Interim response to the Productivity Commission’s report – Immigration - Fit for the future

Immigration, both economic and humanitarian, has significantly shaped New Zealand’s society. COVID-19 has also highlighted the importance to many sectors of the economy of imported skills and labour. The correct balance of immigration settings is important for New Zealand as we transition to a high-wage, low-emissions economy. 

Our priority is to improve how we communicate the goals for the immigration system and that we balance immigration policy objectives with broader government objectives. 

In April 2021, the Minister of Finance and the Minister of Immigration commissioned the Productivity Commission (the Commission) to undertake an inquiry into immigration settings.

In April 2022, the Commission released its report, Immigration - Fit for future, which contained 32 findings and 24 recommendations. The Commission concluded that immigration is likely to be neither the solution to, nor the cause of, the productivity challenges facing New Zealand.

See the report: Immigration - Fit for the future(external link) — Immigration.govt.nz

It also found that immigration has played an important part in New Zealand’s economic development. On average, immigration does not drive down wages or replace local workers. It has had a small and mostly positive effect on the wages and employment of New Zealand-born workers during the last 20 years. The Commission emphasised that the relationship between productivity and immigration requires a balance of trade-offs and a consideration of both short-term and long-term impacts.

The Report illustrates the importance of the correct immigration settings and the need to improve the public’s understanding of our goals. The Government thanks the Commission for its work and generally agrees with the recommendations, which can be broadly grouped into 3 main themes:

• Improving productivity and labour market outcomes by better connecting the immigration, skills, training and education systems.
• Increasing transparency and public understanding of the strategic direction of the immigration system.
• Engaging with Māori, as our Te Tiriti partners to build enduring partnerships.

Improving productivity and labour market outcomes by better connecting the immigration, skills, training and education systems

We have introduced a number of reforms that aim to ensure that employers have incentives to hire domestic workers and that the immigration system makes it easier to attract high-skills and talent shortages.

• The reform of Vocational Education will create a sustainable vocational education system because it will deliver the skills employers need and ensure greater consistency in vocational education across the motu.
• Workforce Development Councils have been established to ensure vocational education addresses the future needs of industries and supports learners to be work-ready.
• Industry Transformation Plans focused on long-term transformation necessary to contribute to a high-productivity, high-wage, lower-emissions economy are being developed through a partnership-led approach for 8 key industries.
• Regional Skills Leadership Groups have been established to address labour market issues in the regions and to plan workforce needs in each region.

We will continue to strengthen the connections between the immigration, skills, education and training systems to respond appropriately to identified skills shortages and support the labour market and New Zealand’s economy. 

The Immigration Rebalance is a key part of these reforms which make it easier for employers to attract and retain high-skilled migrants and provide more flexibility to respond to changes in the labour market. 

Consistent with the recommendations made by the Commission, recent changes to immigration settings are designed to support a more managed flow and the right mix of high-skilled migrants to grow the New Zealand economy:

• The Accredited Employer Work Visa (AEWV) introduces a wage threshold (currently set at the median wage) as a mechanism to shift from low-skilled low-waged migrant workers to high-skilled, highly-paid migrant workers. It is also easier for migrants to change employers, consistent with the Commission’s recommendations.
• Sector agreements have been introduced to support the transition from a reliance on low-skilled migrant labour, while ensuring everyone has better wages and working conditions. Agreements are in place for the sectors of care; construction and infrastructure; meat processing; seafood; and seasonal snow and adventure tourism.
• The Green List makes it easier for employers to hire and attract migrants for specified high-skilled, hard-to-fill occupations. It also provides prioritised pathways to residence for eligible. The Green List will be regularly reviewed to ensure it remains fit for the labour market and reflects high-skilled occupations.
• Changes proposed to the Skilled Migrant Category align with the Commission’s recommendation to provide greater certainty to skilled migrants, simplify the points system and close the gap between eligibility and available spaces.
• Poor employer behaviour can be monitored and addressed through the AEWV accreditation process and the implementation of the Migrant Exploitation Action Plan. Employment New Zealand and Immigration New Zealand have also received more funding to help stamp out migrant exploitation.

Increasing transparency and the public’s understanding of the strategic direction for the immigration system

We are committed to creating an immigration system that is as transparent, evidence-based and fair as possible for New Zealanders and the migrants seeking opportunities in New Zealand. Recently, engagement has been on changes to specific parts of the immigration system such as short-term responses to COVID-19, rather than on our long-term goals.

The Ministry of Business, Innovation and Employment (MBIE) will lead the next phase of work that provides an opportunity to build on the foundation set by the Rebalance and ensure the public has certainty that our immigration settings will deliver a secure future for all New Zealanders and for migrants.

MBIE will undertake targeted consultation with Māori, the new Migrant Community Reference Group, and key stakeholders and report back to Cabinet by mid-2023 on a draft Government Policy Statement that aims to:

• Improve transparency and the public’s understanding of the goals for the immigration system
• Inform how trade-offs between the immigration system objectives and other government priorities are made such as the labour market, education and training, tourism, environment, infrastructure and international relations
• Provide information about the demands that immigration of particular migrant groups creates for infrastructure and public services, including identifying where bottlenecks might exist to inform discussions about appropriate policy and investment responses
• Set out performance metrics to support transparency.

Engaging with Māori, as our Te Tiriti partners to build enduring partnerships

MBIE will continue engagement with Māori to strengthen partnerships and consider Māori perspectives as part of the immigration policy process. This includes to discuss what Te Tiriti o Waitangi means for immigration policy and inform how we should think about the opportunities and impacts of immigration policy for Māori.