New Zealand immigration half-year review: will continued departures worsen labour shortages in the second half?

As we enter the final month of the first half of 2022, we can now take stock of New Zealand immigration over the past half-year. Immigration and the labour market have experienced many ups and downs during this period. In the second half, Immigration New Zealand (INZ) will focus primarily on the border reopening in July 2022, processing 2021 Resident Visa applications, and opening applications under the new employer accreditation scheme.

 

Border reopening and processing of 2021 Resident Visa applications

The border reopening is progressing slowly. Overall, immigration applications are being processed slowly. There are many reasons for the delays. For example, INZ does not have enough staff to handle its heavy workload: many staff have resigned, newly recruited immigration officers need time for training, and many officers have contracted Covid. All of this has significantly affected processing progress.

INZ currently has many new initiatives that urgently need to move forward.

Some of the work currently on INZ's backlog includes:

• As at 26 May 2022, the number of 2021 Resident Visa applications submitted in March under the second phase that had been approved was 0;
• Processing employer accreditation applications, most of which INZ has promised to complete within 10 working days;
• Reopening the border and introducing a new work visa;
• Reopening applications for partner work visas and dependent child visas for existing work visa holders from 31 May 2021;
• Reopening student visa applications.

However, INZ does not have enough staff and is unprepared for the large volume of new work coming over the next 12 months. To process all applications on time, it may need 3 or 4 times its current staffing level.

I advise all visa applicants to prepare for actual processing times to be much longer than expected. Processing is indeed speeding up for some applications, but most are moving at a snail's pace.

 

Will permanent resident visas be abolished?

The 2022 Productivity Commission Report was released on 31 May 2022. I remember predicting around this time last year that the Skilled Migrant Category, SMC, would reopen only after the report was released. As I predicted, the report has arrived, and various visa categories are reopening too.

The New Zealand Productivity Commission is the Government's highest-level think tank and its official economic advisory body. Its reports and recommendations can often directly influence government policymaking. The commission has now completed its inquiry into the long-term immigration landscape and released its final report on creating an immigration system fit for the future. It recommends that the Government abolish permanent resident visas and require new migrants to renew their resident visas every six years.

It is important to stress that, at this stage, these recommendations are only proposals from the commission. Any changes would require government approval before they could be implemented.

Personally, I believe permanent resident visas are unlikely to be abolished within the next 10 years, for the following four reasons:

1. Major changes to the residency structure require approval from New Zealand's Parliament and cannot be decided solely by the Minister of Immigration or the immigration department. Abolishing permanent resident visas would affect many New Zealanders living in New Zealand or overseas on these visas, all of whom are eligible voters.

 

1. All major legislative reforms take a long time to pass. Even in a small country such as New Zealand, minor changes can take 3–4 years. For example, efforts to legalise euthanasia and cannabis in New Zealand took many years and even required referendums. Ultimately, only one actually passed and became law.

 

1. A major attraction of immigrating to New Zealand is the ability to return indefinitely. Abolishing permanent resident visas would have a hugely negative impact on people's immigration choices, and New Zealand would cease to be seen as a popular immigration destination. Labour might fail to win the next election.

 

1. A fundamental legal principle is that legislative amendments do not apply retrospectively. Those who have already obtained permanent resident visas would therefore be unaffected by future legal changes. So, if the Government really wanted to abolish permanent resident visas and require new migrants to renew their resident visas every six years, it would need to:

 

1. Close existing resident visa application pathways;
2. Open applications for new resident visas;
3. Provide a transition period for those lawfully applying for permanent resident visas;
4. Make changes gradually over time.

In my view, any changes to permanent resident visa policy that are handled improperly could be subject to judicial review by the High Court, which has the power to prevent the Government from implementing them unfairly. So, if INZ really wants to abolish the right to return indefinitely, yes, it could eventually do so, but it could take a very long time.

 

My immigration and labour market predictions for the next 12 months

I practise immigration and employment law, so I have a fairly thorough understanding of New Zealand employers and their thinking. The job market is currently strong because many locals are leaving New Zealand. I expect more new residents to leave after securing their status, seeking higher incomes in countries such as Australia. A further wave of departures is coming.

Although New Zealand is a popular immigration destination, one reality cannot be ignored: many people use migration to New Zealand as a stepping stone to another country. From my time as an immigration officer, I know that officers dislike applicants with such plans. They strongly want applicants to make New Zealand their final destination rather than a stepping stone. However, this should not be a factor in immigration decisions. Sadly, immigration officers are human too: they have personal biases, make mistakes, and can make the wrong decision because they dislike an applicant.

With this in mind, I predict employers will find it increasingly difficult to recruit suitable employees, as more people either leave New Zealand or resign to start their own businesses. New Zealand's economy is resilient. Although most newspapers focus on living and fuel costs, life will not become too bad, because our Government can cushion the impact and make changes to improve living standards. There is a delicate balance here, but the best tool the Government must use is one it has used before, and which Labour has so far been reluctant to use: opening up immigration.

Many people will remember the John Key era. Just after the global financial crisis in 2008, New Zealand's property market had fallen into a deep slump. Lawyer friends working for major banks were advising them to apply for mortgagee sales every week. Friends practising property law told me they had hardly any property transaction work, perhaps one a week. Yet within two years, by 2010, things slowly began improving again as New Zealand opened up immigration and allowed more and more applicants to apply for residency.

When New Zealand's economy is struggling, the biggest question is how to revive it. Put simply, in broad terms, there are three ways to truly increase national productivity:

1. Get our people to work harder, increasing output per person by increasing working hours;
2. Design systems that allow people to work smarter, increasing output per person through greater efficiency while keeping working hours the same;
3. Increase the number of people working, keeping working hours and efficiency the same.

Clearly, the first two approaches both take time to work and may be beyond the Government's control. Asking employees to work longer hours is difficult and does not fit local working habits. Designing better systems takes time and is even less achievable in the short term.

Increasing the number of people working is therefore the most realistic choice. We can either raise more local children, although waiting for them to grow up and training them takes time, or open up immigration to attract skilled people from other countries.

In practical terms, the quickest and easiest approach is to bring in workers from other countries. Australia does this very well, 'stealing' New Zealand's top talent year after year. With New Zealand's unemployment rate currently at an all-time low, it makes no sense for the Government to persist in trying to keep migrants out.

What may happen is that the Government refuses to act until the labour shortage becomes truly severe, then makes a major decision and suddenly introduces policies to attract skilled people from China, the Philippines and India.

This is how New Zealand immigration has operated in the past, and the future will be no different.