Changes to New Zealand’s immigration policies announced earlier this year have attracted comment in the Australian media. These changes have been depicted as a move to a pro-active immigration program with an outward-looking ethos that Australia would do well to embrace. The Howard Government’s position has been contrasted to New Zealand’s ‘conservative’ Prime Minister’s progressive stance, and Howard has been chided for holding the line on immigration. The implication is that Australia is being left behind and should adopt a more receptive and open demeanour rather than ‘pulling up the welcome mat for immigrants’.¹ But what were the changes to New Zealand’s policies and what was the context in which they occurred?

There were two aspects to the recent announcements. The first is the number of immigrants to New Zealand to be approved in the 1998-99 year. This was announced on 2 June this year. The second concerns the aims of the program and the mechanisms put in place to achieve these aims, including the selection procedures governing the type of immigrant which the New Zealand Government wants. The changes to the regulations on selecting immigrants were announced on 12 October, four months after the announcement of the new target.

This paper explores these developments. To do so, the recent announcements are placed in the context of previous immigration policies and their outcomes in New Zealand during the 1990s.

In fact, the increase in the numbers to be approved under the 1998-99 target was not large. In 1997-98 the target had been 35,000. The 1998-99 target is 38,000 — an increase of 3,000.² By comparison, Australia’s planned intake of ‘visaed’ immigrants in 1998-99 is 80,000.³ But given the relative size of the two countries’ populations, New Zealand’s target is more than twice as high as Australia’s, for New Zealand is hoping to add 10.5 new immigrants for every thousand of its residents, while Australia’s planned intake is equivalent to 4.5 immigrants per thousand residents. (Neither country includes the free movement of citizens between the two countries under the Trans-Tasman Arrangement in its planned intake.)⁴

At first glance it does seem that, relative to Australia, New Zealand has embarked on a population-building program. However, when the net figures are compared, a different story emerges. Underlying New Zealand’s target of 38,000 is the aim of a net gain of 10,000 people per year, which is equivalent to 2.8 persons per thousand of the present population of New Zealand. In Australia’s case, the Department of Immigration and Multicultural Affairs expects that, under current policy settings, the net gain will range between 55,000 to 70,000 per annum,⁵ which is equivalent to 3 to 3.8 persons per thousand of Australia’s population. Thus net migration is likely to add more to Australia’s population growth than it is to New Zealand’s, despite the difference in the targets.

Why the difference in outcomes? A welcome mat at the front door is only part of the story. New Zealand loses proportionately far more residents than Australia through out-migration. New Zealand may be shining up the front door knob but at the same time many people are leaving through the side door. Thus, in 1997-98, despite the 35,000 target noted above, the actual net intake fell below the 10,000 figure the government hoped to achieve. It appears that the new policies are more an attempt to deal with this problem than an attempt to embark on any embrace of a new and expansive population-building program.

As can be seen in Table 1, the net migration goal has actually been reduced over the time period displayed in the table. The present goal of 10,000 is half the goal specified from 1992-93 to 1995-96. Far from population building, the New Zealand Government’s population goals are contracting, mainly because so many of its residents are leaving, both temporarily and permanently.

The following section gives a brief overview of how this situation came about. The paper then moves on to examine some of the implications for Australia.

New Zealand officially slipped into recession in September this year following the announcement that there had been two consecutive quarters of negative growth for March and June.⁶ Shortly after, on 12 October, the New Zealand Prime Minister, Jenny Shipley, announced the new policy initiatives to encourage higher levels of immigration as part of a range of measures which would, she claimed, boost the New Zealand economy.⁷

The perceived link between higher levels of immigration and boosting New Zealand’s economy is not new. Major changes were made to New Zealand’s immigration policy in 1986 by the Labour Government as part of its ‘experiment’ to enhance New Zealand’s economic performance. Previously, immigration policy had been based on the view that New Zealand had a limited capacity to absorb large numbers of new settlers and that immigration was needed primarily to supplement the domestic labour force. The opening up of the migration intake, particularly to skilled and business migration from non-traditional source countries, was intended to bring new ‘human capital’ to New Zealand as well as to increase the population.⁸

