Ignoring History – part 2

Following on from my last post “Ignoring History“.

So the NZ Labour Party is proposing to cut immigration to help reduce the rapidly rising cost of housing. There has been a lot of confusion about how this is intended to be done – whether to cut temporary visas or residence visas for example.

Labour leader David Cunliffe is now stepping away from the more contentious comments, indicating the whole thing has been a media beat up. While to some degree this may be true I clearly remember Mr Cunliffe stating there is “open slather” on the current immigration system. So is there “open slather”?

Ignoring history
The party appears to have settled on visas being issued through the Skilled Migrant Category as the problem – people on temporary work visas generally don’t buy houses – but this ignores history.

Skilled Migrant is the largest residence stream and is managed through a points system. The Labour Party have most recently indicated they would use this points system to manage numbers on the basis that reducing numbers would reduce pressure on house prices.

I say this ignores history as over the past five years the Skilled Migrant Category has been slashed by a third. This reduction has had no apparent effect in lowering house prices.

Here is a graph of residence visas granted since 2008/09:

residence-visas

Source: Immigration New Zealand Residence programme statistics
As 2013/14 figures are only available to 4 May (307 days of the year) I have calculated a figure based on this for 365 days.

To explain the categories:

  • Skilled Migrant – skilled workers meeting a stringent points system.
  • Other business/skilled – investors, entrepreneurs etc.
  • Humanitarian – refugee quota, pacific quotas.
  • Capped family – family members of migrants (only parents can use this now).
  • Uncapped family – foreign-born partners and children of NZ citizens and residents.

Changes since 2008/09
Clearly the Skilled Migrant stream is by far the largest single stream and this is because the residence programme is designed to fill skill gaps.

While most of the streams have changed very little, numbers coming through the Skilled Migrant stream are down by 32%.  Over the past five years nearly 32,000 less people have gained residence visas through this category compared to 2008/09 levels.

Manipulating the points system

So why have these numbers fallen so far? Because government has been managing numbers using the Skilled Migrant category points system – the same tool Labour proposes to use to reduce house prices now.

Government has incrementally been raising the bar on the Skilled Migrant points system since January 2010 by reducing the types of applications accepted – at the first stage called Expressions of Interest or EOIs.

For example before January 2010 any EOI scoring 100 points or more stood a very good chance of being selected to begin the process. Since January 2010 – across 112 selections – only EOIs with bonus points relating to skills in long term shortage have been selected.

Additional changes in June 2011 and January 2013 further reduced this to the point where the only EOIs being routinely selected now are those with 140 points or a skilled job offer. All of the data is provided by the immigration department and available for analysis.

The natural result of less people entering the system has been less visas being granted: using the points system to manage numbers.

eois

Source: Immigration New Zealand
Again as 2013/14 is incomplete I have used the average for this year for the last 3 selections to go to complete a total year figure.

I am not aware of a resulting drop in the cost of housing in New Zealand.

I am aware however of a huge increase in skill shortages with 59% of employers reported as struggling to find key staff. Skill shortages directly reduce the number of jobs and training opportunities for New Zealanders while lowering wage growth and company profits – arguably one of the reasons the NZ economy has failed to pick up.

The original quotas were set at a level in 2002 for a reason and had been working very well. Since these changes were implemented government has missed minimum quota levels  by an average of over 4,600 per year (10%).

Summary
Labour’s proposal then is for more of the same to produce a different result.

Wasn’t it Albert Einstein who defined insanity as “doing the same thing over and over again and expecting different results”?

It will be interesting to see the next phase in this policy.

Mike Bell

Migrant advocate | Licensed Immigration Adviser

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