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The Government’s plan for Immigration

Hon Michael Woodhouse
Minister of Immigration

19 April 2017
Speech

Speech outlining the Government’s plan for Immigration

Introduction

Good Morning.

Thank you to the Otago and Queenstown Chambers of Commerce for hosting this event.

Ladies and Gentlemen, thank you for the opportunity to speak to you today. It’s a pleasure to be here.

It’s a fitting place to be talking about immigration. This region has been a rich part of New Zealand’s immigration story since the gold mining days of the 1860’s and remains one of the country’s premium destinations for overseas visitors, working holiday makers and other visa holders.

Dougal tells me it was actually the Otago Chamber of Commerce who invited Chinese gold miners to work the Central Otago fields over 150 years ago. So the Chamber as host and this location is highly appropriate for me to outline the Government’s next steps for immigration.

Immigration has definitely been a significant talking point over the last year, so I’m not surprised to see so many of you here today to talk about it.

The National-led Government believes New Zealand should be open to the rest of the world and immigration helps do that by encouraging innovation and deepening our links with international markets.

We want our businesses to have access to new and emerging markets, and we want to maximise the contribution immigration can make to our economy, with a clear focus on building our regions and supporting our sectors to grow.
So at a time when we are doing so well as a country, the focus on immigration is of course heightened.

But there’s a lot more to the immigration story than what you see or hear in the media.

Today, I want to look at the benefits migrants bring to New Zealand, before outlining the Government’s plan for immigration.

But before I get to that, I want to spend some time talking about the economy, and the strong position we are currently in as a country.

Economic Outlook

At a time when many parts of the world face significant political and economic risks, New Zealand is fundamentally doing well.

We are one of the fastest growing economies in the developed world.

That growth is driven mainly by the opportunities provided by our export markets, our global competitiveness, our high skill levels, our confidence to invest, and the resourcefulness and adaptability of Kiwi businesses.

It’s also backed up by this Government’s clear plan for the future.

And with that growth comes more job opportunities and higher wages for New Zealanders.

We’ve seen very strong employment growth over recent years. The economy has seen 328,000 jobs created since 2008; and a further 150,000 are expected by 2021.

The average annual wage, which is currently $58,700 and has been growing at twice the rate of inflation, is expected to reach $66,000 by 2021.

The most recent Household Labour Force Survey reported that for the first time ever we have 2.5 million people employed in New Zealand.

Our employment rate – the proportion of the total population aged 15 years or older in work – is 66.9 per cent. This is a record for New Zealand, and the second highest employment rate in the whole of the OECD.

So, as a country, we are well placed to grasp the many opportunities ahead of us.

Immigration context

It’s easy to see why people are keen to come here.

New Zealand is continually ranked as one of the best countries in the world for ease of doing business. We are renowned for our great lifestyle, safe and friendly communities, good public services and a clean and green environment – all underpinned by a stable government and a growing economy.

As the Prime Minister has said, it’s no wonder more kiwis are coming home, fewer are leaving and more people from all round the world want to come here. That’s a vote of confidence in this country and something we should be celebrating.

But a growing economy also creates some challenges.

That’s why as a Government we are investing heavily in the infrastructure needed to support this growth right across the country.

We’re expanding the roading network, the rail network, electricity transmission, ultrafast broadband and social infrastructure like schools and hospitals.

Here in Queenstown for example, we are currently building the new two lane Kawarau Falls Bridge, and we are investing jointly with the Queenstown Lakes Council on the new $22 million Eastern Access Road.

The Eastern Access Road is a critical link in Queenstown’s transport network which will help relieve congestion through the Frankton Flats area, bypassing the airport and connecting Remarkables Park to Frankton-Ladies Mile. It’s due to be built by the end of this year.

We’ve also invested $18.5 million in the new Shotover Primary School, and we are currently considering the timing of the planned expansion of Wakatipu High School to 1800 pupils.

To ensure our economy continues to grow, we must grow our companies, and that means they must be able to add more skilled staff.

We can and do train New Zealanders for those roles but fast-growing industries like viticulture, horticulture, fishing, farming, IT, construction and high tech manufacturing often need more experienced people than a small country can immediately provide.

And that’s where immigration can help.

Despite positive initiatives to place Kiwis into those growing jobs it is necessary now, and likely for the foreseeable future, that part of that employment demand will need to be met from overseas.

To restrict that would put our strong positive growth at risk and cost Kiwi jobs and export earnings.

