Why there are no easy ways to slash record high net migration

Record high net migration is shaping up as the hottest topic in this year's election debate, but there are no easy ways to significantly cut the inflow, despite what some are suggesting. Shane Cowlishaw takes a deeper look at the details and figures underpinning that debate.

When debating immigration policy, it’s hard not to descend into accusations of racism.

Often, the politicians do themselves no favours when discussing the issue.

Take this 2005 quote from New Zealand First leader Winston Peters: “The Government’s lax immigration laws are changing the face of our country forever. At this rate, it won’t take long for New Zealand to be unrecognisable.”

With Peters shaping up to again play a deciding role in this year’s election, the immigration issue will be one of the most hotly-debated as campaigning heats up.

But it is one that is worthy of discussion.

The influx of people, including temporary visitors, students, workers and permanent residents, is at record high levels - and has been accompanied by a rising level of migrant exploitation.

Immigration is also linked to another hot election issue – housing.

The Labour Party’s 2015 release of data on Auckland property buyers with "Asian-sounding" names was a PR disaster, but it is an inescapable fact that more people moving to the city means fewer houses to go around as building lags behind what’s needed.

So what’s driving this increase and is it actually a problem?

Firstly, let’s look at some basic figures and get them out of the way.

Net immigration, the number of people arriving for a stay of more than 12 months minus the number of people leaving for a similar period, is at a record high.

For the year ended in February, there was a gain of 71,300 people. Compare that to the year ended June 2008, when New Zealand had a gain of only 4700.

The Government is quick to stress that many of these people are New Zealanders attracted back from Australia by a strong economy.

While it’s true that more people are returning home than before, that number has been dwarfed by an increase in migration from other countries such as China, India, and the United Kingdom.

It’s good to remember the net migration figures are a rough guide only. They are based on what people put on their arrival cards, and permanent and long-term (PLT) visitors are classed as someone who intends to stay for 12 months or more.

That means that a person may indicate a stay longer than a year, but leave after nine months meaning they would arrive as a PLT but leave as a short-term visitor, skewing the stats.

When we look at the number of visas issued, the figures jump dramatically.

In 2016, 103,214 student visas, 209,514 work visas and almost 50,000 residence visas were approved.

These numbers are so much higher because they include people that have yet to arrive in New Zealand, those that have applied from within New Zealand and for multiple short-term visas issued within the same year.

But whether it's net migration or visas issued, the numbers have been rising.

Are we recruiting the right people, to the right places?

This will be a question that will form a large part of the election debate.

Labour doesn’t think so and wants to look at the number of temporary visas being issued, especially to those with non-essential skills.

NZ First believes we’re letting too many people in full stop, while National has recently implemented some minor tweaks but has so far held off on large-scale changes.

One question that’s being raised is whether it’s too hard for skilled people living overseas who want to move to New Zealand, compared to those who are already here.

Under the immigration points system, bonus points are awarded for those who have studied and/or worked in New Zealand already.

Labour’s immigration spokesman Iain Lees-Galloway says this is an area the party is looking at changing, giving an example of a low-skilled worker who has already studied and worked in New Zealand being ahead on points compared to, say, an overseas doctor who wants to move here.

Briefings from the Ministry of Business, Innovation and Employment (MBIE) to the Immigration Minister seem to back this concern up.

The documents, released under the Official Information Act, agree the current points system favours temporary work visa holders who have a job offer over offshore skilled professionals trying to immigrate.

They show that there is also a growing reliance on temporary workers in low-skilled industries such as dairy, tourism, and aged care, which could be a “lost opportunity” to encourage New Zealanders into work.

“There are concerns that instead of attracting the entrepreneurs and innovators our economy needs to grow and innovate, we are seeing lower value investments,” the briefing papers say.

Lees-Galloway is tight-lipped on the exact changes Labour would make to address these issues, but they could extend to syphoning migrants away from Auckland as the city groans under its rising population.

“We’ve got to run our immigration system according to our needs and if New Zealand’s need is to have workers in the regions and to relieve pressure on Auckland I don’t think there’s anything wrong with us saying 'look our system is going to require people to go to other parts of the country'.

“As a sovereign nation we need to be sure we have control of our immigration system and at the moment it does feel like the Government has lost control of immigration.”

If there’s a problem, what are the current Government’s plans?

After standing firm for some time, late last year Immigration Minister Michael Woodhouse announced some changes.

He halved the family category from 5500 to 2000, temporarily closed the parent category and raised the number of points needed for residence from 140 to 160.

But the Government’s stance is that the country is still in dire need of people to staff the growing economy.

