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Professor Roger Bowden

The Pressure Points of Immigration

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Immigration is in the news all over these days: the US, Canada, Italy, the UK, and now in NZ, with our net immigration running at over 50,000 a year. True, many are Kiwis returning from Australia where employment prospects have diminished in the wake of the mining downturn. But either way, the economic impact has become embodied in soaring Auckland house prices and infrastructure bottlenecks, while the social impact is a looming concern. We are dealing with two problems here, not just one.

The economic gains from immigration have been well documented. Properly regulated, it augments the nation’s human capital. This needn’t all be high powered information ‘techos or entrepreneurs; it can refer to trades like carpentry (Poles in London) , ‘brickies and stonemasons (Italians in  Perth), or to Chinese business linkages (guan xie in the vernacular). If we get it right, the immigrants can be a source of financial capital.  Immigration is a terrific economic stimulus in itself; right now it is helping NZ ride out our own commodity price downturn. And let’s not forget the education industry, large slices of which are bottom feeding off S.E. Asian students. A cynical view, not too far from the truth, is that we’re not selling the quality of our education (‘conversion[1] Masters’  and similar degrees) so much as the right to look for a job here afterwards[2], get residence; and bring Mum and Dad over as permanent residents as well, something you can’t do in most other countries.

But there are downsides to immigration. Local resentment from being locked out of the Auckland housing market by high prices, some of it fuelled, directly or indirectly, by endemic S.E. Asian  corruption. And as an ‘oldie whose taxes, and the hard work of my forebears, have helped to pay for our infrastructure, it grates a bit to a have wealthy immigrants enjoy it all scot free. And then there’s the exposure to criminal activity from poor screening, including circumventable investment qualification regimes.

But perhaps the biggest risk we run is that of social alienation. It is at its most visible in North East Paris, Duisberg,  and in other European cities, migrant enclaves that have become no-go areas for outsiders. A further damaging  impact is the extremist recruitment (Isil, al-Queda etc.) that arises with disenchantment among the second generation, the sons and daughters  of immigrants. Resentment can go in the reverse direction, as when locals feel locked out of desirable residential neighbourhoods by the influx of wealthy Chinese. It’s already that way in upmarket Vancouver neighbourhoods like Kerrisdale or Richmond. And money can buy you US citizenship by birth; just buy a ticket there from China and bring USD50,000 with you for the laid on service when the birth is due.

It’s  hard not to feel the moral pressure, with all these graphic media images of North African or Myanmar boat people. As the first port of call in the Mediterranean, Italy is proposing that the EEC countries are all allocated a quota of the exodus from Libya, Algeria and other North African and Middle East countries. The UK is not technically required to comply, but even that will help to fuel the promised referendum on EEC membership, already driven by immigration resentment. It’s going to get worse, with the Middle East exploding into sectarian warfare and extremist violence, not to mention a potential Greek exodus as their economy collapses.

Technically speaking, the UN human rights convention we signed up to would demand that we take many more asylum seekers than we do. Apart from some local pressure from the Aussies to take some of their boat people, we don’t have that kind of urgency here in NZ. It helps being at the end of the world. So what can we do to help with the kind of problems we are already recognising? Here are some modest proposals.

  1. If too much inward migration is a problem, encourage outward migration. One easy way to do that is to allow our retirees full portability of their NZ Super entitlement across the ditch to Australia. At the moment that is not possible and I’ve never understood why, for it requires no bilateral agreement with the Aussies. This would solve two problems at this end. Selling the Auckland house would help relieve the housing shortage. And not having to cater for quite so many old age health problems would relieve pressure on our medical system. If necessary, an additional qualifying NZ residence period could be imposed for trans-Tasman portable NZ Super. To be sure, there are details to consider, but no matter which way I think of it, allowing unilateral portability is a dominant strategy.
  2. Buying a residence should be made much more stringent. Technically, it’s true that there is a limited annual quota on this category, but remember that in due course just about the whole extended family can come along as well. And they all want to live in Auckland. Current rules require NZD1.5million or more. But just about any form of investment qualifies, and buying NZ equities or bonds certainly does not require anybody to reside in NZ. Why not stipulate that wealthy immigrants who want to live in Auckland should invest in special infrastructure bonds, with a minimum holding period? Similar remarks apply to backdoor immigration under free trade agreements, such as that currently contemplated with Korea. In such cases we should copy the Australian regime, which limits residential investment to new houses or developments.
  3. The immigration points system needs a review. Points could be awarded for where you intend to live, with supporting evidence that you will stay there for a while. Training and education points should be more selective for technical skills or STEM subjects.

On the face of  it,  with a population density of only 18 people per square kilometre we are well off, certainly when compared with the UK  at 265. The trouble is that everybody wants to live in Auckland, with its unworkable transport and emerging social problems. It’s a mix that requires a fix.


[1] A ‘conversion Masters’  programme rebadges first or second year undergraduate courses.  It’s a money  making opportunity that exists because of a badly designed CUAP proposal review process, which roughly runs: “I won’t vote yours down, on the tacit understanding you don’t mine”. Mediocrity by mutual consensus, with no independent expert review.

[2] Two years to do it, if they’ve completed an Accountancy conversion Masters.