Cutting immigration would stall economy: EMA boss

Debate: Can we afford to restrict immigration? Labour's  Iain Lees-Galloway vs the Employers & Manufacturer's Association's Kim Campbell on The Nation

Lisa Owen: National has backtracked this week on its plans to put a lid on immigration after pressure from employers. There are still calls to restrict the record numbers coming into the country, but with immigration underpinning economic growth, can we afford to close the door? Well, we invited Immigration Minister Michael Woodhouse on to the programme to talk about the changes. He declined. So I’m joined now by Labour’s immigration spokesman, Iain Lees-Galloway and Kim Campbell from the Employers and Manufacturers Association. Good morning to you both. Mr Campbell, if I could come to you first. National’s tweaked its immigration tweak, so it’s lowered that wage benchmark for skilled immigrants from about 49,000 to about 41,500. Has that gone far enough for employers, do you think?

Kim Campbell: I don’t know. Had to do something. So I think everybody agreed that there needed to be some adjustment to the settings. In our view, they’d gone a bit far and people were screaming. Our employer surveys, people were saying that they couldn’t get the people they needed in certain places.

Yeah, what were those surveys telling you?

Campbell: Well, everyone. Pretty much everyone employing anywhere, it was across the board. You couldn’t even isolate any particular profession, whether it was bakers or lab technician or if there was even sales managers. People are having a struggle getting people. So how do you put a filter on all those people that want to come and live in New Zealand? Using an income gap is one way to do it. Whether the number is right to get the numbers you want, you’ll only know when you’ve done it.

What’s your gut feeling about that number, though?

Campbell: I think it’s about right. We have never been in favour of just bringing in the minimum wage people unless it’s perhaps seasonal workers for picking fruit and so on. So there is a little bit of confusion about whether shift allowances are included in the pay rates and so on. But I think the settings are going to be about right. But we had to do something.

Let’s bring Mr Lees-Galloway in here, because Labour would like to pull the cap down on immigration even more — about up to 30,000 people fewer. So you’re just going to make Mr Campbell’s, the people he represents, you’re just going to make it harder for them, aren’t you, given what he’s saying about the survey.

Iain Lees-Galloway: First of all, can I say, I think National’s policy on this is just bad policy, and tweaking the threshold and coming up with a new arbitrary threshold,  I don’t think is actually going to solve any of the concerns that people have about immigration. And I think it’s instructive that the Minister isn’t here today. National has failed to engage in the immigration debate, and they rolled this policy out without consulting with people like Kim or the Federated Farmers, without actually thinking it through properly, because they hadn’t done the homework before they rolled it out. So it’s just a bad policy. Using salary threshold as a proxy for skill is a poor policy. We have just had—

Let’s look at your policy, though, because you want to bring it down. You want to bring the lid down even further. Isn’t that going to create more problems?

Lees-Galloway: We’ve got a far more nuanced approach to this than National’s. My big criticism of National’s approach is it’s a one size fits all approach. We have quite different issues in Auckland and the rest of the country. So in Auckland we have rapid population growth. The latest immigration figures show that there’s been a 15% increase in the number of people settling in Auckland over the last year. That’s having an impact on housing. It’s having an impact on transport. It’s having an impact on hospitals and schools. But in the regions, as I’m sure Kim will agree with me, we’ve got employers who do need skilled labour. So that’s why we’ve come up with our regional visas approach — to regionalise the skill shortage lists and encourage migrants to move to the regions in New Zealand rather than settling in Auckland.

Is that the answer, Mr Campbell?

Campbell: With the greatest respect to Labour, in many ways we agree that we need immigration, which is a good thing, so we’re really arguing about how you go about putting the filters on.

How many and who is what you’re arguing.

Campbell: How many and who. The fact is you can tell… Think of something like farming. They’re actually not paying particularly low wages, and so we need people to help people on the farms. Bakers — it doesn’t matter what you pay them, and there are no trained bakers, right. You’ve got to bring them in. So arbitrarily setting a figure, and I think the 30,000 is too low, you’ll stall the economy. And so all the wonderful growth that we’re enjoying will disappear. I think we’re very lucky to be in a position when we are— These are growth problems, and I think we’ve got to find our way through them, and I don’t think that the arbitrary plan that Mr Galloway’s got in mind will actually particularly work.

Lees-Galloway: We do have to find our way through these growth problems, and that’s why we have always talked about needing to take a breather. We’re particularly talking about Auckland. And we need to get on with investing in infrastructure. Our KiwiBuild programme is about building 100,000 homes across the country.

Campbell: Well, how are you going to build those without people?

Lees-Galloway: Because we’re not going to stop the people that we need. Where there is a genuine skill shortage, that’s—

Campbell: But you’ll need 100,000 people to build 100,000 homes. That’s my problem.

Lees-Galloway: And that is where actually where we’ve got to focus our attention — genuine skill shortages. So where genuine skill shortages exist, we should fill those where we need to with migrant workers, absolutely. But unfortunately our immigration system is being used to prop up the economy. All our economic growth is based on population growth. That’s not making people better off in real terms. That’s not making people better off as individuals. It’s just growing the size of the economy.

Okay. Fair point, though, Mr Campbell, isn’t it, that immigration, population growth is underpinning our economic growth.

Campbell: That’s not entirely correct.

Lees-Galloway: GDP growth per capita is 0.5%.

