The New Zealand economy

It should also be stressed that immigration programmes have a beneficial impact on immigrants' countries of origin with the most tangible aspect being the value of remittances. The amount of money migrants from the developing world send back to their source countries, estimated in 2005 at $167 billion, exceeds the total of all international aid combined 16 and is a literal lifeline for many people in these areas. The other major benefit of an immigration programme is the cultural and ethnic diversity and vitality that new immigrants bring.

As Kasper points out, immigration is a key mechanism in overcoming the "entropy of closed, settled systems. " 17 In a small, relatively insular and formerly homogenous society such as New Zealand the arrival of new immigrants has been predominantly beneficial in this regard. Christchurch's mayor, Gary Moore, illustrated the point, when he referred to the "colour and vibrancy" immigrants can bring with them, which in turn lends a more cosmopolitan flavour to their new homes, and helps New Zealanders become "more comfortable with the wider world". 

While economic factors are generally regarded as a major benefit of immigration programmes, they are also cited as a major detrimental aspect. The most common contention, which populist politicians in a number of countries have appealed to, is that immigrants will displace native residents in the job market and will drive down wages by working for lower rates. However as Poot and Cochrane point out, the surveys of the empirical literature suggest "the effect of immigration on wages of natives is small, often negligible and sometimes even with a positive sign".

19 In relation to the argument that immigrant workers will displace natives in employment, a number of studies, reviewed in economist Julian Simon's work, found there was no across- the- board unemployment caused by immigrants, either in the US as a whole or in particular areas of relatively high immigration. 20 Similarly, in New Zealand, given our well-documented labour shortages and low level of unemployment, it is difficult to argue that immigrants are depriving natives of employment.

Argument is also advanced that immigration programmes can fuel inflation. This contention is currently provoking debate in New Zealand with the Reserve Bank wishing to reduce immigration to ease inflationary pressures. However, opinion in this area is divided, and in a recent article in the Dominion, economist Matt Nolan, examined the counteracting influences of immigration on the rate of inflation. Nolan acknowledged that the housing market offers "a prime example of immigration stoking inflation by creating additional demand for products"21.

However, he concludes that, given the long term nature of New Zealand's labour shortage, particularly for skilled labour, the arrival of skilled immigrants who quickly move into work, is ultimately more like to decrease inflationary pressure. 22 A further detrimental aspect associated with immigration programmes, is the social tension, xenophobia and angst about national identity they tend to provoke. In France, the political administration sought to present the problem of an alienated, non-integrated and economically burdensome immigrant population, as causal of the country's massive civil unrest and rioting in 2005.

Such occurrences represent prime opportunity for the politicisation of immigration and the scapegoating of immigrants for a nation's ills. This factor dovetails into the previously mentioned economic arguments against immigration programmes, with public perceptions of immigrants taking jobs, driving down wages, and draining social services often being encouraged and exploited by populist politicians. While it is highly contestable whether these assertions are accurate, it is their acceptance in some segments of the public mind that can cause friction and an actual, if unwarranted, reduction in the maintenance of social cohesion.

In New Zealand the anti-immigration rhetoric of the current Minister of Foreign Affairs and New Zealand Party leader, the Rt Hon Winston Peters, has been a case in point. The significant number of Asian immigrants, particularly in the Business Investor category, during the 1990s, provided political capital for NZ First and led to its 'Asian Invasion' slogan for the 1996 national election. 23 As Ip points out, New Zealand's historical white immigration policy had "bequeathed one of the most racially and culturally homogenous societies among immigrant nations".

24 While this is significantly changing, a party such as NZ First was able, for a time, to tap into this dubious legacy. It is acknowledged that some immigrants do struggle to adapt in their new host country, and in New Zealand, some concern over the criminal activities of a minority of international students was warranted. However, many of Peters' political speeches were tailored to arouse a general sense of unease about losing 'New Zealand' identity, and hostility against stereotypical wealthy Asian immigrants, and "gate crashing asylum seekers" 25 among some sectors of the public.

Is New Zealand Sourcing the Right Migrants Required for Economic Growth? Ian Pool, Professor of demography at Waikato University makes the valid point that to focus solely on the monetary return value of immigrants is a very narrow view. 26 However, as attracting skilled individuals who will contribute to building a more dynamic New Zealand economy is a primary focus of current immigration policy, we need to consider whether New Zealand is, in fact, sourcing the right migrants required for economic growth.

