New record heats up migration debate

Friday 21 July 2017

Fuel has been thrown onto the fire of debate over immigration with the news that migration flows into New Zealand have hit another record high.

By Miriam Bell

Statistics New Zealand’s latest data shows that annual net migration reached a new record of 72,300 in June.

As compared to the year ended June 2016, net migration rose by 3,200. But the annual net inflow has now been above 70,000 since October last year.

Seasonally adjusted figures showed a net gain of 6,400 migrants in June 2017.

Once seasonally adjusted, there was a monthly net gain of 6,400 migrants in June, which is a jump up on May’s gain of 5,900 and not far off January’s record of 6,500.

Population statistics senior manager Peter Dolan said annual net migration has been steadily increasing since late 2012.

“Over the past three years, annual net migration has been consistently hitting record levels due to an increasing number of non-New Zealand citizen arrivals.”

But Westpac senior economist Satish Ranchhod said the number of New Zealanders moving offshore remains very low.

Further, there continues to be large numbers of New Zealand citizens returning from Australia.

“The net outflow of New Zealand citizens is at its lowest level since 1984. This accounts for half of the pick-up in net migration since 2011.”

Immigration is one of the hot political issues in the lead up to September’s election – at least in part due to the impact of migration-supported strong population growth on housing supply.

ASB senior economist Jane Turner said the record high levels of migration and population growth will continue to place strain on the tight housing market, as construction has been struggling to keep pace in Auckland and Wellington.

The National government recently tightened up immigration settings in a bid to better manage the quality and number of migrants coming to New Zealand.

Many of its political opponents believe the changes did not go far enough with, for example, the Labour Party saying it would slash migrant numbers by 30,000 if it wins power.

However, Infometrics chief forecaster Gareth Kiernan believes that New Zealand’s economic growth is being constrained by shortages of labour in key areas – which would become more widespread if a tightening in migration policy followed the election.

“High levels of immigration have undoubtedly contributed to stresses around infrastructure and the housing market, particularly in Auckland.

“But without these inflows of workers, businesses would have struggled to meet growing demand, and cost pressures would be even more intense in areas such as the construction and tourism sectors.”

He said a large drop-off in net migration would have negative repercussions for economic growth during 2018 and 2019, constraining activity via higher labour costs.

Associated cost pressures could lead to a rise in interest rates and debt-servicing costs which would prompt more forced house sales and hastening a correction in the housing market, he added.

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