A resource-based perspective on immigration

Any debate on immigration has to consider the fixed natural resources that have to be spread across increasing numbers of citizens

A recent article by Professor Spoonley at interest.co.nz  has laid out the demographic aspects of immigration. Spoonley illustrates how since around 2013, New Zealand’s net immigration per capita of existing population has been particularly high compared to other developed countries such as Australia, UK, USA and Canada. He also points out that rate would have been considerably higher if it were not for the long-term net departures of Kiwis that was occurring prior to this last year.

Spoonley’s analysis focuses on the age structure of the population and the implications thereof. He then advocates the need for a national debate on immigration and demography.

There would be few who would argue against the need for a debate on immigration. However, what Spoonley does not focus on are the natural resources that underpin both living standards and quality of life. As such, his identification of issues is not balanced.

Compared to most other countries, New Zealand’s natural resource base is unusual. There is a large amount of fresh water and considerable thermal energy, but limited fossil-based petrochemical resources.

New Zealand has a land-mass shaped by tectonic forces. These forces have led to big mountains but very limited arable soils. Most of the usable land is naturally infertile, with particular deficiencies of phosphorus, sulphur and numerous micro-nutrients.

There is a clear logic why New Zealand has used its land for pastoral activities and forestry. These have been the activities where New Zealand’s specific natural resource base has given it a competitive advantage on world markets.

In contrast, New Zealand struggles to be world competitive at production of most crops.  It is possible to produce very high yields of wheat, particularly in Canterbury, but only with intensive production systems that are costly. There is no way that New Zealand can compete on a cost basis with Canada, the USA, Australia and many other countries in the production of broad-acre crops.

Where New Zealand does have a competitive advantage is in producing horticultural crops out-of-season relative to Northern Hemisphere producers. The window of advantage depends on the shelf-life of the particular crop. For example, with kiwifruit and with current technology, there is a period of about four months where Northern Hemisphere competitors are largely out of the market.

Plant variety rights is the other source of competitive advantage for some New Zealand products, with kiwifruit once again being the outstanding example. However, plant-variety protection is for either 20 or 25 years, depending on the crop, and with kiwifruit being 25 years. Hence, there is an ongoing need for new and improved varieties if that advantage is to be sustained.

The reality of New Zealand’s primary production exports is that the natural resource set is already close to fully used, with environmental sustainability issues already of major importance. There will still be some technological advances that can contribute to improved production and productivity, but it is going to be hard work.

In relation to population issues, the bottom line has to be that if New Zealand’s population continues to track upwards at rates similar to the last decade, then land-based exports can only decline on a per capita basis.  Where will the new exports come from to pay for imports items for which New Zealand is poorly positioned? That issue has to be brought forward into any immigration debate.

Apart from the land-based exports, New Zealand’s big earner of foreign currency is from tourism and education exports. When they might resume is unknown.  However, there is considerable concern that New Zealand’s tourism, which is also natural resource based, is reaching a limit or indeed exceeding it. I have been surprised by friends and associates of mine who depend on the tourist industry telling me that they too don’t want to see further expansion of numbers.

Each year I spend about six weeks in the Wakatipu Basin, making occasional sorties into and through Queenstown. Every time I go into Queenstown, I ask myself as to whether the Basin has reached its human carrying capacity.  There can be little doubt that before COVID arrived, the international tourists were crowding out the local tourists.

Each morning there is a steady stream of workers travelling from Cromwell to Queenstown, and then returning in the evenings. The traffic in and out of Queenstown is heavily congested. Cromwell, some 60 km distant, has become a dormitory suburb for Queenstown. The plan is now to develop another dormitory suburb at Kingston, some 47km of winding road in the opposite direction. That seems crazy stuff.

As for education exports, New Zealand fits into the second or third tier in terms of status. Many of the students who come here in non-COVID times, do so as their second or third choice. And ironically, many of those who come here as first choice do so because the path to citizenship has been easier than elsewhere.

On multiple occasions I have asked foreign students as to why they chose New Zealand, and the potential for citizenship comes up regularly.

For the last hundred years, the world has become used to population pyramids with lots of young people and not many old people.  But that has never been the norm over millennia. Rather, the human population historically only increased very slowly. It is modern agricultural technology and huge advances in health that have lifted the lid on global population.

There is an old saying that only madmen and economists believe in ongoing exponential growth. The last hundred years have shown that within that timeframe the madmen and economists were correct. But it cannot go on for ever.

Right now, New Zealand has a short-term problem with many existing visa holders reaching the end of their visas, and the immigration authorities wrestling with huge backlogs. Many migrants would have been hoping for extensions, including a pathway to citizenship.

It was New Zealand that showed them that potential pathway to citizenship. New Zealand enticed them.

Also, there are unlikely to be any replacement migrants for the next twelve months for positions where there are genuine shortages.

Showing compassion to those who were encouraged to come here can still be consistent with a major long-term policy reset.  These are real people, not just statistics.

A resource-based perspective can also be consistent with ongoing approvals for short-term seasonal workers from the Pacific Islands. Some twenty years ago I worked on an AusAID research project where we explored development strategies for poor and vulnerable countries, with Kiribati and Tuvalu being two of the case studies. From that and other Pacific experiences, I retain a perspective that seasonal work opportunities for Pacific Island people is a win-win situation for both the Pacific Islands and New Zealand.

Within the business community, there will always be groups advocating for more and more migrants to help drive economic growth. These people can be strong advocates for their immigration perspectives. The question is whether this aligns with broader and longer-term perspectives in the community.

About Keith Woodford

Keith Woodford is an independent consultant, based in New Zealand, who works internationally on agri-food systems and rural development projects. He holds honorary positions as Professor of Agri-Food Systems at Lincoln University, New Zealand, and as Senior Research Fellow at the Contemporary China Research Centre at Victoria University, Wellington.
This entry was posted in macroeconomics, The economy, Uncategorized. Bookmark the permalink.

3 Responses to A resource-based perspective on immigration

  1. Glennis Moriarty says:

    It would seem that ‘business as usual’ is unlikely to resume ‘after’ the virus. The following is informative and suggests how the different future will look:

  2. Tom Walker says:

    There was always potential for fossil fuel riches in our large off shore basins Keith..but a certain ”Captains call” put paid to that!

  3. sallyco says:

    What do you think of the latest lock down in Auckland? It seems to me that a huge irreversible error was made with the level 4 lockdown.

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