'$1.8b extra a year' from more migrants

MARTA STEEMAN AND MICHAEL FOREMAN
Last updated 05:00 12/02/2014

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A new report says New Zealand could become richer by about $1.8 billion a year if the number of migrants was allowed to reach a net 55,000 a year.

New Zealand Institute of Economic Research (NZIER) says gently raising net migration over 10 years from an average of 15,000 a year now to 55,000 a year would increase the productivity of each person in the country by $410 a year.

If 4.5 million New Zealanders were producing $410 each more a year that would raise the value of all the goods and services produced (GDP) here by about $1.8 billion a year.

Report author Dr Kirdan Lees, at NZIER, said other reports, such as that from the Productivity Commission, noted that New Zealand firms found it hard to reach any scale because of the smallness of the population. But that had not been translated into a New Zealand population policy.

The current immigration policy points system in New Zealand was the right approach but needed to be relaxed a bit and New Zealand needed to more aggressively market itself to migrants, as Australians did, to increase migrant numbers.

"Without a change in policy we are likely to keep on doing what we've done before. What we've done before is we've had 15,000 people a year. In our view we need 40,000 more than that."

Lees said its modelling looked at "real GDP" growth. The $410 per person figure was calculated after taking out inflation and the volume effect of having more people in the country. Other researchers overseas found small positive benefits, not as much as the $410 NZIER had calculated, but "more like $200 (per capita)". However, NZIER's findings were not out of line.

Almost one in four New Zealanders were born overseas so already "we are a nation of migrants", NZIER said in its report, Migrants Increase Our Incomes.

However, the benefits of more people took time to come through and in the short term there were costs putting pressure on existing services such as housing and transport.

The benefits of more migrants would include providing businesses with new skills and helping them grow and gain greater size.

More immigration would also increase innovation by stimulating competition and lower the average cost per person of expensive infrastructure such as motorways, NZIER said.

"In bad times migrants are seen as taking jobs and increasing unemployment even though there is little evidence that immigrants negatively affect either the wages or employment opportunities of New Zealand-born workers."

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