By Michael Reddell 09/04/2016 3


A reader pointed me to an article on the NBR website in which Science and Innovation Minister [isn’t there something wrong when we even have a government “innovation minister?]  was quoted as telling a business audience yesterday that:

more migration is the only way to bridge the current skills gap for ICT companies in New Zealand.

and

“That’s one of the reasons I’m leery of calls to halt immigration – apart from the fact there’s not much reason to because of the economic gains,” he said.

In the last fifteen years, we have had huge waves of immigration,  under both governments, and yet there is not the slightest evidence of economic gains accruing to the New Zealand population as a whole.  Tradables sector production per capita has gone nowhere in fifteen years, productivity growth has been lousy, and there is no sign of any progress at all towards meeting Mr Joyce’s own governments (well-intentioned but flawed) exports target.

And yet the Minister’s answer is even more immigration.

My simple question to Mr Joyce would be along the lines of “what evidence can the Minister point to suggesting that the very high rates of immigration to New Zealand in recent decades have done anything to lift productivity in New Zealand, or lift the average per capita incomes of New Zealanders?”.

MBIE officials and Ministers of Immigration talk of immigration as a “critical economic enabler”, but in the papers they released last year, there was nothing remotely akin to evidence that the programme has enabled anything very much –  we have a bigger New Zealand as a result, but no evidence that it is a richer or more economically successful one.  Mr Joyce and the other MBIE ministers have huge resources, staff and budgets, at their disposal.  Surely they should be able to point to clear demonstrated economic gains for New Zealanders as a whole from such a large government intervention.  Our non-citizen immigration programme is already one of the largest (per capita) in the world.  Citizens might reasonably ask for evidence that such an outlier programme has benefited them before considering calls from Ministers for “even more immigration”.

An unfortunate experiment?

In the last 100 years of New Zealand economic policy history there has been a weird disinclination to trust New Zealanders and their ability to take on the world and succeed themselves.  The Labour Party from 1938 put in place huge protective barriers, as if we could only prosper by turning inwards and producing everything from tennis racquets, TVs, and cars here just for the domestic market.

It rook decades to unwind that policy.  And for the last 25 years, National and Labour governments have seemed discontented with the New Zealand population, and the skills, energies and expertise of our own people, turning instead to large scale immigration programmes as some sort of enabler/transformer.  25 years on, there is no more evidence that this unfortunate experiment has been much more beneficial to New Zealand than the protective barriers of earlier decades (or for that matter the Think Big programme of an earlier rather-too-interventionist National government).

But perhaps Mr Joyce can point us to the evidence that guides his interventions?

 


3 Responses to “A question for Steven Joyce”

  • My simple question to Mr Redell would be “what evidence can he point to suggesting that if we had very low rates of immigration, or even zero rates of immigration, to New Zealand would done anything to lift productivity in New Zealand, or lift the average per capita incomes of New Zealanders?”. 🙂

    I think the answer lays elsewhere, such as the non-tradeable sector (over regulation, too many resources absorbed by local and central govt) than immigration. Or if it is in immigration perhaps you need to look closely at the mix of immigrants in that time period.

    The tradable sector is dominated by agriculture where by definition it is hard to extract vast amounts of productivity, there are only so many cows and sheep to the acre, and most are family run businesses where apart from some minor technical advances there are no great leap forward to be had , like America industrialising in the 19th century.

    But I agree Joyce’s comments are pretty facile both on IT and immigration but I would rather have immigration than not..just look again at America in the 19th century..as they say “The Scots built the world”

    • The evidence I can point to is our above average interest rates. For decades, serious analysts of NZ have agreed that in the short-term immigration puts more pressure on demand than supply, tending to raise interest rates and, in turn, raise the exchange rate.

      Having said that, our immigration policy is so unusual internationally that I think there is a strong onus on the advocates of that policy to point to the economic benefits. If we were running an immigration programme of conventional scale it might be reasonable to think there was an equal responsibility on both sides of the debate.

      Also, Joyce has 5000 staff and huge budgets, incl for research, while I’m a semi-retired individual : one might reasonable expect hard evidence from the well-resourced.

  • The Labour Party from 1938 put in place huge protective barriers, as if we could only prosper by turning inwards and producing everything from tennis racquets, TVs, and cars here just for the domestic market.

    We shouldn’t need the protective barriers but we do need to set some standards (same minimum wage, same health care, same environmental protections etc)f or other nations to meet before we trade with them. This sets a level playing field that free-trade agreements fail to achieve. Under such conditions trade will naturally minimise as it should.

    Also we should be producing everything that we need here. That’s actually how you develop an economy. Trade doesn’t do this as we’ve learned over the last thirty years of neo-liberalism. In fact, trade as it is causes stagnation in our economy making us too reliant upon commodity exports.

    Muldoon’s Think Big wasn’t a bad idea and certainly set us up to succeed now. If he hadn’t done it our economy would be years behind where it is now and even with it we’re actually going backwards. No, the problem with Think Big wasn’t what was done but that Muldoon borrowed money from offshore to do it. Would have been far better if he’d simply created the money. Would have worked and wouldn’t have left us in a huge amount of debt.