0:06

Kiyoda. I'm Damien Venuto. It's February twenty

0:08

third, and this is the front page. A daily

0:11

podcast presented by The New Zealand Herald.

0:16

It wouldn't be an election year without a discussion

0:18

about the movement of people in and out of

0:20

the country. Massive worker shortages

0:22

across numerous industries have led to call for

0:25

more immigration. But on the other side

0:27

of the debate, there are also concerns about

0:29

our infrastructure capacity. This

0:31

too and Fro has long made immigration

0:33

political foot or kick between the parties.

0:36

But what does a good long term strategy

0:39

actually look like? And is there anything

0:41

we can learn from other countries? Doctor

0:43

Eric Crumpton, the chief economist with the New

0:45

Zealand initiative is with us today

0:47

to look into whether our data is getting

0:50

the immigration balance right. Eric,

0:54

what are your thoughts on our current immigration

0:56

policy and our current approach to immigration

0:58

in New Zealand?

0:59

Current policy is a mess, and I think it really

1:02

comes down to broken infrastructure funding

1:04

and financing models and how local government

1:06

has run. So for a long time,

1:08

the government was accepting a lot more migrants. We're

1:10

very welcoming for migrants. It was great.

1:12

I came here in two thousand and three as part

1:14

of that. Things ramped up afterwards. The

1:17

problem we got into though was that

1:19

when councils can't keep up with infrastructure

1:22

and where they see a few of the benefits that central

1:24

government gets when we've got more active labor

1:26

markets and more people coming in, then

1:28

the politics around immigration turns toxic.

1:31

You'll remember during the twenty seventeen election

1:33

when they're they're thinking about trying to

1:35

count the number of Chinese sounding names, for example,

1:38

at House auctions. And you don't see that for anything

1:40

else. Right? We never talk about migrants stealing

1:42

all the cars or taking up all the

1:44

slots at the hairdressers. Because in

1:46

those areas, Well, things just expand

1:49

to meet demand. Right? But for the constrained

1:51

by local government is kind of turned it into

1:53

a zero sum game where Nobody

1:56

could keep up with enough houses because NZ wasn't

1:58

laying out enough infrastructure for them, and that

2:00

led to a politics of resentment around

2:02

migrants. And then, as a consequence,

2:05

toxic immigration policy. We need to

2:07

get these things fixed. This debate is always

2:09

about how many people are coming into New Zealand,

2:11

but let's take it down to a level even

2:13

lower than that doesn't need even need more

2:15

people coming in at

2:16

all. And if so, why? I think it's still

2:19

the wrong way of thinking about it. Doesn't need it'll

2:21

need to have more barbershops Does New Zealand need

2:23

to have more dairies? It's it's the wrong way of

2:25

conceptualizing the question. In a lot of

2:27

these kinds of cases, the right number is the

2:29

number that just emerges if you've got process

2:32

is right. So right now, I think

2:34

our policies are wrong, and we've gotten the

2:36

wrong low number as NZ of

2:38

it. We shouldn't be trying to think about this as

2:40

either targeting population numbers or targeting

2:43

larger or smaller numbers of migrants. It's

2:45

more having an enabling policy so

2:47

that people come here, bear their own

2:50

cost of getting here and are able to

2:52

help contribute rather than trying to

2:54

pick a number.

2:55

Labor is set to release a visa to boost

2:57

the workforce to help with the rebuild following

3:00

the cyclone

3:00

damage. Do you think that's a good sip? Absolutely.

3:03

So we've done that during the Chrysler

3:05

earthquake. There was a Canterbury Recovery

3:07

Visa where a lot of skilled migrants were able

3:09

to come in. They'd set a specialized killed

3:12

migrant shortage list for the category

3:14

rebuild. I was on campus in Christchurch

3:17

at the time and it was hard to walk across

3:19

campus without hearing a lot of Irish acts NZ

3:21

floor roll vests. So they were having a big

3:23

construction downturn and at the same time as we

3:25

needed a whole lot more workers. So that was great.

3:27

But it shouldn't just be these emergency

3:30

surges because those don't really work. The

3:33

Christchurch surge came in well,

3:35

immigration policy had been fairly NZ,

3:38

and New Zealand was seen as a welcoming place.

