Introduction & Session Notes. Opening Address. Plenary 1, 2, 3, 4. Panel Discussion 1A, 1B, 1C. Review & Preview. Plenary 5. Panel Discussion 2A. Session Notes, Population Change & Social Services. Panel Discussion 2B, 2C, 2D. Plenary 6. Panel Discussion 3A, 3B, 3C. Closing Address.

PANEL DISCUSSION 1C - SUCCESSFUL SETTLEMENT OF MIGRANTS AND RELEVANT FACTORS FOR SETTING IMMIGRATION TARGETS

DR MANYING IP, THE UNIVERSITY OF AUCKLAND DR JOHN YEABSLEY, Senior Economist, New Zealand Institute of Economic Research 1 Introduction 2 Setting the Scene - Policy Issues 3 What Do Migrants Contribute? 4 What Do Migrants Cost? 5 What About Policy And Targets 6 References SESSION NOTES, The Successful Settlement of Migrants & Relevant Factors for Setting Immigration Targets

3.4  Gross Public Social Benefits

These are the general social improvements that come to the wider community from the movement of the migrants. These could include:

• the social benefits from a more varied society - the whole gamut of a varied social background including those that accrue from the cuisine, recreation, or music viewpoints;

• a more tolerant society; and

• a society that reflects a wider spectrum of the rest of the world.

4

WHAT DO MIGRANTS COST?

The costs involved in the migration decision are not symmetrical with the benefits. There are different factors to be included, or they enter the analysis in a different way. This section tries to give the flavour of the sort of items which should be covered.

4.1  Gross Private Economic Costs

This includes the actual costs associated with the movement of the migrant (and family where applicable). These can be wide-ranging and include factors such as:

• search and research costs;

• application and decision costs - use of consultants where appropriate;
• the family fares;

• the removal expenses - including selling up and other property related expenses, such as insurance;

• the loss in economically valuable time;

• the costs of re-learning institutional knowledge and building contacts;

• costs of re-establishing professional qualifications;

• the losses associated with the learning curve in all aspects of the new environment; and

• the effects of signalling difficulty - such as bias against migrants, or against foreign qualifications;

4.2  Gross Public Economic Costs

This reflects the costs associated with the migration decision which fall on the wider public. Typically these can be seem in terms of the diseconomies of scale and scope that are related to the entry of the migrants.

These could include:

• pressure to provide more facilities in terms of social infrastructure, for instance, schools or sewers;

• congestion costs - which mean that roads, footpaths, beaches, mountain tops and other "commons" are just more used and less likely to be uncrowded;

• adjustment costs within the economy as changes in tastes and numbers will demand a series of new economic operations; and

• fiscal and other public economic management pressures as the migrant inflow creates stresses in the balance of the economy.

4.3  Gross Private Social Cost

These are the non-economic costs borne by private individuals associated with the migration decision. In concept they are similar to the economic costs but take on a different style.

They may include the following:

• separation from friends, family and other people;

• inability to undertake familiar pastimes, or usual social behaviour due to lack of institutions such as clubs, or sports facilities;

• missing familiar styles of social interaction or common interests; and

• lack of the supply of items that are necessary to live in familiar ways, such as cooking ingredients, books or music.

4.4  Gross Public Social Costs

These are the wider non-economic negative effects of the migration decision. They will include effects such as:

• the effect on those who do not want more people or a wider spread of cultures;

• the negative impact of the changes the migrants will make in the institutions and other social structures of life including those coming from the new styles of eating places, or different music; and

• congestion effects and different (unappreciated) social behaviours - such as poor queue discipline, different social attitudes, religions and noise preferences.

5

WHAT ABOUT POLICY AND TARGETS

This section is an attempt to pull together the material that has been presented in earlier parts of the paper.

5.1  General Introduction And Recap

This review of the various potential impacts from policy suggests that the design of immigration policy is going to be a complex matter even allowing the degree of simplification used here. An approach might be to try and select migrants so as to maximise the sum of the benefits and minimise the sum of the costs.

This should provide the greatest net benefit. But the discussion has shown that there are interactions between the various elements, including those on the costs and benefits side.

Thus, it is not easy to carry out the optimisation. It seems likely that there would have to be a more holistic approach.

But it does suggest that selection as a concept has validity. There are clear gains to be had from choosing the characteristics of the inflow. These are distinct from the gains that come from regulation of the size of the inflow (which are the subject of the discussion below.)

