Judging the great immigration reset

When our industries are screaming out for workers, why is the government set on slowing immigration down?

In the early-2010s, New Zealand - like much of the world - was reeling from the economic devastation of the global financial crisis. 

Just a couple of years later, we were being hailed by the chief economist of a major global bank as the "rock star" economy of 2014. 

There were lots of reasons for this, of course - boiling it down to a single factor is impossible. 

But one of the big ones was our high levels of immigration: between 2010 and 2017, Aotearoa had a net influx of about 50,000 people every year. 

These arrivals helped fill skills shortages, but critics say a failure to scale up infrastructure to meet the needs of a growing population contributed to strain on the housing market and health system. 

In addition, many low-skilled migrants were taken advantage of by unscrupulous employers. 

During the 2017 election campaign, Labour promised something of an immigration reset: slicing the number of migrants coming in by 20,000 to 30,000 people a year to relieve the pressure on infrastructure. Bringing in a greater proportion of high-skilled workers in that lot would also develop a more high-value, high-wage economy.

Once elected, the party didn't have to do much to hit that target - Covid-19's arrival took care of it. 

But now, five years on from getting into government, Labour is putting its immigration rebalancing into action.

But what does it mean for the economy?

"At a simple level, more people in an economy means more activity, more growth, more GDP," NZ Herald business editor-at-large Liam Dann says.

"The flipside is that GDP is a nice number to have growing, but per capita GDP is our personal wealth, and that didn't grow as much [in the first half of the 2010s].

"Also, if you've got a lot more people coming into the economy, you need to be investing in infrastructure - building more houses, your roads are getting filled up - and so that has to happen, and I guess you could make the case that it didn't happen fast enough."

Dann says during the early-to-mid-2010s, the country was relieved to be tracking in a positive economic direction, and perhaps ignored some of the warning signs that infrastructure and housing supply might not be coping with the relatively sudden influx of people until it was too late. 

Labour's rebalancing plan, announced earlier this year, provides incentives for people working in certain roles and industries to migrate here.

A 'green list' of highly-skilled, in-demand jobs was written up: migrants working in these roles could get residency immediately - things like geotechnical engineers, GPs, psychiatrists, vets, and ICT managers. 

Another list was also drawn up: migrants who could apply for residency after two years, including teachers, nurses, midwives, audiologists, plumbers, and diesel mechanics. 

There are, however, exceptions: some industries which rely heavily on overseas workers - for example, hospitality and tourism operators - have more wage flexibility, but still have to offer overseas workers a minimum of $25 an hour. 

And in August, the government announced the list of exceptions would be expanded to include workers from the aged care sector, construction, meat processing, seafood and tourism.

This led to criticism that the immigration rebalance was closer to shuffling deckchairs. 

Dann says while the government does retain the philosophy that New Zealand needs to prioritise which people to allow to live in the country in order to be a more productive economy, the global labour market is so turbulent at the moment that now probably isn't the right time to be too restrictive when it comes to migration.

Other countries hit hard by the pandemic are competing with New Zealand for skilled workers to fill shortages in their labour markets, Dann says, and decision-makers need to strike a balance between aspiration and pragmatism.

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