We’ve seen a strong turnaround in net migration, from a net outflow of around 4,100 in the year to February 2012, to a net inflow of 71,300 in the year to February 2017.

It’s important to look behind the headline numbers and identify the main drivers of that turnaround which are:

9,000 more Kiwis returning home and 28,000 fewer leaving making up around half of that change.
21,000 additional Working Holiday Visa holders
7,000 more international students arrivals
3,000 more Australians moving here each year

These areas alone account for around 58,000 people each year.

We, of course, can’t stop Kiwis from returning home – and we don’t want to.
And there are areas we are cautious about restricting due to the possible negative impacts.

Restricting the number of working holiday makers for example, would have a reciprocal effect on New Zealanders wanting to travel or study abroad.

And cutting international students would have a major impact on one of our most successful industries and our fifth largest export earner.

But while we don’t want to stop Kiwis returning to New Zealand, there are other migration pathways that we can and do actively control.

We constantly monitor and change the settings depending on the number of people wanting to move here, and the need for international labour.

And today I want to take you through some new steps to control both the number and quality of people migrating to New Zealand.

The areas I think would be of most interest and concern to the public are the numbers of people gaining residence or obtaining temporary work visas where it is necessary to pass the labour market test.

Interestingly, while demand for Residence Visas has no doubt increased, volume is controlled by the planning range settings that ensure the numbers are maintained at the long term average.

As I have said before, we have a Kiwis first policy but it’s not always possible to find Kiwis to do the work. Earlier this year, I spent a few weeks visiting the regions where they are screaming out for more workers.

You will have heard me talk about the barriers to employment that exist for some New Zealanders – location, skills, training, attitude, drugs and alcohol.

This Government has done more than any other to ensure those barriers are removed, and for some those barriers are significant. But we don’t give up on them. We are continuing to increase the number of youth in training and employment. But it the meantime, the fruit needs to be picked, the grapes harvested and employers need the workers do those jobs.

That’s why we have labour market tested temporary visas known as Essential Skills Work Visas. As you will know, this is when employers are required to prove that there is no Kiwi ready and available to do the job.

And it is the trend of these types of visas that I believe are the best proxy for whether there is labour market displacement occurring.

Temporary Visas

Much of the commentary I referred to earlier would also have you believe that the number of Essential Skills visas being issued had increased. In fact, until last year the volume of these visas had steadily decreased by more than a third since the National-led Government came to office.

We are determined to ensure that Kiwis benefit from our growing economy and labour market, and we are working closely with industries that rely on overseas workers to ensure they are diligent in their workforce planning, attraction and retention of New Zealand workers as a prerequisite to accessing overseas labour.

Most of those industries would say that it has actually become more difficult to recruit from overseas. And the Government makes no apology for this. We are absolutely committed to the principle of Kiwis first.

However, it’s about more than just the number of work visas issued. It’s about the conditions that are set for those workers and ensuring that the duration of stay and the likelihood of a pathway to residence is clearly understood.

A material number of Visa holders have been here for many years, despite having little or no chance of gaining residence. It is important that we continue to allow access to overseas labour where necessary, but to ensure that those workers are clear about their future prospects.

Immigration policy, under successive governments, has been about making medium-term settings and accepting that there are fluctuations in migration around that.

Recent NZRP changes

Because of the increase in demand, in October last year we made some changes to immigration settings to keep on top of the number of people gaining residence in New Zealand.

We increased the number of points required to gain residence under the Skilled Migrant Category,

We toughened English language rules and suspended the Parent category for new residents.

These changes will both stop the growth in residence numbers and prioritise access for higher-skilled migrants - striking the right balance between attracting skilled workers that allow companies to grow and controlling immigration in a period of strong growth.

Early evidence suggests the changes are working. The bar has been raised, and the number of people being selected to apply for residence has dropped by almost 50 per cent.

It’s a little early to say whether or not that reduction will be permanent, but there is no doubt that those changes have had the effect of both controlling the number, while at the same time increasing the average skill level of our skilled migrants.

And the net inward migration numbers have now plateaued, rather than increasing.

Migration has remained at higher levels for longer than most forecasters expected, but in certain sectors there is a genuine need for those migrants to help fill skill shortages.

It is important that we are attracting the right people, with the right skills. That’s why we constantly monitor our immigration settings to ensure they are fit for purpose.

So where the changes in October largely focused on the number of migrants, I’m pleased to announce today further changes to further control the number and improve the quality of new migrants coming to New Zealand.