In November 1991, a points system similar to the Australian system was set in place. Since that time, the New Zealand Government has set an annual target for the number of immigration approvals. Between 1991 and 1995, the target was set at 25,000 with a desired net migration level of 20,000. This net figure included New Zealanders leaving from and returning to New Zealand but excluded any government quota for refugees. However, under the system introduced in 1991, the target was not a quota. The numbers set could be exceeded. In essence New Zealand immigration figures had a ‘pierceable cap’ similar to that operating in the United States and, as can be seen in Table 1, approvals exceeded the annual targets between 1992-93 and 1995-96. (These data are years ending 30 June but many of New Zealand’s statistics are presented for years ending 31 March to match the New Zealand financial year.)

In the year to 31 March 1995, out of 46,649 successful applications, 17,469, or 37.5 per cent, were for immigrants from North-East Asia. In the following year, 25 per cent of all approvals were for persons from Taiwan and another 22 per cent were from the other North-East Asian countries (China, Hong Kong, Japan and South Korea). Because there is a delay of up to two years between a prospective migrant gaining approval and actually settling, it was projected at the time that large numbers would continue to arrive from North-east Asia into 1997.⁹ By 1994, people concerned about the scale of the numbers and the changing origin of immigrants were beginning to mobilise politically. One manifestation of this was the formation of the New Zealand First Party under the leadership of Winston Peters who began to call for reduced immigration.¹⁰

Many of the new immigrants settled in Auckland. By the 1996 Census, people identifying as of Asian ethnicity made up ten per cent of Auckland’s population and five per cent of the total population of New Zealand.¹¹ The high numbers and their visibility led to public debate about the ‘Asianisation’ of parts of Auckland. Concern was expressed by some members of the Maori and Pacific Island communities. Middle-class New Zealanders also reacted to the highly educated and highly motivated new arrivals, and opinion polls between 1992 and 1994 showed that many New Zealanders, particularly the less educated, were against, or had mixed feelings about, Asian immigration. In April 1995, the government acknowledged that immigration was overshooting the target and running far higher than the net 20-25,000 net migration level the Government had set’.¹²

The New Zealand Government’s reaction to the ‘overshooting’ of the net migration goal was to assert more control over the target. As a temporary measure to control the flow of immigrants the General category pass mark was raised from 28 points to 29 points from December 1994 and to 31 points in June 1995, but to little effect. In July 1995, adjustments to New Zealand’s immigration policy were announced. A new target management system was to take effect from October 1995 with the objective of ensuring that the total approvals were within ten per cent of the target. The target was no longer ‘pierceable’. Included within the new Global Immigration Target were approvals under the ‘targeted’ (General and Business) categories, the Family and Humanitarian categories, and Refugee and Samoan¹³ quotas. The annual target (somewhat confusingly) comprises both ‘targeted’ and social migrants. The mechanism to achieve control of the numbers approved was a floating pass mark that was to be set for the ensuing week and announced every Friday afternoon. The new floating pass mark was initially set at 25 points.

At the same time, in recognition of the role of English-speaking ability in successful settlement, minimum English language requirements were extended from Principal Applicants (PAs) to all accompanying migrants aged 16 and over who entered under the General and Business programs. A steep fee of $20,000 was levied on all those non-PAs who did not meet the required standard of English. This fee was refundable if the migrant met the standard within 12 months of arrival. In addition, ‘returning resident’ visas were not to be issued unless the PA had obtained New Zealand residence for tax purposes. This was to prevent the so-called ‘astronaut’ phenomena where PAs left their families in New Zealand and returned overseas to work, yet paid no New Zealand taxes.¹⁴ Changes were also made to the ‘human capital’ requirements to obtain a broader mix of skills, including advanced trade skills, and points were given for business experience, accumulated earnings, qualifications and family sponsorship.

