Our performance this year

Reporting on our outcomes

Lifting productivity of New Zealand and lifting the wellbeing of New Zealanders

Publishing research

Our research team has been focused on primary research to support our understanding of the inquiry topics. This has included work on how migrants contribute to productivity in New Zealand, migrant labour market pathways and outcomes, and income mobility patterns in New Zealand. The results from these research projects have fed into the work of our Immigration and A Fair Chance for All inquiries. The results were presented at the New Zealand Association of Economists annual conference, as well as several other public seminars and lectures. At the end of this reporting period, they were being prepared for publication as working papers and in peer-reviewed journals.

Penny Mok and Gail Pacheco’s paper Income Protection in the New Zealand Tax-transfer System was published in the peer-reviewed journal New Zealand Economic Papers.

Income Mobility in New Zealand 2007–2020: Combining Household Survey and Census Data, by John Creedy and Quy Ta was featured in the Working Papers in Public Finance series by Victoria University of Wellington in May 2022.

Immigration by the numbers is a comprehensive collection of the immigration trends and quantitative analysis that informed the Commission’s inquiry into immigration settings for New Zealand’s long- term prosperity and wellbeing. The style of the report was built on last year’s successful Productivity by the numbers publication.

We restarted the Productivity Hub¹, in collaboration with the Government Economics Network. This includes a Research Leaders Group², to bring together research leaders from across the government sector. This group includes representatives from Treasury, the Ministry of Business, Innovation and Employment, the Ministry of Foreign Affairs and Trade, New Zealand Infrastructure Commission, Te Puni Kōkiri, the Social Wellbeing Agency, Statistics New Zealand, the Ministry of Transport, and the Reserve Bank of New Zealand.

Undertaking inquiries

Two new inquiries were assigned by the Minister of Finance shortly after the completion of our Frontier Firms inquiry in April 2021.

Immigration: Fit for the future

The Commission received the terms of reference (ToR) from the Minister of Finance for the Immigration inquiry on 12 April 2021. The ToR alongside the inquiry’s call for submissions and issues paper (released in June 2021) set the scene for this work programme from July 2021 to June 2022.

A Fair Chance For All: Breaking the cycle of persistent disadvantage

In June 2021, the Government asked the Commission to scope a new inquiry into the drivers of persistent disadvantage within people’s lifetimes and across generations. As part of scoping, the Government asked us to consult the public on what the terms of reference should cover – a new approach for the Commission. To assist with this, a scoping paper was published on 21 July, with submissions and feedback due by 27 August 2021.

From January through to June 2022 we undertook work to inform the development of our interim report. This included commissioning and/or releasing the following pieces of research:

• Together alone – a review of joined up social services (by consulting economist Julie Fry).
• Te puna kōrero: Understanding persistent disadvantage in Aotearoa New Zealand – a thematic review of existing research into the lived experiences of people living in persistent disadvantage.
• A report on colonisation, racism, and wellbeing, prepared by Haemata
• Analysis of family resources across the early life course and children’s development in Aotearoa New Zealand, using the Growing Up in New Zealand study data set, undertaken by Dr. Kate C. Prickett, Dr. Sarah-Jane Paine, Associate Professor Polly Atatoa Carr Te Ngira and Professor Susan Morton.

We also undertook our own quantitative analysis into persistent disadvantage, linking the Census and the Household Economic Survey, and collaborating with Dr John Creedy at Victoria University of Wellington to examine income mobility patterns in New Zealand over the short to medium term.

The inquiry’s interim and final reports are due to be published in 2022 and 2023 respectively.

New Zealand Firms: Reaching for the frontier

Evaluation – July 2021

Our final report on the Frontier Firms inquiry was published in May 2021. Institute of Directors, General Manager, Guy Beatson conducted an independent expert review of the inquiry and the final report. We also used an online survey and two independently chaired focus groups and interviews with inquiry participants to evaluate the inquiry and final report. These were all published on our website in July 2021.

