Speech by Hon Richard Prebble, Leader ACT New Zealand
to the ACT Party's Upper South Island Regional Meeting
at Trevino's Restaurant, Cnr Mona Vale and Riccarton Roads, Christchurch at 11am on Sunday, 7 April 2002

New Zealand is, with Sweden, the only country in the world increasing interest rates. Australia last week held its interest rates down. So why are New Zealand's interest rates rising?

The Reserve Bank is facing its old problem - inflation, driven by Auckland property prices. In the last two months, Auckland`s rental prices have exploded. Landlords are holding auctions with desperate tenants bidding up prices.

New housing starts in Auckland during February were double the number for February last year.

What is driving Auckland's housing market? It is a dramatic increase in immigration.

Government Ministers boast that it is the Brain Drain reversing - that skilled New Zealanders are returning after September 11. The media have been running stories about skilled Kiwis coming home. That would be wonderful - if it was true.

The ACT Party subscribes to the Department of Statistics data base. We have access to raw immigration and emigration statistics.

The real figures tell a very different and alarming story - one that I think will cause Labour to go for an early election.

After September 11, migration out of New Zealand did dramatically turn around. In October and November, many more New Zealanders returned home than left the country. But by Christmas, the number returning had started to fall.

In February, just 31 more skilled New Zealanders returned home than left. When the March figures come out, they are expected to show that the Brain Drain is in full flood again.

But digging further into the figures, something disturbing emerges. Far more unskilled than skilled New Zealanders have returned. Only 13 percent of the thousands of Kiwis who returned home after September 11 are skilled.

Changes to welfare entitlements in Australia, that Helen Clark signed with John Howard, now mean that the first sign of an economic downturn across the Tasman results in a flood of unskilled Kiwis coming home. Those people have been paying tax to Australia, not New Zealand.

The immigration news gets worse. The skill level of all new immigrants has fallen. Most new immigrants are now unskilled. To reach a new, higher target for immigration, the government has lowered the criteria immigrants must reach, and expanded family immigration.

A minority of immigrants are skilled. Most are accompanying family and children - or gaining entry on family re-unification or humanitarian grounds, including refugees.

Even those with skills are not necessarily employable. There are still more than 900 doctors whose qualifications are not recognised, who are on welfare. There are too many foreign professionals driving taxis.

Over half the new immigrants are going to Auckland, driving up house prices and adding to inflationary pressure. So we are back into the cycle of Auckland's house prices driving up interest rates. .

If the new immigrants were going to be productive and enterprising, it might be a price worth paying.

The gap between New Zealand interest rates and American interest rates has widened dramatically. The rise in interest rates has caused the Kiwi dollar to appreciate by 10 percent in a month. This will wipe hundreds of millions of dollars off our exports.

For exporting regions such as the South Island, it represents a huge transfer of wealth to the importing regions like Auckland. It is unsustainable. It can't last.

The housing and consumer spending generated by unskilled immigration is also unsustainable.

Labour Ministers know this. I believe the government won't want to wait until November when it will be obvious that we are back into our economic nightmare - an Auckland/immigration-led inflationary cycle, driving up interest rates and the dollar, killing the export sector.

The ACT Party is not into the anti-Asian xenophobia of New Zealand First. What ACT has consistently said is that all immigration, including refugees, should be directed by New Zealand's needs.

The moment the government realised that large numbers of unskilled New Zealanders were coming home, immigration criteria should have been tightened up - as the Canadians have done. It is now easier to migrate to New Zealand than it is to migrate to the US, Canada or Australia.

We need to tighten our immigration criteria. More immigrants need to be skilled and those skills need to be relevant to the New Zealand economy. Foreign professionals driving Auckland taxis is in no one's best interests.

Choosing refugees on the basis of what trouble-spot is on TV tonight, must also stop. There are more than 20 million refugees worldwide. Many have skills and would be productive citizens. Choosing queue-jumpers and boat people just encourages people-smuggling.

Immigration is a policy that we must get right. Short-term politics in immigration will have disastrous long-term consequences for the country.

The government's creation of an election-year economic stimulant to Auckland, caused by immigration, is going to bring the rural-led recovery to an end. The recent rise in interest rates, together with the dramatic rise in the dollar, are the first signs that the good times are over.

Before it becomes obvious that the government's immigration policies have ended the export-led recovery, I think Labour will use the Alliance Party's problems as an excuse to call an early election.

ENDS

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