New Zealand’s Migration Levels Not Sustainable: PM

A general view of houses in Oriental Bay on April 9, 2016 in Wellington, New Zealand. Hagen Hopkins/Getty Images

New Zealand will reduce immigrant numbers to relieve pressure on housing and infrastructure, Prime Minister Christopher Luxon has said on Dec. 11.

Current net migration stands at 118,000 a year—higher per capita than neighbouring Australia—meaning the country’s population grew by almost 3 percent in the year ending September.

Massey University demographer Professor Emeritus Paul Spoonley told Radio New Zealand last week that the nation could end the year with the highest net population gain in the OECD.

A Productivity Commission report last year highlighted the need for more services and infrastructure to keep pace with migration, but the previous government had not made significant policy changes.

After decades of underspending, the new government is forced to find the money to fix the country’s aging infrastructure, with NZ$100 billion currently budgeted. But costs are increasing by the day, and Infrastructure NZ says the true deficit could be more than $200 billion.

Capital Could Run Out of Water

Some critical infrastructure is already failing.

For instance, the entity that supplies drinking water to the nation’s capital, Wellington Water, said last week that the region faces an acute water shortage and could run out by February.

If that happens, it will not be able to guarantee the supply of water to hospitals and rest homes.

Part of the new government’s 100-day plan is the establishment of a National Infrastructure Agency which will be tasked with creating a “pipeline” of projects, allowing the tri-party government to lay out a sequenced, yearly plan for major projects for the next 30 years.

And while house prices plunged as the Reserve Bank increased mortgage rates to curb inflation, they are once again on the increase, raising the spectre of further increases to the cash rate. The Bank specifically warned last month that the surge in migration posed threats to inflation by stoking demand in the economy.

With the cost of living consistently topping polls of what New Zealanders were most concerned about, the incoming government has been looking for ways to manage demand for more infrastructure and housing.

Past Policy a ‘Complete Hash’: Luxon

“We’re inheriting a system that’s been a complete hash,” Mr Luxon said.

The prime minister was critical of the previous government’s arrangements, saying borders had been closed “at a time when employers were looking for workers” during the pandemic, and then “Labour opened the floodgates just as the economy was starting to slow.”

The resulting high net migration rates were not sustainable and any immigration should be linked to filling of skills shortages, Mr. Luxon said.

“We’ve got to go back through and actually make sure that any immigration is linked very strongly to the economic agenda of New Zealand,” he said.

“We can’t always control Kiwis returning or Aussies, but what we’ve gotta do, is make sure that we are getting the settings right. It’s gone from being way too restrictive, to being way too loose, and we’ve gotta find that balance.”

Mr. Luxon conceded it was “very hard for any government to lay out ... a hard-and-fast number” for suitable migration levels.

However, Professor Spoonley pointed out that the total gain masked another statistic that should be worrying the government: the number of New Zealand citizens leaving the country has returned to levels common for about two decades before the pandemic.

“We are seeing a net loss of 44,000 New Zealanders, that is a major concern”, he said.

New Zealand currently has a population of 5.27 million.