Despite its best efforts to become the next Silicon Valley, New Zealand has instead attracted a lot of nice people but very few trailblazers.
A report on migration from the New Zealand Institute of Economic Research (NZIER) for the Productivity Commission concludes that the country’s high level of immigration has not resulted in improved productivity or a significant boost to gross domestic product (GDP).
A long succession of immigration policies tried to increase productivity and attract highly skilled migrants and entrepreneurs, but with very little effect, said NZIER associate Julie Fry.
“Rather than bringing in top-tier skilled migrants and entrepreneurs, New Zealand has welcomed large numbers of perfectly nice immigrants who, while having very modest impacts on GDP per capita, have contributed to the country’s wellbeing in many ways,” said Fry in the report co-authored with NZIER principal economist Peter Wilson.
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New Zealand had all the systems in place to bring in great people if they wanted to come, but the issue has been they didn’t want to come to a small economy a long way from the world’s main centres, she said.
New Zealand’s Global Impact Visa, which aims to attract “pioneering entrepreneurs and investors” with a three-year visa has created just 114 jobs since the pilot began in mid-2017.
Just 16 of the recipients have raised capital, two of them greater than $5 million, and five under $10,000, according to an evaluation of the scheme by the Ministry of Business, Innovation, and Employment released earlier this year.
“New Zealand’s at the bottom of the Earth and it doesn’t have a lot of stuff that’s true, but certainly right now it’s looking attractive,” said Fry.
However, she did not see the country as ever likely to become the next Silicon Valley.
A lot of ingredients were needed to create an ecosystem to sit alongside such high value migrants, she said. For example the United States government had invested in research for decades, and Stanford University at the heart of Silicon Valley was world-leading.
There has been a big increase in permanent and long-term immigration to New Zealand since 2013, and Fry said even at that point there was discussion about bringing in people to manage service stations.
“People in general commentary and people with specialist knowledge have for a long time been saying this whole skilled migrant thing? The people that are coming in aren’t that skilled,” she said.
New Zealand’s three main sources of low-paid labour were working holidaymakers, international students with work rights, and the Recognised Seasonal Employer (RSE) scheme.
The sheer volume of people coming under working holiday visas meant employer expectations had been set lower, she said.
“Employers are getting used to having highly trained, tertiary level people who are prepared to work, not worried about the hours, not worried about the pay, because they’re just financing a trip around the country.”
New Zealand’s response to tighter border restrictions due to the coronavirus pandemic revealed just how embedded its reliance was on low skilled labour.
“In New Zealand the response has been, we need to find a way to bring in migrants because we can’t cope without them, whereas other countries like the United Kingdom were like oh, so we need to speed up robotics.”
Politically when concerns about migration were shoved under the carpet, “you get Donald Trump, you get Brexit, you get people eventually saying, not any more.
“Migration is a good thing – it’s not a great thing but it’s a good thing, and you want to make sure you manage your migration system in such a way that people are happy to have migration continue,” Fry said.
Fry, who has studied migration for about 30 years, said it had long been accepted as fact that when talking about adjusting migration policy, it was not a case of turning the tap off and on again.
“Yet here we are, it has been done. And so let’s go back to first principles and say well OK, now that the border is closed, there’s no rule that says you have to open it up with the same rules again.
“So when we are eventually through this horrific time, we have a choice about what we do.”
When the border did re-open, Fry and Wilson’s suggestions for the Government included substantially reducing the flow of people with the same or lower skills than found on average of New Zealand: cutting generous employment rights for fee-paying students; reduce the number of holidaymaker visas; and reviewing the RSE scheme to ensure its humanitarian objectives.
The recent decision by the Government to allow in 2000 RSE workers under strict conditions, including covering the cost of managed isolation and offering pay of a minimum of $22.10 an hour, looked like the Government saying it did not want a two-tier labour market system, said Fry.
“That announcement was really encouraging to me, it’s a real shift in not just trying to get a volume of people through who are really compliant workers, but how can we treat these people well.”