Economist warns politicians against making snap decisions on migration boom

A leading economist is warning the Government against making snap decisions about migration as he believes the current boom has plateaued.  

New Zealand's population over the second half of last year grew at its fastest rate since 1946, putting our total population now at just over 5.3 million people. 

Infometrics Principal Economist Brad Olsen puts the surge in people arriving in New Zealand down to a COVID-19 hangover of when our borders were shut and also a labour shortage facing the country at the time. 

"We've seen the largest migration boom that New Zealand has ever seen," Olsen told AM on Monday morning.  

"We were sort of adding, I think, a Taupō's worth of people every second month or so, that's contributed to the largest population gain New Zealand has ever seen since the end of the Second World War, since 1946."  

Olsen told AM the migration boom is adding "pretty significant stresses" to the rest of the country as New Zealand's infrastructure, such as hospitals, houses and schools, struggles to keep up.  

But that boom could be ending with Olsen believing the figures have plateaued.  

"If we look at the latest data from Stats NZ, for example, although we're not seeing it sort of shift down particularly rapidly, the migration figures do seem to suggest that we might be around that sort of plateau. In fact, it might have been around October last year that was sort of the peak of that annual growth," Olsen told AM co-host Lloyd Burr.  

This hasn't stopped the Government from planning changes to the immigration settings with Finance Minister Nicola Willis saying the door is currently open to too many low-skilled workers. 

But Olsen said the current boom in migration is what the industry and the Government had been calling for.  

"I think the challenge a little bit is that it's also what the Government had been asking for and importantly, what industry had been asking for as well. They said, 'Look, we need workers to work in tourism operations and accommodation and food services, so let's bring these people in'," Olsen said. 

Infometrics Principal Economist Brad Olsen told AM he believes New Zealand is still not particularly clear on exactly what we want from migration.
Infometrics Principal Economist Brad Olsen told AM he believes New Zealand is still not particularly clear on exactly what we want from migration. Photo credit: AM

He warns the Government shouldn't rush into any decisions about migration as they won't impact what happens today or tomorrow but instead 12 or 18 months down the track.  

"I think the difficulty and the challenge I'm sort of seeing for migration is politicians often make pretty big decisions over the likes of migration policy that often aren't going to affect migration right here and now. It might not even affect it for the next 12 months," Olsen told AM.  

"I'm just a little bit concerned that we might well be needing to react to migration and make policy decisions now as migration is probably starting to turn over, that might well mean that in the future, in 12 months to 18 months' time, when migration is already starting to get that back towards normal, that we then sort of hammer out again and we sort of go through this more topsy turvy big highs then bigger lows and then back again." 

On top of this, Olsen believes New Zealand doesn't have a clear plan for what it wants to do with migration.  

"It's still not particularly clear exactly what we want from migration in terms of, we don't have a particularly well-defined level of at what skills we're wanting because we seem to be debating high skilled, low skilled and otherwise," he said.  

"Migration brings a huge amount to New Zealand, both in terms of culture and society, but also, of course, importantly, the economy. I'm just not 100 percent sure we know exactly what we want and therefore if we're also going to resource it we need to be building more houses, we need to be getting more services so that we can actually support those who come into New Zealand.  

"They're contributing things back to us. We need to ensure that they've got the services that they require as well." 

Watch the full interview above.