In today's email we detail the latest in the ongoing immigration debate, look into the issue of wage theft, and highlight a one big beneficiary of untaxed capital gains.
1. 192,688 work visas issued
The debate about migration is now on in earnest ahead of the September 23 election.
Labour Leader Andrew Little's announcement last week that a Labour-led Government would cut net migration by tens of thousands a year has helped to galvanise the debate, particularly after the Government announced tweaks that it said itself would not materially reduce net migration.
Voters will have a choice between a pro-migration Government and an anti-migration opposition. Labour's rhetoric and policies in this area are also now much more in tune with those of New Zealand First, which may well be the decider in any coalition negotiations.
There's been a lot of talk about how movements of New Zealand citizens back and forth across the Tasman are the major reason for record high net migration. They are part of the story, but an even bigger part is the role of increased numbers of international students (who were given extra work rights in 2013) and the even-larger increase in temporary work visas, particularly those that are not work tested.
The debate can seem confusing, but there are some good sources of data to cut through the noise to the signal. MBIE's annual Migration Trends and Outlook publication is useful. It shows the total number of work visas issued in the year to June 30, 2016 was 192,688. That's up from 138,161 in the 2011/12 year.
Essential skills work visas, which were the ones subject to the Government's changes announced last week, accounted for just 31,766 of the work visas issued in 2015/16, albeit up from 22,065 in 2011/12.
This table above gives a detailed view of what categories of temporary work visa were issued.
Another useful document to understand some of the forces at play is this MBIE discussion document on last week's changes.
It was much more blunt about the need for the changes and the concerns of policy-makers a rung or two down from cabinet.
"The recent trends show that Essential Skills visas seem to be facilitating an on-going supply of low-cost labour in industries already characterised by lower-wage and productivity growth," MBIE wrote in the discussion document.
MBIE's migration trends document notes the three most populous categories of essential skills visa issued in 2015/16 were chef (eight percent), dairy cattle farmer (five percent) and café or restaurant manager (four percent).
The most common occupations for Essential Skills workers from the three biggest source countries were dairy cattle farmer (15 percent) and carpenter (10 percent) for the Philippines, retail manager (15 percent) and chef (10 percent) for India, and resident medical officer (six percent) and retail supervisor (four percent) for the United Kingdom.
2. 'Get tougher on wage theft'
Newsroom's Teuila Fuitai has pointed to a new research paper from barrister and activist Catriona MacLennan that calls for New Zealand employers to be treated just the same as British and US employers over employment law breaches - which means much tougher than they are now.
“Quite regularly, there are cases of employers breaching the law by not paying minimum wage, not paying holiday pay, or in the case of migrants asking them to make payments for help with visas and things like that,” MacLennan observed.
Making wage theft punishable by imprisonment, increasing penalty amounts three-fold for employers that do not pay minimum wage, and revoking the licences of businesses that failed to comply with minimum employment standards were some of the measures that could be taken to curb employers flouting of the rules.
Having MBIE publish “name and shame” lists that showed which employers failed to comply with minimum employment standards - similar to what occurred in the UK - banning these businesses from competing for government contracts, and increasing funding for labour inspectorate investigations, would also help, MacLennan said.
The relatively low number of labour inspectors in New Zealand (currently less than half the Australian number per head of population) is shaping up as an issue, particularly as cases of migrant abuse are proliferating and shaping the debate about migration.
To reinforce that, MBIE reported on Friday that an Auckland Grocer, Amardeep Singh, had been fined $12,000 after he demanded a new shop manager pay him $18,000 in exchange for supporting the man's visas.
The man reported him to the Labour Inspectorate.
3. Untaxed capital gains
Economist Andrew Coleman did a good job earlier this month of highlighting the tax advantages of investing in property relative to other investments. I wrote about that last week.
But it's not just rental property investors who have noticed the tax advantages of pumping money into residential property. So have the listed retirement village developers and owners.
