Immigration brings rewards
Those who slam immigration should look at the evidence, Shamubeel Eaqub writes.
Immigration continues to fuel population growth. The impact of immigration remains hotly contested in public circles. Evidence without an objectively understood and agreed purpose for immigration is stopping this conversation maturing.
A report by the Australian Treasury reiterates that migrants pay more into the tax system than they take out in government services.
The 2015/16 cohort of permanent skilled migrants will deliver Australia’s federal government a profit of A$6.9 billion ($NZ9.4b) over their lifetimes, temporary skilled migrants a profit of A$3.9b, and family stream migrants A$1.6b.
The study is similar to the majority of other published work in recent decades.
But public reaction to the report was swift. The pushback was largely centred around unaffordable housing and congested roads.
Population growth, of course, increases demand for housing, transport and other services.
The Australian study suggests the problem is not investing the proceeds of immigration to keep up the supply of housing and transport.
That’s in addition to the usual issues that get in the way of improving housing supply, like urban planning rules, infrastructure funding and Nimbyism.
The conversation in New Zealand is not so different. Eyewatering house prices and interminable congestion in some of our cities is eroding the social licence for immigration.
There is also the usual fear that immigrants are taking local jobs and depressing local wages.
But the research over the past 30 years suggests that is not the case. For example, the majority of studies find that the impact on local wages is practically nil and the impact on the economy is positive.
Simple models don’t tell the whole story. A simple static model would say this: immigrants add to labour supply, while everything else remains fixed. So it must reduce prices.
But this ignores how firms might respond, especially if they face persistent shortages. It also ignores how population growth may increase demand for some goods and services.
Real life is not fixed. Everything is always changing and responding to those changes. Immigration tends to not only increase supply of labour, it also changes the mix of skills, training and attributes available to firms.
This is particularly important in the current context, when many firms are reporting labour and skill shortages.
If immigrant labour fills this gap, then it allows the business to grow, invest in new capital and create other complementary jobs. An example could be filling an engineering job with an immigrant and also creating a salesperson position.
None of this takes the onus away from businesses facing shortages to offer higher wages, or train up to their staff to fill these gaps. Nor does it take away the need for us to work harder to engage people disengaged from work and study.
The research also shows that the adjustment in the labour market is relatively smooth when migration is stable and predictable.
But our migration patterns are not stable. We have wild gyrations, even though it is caused largely by how many people choose to leave. The number of inward migrants has been steadily rising since World War II.
This evidence is clearly not changing hearts and minds. There is a lingering worry that not all of the growth is good. Some of it is resistance to change and to people who are different.
Without a wider conversation on how many immigrants we want, and why we want them, none of these concerns will go away.
Enough with the economic studies, it’s time for politicians to set the public case for and against immigration.