7.4  Increasing the size of the Immigration Programme

If bringing in skilled migrants can contribute to economic growth through participation, population and productivity levers then perhaps consideration should be given to significantly increasing the size of the Immigration Programme. The New Zealand Immigration Service has advocated a cautious and measured approach to setting the level of residence approvals. Currently residence approvals are sitting around 50,000, but is there any particular reason for choosing that figure? In the past two years in New Zealand the policy debate on the number of migrants coming into New Zealand has focused more on the changing face of New Zealand society and associated concerns around social cohesion rather than any economic benefits that may be conferred to the host community.

A related question is whether an increase in the size of the migration programme necessarily needs to be an increase in the skilled migrant category or whether reducing the entry qualifications to allow in lower skilled workers would also provide greater economic benefits. It is suggested that despite the potential economic benefits that may be reaped from an increase in migration there are valid reasons for not doing this. One of the reasons postulated by the Immigration Service is stability in the NZIP. Stability in desired approval levels sends positive signals to potential migrants, New Zealand industries and employers about government’s commitment to an active NZIP in the medium and long term. Stability enhances confidence in immigration, thus assisting in marketing New Zealand as a destination. Stability assists the NZIS to maintain the capacity to deliver immigration outcomes. There would be logistical difficulties and costs associated with increasing or reducing the NZIS’s operational capacity to deal with large increases or reductions in the level of approvals on an annual basis. Stability also assists other central, local government and other organisations to plan and maintain their capacity to carry out their functions (ranging from housing infrastructure to transport, day care services, education, health to evaluation of qualifications). This in turn assists in the delivery of immigration and settlement outcomes.

There are two aspects to the desire for stability that should be teased out. There is a difference between stability in total numbers of the Immigration Programme versus stability in policy and entry requirements. Stability for the sake of stability is not a strong reason for not increasing the size of the programme, as all that would need to be done would be to increase the size of the programme over a five year period which would provide sufficient notice to local and central government for their planning services. Infrastructure is usually viewed over a longer time horizon, so if necessary the Programme could be stepped up over a ten-year period. It is suggested that the related settlement arguments provide a more serious constraint on restricting immigration. This is not for pure economic reasons, but is related to a concern of possible social fragmentation.

In October 2003 the New Zealand Government developed a national immigration settlement strategy which sets out a programme of action for settlement outcomes that promote social cohesion. Social cohesion was included as part of this review in an effort to focus on the social effects of migration on the host community in addition to the economic effects.

Social cohesion is broader than migrant and refugee settlement. It involves a climate of collaboration so that all groups have a sense of belonging, participation, inclusion, recognition and legitimacy. The current government has identified a need for a greater understanding and monitoring of the stage of social cohesion.

The National Immigration Settlement Strategy proposed six goals for migrants and refugees and their families. The goals are that migrants and refugees and their families should be able to:

• obtain employment appropriate to their qualifications and skills;
• are able to access appropriate information and responsive services that are available to the wider community;
• are confident using English in a New Zealand setting or can access appropriate language support to bridge the gap;
• form supportive social networks and establish a sustainable community identity;
• feel safe expressing their ethnic identity and are accepted by, and are part of, the wider host community; and
• participate in civic, community and social activities.

The priority goals for additional financial investment via the 2004 Budget were the first three goals listed above.

Any decisions on whether to increase the size of the Immigration Programme need to take into account the absorptive capacity of the host society, both in terms of pressure on infrastructure and services as well as impacts on social cohesion. As stated by Chapple (Chapple and Yeabsley 1996), one simple answer to why migration is limited is that there is a binding constraint of some form of social acceptability. The crux of the problem may be that migrants bring change which is highly visible, and by limiting migrant inflows the native population’s tolerance for change is not overstretched (Chapple and Yeabsley 1996).

Quantum of the Programme is also important as the literature indicates that migration adds more to aggregate demand than to aggregate supply (Chapple and Yeabsley 1996). As a result it is likely that migration has some inflationary pressure. The increase in demand for housing caused in part by migration to Auckland has had an impact on housing prices. Increased inflationary pressures can add to the likelihood that the central bank will act to control inflation by increasing interest rates. Net migration over 2001-2002 proved stronger and more sustained than anticipated by the New Zealand Reserve Bank. In the December 2003 Monetary Policy Statement the Governor stated that exchange rate appreciation combined with weakening migration flows was beginning to reduce pressure on the economy’s resources which in turn was beginning to reduce domestic inflation (Reserve Bank of New Zealand 2003).