NZ’s immigration system needs a shake up - report

Te Whanganui-a-Tara - The current Kiwi immigration system is lacing transparency and is struggling to make trade-offs between employment, productivity, absorptive capacity and other goals, according to a new report by the Productivity Commission.

New Zealand’s system takes incremental decisions that fail to take account of cumulative or wider impacts or other government policy objectives.

A key theme of the commission’s recommendations was improving productivity and labour market outcomes by better connecting the immigration, skills, training and education systems and for more engagement with mana whenua on how to reflect Te Tiriti o Waitangi and Te Ao Māori in immigration settings and institutions.  

The Productivity Commission chair Dr Ganesh Nana says he was heartened by the positive response to the need for a government policy statement and look forward to seeing how the draft statement will bring immigration objectives together with other government priorities around infrastructure investment and education and training.

“I am also encouraged to see there will be engagement with Māori and consideration of what Te Tiriti means for future immigration policies.”

The report says there is a need to address particular cases where evidence exists of immigration displacing local workers. The government should implement policies to empower displaced workers, such as:

Improved access to education and training; tailored active labour market programmes; and Industry transformation plans. An approach that included such policies should be the primary focus regardless of the reason for displacement such as economic shock, or automation.

While immigration policy in New Zealand traditionally favoured permanent settlers, since the early 2000s, with the increased use of migration as a way to fill labour shortages, temporary migrants have made up the bulk of those who arrived.

In the decade before covid, the proportion of jobs held by temporary migrants grew significantly to become a substantial share of the labour force for some industries.

New Zealand’s output growth over the last two decades to 2020 has kept up, or eclipsed, the growth rates of other OECD countries. However, New Zealand’s labour productivity has remained well below the OECD average, and the gap has widened.

Output growth has been driven by adding more people (both locals and migrants) to the labour market, and by working more hours, but achieving less output for every hour worked than in many other OECD countries.