There is broad political consensus, except from New Zealand First, in favour of 90,000 to 100,000 new permanent residents being approved every two years.
That is different, however, from the 221,741 who arrived in the past two years to the end of August, as measured by Statistics New Zealand.
Debate is growing about the effect on wages of this surge of temporary workers and students, who often take low-wage jobs in hospitality, tourism and dairying.
Wages have beenstagnant at the lower end of the jobs spectrum for the past couple of years, despite strong economic growth. There has been plenty of exploitation of these migrants.
Meanwhile, the record high net migration of 60,300 in the year to August has been a factor in Auckland’s 25 per cent house price inflation over the past year.
Economic theory suggests bringing in skilled workers should lift overall productivity and ultimately wages and wellbeing.
Two data points published over the past fortnight challenge the conventional thinking.
First, per capita GDP fell slightly in the first half of theyear despite overall GDP rising 0.2 and 0.4 per cent in the March and June quarters. Hourly wage inflation is mired at under 2 per cent.
Second, the 9300 houses built in Auckland to August were soaked up by the 27,900 migrants who arrived in that time. That meant Auckland’s shortage of about 25,000 was not whittled away by the recent spike in building. If anything, it worsened as Auckland’s population grew naturally, with about 15,000 more births than deaths.
Strong migration has artificially juiced up GDP and house prices. But does it make everyone richer?
Not all migration boosts the economy. A proper inquiry by our Productivity Commission would test those assumptions and allow better choices.
Blunders by successive governments have led to ordinary people struggling to afford houses in Auckland, an economist says.
Governments have made it really hard to develop new urban land to build new houses and at the same time have brought in tens of thousands of new immigrants each year, former Reserve Bank economist Michael Reddell says.
He says Reserve Bank modelling shows a 1% boost in population will lead to a 10% increase in house prices and history shows that when unexpected population increases happen it has a big impact on house prices.
“Immigration in conjunction with supply restrictions is a big factor,” Mr Reddell says.
“I’m slowly coming to the view that we should be considering restrictions on foreign ownership…it’s not as if there are any obvious gains for New Zealand as a whole for allowing off-shore purchases, particularly if the houses are being left empty.”
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