Bo-Jangles

There are some nationalities for whom that scenario would be like winning lotto and the farmers apparently can't manage without folks from the Philippines and the likes as a source of cheap labour. So surely a win : win situation.

It still doesn't make it right and nor will it stop Winston Peters and the like whining on about people coming here and 'taking our jobs' yet we don't have an alternative solution, we don't appear to have a queue of locals lining up to do minimum wages jobs and farmers are reluctant to pay more.

LoCarb

Dairy farming has (as far as I'm aware) a very poor return on capital.
I believe it's around 5%.

It appears dairy farmers have relied more on capital gains than actual profits.

If you added in the externalities e.g. the actual cost of water, and the river pollution for which they don't pay, it probably has zero profit overall.

This government has three strings to it's bow:

1/dairy farming expansion, as above.
2/tourism. An industry where we all run around making cups of coffee for visitors.
3/immigration to help with with 1 & 2

No wonder we have appalling productivity and low wages....

LittleGreyCat

"The changes would mean raising the minimum median annual income requirement to $48,859, make it harder for families of workers to enter the country, and those on temporary work visas who earn less than the median income could only work for three years before a stand-down period. "

Well, that is us kicked again.

I have this feeling that we are due (eventually) for this kind of conversation:

"Congratulations! Your EOI has been drawn and you've been allocated a case officer.

Oh.
Dead, you say?
Extreme old age?
Yes, 105 is a respectable age, I'm sure.
Well, my condolences.
No, you can't have the money back.
{mutter} more whingeing Poms {mutter}
CLICK"

Charismatic

New report from infometrics. Their research report concludes:
- Net migration is being underestimated by 4-8k per year, the actual net migration rate is closer to 80k per year than official estimates at 72k per year.
- The ideal rate they calculate would be between 10.5k and 16.6k per year but it would take at least 7 years of ramping down to achieve this rate.

Here is their report:
http://static.infometrics.co.nz/Migration%20informing%20the%20debate.pdf

LittleGreyCat

Yeah, I saw that report.

What they don't seem to mention is that the NZ economy is allegedly only growing because of the influx of migrants (who have to be medium-high earners) bringing in the money.

General productivity seems to be static or falling.

So if you turn off the golden tap then presumably the economy will tank.

Of course, that may mean cheaper housing but........

LoCarb

You won't get economic growth if the govt keeps shrinking money supply by running (or trying to run) budget surpluses.

Budget surpluses force the private sector to take on more bank debt, or use up their savings.

Bill Mitchell explained this in his RNZ interview last week.

(see Sectoral Balances in MMT).

Charismatic

- GDP as an aggregate is increasing as New Zealands population has grown.
- GDP measured on a per capita fell slightly last quarter but has grown over the last 5 years as people have worked more hours.
- GDP per hour worked ("productivity") has been in recession for five years now.

Aggregate GDP ("headline GDP") tells you something interesting about New Zealands economy as it reflects an aggressive choice to utilise population to drive aggregate growth in a way most of New Zealands trading partners are not prepared to.

Immigration doesn't currently appear be some amazing economic virtuous cycle for New Zealanders as productivity and per capita GDP show. An economic argument for New Zealands lax immigration policy would appear hollow in my view. It's not that immigration can't drive growth but that it's not likely contributing to quality of life by economic measures at this point and has now created major bottlenecks (housing, infrastructure etc.) in New Zealands economy that is diminishing quality of life in some peoples view.

Hopefully this offers some indication as to why immigration policy to change in the near future. After all what's the point in having a larger economy if it means people will have to work longer hours for less money?

LoCarb

Designed by National so they can keep saying that we have strong growth.

Most commentators are well aware of the smoke and mirrors GDP figures.

LoCarb

Richard Murphy (UK) had a piece along these lines this morning:

The government is a key player in the economy

Charismatic

Well the high rate of immigration has masked underlying weaknesses like productivity and wage growth. My feeling is that National have been very astute (deceptive if you prefer) in pointing to headline GDP growth in a simplistic fashion whenever anyone with half a brain asked a question about the economies performance. For a long time it worked but even John Key saw that approach was starting to fail.

Actually I'm very optimistic that there are still many infrastructure and social projects that could create well paid employment and growth that can be budgeted for by borrowing at low rates and funded by new taxes (e.g. CGT.) There's no shortage of improvements that can be made here as the ongoing Manawatu gorge fiasco shows.

LoCarb

I'd have to agree that the economy is only firing on three cylinders and has been for a long time.

Bill Mitchel has an interesting graph that shows the growth gap.... where we would have been if it wasn't for this forced austerity (e.g. 12% underutilisation in labour market etc.).

Quite sobering really as it is lost opportunity, meaning our wealth is considerably lower than it should be.

Higher productivity would easily have covered the bulge in retirees without all the current panic!


Sorry, but you know I'm going to pull you up about the funding argument

I suppose you know that government so-called borrowing is nothing of the sort. The money from bond issues just sits in the Reserve Bank accruing interest but is never "used" by government.

Taxes of course don't fund anything, simply being redeemed NZ$ (IOU's) the government issued in the first place.
Money is just a social contract (an IOU) between two parties (e.g. government & non-government, private bank and borrower) not an object as most people think.

Stephanie Kelton gives a simple explanation of the nature of money in this video (starts at 3 min point):

Clappy

I have seen things in this country change a lot even in the eight (and a half) years that I have lived here.

Eight years ago companies were more likely to be retrenching staff than they were recruiting new ones.

Now, the stories I hear are that it is impossible to find new staff - both in the skilled jobs that immigrants do but also in the retail jobs that won't get anyone a visa.

The economy is too small to be managed sensibly. I think that getting the population up to ten million should be a target.

Charismatic

As far as I'm aware New Zealand doesn't have a population growth strategy which in part may explain why infrastructure spending has so painfully lagged demand. However I actually disagree with your assessment of the economy as being too small to manage.

I have also heard anecdotal stories of businesses finding it difficult to attract applicants for positions. For the last decade (possibly much longer, depending on who you ask) the labour market has been very slack due to local labour market conditions and a boom in immigration so substantial adjustment will be required as employers adjust their pay expectations to attract the talent they need and put more emphasis on retaining existing staff.

Charismatic

In keeping with this thread there is another new record for July. To quote Statistics NZ "The net migration gains where mostly driven by non-New Zealand citizens." That rubber stamp at the immigration office will wear out if they keep going like this.

Charismatic

Another new migration record! 130k+ arrivals.

Real (per capita) GDP grew a dissapointing 0.3%