November 12th, 2009
The Department of Labour has been looking at immigration and its value to the economy, and it seems policy settings are all wrong. It says attracting highly skilled immigrants will not significantly benefit the economy, because NZ needs people of all skill levels to boost growth. The Dept’s study, Economic Impacts of Immigration, says having only skilled immigrants boosts GDP by just 0.1% more than when immigrants of all types are allowed in.
The study also found the benefit to the export sector from skilled immigrants is 8.3% above baseline – less than the 8.5% recorded where the inflow is “demand determined” rather than policy specified. It says increased immigration reduces production costs, improves the competitiveness of NZ goods and services, benefiting exporters, and boosts domestic investment and consumer spending. It says more immigrants mean higher Govt revenues, outweighing the impact on spending.
If the annual net inflow of 20,000 migrants is sustained, NZ would have a population of 4.5m and annual GDP of $248bn in 2021. Doubling the net inflow to 40,000 would add 6.1% to the population to 4.8m in 2021 and boost GDP by a massive 7.6%. Stopping immigration would be a disaster. The report says zero immigration would drop GDP 11% below the baseline (no change to policy) and available labour would be 10.9% below baseline figures.
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