3:40

Over the past several years, instead, we've earned

3:42

a bit of a bad reputation among migrants

3:44

where Immigration New Zealand doesn't work

3:46

very well. Vases get kind of piled

3:49

up, sometimes lost. They've lost the

3:51

consumer service kind of focus that they

3:53

had at least in the two thousands and

3:55

early twenty tens. So getting

3:57

those background bits right would

3:59

also be really helpful and encouraging people

4:01

to come here helped with the recovery

4:04

in Hawks Bay. And really,

4:06

maybe staying here for the longer term, one of the

4:08

tragedies that we had after a CRISIS rebuild

4:11

is that we weren't able to encourage a lot of those

4:13

construction workers to stay because we need to have a lot

4:15

more houses in Auckland

4:16

too. Right? It should have turned into a rolling

4:18

mall of getting a lot we're building everywhere.

4:21

Eric, the economy of travel build, Yacoburites, and

4:23

he said on this podcast that our immigration

4:26

policy has largely been done on an ad

4:28

hoc basis as you just mentioned. When

4:30

it comes to immigration, we'd seem to do it

4:32

in fits and stats. We don't

4:34

have a really comprehensive plan

4:36

for dealing with our aging

4:39

population, our skill shortages,

4:41

and all those kinds of things with immigration

4:44

as a important

4:46

lever. Instead, what we tend to do is

4:48

when things feel good, public basically,

4:50

we ramp it up. So why do

4:52

you think there is such a lack of long

4:54

term planning and political consensus when

4:56

it comes to this issue?

4:58

Politicians react to public sentiment,

5:00

and whenever you are in a downturn,

5:02

people start seeing migrants as competitors

5:04

for jobs or competitors for wages. And

5:06

if housing markets are fundamentally broken,

5:09

then voters see migrants

5:11

coming in as stealing the house that they might have

5:13

gotten or that their kids might have needed.

5:16

So that builds a toxic

5:18

environment for the politics around

5:20

migration where whenever there's the slightest

5:22

pressure that way, government is tempted

5:24

to clamp down. That again points the

5:26

need to get those longer term

5:28

settings, right, around infrastructure policy,

5:30

around local government funding and financing.

5:33

You have been quite critical of setting a population

5:35

target saying that we need this number of people

5:37

and then working toward a certain

5:39

population

5:40

level. Why don't those targets work?

5:42

Again, you're trying to pick a number where the

5:44

right number is the one that emerges if you've

5:46

got the processes right. So it's

5:48

that of a fundamental error in thinking

5:50

about things. But even within the context

5:53

of, well, let's say, we've picked a number, you

5:56

can get some perverse implications of it.

5:58

So for example, say that you'd picked a target

6:00

number for population, say that

6:02

we're having a downturn here, and a lot of

6:04

Kiwis have gone overseas to find work. Well,

6:07

if you've got a population level target,

6:09

then that would say, well, let's let a whole pile more migrants

6:11

in and lower the threshold and make it really

6:13

welcoming at a precise period when

6:16

we're having a downturn. On the

6:18

flip side, if things are booming

6:20

here and the million Kiwis who live abroad

6:22

are all coming home, because they're attracted

6:25

by, well, booming conditions, then

6:27

you're telling other migrants at the

6:29

time. Well, sorry, you can't come in now because too

6:31

many Kiwis are coming home, but that's exactly the

6:33

time when you would want more people coming in

6:35

because things are booming and you really need

6:37

a lot more help. Western Australia is currently

6:40

making a major push to attract more than thirty

6:42

thousand workers to the region. The

6:44

group are coming armed with promises of

6:46

sunshine, lower energy bills,

6:48

and higher pay. Nurses in Western

6:50

Australia are able to earn almost

6:52

three fifths more than that British counterparts.

6:55

Why are they doing that? And could Audeo's

6:58

more conservative immigration approach end

7:00

up hurting the economy in the longer

7:01

run. I don't know enough about Western Australia

7:04

in particular. I expect that they

7:06

are hitting the same sort of skill shortages that

7:08

everybody has been hitting. There's been a combination

7:10

of shocks where reserve banks around

7:13

the world have been fairly loose with monetary policy.

