Politics

Housing and migration, a messy business

ANALYSIS: Housing and migration are always hot-button issues, and both have been brought to the fore by a major revision in net migration figures. Laura Walters talks to experts about what the change to population growth means for a Government that campaigned on housing and migration.

A major revision of New Zealand’s net migration numbers means the country will need about 18,000 fewer houses, but that doesn’t mean we don’t still have a housing crisis.

Policy analysts warn of over-simplifying the housing crisis, or using migrants as scapegoats for New Zealand’s housing woes.

New Zealand First and Labour both campaigned on migration ahead of the 2017 election, however, movement on migration policies is not what some may have expected based on the pre-election rhetoric.

The coalition Government seems to be taking a soft approach, with the focus on tackling migrant exploitation and wage pressures. Gone are the days where migration was seen as a simple lever to be manipulated in an effort to ease pressure on housing and infrastructure.

The debate around migration pressures and housing has again bubbled to the surface after Statistics NZ released its newly revised net migration figures.

The revised figures show more than 45,000 fewer people stayed in New Zealand on a long-term basis in the past four years than was originally estimated. This is close to 1 percent of New Zealand’s population.

The latest estimates also show net migration has now fallen to an annual rate of about 43,000 – about 20,000 lower than initially thought.

Net migration actually peaked at 64,000 in mid-2016, not 72,500 in 2017, according to revised figures.

No longer based on arrival card claims

Statistics NZ has begun using a new, and more accurate, way of measuring migration, as the country does away with arrival and departure cards.

The new method is linked to passports and records electronic data on people’s movements in and out of the country.

Previously, data was collected from arrival cards, and based on migrants’ plans. The new 16-month method has found not everyone follows through, and some end up leaving the country rather than hanging around. Essentially it measures outcomes, rather than intentions.

Data revisions are common, and in itself the fact that the numbers based off the arrival cards were not completely accurate is not surprising.

And experts warn the figures generated from the new method will also fail to tell the full story.

However, the magnitude of the revision, at a time when New Zealand has been dealing with a housing shortage, is significant.

Not a fix for the housing crisis

While New Zealand’s population is still growing – and there’s no doubt there was a migration boom during the past few years – the population is growing slower than initially thought. Population statistics due out this month are also expected to be revised downwards.

“We’ve still not built enough homes… it doesn’t matter what happens with migration, New Zealand never builds enough houses.”

New Zealand will still need a large number of new homes - including affordable homes and social housing - over the coming years. But with fewer migrants settling down on a long-term basis, the number of homes eventually required is lower than previously thought.

Currently, new building consents and GDP growth match up with these updated population statistics. On Monday, the number of building consents for new dwellings in 2018 reached 32,996 – of these 21,125 were stand-alone homes, 3551 were apartments, 1829 were retirement village units and 6,491 were town houses or home units. Government-related building consents reached 1999.

Economist Shamubeel Eaqub said New Zealand would probably need to build about 18,000 homes fewer than initially thought, in order to keep pace with population growth. This figure is based on homes housing 2.7 people.

But this easing of demand pressure didn’t solve the housing crisis, Eaqub said.

“We’ve still not built enough homes… it doesn’t matter what happens with migration, New Zealand never builds enough houses.”

If net migration had been as high as initially thought, rents – especially in Auckland – would have been rising at a much higher rate than they have been.

Eaqub said it was also important to remember the number of people coming into the country was the same, but people were leaving after a shorter stint.

Salvation Army senior policy analyst Alan Johnson also warned about linking migration to the housing shortage.

Housing crises were caused by a complex set of factors, and while population growth did put pressure on infrastructure, it was also migrant workers who helped build infrastructure, and added to the overall growth of the economy, he said.

Migrants did not cause the housing crisis, Johnson said; a lack of planning and policy did.

Migration would be part of New Zealand’s story going forward, especially in terms of the future workforce. This meant policy and planning needed to improve in order to support everyone living in New Zealand.

Migration politics

Migration is always a hot-button topic in politics.

Ahead of the 2017 election, New Zealand First was talking about cutting net migration to 10,000 – from what was then thought to be about 72,000. Meanwhile, Labour – under former leader Andrew Little – promised to slash immigration by tens of thousands.

AUT Policy Observatory senior researcher David Hall pointed out Labour’s rhetoric changed markedly once Jacinda Ardern became leader.

Even before the election, there was a change of focus, framing the 20,000-30,000 cut as the expected impact of policy changes, rather than a target - something Iain Lees-Galloway has gone to pains to explain since becoming Immigration Minister.

Included in the coalition agreement is a promise to crack down on migrant exploitation – something New Zealand First says it’s achieved in its coalition tracker. But on the whole, New Zealand First has stayed relatively quiet on the topic of migration since coming into power.

This focus towards stamping out migrant exploitation, and increasing wage growth in industries that employ migrants, marks a move away from a target-based approach previously pushed by both parties.

This softer approach marked a move from “relentless scapegoating, to relentless positivity”, Hall said.

Migration was cyclical and bringing in a raft of hard measures may not have the intended consequences, Hall said, as he referenced the UK.

The coalition Government has achieved its goal of cutting net migration, but the discerning voter will be aware that slowing is more to do with the cyclical nature of migration booms and busts, than with the Government pulling a policy lever.

In 2017, UMR Research polled 1000 Kiwis on their thoughts about immigration. While 34 percent thought it was positive, and 41 percent were neutral, 23 percent said they thought migration was a negative thing.

Hall said the 23 percent – who were more likely to be New Zealand First voters – could potentially be unhappy with the lack of Government action focused on slashing the numbers.

“Maybe it will help bring some more realism to both the housing debate and the international education debate.."

However, further cutting migration could also have detrimental economic outcomes, in terms of the labour force and GDP growth.

Like Johnson, Hall urged caution and context when discussing migration.

The conversations were often masked by talking about population growth and pressures but were really about values, he said.

Former minister and National MP Steven Joyce tweeted in response to the data revision, saying he initiated the change to the Statistics NZ method, after having concerns about student visa figures.

“I’m just glad it’s been resolved,” Joyce said.

“Maybe it will help bring some more realism to both the housing debate and the international education debate. International education is hugely important to NZ economically, socially, and geo-politically.”

Hall said the downward revision of net migration would only serve to further neutralise the topic for the Government – something Labour had been doing since Arden took over - rather than stoke the debate.

The economic nuance

It’s important to understand the change to the overall net migration figures doesn’t mean fewer people travelled to New Zealand, but they weren’t staying as long as they originally planned.

Westpac senior economist Satish Ranchhod said it was important to note the difference between the types of migrants.

Permanent or long– term migrants (those who remain in New Zealand for more than a year) had a larger impact on the country in terms of their spending, employment, and housing needs.

Those who entered the country on a short-term basis still contributed to the economy, but the impact was likely to be smaller and less enduring.

The updated migration estimates showed both long-term arrivals and long-term departures were higher than initially thought. But departures were the bigger of the two, pulling down that net migration figure.

In addition to housing, the changes to population growth would impact on GDP and demand on businesses. Population growth, and migration had accounted for about 2 percent growth in the economy in recent years, Ranchhod said.

The difference has been heavily centred on those aged 20 to 29.

This age group would include a large proportion of international students, as well as those on temporary work or working holiday visas – all groups that tend to be highly mobile.

In other words, more young foreign people have been leaving New Zealand than initially thought.

Eaqub said New Zealanders leaving to go on their OE, or taking advantage of Australia’s booming economy, also contributed to that outward flow.

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