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New Zealand's current situation

How open?

Foreign-born Population - % of total population, 2005
Foreign-born Population - % of total population, 2005.
Source:  OECD
Travelling to and from New Zealand is often visa-free. Australian and New Zealand passport holders may travel or work in either country visa-free. New Zealand has reciprocal visa-free arrangements for up to three months with over 50 countries. New Zealand business travellers are eligible under specified visa-waiver schemes, and accredited business people can enter 18 economies visa-free with the APEC business travel card. New Zealand has working holiday schemes with almost 30 other countries.

Immigration for skilled migrants is subject to a points system. 60% of residence places are granted to skilled/business migrants (including family members), with the remainder under humanitarian and family-sponsored categories. A large proportion of migrants are not subject to explicit skills screening, such as Australian residents, returning New Zealanders, and spouses of skilled migrants. However, with low illegal migration, New Zealand is well-placed to implement selection policies where appropriate. A separate category for investor migrants is also available.

Transport to and from New Zealand is costly given geography. Relative to other advanced countries, transport to and from New Zealand is relatively higher cost and lower frequency. Air is effectively the only mode of transport for people, given geographical isolation, fuel costs are higher given geographic distance, and competition is relatively lower, given the smaller population base.

How well connected?

New Zealand has relatively high flows of travellers. On a per person basis, New Zealand receives about twice the visitors Australia does. The main sources of travellers are Australia (37%), UK (12%), USA (9%) and Japan (5%). Visitors from Asia make up 21% of New Zealand's visitors, compared with 40% of Australia's. Most visitors come for tourism and visiting friends or relatives. New Zealand's main attractions as a tourist destination include the country's scenery and reputation as being safe and relatively inexpensive. The main destinations for New Zealand travellers are Australia (50%) followed by Fiji (5%), UK (5%), and USA (5%).[36]

International students are a significant part of temporary migration. Between 2005 and 2007, 12.2% of migrants came to New Zealand to study.[37] New Zealand has more foreign students as a proportion of all enrolled students than any other OECD country except Luxembourg.[38] Nine percent of permanent migrants move to residence directly from a student visa.[39]

The flow of migrants is relatively high. New Zealand has relatively high flows of migrants in and out, while the long term trend is for a small net inflow. To illustrate the importance of immigration to labour supply: between 1996 and 2006, New Zealand would have had no population growth without immigration, and immigration accounted for half of overall employment growth.[40]

The foreign-born population is also high. Consistent immigration has resulted in a large stock of migrants: 23% of the population was born overseas according to the 2006 Census, compared with 18% in 1996.[41] The main source countries are UK and Australia, but over the last ten years immigration from China, India, and Korea has increased markedly. The vast majority of migrants approved for residence have been to New Zealand before,[42] highlighting the links between short-term travel and long-term migration.

Diaspora - % of total population, 2001
Diaspora - % of total population, 2001.
Source:  Bryant & Law (2004)

Migration broadly represents a ‘brain exchange'. Both immigrants and emigrants tend to be highly skilled.[43] Immigrants typically have higher education levels than New Zealand-born residents, while more than half of emigrants are classed as highly skilled. The overall ‘brain exchange' can mask skill shortages in particular sectors and varying levels of labour market performance. Immigrants tend to underperform natives, but New Zealand emigrants tend to outperform natives. Trans-Tasman migration is, however, broadly representative of the overall population, as might be expected given that residents are completely free to move between Australia and New Zealand.

The diaspora is large, but concentrated mainly in Australia. Relative to population size, New Zealand's diaspora is large compared with other OECD countries, at about 14% of the population. The skilled diaspora is the largest in the OECD: 24% of skilled New Zealanders live abroad.[44] The vast majority, almost 80%, live in Australia – around 11% of all New Zealand-born people.[45] Significant numbers also reside in the UK, USA, and Canada.

Immigrants come mainly for lifestyle and family, while emigrants leave for job opportunities. While motivations vary, surveys suggest that the main ‘pull' factors to New Zealand are lifestyle, the climate and clean, green environment, safety and security, and to provide a better future for their children. The main ‘push' factors are job opportunities and standard of living.[46]

Potential adverse consequences

High immigration can reduce social cohesion, at least in the short term. In New Zealand, over half the foreign-born population resides in the Auckland region, creating the potential to reduce social bonds, particularly if immigrants tend to settle in separate geographical communities. These negative effects may be able to be overcome, however, by constructing broader identities (e.g. what it means to be a ‘Kiwi') and creating new forms of social solidarity.[47]

Foreign students enrolled in tertiary education - % of all tertiary enrolment, 2006
Foreign students enrolled in tertiary education - % of all tertiary enrolment, 2006.
Source:  OECD
Immigration could put downward pressure on native workers' wages, depending on conditions. Standard economic models suggest that an influx of foreign workers is associated with reduced market wages and increased returns to capital.[48] The degree to which this occurs and the relative strength of the effects depend on a number of factors, such as the skill difference between immigrant and native workers (more difference, less effect) and the elasticity and ownership of capital.

Notes

  • [36]Data from this paragraph is from Statistics New Zealand (2007a) and Statistics New Zealand (2007b).
  • [37]Statistics New Zealand (2007c)
  • [38]See OECD (2008d), Table C3.1.
  • [39]Harkness et al (2009)
  • [40]This result is based on data from Statistics New Zealand and Treasury calculations.
  • [41]Statistics New Zealand (2006). Note that the chart on the previous page uses OECD comparator data that is not based on New Zealand’s latest Census data.
  • [42]Statistics New Zealand (2008a) found that: “Most migrants (85.7 percent) had spent some time in New Zealand prior to gaining permanent residence, and over half (54.6 percent) had been employed in New Zealand before.”
  • [43]See Bushnell and Choy (2001), Glass and Choy (2001), and Moody (2006).
  • [44]Dumont and Lemaître (2004)
  • [45]Bryant and Law (2004)
  • [46]For example, see Inkson et al (2004), KEA (2006), and Statistics New Zealand (2008a).
  • [47]See Putnam (2007).
  • [48]For example, the Australian Productivity Commission (2006) simulated a 50% increase in skilled migration and found that the aggregate real wage increased by 33% between 2004/05 and 2024/25 in the base-case simulation, but the real wage was 1.7% lower by 2024/25 in the increase migration scenario relative to the base case. See also Borjas (2000).
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