2.2  21^st Century trends

2.2.1  Demand for residence and temporary permits

Demand for residence was strong in New Zealand over the 2000-2005 period leading to a high level of approvals. Changes to the skilled/business stream in 2003 seem to have led to an increase in residence approvals under this category, despite a dip in 2003/04. The higher approval numbers in 2004/05 were a result of a combination of factors including prioritisation of SMC applications, low SMC decline rates, successful marketing initiatives in key markets and a slightly higher average family size.

Under the current system approximately 60 percent of places in the Immigration Programme (NZIP) are allocated to a skilled/business stream, 30 percent to a family sponsored stream and 10 percent to an international/humanitarian stream. If the full quota is not taken up under either the family sponsored or international/humanitarian stream, the places can be reallocated to the skilled stream.

The final total residence approvals for the 2003/04 Immigration Programme are set out in Table 1 below.

Source: New Zealand Immigration Service (2005)

In 2002 the Immigration Programme was set at 45,000 (+/- 5,000 places). This level was identified as an appropriate numerical constraint on residence migration for the next three years. In 2002/03, however, the programme was raised to 50,000 to meet excessive demand. Concern has been voiced in the media regarding the relative decline in skilled/business approvals in 2003/04 relative to previous years. This decline is likely to be a result of the transition to the new SMC and to the higher quality standard required of migrants under the SMC. The results from 2004/05 show that this concern is unfounded, with a significant increase in approvals in the skilled/business stream from 20,596 approvals in 2003/04 to nearly 30,000 in 2004/05.

The figure below shows trends since 1995/96 in the residence categories.

Figure 1 – People approved for residence compared with the NZIP from 1995/96 to 2004/05

Demand in temporary categories has also been high. Work permit numbers have increased substantially since 1997/98 from 26,336 to 66,827 in 2002/2003. The majority of this increase can be attributed to more skill shortage permits being issued and an increase in working holiday scheme visas. In the six months to 31 December 2003 over 35,000 individuals were granted work permits. 38 percent of these were granted for the purpose of filling a skill shortage in New Zealand (New Zealand Immigration Service 2004). The majority of those applying for work visas are high skilled people.

The impacts of migration for the labour market are significantly affected by trends in work permits. This is discussed further under the sections on labour utilisation and labour productivity.

2.2.2  Net migration trends

New Zealand’s net migration figures can be quite volatile. 2002 was a key turning point as there was a rapid turnaround from negative to positive net migration. New Zealand has remained a net recipient of migrants since that period.

Very high movements of people (both in and out) typify New Zealand’s net migration statistics. Permanent and Long-term (PLT) net migration records the balance of migrant inflows and outflows for 12 months or more. NZIS data records applications and approvals for permanent residence, and student and work visas.

In the 12 months to the end of May 2002 there was a permanent and long-term net migration gain of 31,231 people compared to a net loss of 11,114 for the previous 12-month period. In the 12 months to the end of May 2003 the gain spiked at 42,541 and dropped to a net gain of 23,983 to May 2004 (Statistics New Zealand 2003). Since this time net migration has continued to fall. These figures clearly indicate why the government’s immigration programme is not linked to any net migration targets.[5] With the existence of largely demand driven categories such as student and work permits and the free movement of New Zealanders out of the country, any attempt to reach a net annual target would not be feasible.

Figure 2 – Monthly PLT Arrivals and Departures

Source: Statistics NZ.

An increase in departures and slowdown in the arrival of overseas students led to a decline in net migration over 2005. Possible reasons for this were improved economic prospects overseas and an improvement in the perception of safety overseas. Up to February 2006 there was a slight drop off in departures of both New Zealand and non-New Zealand citizens. Monthly arrivals remain volatile with an upward trend, despite a drop off in January 2006. Arrivals from the UK are dominating the increases.

Generally, the state of the New Zealand economy has a large impact on net migration changes. A large proportion of PLT departures (people who intend to leave for at least one year) tend to stay away for longer when NZ is in a recession and there are people who category jump (ie people who don’t intend to stay away for a year switch categories) in response to the economic conditions of the day.

Net migration is strongly influenced by emigration as it plays an important role in exacerbating certain immigration effects. The number of New Zealanders permanently leaving New Zealand has been steadily increasing since the early 1990s, but high levels of immigration have masked any effects of this emigration. In the year to June 2001 there was a net loss of 41,000 New Zealand citizens. However, with a net gain of 31,000 non-New Zealanders, the overall net migration loss was only 10,000 people (New Zealand Ministry of Economic Development 2003). From 2001-2004 the return migration of New Zealanders has been at its highest recorded levels. Emigration is discussed in more detail in Section 5.

2.2.3  Composition Trends

The inflow of migrants affects the composition of the New Zealand population, for example new and recent migrants have a smaller proportion of people in the younger and older age groups (NZIER 2003). Migrants also affect the ethnic composition of New Zealand. Asia currently dominates as the region of origin for migrants. In 2001 one in five of New Zealand’s working-age population was born overseas. This proportion rose to one in three in Auckland. The 2001 census found that there were nearly 230 countries represented in the birthplaces of people usually resident in New Zealand.

As noted above, it is important to look at the levels of temporary migration, which have become increasingly significant as a proportion of total arrivals in New Zealand in the past few years. Strong work permit numbers are a key source for the permanent residence skilled category, particularly under the new SMC. Work permit numbers are also likely to be more sensitive to current conditions relative to competitor countries than other categories as temporary workers are usually more flexible and may substitute other similar countries with better conditions.