As examined above, though, there are great practical difficulties associated with selection as a process. These stem from a variety of sources, but there is one not covered earlier that should be mentioned. It is the consequence of permanent residence being a long term decision. The analysis thus should be about the long run implications of migration.

But in practice, over any realistic period the structure of society and the economy will change. Indeed, one of the influences for such change will be the flow of migrants themselves; New Zealand itself is a different place than before the abolition of preferred source countries a short 10 years ago. So trying to determine how to make the selection will demand some criteria that are robust in the face of fairly significant social and economic change.³⁶

We can quickly check what these might consist of. At a high economic level the critical factors might be seen as the following:

• on-going success in the labour market - this has been important in New Zealand for years, though the challenge has changed; and

• positive externality enhancing - that is, the migrant tends to improve the economic workings of the wider community as well as experiencing the captured personal benefit.

Turning to the social side, once the pathological threats have been eliminated, the social criteria at a similar level of abstraction to that for economic factors might be:

• well suited to New Zealand's social style, while readily able to adjust to the possible continuing changes; and

• possessing the positive socially enhancing characteristics that will bring something extra to the whole community, such as novel ideas, and the enthusiasm, energy and public spirit to create fresh institutions.

5.2  Targets As A Working Idea

Turning to targets, in concept there are many types:

• annual limits;

• complementary to total population growth;

• supplementary to population change;

• proportional to GDP; and so on.

In theory, the idea of annual targets suggests that there is a constraint that has some annual limit.

What would this be like?

In the light of the earlier material and the New Zealand situation, two threads come to mind: economic and social. These can be briefly examined.

5.2.1  Economic

An annual economic constraint would imply that the community might not be able to absorb more than x thousand, or an additional x% without straining some feature. What are the candidates for control?

This might be thought of as infrastructure - water pipes, roading, or electricity generation, but this seems hard to pin down. We have geared up in the past for sustained periods of growth, when the population was being driven by natural means. Why is this new source of growth unable to be accommodated?

Could it be there fore some more basic capacity, say the ability of the building industry to provide more housing, because the supply of builders or some other skill is in short supply and cannot respond? This again, even in the light of casual historical reflection, seems to be unconvincing.

What is inhibiting the growth rate of the scarce factor? The plausible explanations all seem to fall into the two categories of temporary (such as the some vital imported component, in which case they could be relaxed under pressure, or with a more flexible economy) or caused by some other policy which has not been co-ordinated (such as the supply of schools, which suggests a need for a better, more flexible schools policy.)³⁷

Also, the issue here should not become confused. The same signals which are causing locals to move within the country, such as dynamic change in the employment market and growth in commercial opportunities will be influencing migrants decisions about where to settle, too. Thus their concentrations will often make existing adjustment pressure problems (think of Auckland schools) worse. But the migrants are merely adding to the need for a flexible response, in general.

The only other area where some economic factor may play a role is in terms of the maintenance of stable economic policy. Inflows of migrants create potential inflationary pressures, as their increased demand for goods (including housing and schools) can, in the short run, exceed the capacity of the economy to supply. In general this will tend to increase prices.

It was this sort of thinking that led the Monetary and Economic Council of the mid-1960s to suggest a exceeding a limit of 4,000 migrants per year would be inflationary and that the effects would persist over five years.³⁸ Today we are just as concerned about price pressure, but see the solution more in terms of economic flexibility.

Overall, there has been a lot of rather poorly argued discussion of the "pressure" that immigrants put on the economy and infrastructure. There are undoubted effects but these can be mitigated by increasing the flexibility of the economy in general. Particular attention needs to be paid to artificial barriers to entry to industries and professions. These can be serious impediments to immigrant success.

5.2.2  Social

Annual adjustment on the social side is related to the speed the social fabric or attitudes can adapt to a new set of faces with new ideas and aspirations. The mechanisms involved in these processes will be institutions and collective attitudes.

This seems somewhat woolly, perhaps reflecting my lack of knowledge of the literature in this area. Nevertheless, there is a degree of plausibility about the idea that social attitudes take time to shift. This fits with a picture of a community with limited experience absorbing a wide range of social types and people of differing cultural backgrounds.

It would seem reasonable for there to be implicit bounds to the speed this can be successfully done. Relatively recently there have been two experiences to draw on. In both the early 1970s and the early 1990s New Zealand had surges in migrant numbers resulting in several years of annual inflows greater than 40,000 persons. It is hard to tease out the social attitude formation process, and just what drove the seeming increase in tension³⁹. Both times there were high levels of inflows and surges in the numbers. An economic approach would suggest that the surges, neither of which were well signalled in advance, were the initiator of real economic adjustment problems, which related with social tension. But there is an alternative view which suggests that the high numbers themselves made migrants visible enough to be seen and thus available to act as a scapegoat for all current problems. In fact there is probably a mix of reasons, both level and surge related.

