers to ap­ply a flex­i­ble ap­proach to im­mi­gra­tion pol­icy and visas over the next 12 months.

The Im­mi­gra­tion (COVID-19 Re­sponse) Amend­ment Bill 2020 al­lows the Govern­ment

eight rad­i­cal new pow­ers to:

● Im­pose, vary or can­cel con­di­tions for classes of tem­po­rary en­try-class visa hold­ers

● Vary or can­cel con­di­tions for classes of res­i­dent-class visa hold­ers

● Ex­tend the ex­piry dates of visas for classes of peo­ple

● Grant visas to in­di­vid­u­als or classes of peo­ple in the ab­sence of an ap­pli­ca­tion

● Waive any reg­u­la­tory re­quire­ments for cer­tain classes of ap­pli­ca­tion (that is, waive any pre­scribed re­quire­ments that peo­ple need to ful­fil to have their ap­pli­ca­tion ac­cepted by Im­mi­gra­tion NZ for as­sess­ment)

● Waive the re­quire­ment to ob­tain a tran­sit visa

● Sus­pend the abil­ity to make ap­pli­ca­tions for visas or sub­mit ex­pres­sions of in­ter­est in ap­ply­ing for visas by classes of peo­ple who are off­shore

● And to re­voke the en­try per­mis­sion of peo­ple who are deemed to have been granted en­try per­mis­sion

Those pow­ers should make a prag­matic re­sponse to the im­me­di­ate im­mi­gra­tion needs of em­ploy­ers much eas­ier to de­liver.

But so far there has been very lit­tle ac­tion on this front, which is frus­trat­ing both for many mi­grants left in limbo and for many busi­nesses, says Cooper.

In a state­ment, Im­mi­gra­tion Min­is­ter Iain Lees-Gal­loway has ac­knowl­edged the is­sues fac­ing mi­grants who were caught by the border clo­sures mid-process.

“The is­sue of mi­grant work­ers stuck out­side the coun­try is very much on our minds,” he said. “I am cur­rently await­ing ad­vice on us­ing the new pow­ers es­tab­lished un­der the Im­mi­gra­tion Act and will then make de­ci­sions on po­ten­tial visa changes that may as­sist them.” So while some clar­ity for those caught in the tran­si­tion may be im­mi­nent, de­ci­sions about a wider pol­icy seem some time away.

“Yes, we’ve had the im­mi­gra­tion law changes but it’s the pol­icy that the Govern­ment wraps around those that will de­ter­mine the out­come,” says Cooper.

“We polled em­ploy­ers dur­ing the lock­down. With­out ex­cep­tion they’ve said: we need those skills and we’re happy to fund the 14-day quar­an­tine.”

But so far, de­spite at­tempts to both of­fer ad­vice and re­ceive some, Cooper says he’s had no re­sponse from Govern­ment.

That’s a worry, says Oliver Hartwich, ex­ec­u­tive di­rec­tor of eco­nomic think tank The NZ Ini­tia­tive.

He also be­lieves there is some ur­gency re­quired on im­mi­gra­tion pol­icy.

“The choices we make now, even in the next few months, will have an im­pact on where we go in the next few years.”

The NZ Ini­tia­tive sees strong net mi­gra­tion as a driver of eco­nomic growth that the coun­try should lean on in the re­build.

Hartwich does ac­cept that rapid pop­u­la­tion growth has flat­tered New Zealand’s eco­nomic growth fig­ures.

“On the one hand it is true that we haven’t had the GDP per capita growth we’d have liked to have. And high mi­gra­tion fig­ures do mask that,” he says.

“But we shouldn’t con­clude from that, the high mi­gra­tion fig­ure has led to the low GDP fig­ure.

“These are two sep­a­rate is­sues. We could have had both. It is a ques­tion of get­ting the right kind of mi­grants into the coun­try . . . es­pe­cially qual­i­fied young mi­grants.”

To a de­gree, we were al­ready do­ing that, he says. An NZ Ini­tia­tive study in 2017 found that the coun­try was well served by its mi­grant com­mu­nity, which typ­i­cally paid more tax than peo­ple born here, had higher stan­dards of ed­u­ca­tion and bet­ter work out­comes.

“Typ­i­cally mi­grants are more en­tre­pre­neur­ial,” Hartwich says. “It would be a bad pol­icy choice to give up on that, I think.”

