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Insights 30: 12 August 2016
Register for the Auckland semi-final debate: Monday 15 August (limited seats)
 
Oliver Hartwich on why New Zealand should be the Switzerland of the South Pacific
 
Read our latest report - The Local Benchmark: When Smaller is Better

Housing New Zealandís migrants
Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz
This week, Newshub released a new opinion poll showing a large majority of New Zealanders demand curbs to immigration. Three in five voters said so.

The same opinion poll also revealed that three quarters believed the government was not doing enough to control the housing market.

Taken together, these results make perfect sense. It is not so much that New Zealanders have suddenly become xenophobic. They just fear that the country’s housing market cannot accommodate many more newcomers.

And they have a point.

The way the housing market currently works (or rather doesn’t), supply will struggle to keep up with demand. There is a housing shortage already as indicated by ever more exorbitant house prices, particularly in Auckland. More migrants would exacerbate this problem.

There is a problem with this logic, though. It implies that we should let our dysfunctional housing market determine migration policy settings. But that is putting the cart before the horse.

A better conclusion would be to make the housing market functional – for the benefit of both migrants and New Zealanders.

There are good reasons for not curbing migration, even if it is currently showing a record net intake.

Prime Minister John Key commented on Tuesday that it would be undesirable to cut numbers since we were largely dealing with natural flows. “When you look at what drives migration at the moment, for a large part it is New Zealanders returning or Australians coming over here or people coming on working holiday programmes or students and I think that’s broadly about right,” Key explained.

In other words, the government believes it has little control over the migrant numbers. You cannot stop New Zealanders from coming home – or Australians from seeking a better life in New Zealand. You would not want to cut the numbers of tuition fee paying international students. Nor would you want to stop highly skilled people or investors from entering the country (though questions should be asked whether our current migration intake is indeed highly skilled enough).

The Prime Minister rightly realises that he cannot easily fiddle with migration numbers. But that means that he finally has to deal with the housing market. And that means planning reform, new vehicles for infrastructure finance and local government finance reform.

Having ignored the housing crisis for too long, the government has seen it spin out of control. It has also allowed a dangerous anti-immigration sentiment to grow.

If Newshub’s poll is not a wake-up call to get serious with housing reform, then what is?


Valuing a dayís fishing
Dr Randall Bess | Research Fellow | randall.bess@nzinitiative.org.nz
The easiest way to catch a fish is to visit the local New World store.

Commercial fishing can deliver seafood far more cost effectively than the average recreational fisher. Seafood available at New World typically costs a fraction of what it costs recreational fishers when considering the cost of a boat, trailer, gear, fuel, etc.   
If the prospect of catching a fish or two yourself is the goal, it raises the question of the value placed on a day’s fishing.

The real value of a day’s fishing, for many fishers, is the enjoyment the experience provides: the opportunity to apply one’s skills to the local conditions to get a fair day’s catch to share with family and friends, even if a trip to the local supermarket would be cheaper.

Fishers must get at least enough enjoyment from fishing to cover the extra costs of catching fish in the water instead of at the store. But, it is hard to put a number on the extra value of the fishing experience. 

It’s little wonder that there’s so many fishing phrases like, ‘There’s more to life than fishing, but not much!’

Interestingly, overseas research shows that fewer people participate in fishing as population density increases, as well as median age and average household size.

But, if the continual increase in the number of recreational boats is any indication, New Zealand may well be an exception to the rule when it comes to increasing urbanisation.

In addition, any decline in the rate of participation in fishing should be offset by immigration in the tens of thousands each year.

So, one thing that can be anticipated is that as the population continues to increase, so will the demand for recreational fishing. When more and more people join in catching their own fish, sustaining the fishery for the future eventually becomes a concern. What comes with that is ever decreasing daily bag limits and shorter seasons.

It raises the question, what value will be placed on a day’s fishing in, say 20 or 40 years’ time, if fish are harder to find?

Ideally, we would know whether the value of the next fish caught was greater for recreational or commercial fishers. That aside, we need to figure out how to maintain the enjoyment the fishing experience provides for the future.  


Raindrops on koru and whiskers on kiwi
Dr Eric Crampton | Head of Research | eric.crampton@nzinitiative.org.nz
Minister Simon Bridges has killed a few of my favourite things.

By not granting tiny, low-risk iPredict an exemption from Anti Money Laundering regulations designed for the big banks, he helped to strangle it.

Flying drones for fun in your backyard used to be fun and easy, but the same rules that have been laudable on the commercial side for drones have terminated urban recreational use.

And now he’s mulling over capital punishment for Uber.

If it’s of any help, here are a few of my other favourite things about New Zealand that I absolutely hope Minister Bridges never changes. Cabinets shuffle occasionally, so it is worth preparing for contingencies. Please do not throw policy into these briar patches.

I hope the Resource Management Act’s red tape never goes away – I love it. Sure, people are living in cars. If central government fixed the RMA and provided Councils with incentives to allow growth, the housing crisis would disappear, but the value of my house would not keep going up. Homelessness and overcrowding are clearly trivial relative to that.

It fills me with joy that Education Review Office reports on school quality are so opaque that only people with PhDs can tell good schools from bad schools. That means it’s easier for me to get my kids into good schools.

While I am saving for my kids’ eventual tertiary education, I love that they will be able to borrow at 0% and put the money into term deposits. It is free money for my family covered by taxpayers who don’t send their children to university.

I love that New Zealand lags America and Canada in legalising marijuana use.

I absolutely love that film festivals and streaming content providers have to jump through costly hoops to get films rated by the Censor’s Office rather than just saying that the Brits think some film is R18. It makes New Zealand a much better place for reasons too obvious to enumerate here.

I should probably end the list here. There is some risk that more of my favourite things would be killed, and it is better to err on the side of saying too little.

But, more seriously, dark clouds sometimes have silver linings. I really do love that my next Uber ride will come with the thrill of civil disobedience.
 
On The Record
 
All Things Considered
  • Graph of the day: All the places you cannot build in Auckland even under the IHP recommendations.
     
  • Seeing African cities in transition
     
  • Kiwis can be glad we aren't hosting the Olympics. And we should be just as skeptical about the economic impact reports supporting other boondoggles
     
  • The benefits of immigration are limited by bad policies elsewhere. More reasons to fix zoning.
     
  • How to turn around a failing school
     
  • Population growth outstripped house price growth in Tokyo. Why? They can build.
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