ANZ’s chief economist in New Zealand, Cameron Bagrie, has questioned whether New Zealand’s high immigration policy has the “right mix” and is delivering better standards of living for the existing population. From Interest.co.nz:
Bagrie said GDP per capita growth was “lacklustre”. In the March quarter, annual per capita real GDP growth was just 0.7%.
…clearly this is a less-than-desirable rate of growth for what is ultimately the most widely followed measure of living standards. So we’re not seeing “value creation” right now from this population boom,” he said.
“Sub-par GDP per capita growth is telling, as is the mismatch between reported skill shortages and the skill sets of arrivals. It is also odd that more foreign students are heading into Private Training Institutes as opposed to Universities.
“In short, there are aspects that suggest the migration framework, and the application of the rules, could be in need of adjustment,” he said.
Bagrie said the “rhetoric” was that migrants are needed to fill skill shortages… But that is not necessarily backed up by what skills end up coming through the system… three of the top four occupations of principal skilled migrants approved for residency are chefs, retail managers and café/restaurant managers…
Bagrie said it was a “broadly similar story” when looking at temporary visa approvals. There seemed to be a mismatch between the skills of those coming in and what is actually needed…
…we are seeing a massive surge in students heading to polytechnics and private training institutes (52%) without the same growth in those going to universities (10%). Is that the right mix?
“Around half of these international students are from China and India. Most of the Chinese students are attending university while well over half of the Indian students are attending private training establishments. That looks a little odd, and we can’t think of good reasons why this should be the case.”
One wonders why the ANZ does not also ask the same questions about Australia’s immigration system?
Australia’s growth in GDP per capita has also been poor (see next chart), suggesting that the constant flood of new residents into Australia has not raised living standards (probably the opposite once negative externalities like congestion are taken into account).
And yet, Australia continues to import large numbers of so-called “skilled workers” to work in restaurants and cafes, as well as other professions that could easily be filled by locals with a little bit of training (see below tables).
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The system surrounding so-called skilled and student visas has also been corrupted, with widespread rorting and fraud revealed by the recent joint ABC-Fairfax investigation (see Australia’s hidden people smuggling scandal), leading to claims the system has been overtaken by “crooks and criminals”.
I will also add that for a major commodity exporter like Australia, which pays its way in the world by selling-off its fixed endowment of resources, ongoing high immigration can be self-defeating from an economic standpoint. That is, continually adding more people to the population year after year means less resources per capita. It also means that Australia must sell-off its fixed assets quicker just to maintain a constant standard of living (other things equal).
Again, where is the discussion and debate around Australia’s immigration settings, which are failing to raise the living standards of the existing population?
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