Despite the lowered pass mark and the attempt to attract a broader range of skills, it appears that the costly bond and the extra time required to sit the English language test nullified the measures. The number of applications were lower than expected. In trying to diffuse the debate by modifying the intake numbers, the Government had once again missed the mark (though this time they had undershot it). Table 1 shows that there was a marked drop in the number of approvals issued to immigrants under the General Skills and Business categories after the year ending June 1995-96. Even though the 1996-97 target level had been lowered from the previous year’s high of 48,000 to 35,000, a number that was thought to be commensurate with New Zealand’s ability to absorb new migrants,¹⁵ the new lower target was not filled. But, because of the time lag between approval and settling, the number of people arriving in 1996-97 (year ending 31 March) was only a little lower than the peak year of 1995-96.

The March years from 1994-95 to 1996-97 were also the peak years for net migration as a result of the high numbers arriving. In contrast, in 1997-98, the net permanent and long-term movement (stays of 12 months or more) plummeted to 2,747, the lowest level since 1989-90 — the year before the introduction of the 1991 ‘targeted’ immigration policy (see Figure 1). Later data extend this story with the net permanent and long-term figure at 450 for the year ending 30 June 1998 (see Table 1). This rapid decline was largely due to net losses of 14,740 to Australia and 2,410 to the United Kingdom in the 1997-98 June year. These losses were balanced by net gains of 10,870 from Asia and 6,730 from all other countries.¹⁶ Lidgard et al. report that:

By 1997, New Zealand’s migration system began to reflect the combined impacts of policy changes in 1995, slowing economic growth in the domestic economy and, from October 1997, fiscal crisis in many parts of Southeast and Northeast Asia.¹⁷

Figure 1 shows that during the early to mid 1990s the increased numbers coming under the migration program did pull the net numbers up. Net migration was further strengthened by the lower numbers of departures from New Zealand until 1994. But, since 1994, the number of departures has increased each year. It is obviously difficult for New Zealand to keep its population growing when so many are leaving, a point not lost on some immigration advocates in New Zealand. Their response has been to call for the replacement of those who leave,¹⁸ rather than to try to retain skilled people already in New Zealand.

While economic stimulus is most prominent amongst the reasons advanced by the New Zealand Government for a more open immigration policy, in reality the emigration of New Zealand’s residents plays a central role in the determination of New Zealand’s immigration policies. The New Zealand Government places much importance on achieving the net migration goals. This concern suggests that the recent increase in the gross target from 25,000 in the early 1990s to 35,000 in 1996-97 and 1997-98 is more to compensate for the outflow of New Zealand citizens than an effort to promote population growth or, for that matter, simply an effort to try to stimulate the economy.

Recognising the lack of control over emigration, the new Coalition Government decided late in 1997 that New Zealand should aim for a more modest net gain of 10,000 people per year. Even though the net migration goal was virtually halved relative to the early 1990s, the then Minister of Immigration, Max Bradford, announced on 19 December, in ‘a package to create certain, long-term immigration policy which will make a positive economic and social contribution to New Zealand’, that the 1997-98 residence approvals target remained the same as the previous year at 35,000.¹⁹ The Government estimated that, in future, depending on how many New Zealanders leave or return permanently, the gross target would vary between 35,000 and 45,000 per year.

The goal of 10,000 net permanent and long-term annual migrants has been maintained into 1998-99, but with the added rider that it was expected to be achieved on average over a period of five to ten years, not each year. In recognition of the higher outflow of New Zealand residents, the gross target has been raised by 3,000 to 38,000 in 1998-99 in an effort to maintain the net goal. Even as he announced the new higher target in June this year, Minister Bradford acknowledged that the number of approvals in 1997-98 had fallen short of the target by 5,000 with only 30,000 approvals being issued.²⁰

As a result, New Zealand has recently found it impossible to meet its annual net migration goal. The number of New Zealand citizens who move to Australia appears to be the main determinant of the size of the outflow (see Figure 2). Return migration of New Zealand citizens from Australia to New Zealand does reduce the impact of this outflow. But, since 1983-84, only in 1990-91, when the Australian economy was in recession, did more New Zealand citizens leave Australia than arrive. From 1984-85, the average annual number of gross permanent and long-term arrivals of New Zealand citizens in Australia was 23,719 per annum compared with the average net figure of 11,185 per annum.