Campbell: Yeah, but look at the way we’re recalibrating the economy. The service sector is growing enormously, particularly through education and tourism. But we’re also seeing the emergence of a tech sector which we didn’t even have 10 years ago. And these are highly skilled people. A large percentage of our foreign exchange earning is now coming from consultancy and all sorts of things which are weightless exports, and they are skilled people. They are high-wage people. And then tourism, of course, which mops up a lot of people, is mopping up people at the lower end. I’d argue that we need to do a lot more to add value to the economy. We need a lot more investment in productive enterprise. But in the meantime I’ll bank what we’ve got. And the fact is we’re now able to build infrastructure and so on. And, remember, infrastructure uses a lot of local materials, and that drives our manufacturing businesses.

Mr Lees-Galloway, the thing is you are saying that our growth is underpinned by this, so again we come back to the same thing. If you turn that tap down, you are forgoing that growth.

Lees-Galloway: As long as we carry on relying on migrant workers coming and working in minimum wage jobs, we are not going to have the impetus our economy needs to become more productive. We need to make some changes to actually—

How do you plug the gap in the meantime, though, in terms of earnings?

Lees-Galloway: There are skill shortages. There are absolutely genuine skill shortages particularly across the regions.  We want to continue filling those. But do we need tens of thousands of students studying at low-quality, low-skill levels who then go on into minimum wage jobs that we could be training New Zealanders to do? And that’s the big thing that we haven’t talked about is that, sure, in the short term, there’s a lot of roles that we’ll need to fill with migrant workers, but, actually, we have not had the investment from the government in getting those 90,000 young people who are not in work and not in training skilled up so that they can fill jobs in the New Zealand economy.

Campbell: Look at these numbers. 72% of employers — our survey — find it difficult to recruit staff. 56% say ageing is a problem; in other words, baby boomers retiring.

Ageing population.

Campbell: Yeah, ageing population. And leaving gaps all over the place.

But Mr Lees-Galloway raises an important issue here, because your critics would say that you’re using immigrants to keep wages down, suppress wage growth. You want cheap labour. You’re using it to fuel cheap labour.

Campbell: That’s not correct at all. Bear in mind there’s two parts to this. One of the reasons why we’ve got some growth in the economy is we’ve got some flexibility in our economy. It means that businesses can adjust to the changes. And staying competitive is the second part of it. In the end, you can nominally put up all the wages you want to, but if it puts people out of business, they lose their customers, then we’ve got nothing to fight over anyway.

Lees-Galloway: I think businesses that are exploiting migrant workers – who don’t pay them the minimum wage, that don’t pay them holiday pay, that don’t pay them for all the hours that they work, that put them in substandard work conditions – maybe some of them should go out of business. We need good-quality employers, and we should not bring migrants into the country to be exploited.

Campbell: Who sponsored the Migrant Exploitation Act? It was us. And to his very great credit, the late Peter Conway, he and I together went to the minister Simon Bridges. Within months, we had legislation in place. We agreed that the exploitation of migrant workers was unacceptable, it was non-competitive and wrong. So there’s no—

Lees-Galloway: And yet it carries on. I was in the Bay of Plenty last week, the day after an article came out showing that the majority of employers that had been inspected in the kiwifruit industry were exploiting their migrant workers.

Campbell: It’s shameful.

Lees-Galloway: It is shameful, and it carries on, and we have got to put a stop to it.

In saying that, Mr Lees-Galloway, there is an example. Chris Lewis from Federated Farmers, he talked about having a job – basic farm-assistant’s job – 55K – 55,000.

Campbell: Plus housing.

Plus housing. That’s well above the minimum wage. So, you know, it’s not just low-skilled jobs.

Lees-Galloway: Where is he?

He is down south,…

Lees-Galloway: Ah.

…and he said he only had two Kiwis apply for the job. Out of 50 applicants, 48 of those were immigrants.

Lees-Galloway: I know that in Southland in particular, they are really struggling to hold on to their young people, and I know that— yeah, farm workers, for instance. I think if you had a regional skills list that applied to Southland, I think you could make a very strong case for putting some farm work on a regional skills list. So I think we’ve got a solution for that gentleman. National doesn’t. National has not thought this through.

Campbell: Let’s wait. I think we need to see if the policy actually starts to work properly, and we mustn’t ignore the fact –and I’m obliged to say this – that we have a serious problem in our community with drugs.

And is that why you’re saying that Kiwi workers aren’t taking these jobs?

Campbell: It’s only part of it, but it sits under there. We know for a fact that when an employer says, ‘Well, there’s a job here for you. Come to the interview, but you will have a drug test,’ they don’t show up. And it happens all over the country. And our survey shows that 58% of employers in the last year have had disciplinary action with staff relating to drugs at work.

Lees-Galloway: I think it’s a sorry indictment on the National government that this has become such a prevalent problem under their watch. Why do people self-medicate with drugs? Why do people turn to drugs to escape the life that they’re in? Because they’re at the margins, they’re—

You don’t seriously think that drugs are specific to the National government, do you?

Lees-Galloway: This problem of not being able to get young people into work because so many of them are supposedly on drugs, this is a problem that has developed, that’s been talked about—

Campbell: it isn’t just young people.

Lees-Galloway: …that’s been talked about—Well, according to Bill English, it is. But, yeah, this is something which has been talked about a lot over the last three, four, five years. This has grown under National government.

We’re almost out of time. Mr Campbell, I want to ask you before you go - do you think there is a racist element to this immigration debate and calls for crackdown?

Campbell: First of all, I hope it isn’t, and, certainly, it depends—It’s not a crackdown at all. It’s obviously a concern of the community that if you can’t have houses and provide roads and pipes and everything, then you have to, you know, ‘control the growth’, I think is the term. And certainly among our members, they want the immigration. And if you look at the workplaces, which are highly diverse and highly productive – even our place – 26 ethnicities among 75 employers in one building – it works wonderfully. So I don’t believe there is. If it is, then it’s shameful.

All right. We need to leave it there. Nice to talk to you both.