Is it time to tighten up migration?

Stuff reports:

Immigration is set to hit record levels, pushing up house prices over the coming year, but Prime Minister John Key believes immigrants’ skills are needed and enough houses are “in the pipeline” in Auckland to meet the influx.

In their monthly update to ministers yesterday, Treasury officials said net permanent and long-term (PLT) migration in the year ending March was “likely to exceed our [December] Half Year Update forecast of a peak of 52,400”.

Inflows were expected to start easing in the first half of this year, and the impact on house prices and household wealth appeared more subdued in this cycle, possibly because of the concentration of 20-34-year-olds in the numbers.

“However, it is possible that the strength in PLT arrivals recently may begin to impact housing demand more significantly over the coming year,” they warned.

Key said there was no question immigration has some impact on housing.

“Generally, the Reserve Bank takes the view that net migration is positive for the economy but has some spill-over implications.”


I agree with the Reserve Bank that net migration is positive for the economy. And we have policy settings that migrants need to have skills and/or wealth. It is actually quite hard to qualify for residency.

However while the medium to long-term effects of migration are positive, the rate of migration can and does put pressure on infrastructure such as housing, schools, hospitals. That is not an argument against migration, but for making sure that the net inwards flow is at a reasonable rate.

The challenge is the net flow in is made up of four components. They are:

  1. Residents leaving NZ – Government has no control
  2. NZers returning to NZ – Government has no control
  3. Australians migrating to NZ – Government has no control
  4. Other nationalities migrating to NZ – Government has control

The first three components are all strongly increasing net migration to NZ. This is going to put some stress on infrastructure. So the question is should the Government make it harder for people in category (4) to migrate?

For NZ’s long-term good, the settings are at the right level. Overall migrants boost NZ’s economy and skills. But for a few years, the Government may want to consider increasing the number of points needed to gain residency, as a way to reduce the overall level of net migration to keep it to a level which won’t strain the infrastructure too much.

Increasing the points may not have much impact. The other three components are strongly supporting net migration, and the Government has no control of those. And it is a good thing fewer Kiwis are leaving, and more are returning home. But there will be infrastructure challenges.

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