7:15

That's been tightening up now, but that has meant

7:17

a lot more demand for workers. At the same time,

7:19

we've had lots of supply side shocks

7:21

hitting global economies, changing

7:24

relative demand for different types of workers and

7:26

different types of skills. And one of the quickest

7:28

ways of trying to ease those shortages

7:31

is letting skilled migrants move from places

7:33

where they're no longer quite as needed

7:35

to places where they're skills are in really

7:37

strong demand. So enabling that makes

7:40

for more flexible responses to changing

7:42

conditions. At the same time, you will

7:44

have firms that just need to have more

7:46

workers to get any job done. You've

7:48

got more people who have been taking sick leave,

7:50

some who may be shipped acting from full time to

7:52

part time work because of long COVID issues,

7:54

it'd be a fairly small number, but nobody seems

7:56

to be tracking it. All of that means that firms

7:58

have more demand for workers. They need more workers

8:01

to get same jobs done and there's been changes in the

8:03

jobs that need to be done. So we really

8:05

do wind up hurting ourselves if we prevent

8:07

those migrants from coming in and assisting

8:10

with getting those jobs done. And what

8:12

people view as skilled really need to

8:14

be changed. So there's always been this emphasis

8:16

on getting in, like, really highly educated workers,

8:19

but if you start recognizing that

8:21

migrant labor isn't really a substitute

8:24

for local workers, but a complement

8:26

to it, then you start seeing things differently.

8:30

A

8:30

recent story in the herald detailed the plot of

8:32

a mother of four New Zealand children

8:34

who was denied a resident

8:36

visa. What does that say

8:38

about the fairness of system when decisions like

8:40

that are made? One of the reasons that New

8:42

Zealand has been getting a terrible reputation

8:44

among migrants is just how we treat migrants.

8:46

So you've had a lot of people who have been stuck

8:49

here in a bit of a limbo for a long time. They

8:51

weren't processing NZ including

8:53

among people who were here on work visas.

8:55

And that has all kinds of terrible consequences

8:57

for people who are living here. Now when I'd first

9:00

moved here, I was on a skilled

9:02

work visa that had potential for shifting

9:04

into NZ, and I've been resident here for,

9:06

well, ever NZ. But you weren't

9:08

treated a second class. You were allowed to buy

9:10

a house if you wanted. You could live a normal

9:13

life here without feeling

9:15

like you were somehow beneath everyone else.

9:17

That changed a lot. So now

9:19

if you're living here as a migrant, you're not

9:21

allowed to buy a house, it's going to be harder

9:23

to settle in your community. But you've

9:25

also got sharp restrictions if

9:27

your kids turn eighteen, for example,

9:30

and you're in on a work visa rather than a NZ

9:32

visa, and government isn't processing residence

9:34

visa, you're stuck, your kid's not going

9:36

to have work rights nor will they

9:38

have access

9:40

to education here. So you'd be treated

9:42

as an international student rather than a domestic

9:44

student. Even if your parents have been paying

9:46

tax here for a while, it's a terrible

9:49

situation to put people into. New

9:51

Zealand's low wage economy has historically

9:54

been blamed on immigrants willing to

9:56

work for much

9:56

less. What did your response be to that?

9:59

Well, it's out of line with the international literature

10:01

on it. So the evidence

10:03

that we have out of lots of studies conducted

10:06

overseas is that if anything, migrants

10:08

have very small effects on the wages of locals

10:11

And there is more evidence for small

10:14

positive effects than there is for small

10:16

negative effects. Lots of study find

10:18

no effect at all. It seems pretty unlikely

10:21

that New Zealand would be all that different

10:23

and what evidence we do have out of New Zealand

10:25

and there's a lot less of it because we're a small

10:27

country and we've got a smaller research base

10:29

It's not inconsistent with the international literature.

10:32

So there was work by Dave Murray late

10:34

two thousands showing that

10:36

there was very little effect on the

10:38

wages of locals. They couldn't find

10:41

evidence of negative effects on wages or employment

10:43

opportunities. And if there were negative

10:45

effects it was more likely to be concentrated

10:48

in the really high skilled areas than

10:50

among medium skilled workers where there were positive

10:52

effects on wages. In any case, the effects

10:54

were small. Twenty twenty two work

10:56

from the productivity commission, again involving Dave

10:59

Murray, was showing that New Zealand

11:01

high skilled workers tend to be more productive

11:03

or do better in firms that have a higher

11:05

my and share. So again, migrant workers

11:07

being compliments to the native born workers

11:09

rather than substitutes for

11:11

them. I suppose that's been one of Labour's major

11:13

arguments in terms of keeping border restrictions

11:16

quite tight. And they've been pushing local

11:18

industries to pay local employees fairly

11:20

or increase the wages of local employees.