I believe that the overall direction of immigration policy is achieving this outcome. This is demonstrated at the outset by the fact that the Skilled/Business stream provides 60% of new immigrants, while our international/humanitarian stream, which contains the immigrants most likely to absorb social services and to encounter difficulties in obtaining employment, comprises a mere 10% of immigrants.

In terms of sourcing the right migrants for economic growth, international students who are also classed as immigrants have significantly contributed to a lucrative $1.1 billion export education industry, which is already larger than the wool and wine industries. 28 Policy changes made in 2002 and 2003, although receiving criticism in some quarters as discriminatory against Asian immigrants, were driven by the need to ameliorate the problems a number of skilled immigrants had experienced in finding employment upon their residency in New Zealand thus hampering their ability to contribute to economic growth. The first policy change resulted in a tightening of the English language requirement with the standard being raised from IELTS 5 to IELTS 6.

The second change replaced the General Skills Category with the Skilled Migrant Category. Previously skilled migrants had automatically qualified for residence if they gained enough points. However, the 2003 changes resulted in applicants who qualified for a certain level of points entering a selection pool, from which they were invited to apply for residence. This was specifically designed to counteract the acknowledged problem of highly qualified immigrants, who due to poor English skills or non-recognition of qualifications, were either under or unemployed.

In order to promote more even skills distribution, and ultimately greater economic growth throughout the country, points were also awarded for immigrants who gained employment outside the Auckland region. 29 The Work to Residence Programme was also designed to minimise the risk that immigrants could absorb public funds rather than contribute to economic growth. Instead of gaining residence outright, this stream allowed immigrants a two year period in which to demonstrate their ability to settle and gain relevant employment, after which time, they were either successful or had to return to their source country.

30 However, an area where there has been difficulty in attracting the right migrants for economic growth has been in the Business Investor Category, which has ultimately failed to attract high numbers of applicants, and generated largely passive investments. Ip's paper, which addresses the failure of policy in this area from the perspective of Chinese business immigrants, criticises the lack of induction assistance into the local business environment provided to such immigrants during the 1990s.

While the intention of economic development has been the consistent rationale behind investor policies, a recent Cabinet Paper, has acknowledged that the current investor programme is not working. 31 The tighter English language requirements of 2002, which resulted in an 80% reduction in applications, and the requirement of investment with the government have proved unattractive to many business migrants. To remedy shortcomings in this area of immigration policy, a new Active Investor Migrant Policy is being formulated.

This is based on principles of more active investment by allowing business immigrants to select more profitable investment options, and accepting greater risks in areas such as English level and settlement funds in exchange for a greater number of high value migrants. 32 A final point to be addressed in terms of whether our current immigration programme is sourcing the right migrants for economic growth is the area of unskilled labour.

A recent paper has stressed that while the recent focus of our immigration programme has been on the need to attract skilled labour to alleviate chronic skills shortages in New Zealand, there had not been a corresponding emphasis on the need to alleviate chronic shortages of unskilled labour. 33 This is a particularly pertinent problem in areas of high seasonal and periodic labour demand such as the horticulture, viticulture, fishing and construction industries, which contribute significantly to the New Zealand economy.

34 However, in recognition of the fact that economic growth requires the sourcing of unskilled migrant labour during times of peak demand, a Seasonal work permit pilot was implemented in 2005. This pilot allowed employers who gained Recognised Seasonal Employer status to recruit overseas workers with the provisos that no New Zealanders are available to undertake such work, and that employers must pay market rates and provide evidence of good work practices. 35 This pilot has proved successful in regions with an identified labour shortage and has been extended to 30 September 2007.

Such initiatives are a step in the right direction as the future demand for unskilled labour is likely to remain high given the tight labour market, and our immigration programme must acknowledge that sourcing unskilled as well as skilled migrants is a pre-requisite for continued economic growth. Conclusion Notwithstanding the conflicting arguments for and against immigration programmes, globalization has indisputably increased the number of people with the capacity and desire to move countries.

Governments are becoming more willing to view international migration "through the prism of opportunity rather than fear"36, and to accept that given the right set of policies, immigration can be a positive force for development in both countries of origin and countries of destination. In line with the current era of global development, New Zealand, through its proactive immigration programme, is attempting and generally succeeding, in attracting migrants who will enhance the economic prosperity of the country and bring less tangible but equally important social and cultural benefits.

Despite the stance of New Zealand First, and the concerns of the Maori Party,(which while not anti-immigration as such, has reservations that there are no official channels for addressing their interests as a Treaty partner in the area of immigration), there appears to be a party political consensus that continued immigration at or above present levels will produce beneficial outcomes for New Zealand's economy and society.