Migrants bring in higher revenues to government, study shows
Department of Labour research has shown that migrants are vital to the New Zealand economy’s growth and the country’s development. The study, part of the Department of Labour’s wider Economic Impacts of Immigration research programme, analysed increased immigration scenarios. These have proven that, amongst other effects, increased immigration:
- Reduces production costs
- Improves the competitiveness of New Zealand goods and services, benefiting exports
- Benefits domestic investment and/or consumer spending, depending on the skills composition of the immigrant inflow
- Results in higher revenues to government, which outweigh the impact on spending, thereby translating into an improvement in the balance of the government’s accounts
The Department of Labour’s forecast for 2021 analysed what impact immigration will have in the country’s economy. According to the study, an average annual net permanent and long-term inflow of 40,000 non-New Zealand-born migrants would add 6.1% to the resident population in 2021. The real GDP would also increase to 7.6%, taking GDP per capita up to 1.5% or $800 above the baseline.
A zero immigration scenario would take the country’s population to 4.1 million in 2021, 9.6% below the 2021 baseline population and give the country a GDP 11.3% below the baseline.
At the current levels, net migrant results in a significantly larger New Zealand population of 4.5 million and annual GDP of $248 billion in 2021.
The Department of Labour concluded with this study that "increased immigration inflows result in a larger economy. Further, under the assumptions adopted for the scenarios presented here, increased immigration inflows result in a positive effect on GDP per capita".
Moreover, the department stated that all levels of immigration are beneficial for the country. "The current net inflow of around 20,000 overseas born per year results in a significantly larger and more externally focused economy than if there were no inflow of immigrants," reads the report, adding that "when an economy grows labour is required at all levels. This finding supports the need for a demand driven policy aimed at filling genuine shortages and not just focusing on the highly skilled."
