Week in Review

The limit on NZ Inc’s migrant-led growth

New Zealand can only quarantine 250 arrivals per day, creating the single biggest choke point for an economic recovery based on tourism and cheap guest workers, Bernard Hickey reports.

It’s the number that hardly anyone outside of the Government knows, but is crucial in any analysis of how New Zealand’s economy will recover under Level 1. 

It is 250 per day, which is the number of quarantinable hotel rooms the Government has arranged for returning citizens, returning guest workers, new guest workers and anyone else who can somehow get a visa to fly here. There are 3,200 rooms available in total, but the need to keep arrivals contained for 14 days means New Zealand can only handle 250 arrivals per day.

That is basically one plane load a day that we can handle, and that number hasn't increased in a month. There are about 10,000 New Zealand citizens trying to come home who are at the top of the queue, followed by 14,000 people who are normally resident in New Zealand with temporary work visas, but were stranded outside the country when the boom came down. 

Immigration Minister Iain Lees-Galloway explained the significance of this choke point for arrivals and handling returning citizens and guest workers, let alone new guest workers and stranded partners of New Zealanders, in a 27 minute interview on Monday with Kathryn Ryan on RNZ's Nine to Noon programme. It is well worth a listen to get a sense of the scale of the problem.

Currently this single plane load is all we have. For everyone. Returning citizens. Partners of citizens. Stranded guest workers. New guest workers that many in business are desperate to get. Avatar directors and their partners. And then tourists. 

Lees-Galloway explained that we've barely even scratched the surface. 

"What that means in practical terms is that around 250 people per day can travel into New Zealand, and can go into quarantine or managed isolation for 14 days so that we can have satisfaction that they are not bringing the virus," the Minister said.

He acknowledged it would take a long time before the backlog of New Zealand citizens was cleared, let alone bring in new guest workers.

"We are looking at how we can get that moving more quickly because as you as you point out, at 250 people a day, it's going to take a very long time," he said.

"The bulk of those 250 places a day are still being taken up by New Zealanders. New Zealanders are still travelling back into New Zealand. And, of course, our own citizens and residents remain at the top."

The Government is trying to increase that number of quarantining spaces, but it hasn't increased in the month since the Minister's office last disclosed the number to Newsroom's office and is difficult to increase. It's not just a matter of using empty hotel rooms, as Lees-Galloway explained:

"Because it's ultimately about more than just that there's empty hotels. People have to be isolated, the way that food is prepared, the way they're able to exercise -- all of these things have to be carefully managed. And so as other parts of government look at how we might be able to increase capacity, they've got to take all of those measures into account."

So where does the growth come from?

Just let that sink in for a moment.

New Zealand imported about 80,000 fresh people on student and work visas in calendar 2019 and the number of people in New Zealand with those temporary work rights has almost tripled over the last decade to just over 300,000. That doesn't include the 50,000 holiday makers and some others who also have temporary work rights who are here at any one time. 

New Zealand's economy grew over the last decade, largely because we had more people working longer hours, as this chart from David Skilling in his recent paper for the Productivity Commission showed. 

The 'high protein' growth bars are the blue bars showing real GDP growth per hour worked. The yellow bars are essentially more people working longer hours. Most of those jobs created over that decade were occupied by temporary guest workers or those lucky enough to score full residence visas, and many were based on the growth of the tourism sector.

Now they have both gone.

Many employers are hoping guest workers who have just been made redundant (but can't apply for a benefit) will be able to get Immigration New Zealand to 'vary' the terms of their work visas, which are currently linked to an individual employer. 

But this is proving much harder than many had hoped, even though the Government passed urgent legislation a month ago allowing the Minister to make 'blanket' changes to work visas. There are about 200,000 stranded here who may need those variations if they are to stay and work legally.

Work tests first...and very few variations

Instead, as Lees-Galloway explains, those employers wanting to employ jobless guest workers wanting variations will have prove all over again -- in a different environment -- that there are no New Zealanders available to do that particular job. 

"Those variations are happening and where it's possible for people to be redeployed to other roles that is being done. But, of course, one of the complicating factors here is the fact that New Zealanders have been losing their jobs in numbers that none of us think is acceptable," he said

"And so when Immigration New Zealand considers those variations to visa conditions, they are taking into account the labour market situation and they are asking the question: Are there New Zealanders available to fill those roles?"

Is NZ Inc being quietly told it has go cold turkey on cheap migrants?

The question for many often small businesses in tourism, hospitality, aged care, farming, horticulture and all manner of low-wage service industries is: are they about to be told to go 'cold turkey'.

The Government doesn't want to spook people in business, but is quietly telling both employers and the temporary migrants already here, even if they were tempted here with the prospect of a full residency, that they should look to leave.

"I think it's actually something that people need to be thinking about seriously for themselves is: what is the long term viability of their job, of their working situation in New Zealand? The immigration system, particularly the temporary visas, are there to fill gaps in the New Zealand labour market," Lees-Galloway said.

"And the unfortunate truth is that there will be fewer guests as we recover from this pandemic than there were before. And I suppose we got very used to very, very low unemployment and a high reliance on the migrant workforce, particularly in some sectors. And some of those sectors are going to have to rethink it.

"And some of our migrant workforce are going to have to take it seriously, weigh up what the future holds and think about their options because if there is if there is not work available when it comes time to renew their visas, the labour market test will be applied and they may well get a different outcome than they have done in the past."

So how long could this last?

It's clear from the current limit of 250 per day, which also limits the number of outward spots on planes (given few planes want to fly here empty and leave full) that it would take nearly two years at this rate just to bring stranded citizens and work visa holders back in. 

Some employers may hope the travel restrictions would end well before that, but a closer examination of the landscape for Covid-19 shows that it could take years. New Zealand may form a bubble with Australia, but that would just as likely allow an influx of New Zealand citizens to compete with stranded guest workers. 

No New Zealand Government, now that it has eliminated Covid-19, is likely to allow unquarantined access from countries without widespread vaccination. A vaccine is not expected to be rolled out for 18 months, and it could take much longer than that to vaccinate populations such as India, China and the Philippines, which have been our largest sources of guest workers in the last decade.

So are New Zealand businesses read to go cold turkey? Have they thought about what it might mean? Have home owners thought about what it might mean for house prices? And has the Government thought about what it might do with the 300,000 or so guest workers stranded here, unable to leave, and unable to earn money? They currently can't get the benefit, largely because New Zealand First -- which is now openly telling them to leave -- doesn't want to give migrants that benefit.

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