Australia is not the only destination for disillusioned New Zealand residents. According to reports in the New Zealand media, some of the recent Asian immigrants are returning home to support family in their country of origin following the Asian currency crisis. Others are returning to Asia because their children cannot find jobs in New Zealand after graduation.²¹ However, in the year to August 1998, apart from Australia (26,834), the most popular destinations for New Zealanders departing New Zealand for 12 months or more were Britain (15,323) and North America (4,080).²² With Britain’s recent toughening up of entry rules for New Zealanders and gloomy economic surveys from Britain it has been suggested that this may be less of an option for emigrating New Zealanders in the future.²³

How does New Zealand intend to meet the higher 1998-99 target? An extra 8,000 immigrants are required over the number of successful applications in 1997-98. To achieve the desired numbers, there have been major policy changes. The New Zealand program puts more emphasis than Australia does on the independent stream (which, in New Zealand’s case, includes the General Skills and Business categories) than the family and humanitarian streams and the new policies are unashamedly aimed at encouraging business people, investors, entrepreneurial and skilled immigrants in particular. Some of the key features are summarised below.

•The most significant change is the abolition of the $20,000 English-language bond which was thought to be a prime cause of the lower level of applications. This has been replaced by the pre-purchase of English language lessons (at the cost of NZ$1,700 to NZ$6,650, depending on competency levels) by non-principal applicants and by business migrants who do not meet a basic standard of English.

•New Zealand sees itself as competing for migrants and there is an emphasis on marketing New Zealand as a destination, something which is not a prominent aspect of Australia’s migration program. To this end, new offices are to be opened in Pretoria, Moscow and Shanghai.

•Under the General Skills category, holders of a New Zealand qualification will now receive a bonus point and will be exempt from the work experience requirements. Other applicants are no longer required to have a minimum of two years work experience directly related to their qualification held. Work permit holders who qualify for residence on all other grounds except the English language requirement can now qualify for residence under the General Skills category upon pre-purchase of English language lessons.

•The Business Investor category (which has had a sub-target of 500 since December 1997) has been effectively split into three categories: Entrepreneur, New Investor and Long-term Business Visa. Those applying under the Entrepreneur category have to have established a business in New Zealand and they have to demonstrate that the business is benefiting New Zealand through the creation of jobs or by providing a new type of good or service or by revitalising an existing business. The New Investor category focuses more tightly on the investment funds that an aspiring immigrant has, with points also given for two to ten (plus) years business experience. Points are no longer given for additional factors such as partner’s qualifications, New Zealand business experience, or family sponsorship. The maximum age has been raised from 65 to 84 years, although negative points are given for those aged 65 or more.

•A new three-year multiple entry visa, the Long-term Business Visa, is to be available to persons who are interested in establishing a business in New Zealand but who do not wish to live in New Zealand permanently. They will be eligible to apply later for residence under the Entrepreneur category. Employees of existing businesses which are relocating in New Zealand who do not qualify under other categories can be granted residence on a case-by-case basis.

•Changes have also been made to policies covering international students with the objectives of boosting the education market, attracting students as potential migrants and encouraging external linkages. There are 7,500 foreign students studying in New Zealand at present. A major initiative is the raising of the quota on students from the People’s Republic of China (PRC) from 1,000 to 4,000 each year. (As a comparison, Australia issued less than 2,000 PRC students with visas in 1997-98.)²⁵ Overseas students will be encouraged to apply for permanent residence on completion of their courses. Some of the changes to the General Skills points scheme are specifically aimed at this.

Changes to New Zealand’s immigration policies have a downstream impact on Australia. Recent immigrants to New Zealand are influenced by the same economic circumstances that propel other New Zealand citizens to move to Australia. For many New Zealanders, underemployed or struggling to find employment at home, the Australian labour market is an alternative worth exploring.