Would New Zealand be a good absorber of migrants? This is a hard question - particularly as what we mean by absorption has changed radically. It used to imply conformity to a fiercely conformist society. Now it is a much more two way process with the society changing to encourage the variety that migrants contribute.

A bold answer might be that we are probably better now than ten years ago, but poorer than we are likely to be ten years hence. The reasoning would go, that this is a skill which has a degree of "learning" about it. The more one has done, the easier it comes. Moreover, there will be a side which depends on institutions (such as support networks, and public bodies like the Race Relations Conciliator) for successful adjustment. These take time to establish and to hone their effectiveness.

Leadership is another issue. Though the policy has been successfully liberalised steadily since the changes of 1975, there has been little sustained public expression of the need for a favourable attitude toward migrants. There is no public structure comparable with that established in Australia. While some of the institutions there seem like ways of building political support, community attitudes have been influenced by sustained political leadership and public commitment.

Finally, other societies have taken time to adjust to speedy internationalisation of their populations.

Thus there seems to be some sense in which the annual target will reflect a limited but growing ability to absorb increased inflows of migrants.

5.3  Acceptable Rates - Tentative Speculation Towards Policy Change

So, on this brief analysis, the task will come down to selecting the best set of choice attributes, then decide an annual target. The discussion above suggests that over time, the latter will be more determined by social than economic effects.

The discussion suggests that carefully chosen migrants can improve the lot of the whole domestic population. Provided we can carry out the selection right and focus on the settlement issues in the appropriate way, there seems much to gain both economically and socially by an enlarged population and thus an enlarged inflow of migrants.

How to proceed?

Given the less easily quantifiable and measurable aspects of the social restrictions, a cautious advisor might propose a sensible package looking like this:

• some careful testing by gradually and publicly increasing the quotas;

• integration of temporary and permanent entry policy;

• intensive monitoring of the social mood;

• positive political leadership and public encouragement for the idea of immigration to lower social costs; and

• careful monitoring of economic stress to ensure that other policy failings (such as restrictive occupational licensing) are not impeding adjustment.

This would be supplemented with quality research into the underlying factors which have proved to be difficult to pin down here.

This would focus therefore on deep questions and issues, such as the following:

• what are the dynamics of immigrant experience?

• how do immigrants behave in the long run?

• what are the determinants of social attitudes toward migrants?

• are there key factors associated with successful settlement aside from language?

6

REFERENCES

Akerlof, G (1970)

"The market for lemons: Quality uncertainty and the market mechanism," Quarterly Journal of Economics.

Bollard, A and Duncan, I (1997, forthcoming)

"New Zealand migration: business related flows - Their role in internationalisation," NZIER Working Paper 97/11

Bollard, A, Duncan, I and Yeabsley, J (1997, forthcoming)

"Trade, investment and migration: Their role in economic internationalisation," NZIER Working Paper

Borjas, G (1995)

"The economic benefits from immigration," Journal of Economic Perspectives

Chapple, S and Yeabsley, J (1996)

"A framework for the assessment of economic and social effects of immigration," NZIER Report to the Department of Labour

Chapple, S, Gorbey, S and Yeabsley, J (1994)

"Literature review on the economic impact of immigration," NZIER Working Paper 95/5

Chisolm, D (1987)

"Ill-structured problems, informal mechanisms and the design of public organisations," in JE Lane, (ed) (1987) Bureaucracy and public choice, Sage, London

Gould, DM (1994)

"Immigrant links to the home country: Empirical implications for US bilateral trade flows," Review of Economics and Statistics

Gurak, DT and Caces, FE (1992)

"Migration networks and the shaping of migration systems," in Kritz et al, (1992),

Kritz, M, Lin, LL and Hania, Z (1992)

International migration systems - A global approach, Clarendon Press, Oxford

Lane, PA, (1970)

"Immigration and economics," in KW Thompson and AD Trlin (eds) Immigrants in New Zealand, Massey University, Palmerston North

McKinnon, M (1996)

Immigrants and citizens: New Zealanders and Asian immigration in historical context, Institute of Policy Studies, Wellington

Monetary and Economic Council of New Zealand (1966)

Increased immigration and inflation, Report No 12

OECD, SOPEMI, (1997)

Trends in international migration: Annual report 1996, OECD, Paris

APPENDIX A: CBA FRAMEWORK

A simple economic approach to the analysis of complex problems and issues is built around the cost benefit model. In this case this involves the analysis of the additional migrants. The framework is relatively simple.