Introducing Remuneration Bands

Firstly, we plan to introduce remuneration thresholds for both permanent and temporary skilled migrants.

Remuneration is an excellent proxy for skills - and will complement the qualifications and occupation framework to ensure the Skilled Migrant Category selects higher-skilled and higher-paid migrants.

Two remuneration thresholds are being introduced.

The first remuneration threshold will be set at the New Zealand median income – around $49,000 per year.

Anyone who earns less than that amount will no longer be classified as highly-skilled – regardless of whether their job may have been classified that way previously.

Permanent residence applicants will no longer be able to claim points for jobs that are considered skilled but are paid below the median income.

We are also proposing that those eligible for a temporary ‘Essential Skills’ work visa but who earn less than the threshold will still be able to work here, however they will be limited to a maximum time in country duration of three years.

Partners and children of these lower-skilled work visa holders are presently able to obtain open work visas and student visas that allow them to attend primary and secondary school in New Zealand as domestic students.

Under these changes, we propose that partners and children will be able to come to New Zealand as visitors and will only gain a work visa if they meet visa requirements in their own right.

We also propose that those occupations that are seasonal in nature will have visas issued for the duration of the season, rather than for twelve months as is presently the case. We will be consulting with industries to ascertain what occupations would fall into that category.

Together, these changes aim to encourage higher-skilled workers to come to New Zealand, so a second threshold will also be set at one and a half times the median income – around $73,000 per year.

Anyone who earns more than that amount will automatically be classified as highly skilled.

Permanent residence applicants will be allowed to claim points for jobs that are not currently considered skilled, but are paid above the higher threshold.

And temporary work visa holders earning over the threshold will automatically be classified as higher- skilled, meaning they will not be subject to the same time in country constraints as those considered lower-skilled.

Introducing these thresholds is about creating a balance – a balance between ensuring employers can meet genuine labour shortages by using people from overseas, while at the same time ensuring those lower skilled migrants are coming here with a clear understanding of their visa conditions.

In fact, there will be some workers who are now likely to be eligible for residence for the first time such as outdoor adventure instructors, heavy machinery operators and experienced workers in the construction and oil and gas industry.

Migrants already in New Zealand should know that they would not be immediately affected - the new requirements would only apply to visa applications made after the policy is introduced.

I also want to make it crystal clear that employers will be able to continue using migrant labour when they can demonstrate a real labour or skills shortage and that they cannot find New Zealanders for the job.

But we’re also setting a challenge to employers to take on more New Zealanders and invest in the training needed to upskill them.

South Island Pathway to Residence

I also want to cover one final issue.

As a result of the sustained demand for labour, there has been a significant growth in the number of lower-skilled temporary migrants in the South Island who help fill genuine labour shortages and have become well-settled here.

In fact there are around 4,000 migrant workers and their families who have been living in the South Island for more than five years, but who have little likelihood of gaining residence under current settings.

So, on top of the proposed changes I’ve just announced to our temporary migration settings which will prevent this situation from reoccurring, I’m pleased to also announce a new policy to provide a one-off pathway to residence for those lower-skilled temporary migrants already in the South Island.

Eligible migrants will be granted an initial Work to Residence temporary visa, which will make them eligible for residence in two more years provided they stay in the same industry and region.

Many of these migrants are already well settled in New Zealand and make a valuable contribution to their communities. The requirement to remain in the same region for a further two years after being granted residence ensures that commitment to the region continues.

This last announcement delivers on the Government’s 2015 commitment to provide this group of people with a pathway to residence, and enables employers to retain an experienced workforce that has helped meet genuine regional labour market needs.

Conclusion

Ladies and Gentlemen, the Bill English led-Government has a clear plan for the future, with a focus on building our regions and supporting our sectors to grow.

And our immigration settings have a key role to play in achieving that. But it’s important that we continue to control both the number and quality of people migrating to New Zealand.

The changes announced today are about striking the right balance between enabling employers to continue to access migrant labour where there are genuine skills shortages and improving the quality of new migrants coming to New Zealand.

They also reinforce the temporary nature of work visas which will help reduce expectations of settlement from temporary migrants with no pathway to residence.

Permanent and temporary migrants make a significant contribution to our economy and the Government is committed to maximising that contribution by focusing on the selection, attraction and retention of higher-skilled migrants.
We’re confident that these changes will help improve the long-term labour market contribution of temporary and permanent labour migration.

Thank you.

ends

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