Which leads to the re­cent sug­ges­tions, from the likes of tech en­tre­pre­neur Rod Drury, that we should lever­age our global pro­file as a safe haven and in­vite a wave of mega-rich mi­grants to our shores.

Drury has ar­gued for loos­en­ing for­eign in­vest­ment rules to let bil­lion­aires pur­chase land in ar­eas such as the Hawke’s Bay, Queen­stown and North­land, in or­der to stim­u­late economies hurt by tourism’s de­cline.

The Prime Min­is­ter has been de­cid­edly luke­warm on that sug­ges­tion.

But Cooper ar­gues there is no need to rein­vent the wheel.

We just need to fix the ex­ist­ing en­tre­pre­neur visa cat­e­gory so it ac­tu­ally brings the de­sired re­sults, he says.

“We have an en­tre­pre­neur pol­icy that is an ab­so­lute bas­ket case,” he says.

“It’s not work­ing, and hasn’t been work­ing. I told the Min­is­ter over two years ago.”

Cooper says ap­pli­ca­tions for the visa cat­e­gory have peaked at a 90 per cent de­cline rate. “I’ve been in the in­dus­try 35 years and I’ve never seen a visa cat­e­gory with such a high de­cline rate,” he says.

“That visa should be about bring­ing smart peo­ple in who have the money, the tal­ent and the en­ergy to run busi­nesses. It can ac­tu­ally help save jobs and cre­ate new ones.”

The coun­try also al­ready has a pretty good in­vestor visa cat­e­gory, he says.

“The PM has said no, we’re not go­ing to take the mega-rich here . . . but the re­al­ity is there is a pol­icy for the mega-rich,” Cooper says. “It’s work­ing. Ev­ery­one thinks Peter Thiel and so on are just buy­ing life­style blocks and not mak­ing a con­tri­bu­tion . . . that’s not true.”

The com­bi­na­tion of the di­rect in­vest­ment re­quire­ments of the visa con­di­tions and in­di­rect spend have added bil­lions to our econ­omy, he says.

“I’d say it’s been worth $15 bil­lion since the pol­icy was in­tro­duced [in 2009].”

New Zealand runs two cat­e­gories of in­vest­ment visa: one for those with $3m to in­vest and an­other more le­nient one for those with $10m.

Drury was ef­fec­tively sug­gest­ing a third tier for those with $50m to in­vest.

Cooper ar­gues there are other ways to en­hance the scheme.

“At the mo­ment it’s the tax­payer fund­ing all these projects; what if we asked the wealthy to put their money into in­fra­struc­ture bonds,” he says. “The Govern­ment then gets free money for five or 10 years.”

Ranch­hod, though, ex­pects this Govern­ment will be very cau­tious, par­tic­u­larly in an elec­tion year.

“There may be ways to struc­ture mi­gra­tion pol­icy to en­cour­age the flow of cap­i­tal into New Zealand to re­ally kick­start the busi­ness sec­tor but we’d need to be quite care­ful about that,” he says.

“One of the fo­cuses we’ve had from a pol­icy per­spec­tive is about en­sur­ing lo­cal own­er­ship of im­por­tant re­sources and we don’t want to give that up while we’re boost­ing the econ­omy.” There is a need for dis­cus­sion about the skills bal­ance we need in the econ­omy, he says.

“But we need to kick-start the econ­omy first to be in a bet­ter po­si­tion to ad­dress im­mi­gra­tion pol­icy.

“If the econ­omy is grow­ing, it will put us on a much more sta­ble foot­ing for ad­dress­ing other chal­lenges . . . and there’s likely to be quite a few in com­ing years as we ad­dress the last­ing scars of this down­turn.”

For his part, Cooper says he is not push­ing for mass im­mi­gra­tion.

He just wants some cer­tainty and some faster ac­tion to get the pol­icy fit for pur­pose in the new eco­nomic land­scape.

“Con­trolled and smart im­mi­gra­tion has proven time and time again to help build this na­tion over the last 50 years in good times and bad. Let’s get on with it now and not get caught up in long pol­icy pro­cesses — be­cause we need the wins to­day to help our econ­omy get back up and run­ning.”

Photo / Brett Phibbs

Photo / Getty Im­ages

Per capita, im­mi­gra­tion into NZ lately has been three times as high as in the US or the UK.

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