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How will the Labour led Government impact New Zealand immigration?

There is general apprehension in the market regarding the stance of the new Labour-led Government, and the influence the coalition partner New Zealand First will have given its public stance against general immigration.

However, early signs are reassuring with Prime Minister Jacinda Ardern quickly moving to confirm the Labour immigration policy will hold sway over that of New Zealand First. Fundamentally, this means the main focus will be on reducing the current annual net migration of just over 70,000 to between 40,000 and 50,000 people.

Net migration is currently a simple measure arising from information obtained from the airport arrival and departure cards for travellers who are either departing for 12 months or longer or intending to stay for 12 months or longer. It is not a measure of people obtaining residence to live permanently in New Zealand.

It is quite possible that the new Government will be able to achieve the required reduction in net migration without any major policy changes.

The current net migration is already trending downwards and this trend will very likely continue more strongly in the coming years for the following reasons:

  • The resetting of the Skilled Migrant Category (the main residence category) in August, has significantly raised the qualifying threshold with the number of eligible applicants reducing by 40%. This higher threshold will see less people coming to New Zealand with the expectation they can qualify for residence.
  • Less NZers returning home – this group of people are typically motivated by economic outlook and stability, and they may now choose to remain where they are for the time being.
  • More NZers will now consider relocating to Australia – historically, this has always been a popular option for NZers, but the comparative economic performance of the two countries has seen this trend reversed in recent years. This trend now looks like it will slowly return to normal.
  • The new Government has signalled a crackdown on education institutions offering low quality courses to attract international students and has also signalled that policy changes will be made to restrict some work rights for particular international students. Providing the agent networks accurately convey these “signals”, the outcome will be a significant reduction in students coming to New Zealand, and in particular those from India. The Government’s plans to remove points within the Skilled Migrant residence category for applicants who have studied or worked in New Zealand will further “dis-incentivise” international students to choose studying in New Zealand as a pathway to residence.
  • Lastly, the perception that the new Government is getting tough on immigration will naturally influence the decision making of prospective workers, students and migrants who will now consider alternative countries that they perceive as being more “immigration friendly”.

The above factors alone are expected to directly lead to the reduction in the net migration the new Government has indicated – and this may happen a lot quicker than expected. There will also be ramifications arising from these factors, including a huge shakedown of the international education sector, which may well lead to school closures and job losses. The Auckland property market may also be influenced, particularly by reduced demand from returning NZers and those NZers selling to relocate to Australia.

It appears that work visas for low-skilled workers will be most at risk under the new Government. However, the NZ First Leader and now Deputy Prime Minister Winston Peters, has clearly indicated that employers in the regions requiring workers who contribute to “productive industries’ will still be able to rely on work visa holders for these roles – such as farm workers.

There were indications in the lead up to the election that the Labour Government will re-open the parent residence category in some form, but this would seem completely contrary to the stance of NZ First on parent immigration. Parent residence policy settings are a particularly difficult challenge and it will be very interesting to see how the coalition partners deal with this challenge.

The Government also plans to introduce an Exceptional Skills visa for “people with exceptional skills and talents that will enrich New Zealand society (not just the economy) to gain residency”. This appears to be a very niche policy and it is unclear whether this will replace the existing Global Impact Visa which seems to share a similar objective.

For business investors, the new Government has signalled an intention to increase the minimum investment required from $3 million to $5 million for the Investor Visa, and from $10 million to $15 million for the Investor Plus visa. The required investment terms will also be doubled to 6 and 8 years respectively, and applicants will be denied residence until completion of their investment term – contrary to the current situation. Given the fact that the current investor policy is relatively new and is already performing poorly (compared with the previous policy) the raising of the thresholds as proposed will effectively kill off the investor policies. On the other hand the additional proposal to establish a Government-sponsored infrastructure bond investment for investor applicants has considerable merit – but only if the underlying investor immigration policies are conducive to actually attracting investors in the first place!

There are early signs that the new Government may take a more empathetic and humane approach than the previous Government when considering individual immigration situations and the difficult circumstances people and families can find themselves in. Such an approach should be welcomed as the existing regime has become overly bureaucratic and inwards-facing, and has lost the ability to assess, comprehend and properly value the human context of immigration.

Having been in the immigration industry for 25 years, we at Pathways have seen many Governments and immigration policies (and Immigration Ministers!) come and go and we are very much looking forward to the challenges that will be presented by the new Government. Ultimately, quality immigration advice, gained from many years of experience, will be the key to understanding and overcoming these challenges.

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