June 23, 2017

New Zealand net migration figures hit record high

New Zealand net migration figures hit record high

Annual net migration reached a new high in New Zealand in the year leading up to May 2017, according to figures released by Statistics New Zealand.

The rise in annual net migration reached 72,000, up nearly 4,000 over the same period last year. The gain is largely attributable to rising numbers of foreign immigrants, with the majority coming from China (comprising 12%), the UK, and Australia (comprising 10% each).

Gains from the UK in particular offset a drop of 31% in citizens arriving from India, with a 40% drop in annual student visas granted to Indian citizens also reported.

With the country’s economic growth continuing to outpace Australia, the figure was also driven by a slowdown in the net rate of migration of New Zealanders to its larger neighbor. Over the period, the number of New Zealand citizens leaving and returning almost balanced itself out.

As the country continues to experience record numbers of net migration, the issue has become a key area of political debate, and is set to become important in September’s general election. In particular, arrivals have been blamed for inflating the country’s property market and straining its infrastructure.

This follows the announcement of plans from the New Zealand government in April to tighten access to skilled work visas to help home citizens into jobs ahead of migrants.

In his article How immigration affects investment and productivity in host and home countries, Volker Grossmann suggests that contrary to such policy, skilled immigration in particular can have substantial benefits. Indeed, he argues that increasing the share of high-skilled immigrants has sizable income effects, which he attributes to gains in productivity.

Nevertheless, he recognises that "Despite the many potentially positive effects of immigration, policymakers have to be aware that high levels of immigration can provoke a backlash against liberal immigration policies in host countries, especially if housing prices rise as a consequence."

He concludes: "Clearly, not everyone in the host country benefits from the efficiency gains from immigration. Possible measures to redress the imbalance include transfers to low-income households (who typically rent rather than own housing property), possibly financed by increases in taxation of housing property, wealth, and bequests. Thus any undesirable income distribution effects associated with higher housing prices could be addressed by the tax-transfer system instead of by limiting immigration and forgoing the related positive impacts."

Read our articles on migration policy and the labor market.