Yesterday at Parliament, Prime Minister Bill English said tweaks were always being looked at, but it was about balance.

“The other day I spoke to a transport operator who had 25 trucks parked up because he couldn’t get truck drivers,” he said.

Woodhouse was unavailable to be interviewed, but in a statement said the increase in net migration was largely due to fewer New Zealanders leaving and more returning, working holiday visas and international students.

“The number of essential skills work visas being issued is actually lower now than it was when this government came into office.”

Employers are required to talk to Work and Income first to ensure there were no local workers available to do the job before looking at migrant labour, he said. But this had to be balanced with ensuring genuine skill shortages could be filled at a time of economic growth.

International students – a benefit or drain?

Since 2007, the amount of people entering New Zealand on student visas has doubled.

That number is important, but what happens after people arrive is a more complex story.

Let’s take those student arrival figures, for example.

In 2016, 24,562 people arrived to study.

Once those student visas expire, some people then apply for a work visa and roughly one in five go on to residency.

The problem is, more and more of those people end up working in low-income jobs.

Back to those briefings from MBIE.

They contain a breakdown of the median annual earnings of both skilled migrants and skilled New Zealanders, by industry.

It shows migrants’ wages are often far less; to pick one, immigrants working in the transport, postal, and warehousing industry could expect to earn about $18,000 less a year.

Across all industries, skilled migrants earn a median wage of just under $58,000 while their New Zealand counterparts receive just over $60,000.

Overall, the median income of skilled migrants is lower than when the category was introduced in 2003.

This is because of a growing number of people working in lower-paid industries, with three of the top six occupations being chefs, café and restaurant managers, and retail.

Skilled migrants applying for residency are also increasingly former students and temporary workers, the documents show.

In 2008/09, 32 percent of residency applicants were from former international students but that number jumped to 43 percent by 2014/15.

There is also drop in former students with bachelor degrees applying for residency, with more holding low-level certificates or diplomas.

“International students are becoming the predominant source of skilled migrants, we may need to reconsider our settings,” MBIE warned.

Massey University’s Professor Paul Spoonley, an expert in migration, says an increase in the on-shore path to residency was not necessarily a bad thing.

There was a lot to be said about testing someone’s suitability by allowing them to gain a qualification and job while in the country.

But he agrees the area needs tidying up and suggests either aiming at the high-end, skilled international student market rather than English language qualifications, or providing an income threshold on a former student’s transitional visa that they would have to meet to gain residency.

If issues are emerging, why do we need so many students?

Alongside many genuinely filling skill gaps in New Zealand and helping diversify our society, they bring in a lot of money.

A recent report by Education New Zealand into the economic impact of on-shore international education estimated the total contribution to GDP in 2014/15 was $4 billion.

Excluding primary and secondary pupils, 97,950 students were paying $886 million in fees at universities, polytechnics, and English-language institutions.

Overwhelmingly, students live in Auckland with 65 percent based in the city.

So, while there are concerns about the increase in international students moving into low-skilled work, turning off the tap would have massive economic repercussions.

Winston wants cuts, but from where?

Winston Peters looks set to be courted by both sides of the political spectrum in this election year.

Always vocal on immigration, he believes we are letting too many people into the country and wants to chop net migration down to between 7000 and 15,000.

Unfortunately, Peters was too busy for an interview and to answer exactly where those drastic cuts would come from.

NZ First’s media advisor suggested reading past press releases on immigration to get the background on the party’s stance.

There is indeed a trove of releases slagging off the Government for high net migration.

“It’s academic gobbledygook for anyone in New Zealand to believe 125,000 people settling here in a year is beneficial,” one roared.

But, again, details of where such a massive reduction would come from were elusive.

Of the 127,305 people who arrived for a long-term stay in 2016, just under a third were New Zealand or Australian citizens. No cuts can be made there.

About 20 percent were on student visas, a lucrative source of income as mentioned above - so any reduction would be a serious decision.

About 13 percent were on residence visas and a third on work visas.

The latter seems the most open to any squeeze, but again a third of workers were here on working holiday visas and clamping down on those would mean the end to reciprocal agreements for New Zealanders.

This leaves someone trying to work out how NZ First will reach its target scratching their head, as Lees-Galloway points out.

“I don’t know how you would achieve the number Winston wants to achieve, I think it would be very, very challenging and the shock to our economy would be dangerous.”

Spoonley says a reasonable long-term net migration goal is about one percent of the population.

He says this means there is a good case that current levels are too high and it would be worth investigating if skilled migrants were of high value and meeting demand.

But this would lead to a lot of employers complaining they could no longer staff their businesses and it is hard to see how cuts could be made to the level NZ First is touting, he says.