John Carran, 2 April 1996
By John Carran
Vehement opposition to immigration, particularly from Asian countries, in New Zealand from an ill-informed and xenophobic rabble persists despite overwhelming evidence that immigration will improve our long term economic prospects.
In 1988 The Institute of Policy Studies published detailed research by Jacques Poot, Ganesh Nana and Bryan Philpott on the effects of migration on the New Zealand economy. The research, which abstracted from the social and environmental impact of immigration, concluded that “...a significant migration inflow can be beneficial to the performance of the New Zealand economy and subsequent consumption and income levels.” The authors point out that this is in general agreement with Australian research on the economic consequences of immigration.
New Zealand’s economic performance since the beginning of 1990 has lent support to the findings that immigration is beneficial to the economy. In that period, New Zealand’s population was boosted by 82,300 people as a result of net migration. At the same time New Zealand’s economy expanded at an average annual rate of 3.2%, compared to 1.7% annual growth in the previous decade. New Zealand’s real consumption per head rose 2.8% while unemployment fell from a peak of 10.9% of the workforce to 6.1 %.
The only economic evidence that opponents of immigration can hang their hat on at the present time is the inflationary impact of high levels of immigration. There is no doubt that the recent surge in immigration has exacerbated inflationary pressures particularly in the housing market. The Reserve Bank has been required to put upward pressure on the exchange rate and interest rates to counter these pressures and this has caused some hardship for exporters. However, the recent bout of inflation has been produced not only by immigration, but also by strong domestic demand, a willingness by households to spend beyond their income, a cyclical fall in productivity and rising government charges.
Under New Zealand’s current monetary regime high inflation will not persist. Most forecasters are expecting inflation to fall well within the Reserve Bank’s 0-2% target range by early next year. Interest rates and the exchange rate will ease commensurately, reducing the burden on exporters next year. The economic benefits from immigration are long term and ongoing in nature. To stem the flow of migrants because of the extra inflation they sometimes produce would be a case of cutting off the nose to spite the face.
Of course there is more to life than attaining economic excellence. The social and environmental impact of immigration also needs to be considered. But here the reasons given for restricting immigration range from pathetic to extremely dodgy. Most of the accusations are barely disguised racist piffle backed by tenuous rumours and cloudy anecdotes. Winston Peters’ stirring of the masses has exposed the ignorance and racial biases of a small and distasteful section of New Zealand society. These people yearn for a cloistered, inhibited, white (with a bit of brown at the edges) dominated utopia fondly envisaged by racists and xenophobes everywhere.