The NBR's Tim Hunter highlighted this fact in a piece on Friday showing Ryman Healthcare, Summerset and Metlifecare had not paid any tax since at least 2007, despite reporting $2.3 billion worth of pre-tax profit over that period. Their unrealised capital gains on the sales of occupation rights of their retirement units are not subject to corporate tax.
Finance Minister Steven Joyce told the NBR there were no plans for a specific review of the tax position of the retirement sector, but did hint at possible action if something was found. Possibly.
"However, Inland Revenue is reviewing sectors of the economy that appear to pay a low level of tax relative to their accounting profits," Joyce was quoted as saying.
"If this work reveals a policy problem for any of the sectors, including the retirement villages sector, the Government would put this on the tax policy work programme," he said.
4. Civil Defence restructure?
Civil Defence Minister Gerry Brownlee announced on Sunday he had established a Technical Advisory Group to look at Civil Defence's structure in the wake of shortcomings, as he put it, following the Kaikoura Earthquake and the Port Hills fires.
He said cabinet had approved the appointment of the advisory group after a cross party meeting in March. The group would meet for the first time on May 22 and submit recommendations to Brownlee by the end of August.
"Civil Defence has operated under the structure that civil defence is ‘undertaken locally, coordinated regionally and supported from the national level’," Brownlee said.
"It’s been this way since 1959 and whether this way of operating is still fit-for-purpose needs to be scrutinised," he said.
Elsewhere over the weekend, Todd McClay announced $53.3 million would be included in Budget 2017 to build New Zealand's pavilion at the World Expo 2020 to be held in Dubai.
5. 'This thing's gonna blow'
I've been in Melbourne over the weekend visiting family and was struck by the amount of in-fill medium density housing being built around the inner city fringe.
There are one and two bedroom apartment blocks popping up everywhere with many being advertised for less than A$400,000. There are fears that a glut of apartments and townhouses in Melbourne in particular could be the trigger for some sort of housing bust in Australia.
The jury is still out on that, but certainly there are plenty of warnings of potential downturns coming from economists and ratings agencies alike. They all point to potential household finance stress when interest rates rise.
A warning from Deloitte's Chris Richardson (who I got to know when I worked in Canberra for Reuters) was particularly memorable this week.
He told the Sydney Morning Herald that Australia's house prices were "dangerously dumb" and "asking for trouble" because many houses were now making more money than the people who lived in them.
"That's kind of God's way of saying: this thing's gonna blow," Richardson said.
6. Profiling David Rutherford's work
In the third of his series of interviews with the watchdogs, Shane Cowlishaw talks to the Human Rights Commissioner David Rutherford.
Rutherford explains why explains why violence, and gender discrimination, are New Zealand’s biggest problems.
He also points to another report coming out from his office this week on seclusion and restraint, similar to one issued earlier this year from the Ombudsman.
Rutherford sees violence as the country's biggest problem.
“Again, it’s an area where we don’t talk about the fact that most of that violence is gendered," Rutherford said.
"Unlike other countries it’s not racial, it’s men beating women, adults beating kids. That’s the hate crime in New Zealand.”
Here's Shane's full profile of Rutherford on Newsroom Pro from Friday.
7. $50 million bet on Kiwi soccer
Shane has also interviewed high profile employment lawyer Andrew Scott Howman about his new role on a powerful FIFA committee and the risks that New Zealand provincial football becomes a major focus for match fixers.
Surprisingly, games between local teams are closely watched by Asian sports betting markets.
Games being played in front of modest crowds at Nelson’s Trafalgar Park and Napier’s Bluewater Station attracted $50 million in bets last year, Shane reports. Most of that is coming from Asia, where football is the most popular sport to gamble on.
“Over 200 people are offering a book on Hawke’s Bay United playing Southern United, which is mind-blowing.”
8. One fun thing
Marches in support of science (and against the alternative facts wielded by the Donald Trumps of the world) were held all over the world over the weekend.
My favourite: 'I've seen smarter cabinets at Ikea'