Economy Powers Along

March 25, 2016
Iain MacLeod

Statistics released this week continue to add to the good economic news that New Zealand has been for at least the past four years.

Unemployment has fallen to 5.3% – once it hits 5% (which it is estimated to do within the next two years) experience suggests skills shortages will become acute. The Reserve Bank is picking 4.9% unemployment by 2018.

There is no doubt that there are chronic skills shortages already across many sectors.

Strong net inward migration is helping to boost Gross Domestic Product. GDP is up by 2.3% over a year ago taking NZ close to being a $250 billion economy. The two go hand in hand – the more jobs that are created, the more economic activity there is and the more people wishing to come and live here or come home (most long term migrants are Kiwis ditching Australia and heading home).

We have now had 11 straight quarters of positive GDP growth.

The Reserve Bank is forecasting positive economic growth for every quarter in 2016, 2017 and 2018 with the March 2016 quarter projected to grow by 0.7 per cent, the next two quarters by 0.8 per cent each and the December 2016 quarter by 0.7 per cent.

This in the middle of a dairy slump (traditionally one of our top two exports).

Tourism continues to surge ahead to the point where infrastructure is groaning at the seams. In the past year we have welcomed over 3.2 million visitors.

Construction in all sectors is booming. Commercial, residential and industrial. Critical shortages of those involved in the sector exist, particularly the hands-on building and fitting out tradesmen. If anyone is looking to build in Auckland or the Bay of Plenty most people are waiting a year or so for their builder and team of choice to be available.

A shortage of houses, particularly in Auckland continues to see record prices. I would suggest that is great if you own a home, not much good if you are a young person looking to buy or a migrant from a country like South Africa. The British, American, Singaporean and other migrants find it affordable as they enjoy the twin benefits of strong currencies and off the chart house values as well.

Evidence suggests Aucklanders are starting to cash up and move south – a $1.5m home in Auckland can be replaced like for like in cities like Tauranga, Hamilton or in the Hawke Bay for half that number leaving a tidy little nest egg for those close to retirement. Property values in those areas are up around 15-20% in the past 12 months.

Services and manufacturing continue to expand.

All of this might make some (particularly South Africans) wonder why a small percentage are still being stopped from boarding flights or being hassled on arrival when they are coming over on their Look, See and Decide (’LSD’) trips in order to see if they like NZ and can find skilled employment so as to become part of the Government’s Skilled Migrant programme. A senior immigration official said to me privately a couple of weeks ago that the ‘disconnect’ between what the Government wants in terms of skilled migrants and those responsible for securing our border is real and the official expressed frustration at the blinkered approach taken by border staff; particularly in respect of South Africans.

It is interesting – I have obtained figures under the Official Information Act that show that as of about four weeks ago there were 122 South Africans unlawfully in the country versus 1300 Chinese, 600 Indian and over 300 British. Given the thousands of South Africans who visit here there is scant evidence of any great risk to the integrity of the immigration system or the border.

It makes me wonder why South Africans are being singled out as they undoubtedly are. It isn’t in my view ‘anti’ South African sentiment per se – those at the border really do believe South Africa is collapsing; passports are freely for sale through Home Affairs and there is a risk that we end up with some here we would prefer did not come. As I remind the Department constantly however – these are clearly two sets of people with quite different profiles to IMMagine’s clients.

I have been given encouragement to begin some work on tweaking the Skilled Migrant rules so that this disconnect could become a thing of the past.

In the meantime we are going to have to live with border officials prejudging the reasons South Africans are visiting and presuming they are coming to find work (which is not illegal by the way and these border guards have been told that over and over again). I cannot fathom what is so hard for these officials to comprehend – coming here to look for work is not a crime…coming here with a job offer in one’s back pocket and applying for a work visa is.

We are going to have to live with new Zealand employers missing out on some very good skills sets as a consequence – what I term a clear sabotaging of the skilled migrant programme by the Government’s own officials through little more than ignorance of their own rules.

Clearly the Government is right to be concerned about economic and potential social meltdown in South Africa but as long as they demand the majority of skilled migrants get skilled jobs first and work visas second, migrants are going to have to continue to run the gauntlet. Most will get through (around 95% are not stopped or questioned). All will be put through unnecessary trauma along the way, however.

I am hoping my work with officials over the next few months might result in a more certain pathway not just for South Africans wanting to be part of the skilled migrant programme but many other nationalities as well.

This economy has a big problem now – we do not produce the skills needed to fill the tens of thousands of jobs we are creating – IT, Engineering and Trades to name three – we rely on migrants to fill them.

If we stop the immigrants that we need to fill these vacancies being able to get here for interviews then the skilled migration programme could be in big trouble indeed.

If that is allowed to happen our stellar economic performance that so relies on these immigrants might stutter and stall.

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