Note, too, this discussion merely provides the raw material for the structure of the paper; it does not debate the shortcomings of the model compared with the complexities of reality. The criticisms which arise from the latter source are treated above.

Consider the change in the well-being of New Zealand brought about by the addition of one extra unit of migration.

This can be seen as the result of the interaction of the benefits brought by the new unit, less the costs imposed. This can be characterised in the following equation:

NB = GB - GC    where NB is net benefit, and GB, GC are Gross Benefits, and Gross Costs, thus, we can write:

NB = GEB + GSB - GEC - GSC    with E indicating "economic" facets and S "social"

or, the final model, using the further subdivision associated with who gains/bears the benefits and costs, the migrant (or associated interests) being the "Private" side and the wider community (which is not the same as the public purse) being the "Public" side:

NB = GPrEB	Gross Private Economic Benefits;
+ GPuEB	Gross Public Economic Benefits;
+ GPrSB	Gross Private Social Benefits;
+ GPuSB	Gross Public Social Benefits;
- GPrEC	Gross Private Economic Costs;
- GPuEC	Gross Public Economic Costs;
- GPrSC	Gross Private Social Costs
- GPuSC	Gross Public Social Costs

These are the categories discussed in the body of the paper.

To sum up, the dichotomies are based on the assumption that the following distinctions are clear and can be kept apart. In all cases there will be practical problems in holding this line. However, for the sake of exposition the breakdown is based on the following ideas:

• benefits from costs, this is a straightforward distinction which separates the positive from the negative;

• economic issues from social issues, the definition here casts all non-economic issues into the "social" box;

• public from private, here "private" is taken to be the aspects related to the migrants and those involved in their decision to migrate.

SESSION NOTES, THE SUCCESSFUL SETTLEMENT OF MIGRANTS AND RELEVANT FACTORS FOR SETTING IMMIGRATION TARGETS

Dr Manying Ip, Department of Asian Languages & Literature, University of Auckland

• Argued against the short-term utilitarian manner in which migrant policy issues are addressed.

• We should view migrants as fellow citizens.

• Poor non-traditional migrant labour market performance can be put down to unwelcoming attitudes to these migrants (particularly Asians).

• Against the idea of an annual rigid target, number of entrants fluctuate according to the quality of applicants every year.

Dr John Yeabsley, Senior Economist, New Zealand Institute of Economic Research

• Problem with how to select people who are going to be successful.

• Need more research and we need to be able to make comparisons.

• We need to look at net benefits and costs - private and public.

• Idea of citizens of the world - migrants are temporary but this is not bad.

• Rash policy changes puts pressures on infrastructure and social intolerance.

• New Zealand has limited experience with multiculturalism.

• Reduce barriers to migrants, for example, skill recognition.

• Strong public leadership on immigration issues.

Dr Rasalingham, President, Auckland Refugee Council

• Non Governmental Organisations need to be included in policy making decisions.

• New Zealand needs a comprehensive, effective settlement programme including ESOL training, support and funding.

• Accurate information needs to be given to migrants.

Jean Mitaera, Chair, Pacific Island Health Research Council

• Has been a concentration of visible factors of success, but we need to recognise that different cultures have different measures of success.

• Success can be considered as the ability to maintain ones cultural practice.

• Policy setting targets needs to consider Maori, the Crown and other groups.

Discussion

• New migrants need to be involved in decisions.

• Need to understand that refugee needs are different.

• More flexibility in terms of targets.

• Should there be Government regulation of Immigration consultants? No.

• Should we have a Minister of Immigration and Ethnic Affairs?

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Footnote(s)

36

Some of these ideas are better developed, and addressed in more detail, in the keynote speech given by Alex Sundakov to the Conference.

37

Note that the same pressure could come about (and indeed has) from internal migration. In that case we are less inclined to take the superficial analysis without criticism.

38

See, Monetary and Economic Council (1966). Note this inflationary pressure theme was a major policy debate in Australia throughout the 1960s and 1970s.

39

Note that both periods were characterised by inflation - though at completely different rates. In particular, house price rises in Auckland at both times were associated with migrant inflows.

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