11:23

So how does that research

11:25

fit with Labour's policy, which

11:27

seems to be suggesting something completely

11:29

different. Well, all of it seems to be based

11:31

on what economists call the lump of

11:33

labor fallacies. So the idea that there's

11:35

just this fixed number of jobs out there

11:38

and that if some migrant comes in and

11:40

takes one of the jobs away from the lump There's

11:42

fewer jobs left for anybody else.

11:44

But migrants increased demand as well

11:46

as supply. So a migrant worker coming

11:48

in doing a job will be buying

11:50

goods and services here. So there

11:53

isn't a lump of labor. There's an expansion

11:55

in the number of jobs that need to be done if

11:57

migrants come here and all contribute to demand.

12:00

It's often NZ about whether migrants are putting

12:02

pressure on working conditions as well, but you have

12:04

to remember that we face an international market

12:06

So even for example, in fruit picking

12:08

RSE work, New Zealand has been losing

12:10

RSE workers to Australia in part because

12:12

of better paying conditions there. So So

12:15

even in cases where you're worried that all

12:17

while it's putting a lot of pressure to keep conditions

12:20

down and keep wages down, it's a global

12:22

market for migrants. People have choices

12:24

of where to go. And if employers

12:26

here aren't keeping up, then migrants

12:29

are not going to be choosing New Zealand over

12:31

other places. Even RSE workers

12:33

have choices of places where they might want

12:35

to

12:35

go, and New Zealand won't NewstalkZB if

12:37

we are not keeping up. Any

12:42

debate about immigration always conjures up

12:44

infrastructure NZ. So why has

12:47

our infrastructure battled to keep up with our

12:49

growing population over the last few decades?

12:51

Longer than we can get into properly here,

12:54

but the short version of it is that

12:56

local government funding and financing convinisms

12:59

were fundamentally broken in the vasset

13:01

reform a few decades ago. So where

13:03

councils used to be able to issue special

13:05

purpose debt to fund and finance

13:07

piece of infrastructure kit that is backed by revenues

13:10

from those who were benefited by the kit.

13:12

Everything turned into sort of general obligation

13:15

debt. For councils. Now when a council gets up

13:17

against its debt limit, it simply

13:19

can't put out infrastructure to

13:21

meet demand. The payback period for it

13:23

is much too short, Now when that

13:25

gets combined with most

13:28

of the tax revenue benefits from migration

13:30

going to central government and the costs being

13:32

left with local governments, Again, you're left with

13:34

messes. NZ don't really know how

13:36

to fund and finance kit that they need

13:39

to accommodate growth. Central government

13:41

will often tell them please accommodate growth.

13:43

We benefit from it, but local councils

13:45

don't. So we need to start thinking about

13:47

revenue sharing mechanisms so that when

13:50

a city council or a region

13:53

does very well and contributes a

13:55

lot more to central government revenues

13:57

than it otherwise might have, that they get

13:59

a taste of that back. So I

14:01

live in Mandela in Wellington, and

14:03

we had a town hall meeting

14:06

about a Wellington NZ proposal

14:08

to allow up zoning. In our neighborhood.

14:10

And I supported it because I liked the idea of having

14:12

more neighbors, and I hate the idea of housing shortages.

14:15

But there were real concerns that were raised by a lot

14:17

of people in the town hall. And there's

14:19

not much that NZ could do about it.

14:21

So if the up zone and can

14:24

dial it, it didn't really bring them much more revenue.

14:26

Didn't have anything that they could do to improve

14:28

local amenities, to try and improve

14:31

things for preexisting residents, and

14:33

existing infrastructure constraints were only going

14:36

to be made worse. So it wasn't

14:38

made into a kind of a winning proposition where

14:40

it should have been. Right? Everybody does better

14:42

when you ease a housing shortage,

14:44

central government gets more revenues, people

14:46

have better lives. They're not stuck in

14:49

substandard accommodation or overcrowding, but

14:51

we've set things so that the

14:53

parts of government that wind up with

14:55

the bills don't get the revenues

14:58

to pay them.

