Gareth Morgan, in his Tuesday Herald column ("Lack of Immigration brings a Reduction in Economic Growth"), tries to link net migration statistics to NZ First's immigration policies. Morgan is concerned that a net inflow of 450 people for the year to June 1998 is too few. But he is more concerned to paint Winston Peters as Pauline Hanson; as a "redneck" nationalist.

I agree with Morgan that New Zealand could do with more people. I would go further and say that more people contribute sufficiently to economic diversity and economies of scale that, with population growth, green outcomes are more rather than less likely. My major proviso here is that the post-1984 economic reforms have made provincial New Zealand into an economic tsunami zone. As a result, growth in New Zealand's population, especially immigrant-sourced population, means growth of Auckland's population.

Actually, I don't fear an Auckland in 2025 of 1.5 million people. If Brisbane and Perth can do it, then so can Auckland. A higher population in Auckland means that better sewerage and infrastructure will happen. But I think it will be a tragedy for New Zealand if more than 40% of our population lives in Auckland. Immigration is no guaranteed panacea for the revival of Heartland New Zealand.

The bigger problem with Morgan's article is his obsession - and the obsession of the right generally - with policy, with government.¹ Thus, a reduction in net migration (which might not be caused by a fall in immigration; it might be caused by a rise in emigration) is assumed to be caused by government immigration policies. In fact, immigration policy is one of only many factors that contributes to migration statistics.

Economic policy is more important. But national economies have upturns and downturns despite rather than because of policies; and different countries have upturns and downturns at different times. Economic circumstances in the migrant source countries are particularly important, and New Zealand is and always has been a source country for migration. New Zealand is losing both New Zealand born citizens, and recent immigrants.

Even given the importance of economics as a determinant of migration, it's rather complex. Some types of emigration happen more often when the source country is generating high economic growth. Much of the Asian emigration of the early 1990s was of that form; wealthy Asian families were escaping the stresses associated with too much growth. Further, traditional New Zealand OE - the extended working holiday - is also facilitated by the ability of young New Zealanders to earn money here before they leave.

Ultimately, however, immigration flows are determined by employment opportunities. Migration statistics offer an excellent indicator of the relative well-being of New Zealand with countries such as Australia, Britain and Canada. Trans-Tasman migration dominates. It is almost fully independent of immigration policy. Going right back to the 1840s, it invariably shows the relative growth of employment opportunities between Australia and New Zealand.

I did a study of this in the inter-war years. There was a huge surge of New Zealanders going to Australia in 1927 and 1928. In 1929 and 1930, large flows of Australians came here. The flows were smaller after 1931, with New Zealanders on balance going to Australia from 1932 to 1935. Then, in 1938 and 1939, there was a significant flow of Australians into New Zealand. The same stories apply in the years before World War I, and in the years after 1975, although, increasingly, the Australians migrating to New Zealand are NZ-born Australians.

There are many people living overseas with an automatic right of residency in New Zealand: the New Zealand born, Australian passport holders, and people living overseas with residency permits gained several years ago. Their movements are unaffected by NZ immigration policy, as are of course our emigrants who contribute so much to net migration.

Inasmuch as immigration policy has contributed to the reduction in the net inflow, it was changes implemented by Bill Birch (including expensive language requirements) late in 1995 that stemmed the inflow from Asia. There has been no tightening of immigration policy since Mr Peters became Deputy Prime Minister, despite Peters' rhetoric on the hustings in 1996.

As often happens (see my Herald article "NZ must not go back to capital addiction"), Gareth Morgan puts the cart before the horse.² He sees a pro-active immigration policy as being a means to strengthen the national economy. In reality, higher immigration (and, especially, less emigration) is a consequence rather than a cause of economic well-being.

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1. There is some division within the right about this focus. There has been a recent distancing between the National Party and the NZ Business Roundtable (ref. Fran O'Sullivan, NZ Herald, 3 August 1998 p.D2, "National squares off with the Business Roundtable", subhead "Politicians whose feathers have been somewhat ruffled by the Roundtable are actively looking for an alternative right-wing think tank"). And the Herald's economics journalist Fran O'Sullivan - certainly no left-winger - says in a piece headed "Orthodox prescriptions may not cure economic malaise" (29 June, p.C2; subheading "As the Asian crisis bites harder some governments are looking at alternative ways to tackle the fallout"), says "Last Friday, both Brash and the Business Roundtable advocated that the Cabinet should focus on the Budget surplus and further microeconomic reform - but in these times a focus on private sector responses would be more apposite." [back]
2. More generally, Morgan sees factor inflows, capital as well as labour, as being a source of New Zealand growth. It is a surprise that a free marketeer such as Morgan should wish that the flows of labour and capital in the global economy should be diverted 'in our favour' through 'mercantilist' (ie devoted to economic nationalism rather than internationalism) national policies. [back]

© 1998

Rankin File | 1998 titles