In the 1997-98 financial year, 77,327 people arrived in Australia with the intention of settling permanently. More than 25 per cent (19,393) were New Zealand citizens who entered Australia under the Trans-Tasman Arrangement. This is the highest proportion since records of the movement of New Zealand citizens began to be kept in 1960-61. The previous peak was in 1988-89 when the 27,254 New Zealand citizens arriving with the intention of settling permanently in Australia formed 19 per cent of all settler arrivals.

How did this non-program movement come to account for such a large proportion of the new settlers arriving in Australia? The answer lies in two unrelated but simultaneous developments.

Since coming to power in 1996, the Coalition Government has reduced the numbers visaed under Australia’s official migration program. In 1997-98 the outcome was projected to be 80,000, nearly a fifth less than the number visaed in 1995-96 under the Labor Government.²⁶

The second development is the increasing number of immigrants arriving from New Zealand as the Australian economy improved after the recession in the early 1990s. In 1991-92, the number of New Zealand citizens who arrived in Australia fell to 8,206 but it then increased steadily from 1994-95 onwards (see Table 2). Since New Zealand’s economic performance started slipping in 1995, New Zealanders have expressed their concern about the future in opinion polls²⁷ and with their feet.

The size of the New Zealand flow is significant and the factors that shape the dynamics of this movement should be of interest to Australians. Immigration spokespersons for both the Australian Labor Party (ALP) and the Coalition have acknowledged this.²⁸

New Zealand’s response to population loss is to increase immigration. It is ironic that the likely downstream effect of this response is that higher numbers will emigrate to Australia. This is because migrants have a higher propensity to leave and, having emigrated, are less likely to return to New Zealand.²⁹ This tendency shows in the increasing importance of the re-emigration to Australia of third-country nationals who have taken out New Zealand citizenship during the 1990s (see Table 2). After three-years residence in New Zealand immigrants are entitled to apply for New Zealand citizenship and thereafter are free to emigrate to Australia.

This component of the Trans-Tasman movement reflects New Zealand’s own immigration program, which can be broadly characterised as having four main sub-systems: the Trans-Tasman flow; the colonial flow linking New Zealand to the United Kingdom; another colonial flow linking New Zealand to its former Pacific Island protectorates; and, by end of the 1980s, a fourth sub-system which has developed linking New Zealand to the countries of North-East Asia. So strong is this new stream that, by the June 1995 quarter, the United Kingdom had lost its number one ranking as settler-source country to Taiwan.³⁰

Migrants entering New Zealand in the Polynesian and Asian sub-systems are more likely than those from the United Kingdom to move on to Australia.³¹ The main reasons for this difference are most likely to be the average age of the immigrant groups, the timing of their settling in New Zealand and the range of other choices open to each group. Although many United Kingdom citizens leave New Zealand, about half of those who left over the last decade have returned home to Britain.³² The United Kingdom-born in New Zealand are older than most of those in both the Polynesian and Asian sub-systems.³³ Many of the latter two groups, particularly the North-East Asia-born, have also been more recent immigrants to New Zealand than the United Kingdom-born³⁴ and therefore are likely to be less ‘settled’ in New Zealand. For those of Asian ethnicity, integration has been made more difficult because they are more likely to be unemployed than recent arrivals of British, Irish and other white Caucasian ethnicity, despite the fact that they are targeted ‘quality migrants’.³⁵ It is not surprising that a bigger labour market and the presence of larger ethnic communities with their potential for support attracts these recent migrants to New Zealand to re-emigrate to Australia.

Whether Australia likes it or not, any changes that New Zealand makes to its immigration program have an impact on the size and shape of the net Trans-Tasman flow to Australia. The Australian Minister for Immigration, Philip Ruddock, has acknowledged that Australia and New Zealand do not have a common border which they supervise together but has added that the Government does not see any reason to abandon the present longstanding arrangement that has benefited both countries.³⁶

Note

Statistics New Zealand and the New Zealand Government both maintain websites which provide a wide range of information. Many of the following references, including media releases, were downloaded from these sites which can be found at http://www.immigration.govt.nz, http://www. executive.govt.nz and http://www.stats.govt.nz.

References