14:59

Isn't the infrastructure issue also one

15:01

that's bit the chicken and the egg because surely

15:03

if immigrants don't come, we won't

15:05

have the motivation or incentive to build

15:07

the infrastructure in first place. So our infrastructure

15:10

will never grow sufficiently to accommodate more people

15:12

in any case.

15:13

Well, there's a bit of that, but we

15:15

do have a lot of crumbling infrastructure that's due

15:17

for refreshment. And you

15:19

would hope that if you're

15:21

digging the trench anyway to put in water

15:23

pipes, it's not that much

15:25

more expensive to put in a bigger pipe rather than

15:27

a smaller pipe because most of the cost is in the trenching

15:30

and all of the complicated consenting around

15:32

getting permissions for it. Making

15:34

sure that you upscale the

15:37

infrastructure to be able to deal with

15:39

migration to come, whether domestic or

15:41

international would make an awful lot of sense.

15:43

Now if you have

15:45

view that immigration should forever be tight

15:47

and that New Zealand should never have more than say six

15:49

million people.

15:50

Well, that just won't happen and we will always

15:52

be in this mess.

15:53

Eric, in your view, what would a

15:55

solid immigration policy look like in

15:57

the lead up to the selection? First priority,

15:59

I think, has to be making sure that immigration in

16:01

New Zealand is able to process visas

16:03

properly. So part of the reason

16:05

that New Zealand has gotten a very poor reputation

16:08

is that Well, immigration, New Zealand

16:10

has been stuck. They had a government

16:13

two thousand seventeen through twenty twenty

16:15

that was fairly hostile to migration,

16:17

but wasn't really changing policy much

16:20

around it. NZ, it looked like immigration,

16:22

New Zealand was more on a go slow around

16:24

processing.

16:25

National's immigration spokesperson, Erica NZ.

16:28

The biggest thing is just the amount of

16:30

residency places we've given out. That is the

16:32

one single biggest thing that holds

16:34

immigration New Zealand back. They work to a target

16:37

They have been on a deliberate go slow to meet

16:39

that low target. If you just up the

16:40

target, but meet that go slow.

16:44

Now you start treating people like that. Where

16:46

you're not processing your applications or

16:48

sitting on them for a while or maybe losing them,

16:51

you get very bad reputation among migrants

16:53

and especially among those who have choices of

16:55

places where they might want to live. There's a global

16:57

race for talent on Canada's sharply increasing

16:59

migration, and New Zealand now has

17:02

a pretty stink reputation. Fixing

17:04

that would be pretty good, and that has

17:07

to start with their direction to immigration

17:09

New Zealand and making sure they have the capacity

17:11

to get visa settings right. And just making

17:13

clear that New Zealand again is welcoming

17:15

to migrants the same way that we were

17:17

in the period leading up to twenty seventeen.

17:20

At the same time, and this is a far more minor

17:22

one, but it's one that I care about. New

17:24

Zealand recently put in a trial for

17:26

the sponsored refugees program that

17:29

Canada has been running. Whenever civil

17:31

society gets together and raises the money

17:33

to be able to help a new refugee come

17:35

into the country, find housing, acclimate,

17:37

get settled, then central

17:40

government lets one more refugee in.

17:42

So instead of people banging central

17:44

government to increase the quota and

17:46

put more central government money into it, they can

17:48

just fund raise. And then help more people.

17:51

So during Syrian refugee crisis,

17:53

the sponsorship regime in Canada

17:56

meant that they could accommodate tens of thousands

17:58

more refugees than they otherwise could have because

18:00

people wanted to help having a kind of

18:02

a flexible system rather than one that

18:04

relies on central government

18:06

putting in more money when there's a lot of competing

18:08

priorities for central government. That would be nice.

18:10

It would let civil society respond more It's

18:12

far less critical for overall economic performance

18:15

and sort of the big ticket

18:16

issues, but it could really help. Thanks

18:18

for joining us, Eric. That's

18:22

it for this episode on the front page. You

18:24

can read more about today's stories and extensive

18:26

news coverage at n zed herald dot co dot

18:29

n z. The front page is produced by

18:31

Sean D. Wilson with executive producer,

18:33

Ethan Sills. I'm Damien Venuto.

18:36

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