The expert review found that, overall, the final inquiry report achieved, if not exceeded, high standards for quality policy advice. The review also found we should continue with some practices from the Frontier Firms inquiry to improve our inquiry practice in other areas.

Most focus group participants and interviewees viewed the inquiry favorably. Our staff, engagement and inquiry process drew positive comments. The inquiry’s Māori engagement was welcomed and regarded as appropriate and of a high quality. Our engagement with Māori was useful for our analysis, findings, and recommendations, and promoted goodwill.

Government response and request for a follow-on review – March 2022

The Government released its official response to the Frontier Firms inquiry in March 2022, thanking the Commission for a well-researched, well-evidenced, coherent, and practical inquiry. The Government also appreciated us challenging it to think about where and how to focus its efforts and help guide its economic strategy towards a more productive, sustainable, and inclusive economy.

In its response, the Government asked us to undertake a “follow-on review of Government’s policy settings in 12 months, to determine whether we are shifting the productivity dial and progressing towards a more sustainable and inclusive economy, or whether more radical change is needed.”

We are undertaking this follow-on review from September 2022 to March 2023.

Promoting understanding

We published the draft report of the Immigration– Fit for the future inquiry with our preliminary findings and recommendations in November 2021.

The final report was delivered to the Minister of Finance, on 30 April 2022, with our findings and recommendations, together with an associated report (Immigration by the numbers) containing much of the quantitative evidence generated during the inquiry.

The public rollout of the findings and recommendations of the Immigration inquiry began in June 2022, and included webinars, media activity and a range of public events and meetings with key stakeholders. Ten events were held in June, including two that were open to the public – a launch event on 10 June (attended by 140 people) and a seminar organised in association with Motu Economic and Public Policy Research on 16 June.

Several organisations hosted meetings to discuss the inquiry’s final reports, including NZCTU, FOMA Chairs, Workforce Development Councils, the Employers and Manufacturers Association Members Forum, NZ Aged Care Association, Education New Zealand (the International Education Chief Executives Group), MBIE’s Policy Forum, the Treasury’s Economic Strategy Team (as well as a guest lecture at the Treasury), the Stats NZ DataLab User Forum, and the New Zealand Association of Economists Conference in late June.

An evaluation for the inquiry, including an expert review, focus group evaluation and public survey was undertaken and published on the Commission’s website.

In addition to supporting our inquiries, our E&R team also completed the following pieces of work:

Migration and productivity

Research by the Commission examined how migrants contribute to productivity in New Zealand. Using administrative data on the flows of migrants into and out of New Zealand, visas, earnings, and jobs between 2004 and 2019, our research compared migrant workers with NZ-born workers. Through the lens of a derived ‘productivity-wage gap’ we captured the difference in relative contribution to output and the wage bill. The research found that skilled and long-term migrants make contributions to output that exceed moderately skilled New Zealand-born workers. The higher contribution is likely due to a mix of skill differences and/or effort that is largely reflected in higher wages.

We found tentative evidence that Māori highly skilled NZ-born workers make a stronger contribution to output when they work in firms with higher migrant shares, which suggests complementarities between the two groups or, at least, positive mutual sorting of these groups into higher productivity firms.

Migrant spells and transitions

The Commission examined recent migration trends in New Zealand, focusing on the visa spells and transitions. Visa spells are the time spent by migrants on a visa when they enter and work in New Zealand. Visa transitions describe when migrants change status, such as changing visa category, becoming a New Zealand citizen, or leaving the country. The work looked at visa spells and transitions for migrants arriving between 2000 to 2020, focusing on groups based on the years migrants first arrive. We found that most migrants enter and stay only a year or two before leaving.

Only a small number of migrants ‘visa-hop’ between multiple visas with most only holding two different visas. Many migrants leave after several years in New Zealand. Of those who stay, there has been an increasing trend towards spells on temporary work or student visas before gaining residence visas.

Migrant selection and outcomes

The Commission explored differences in the selection for permanent residence, where employers select for temporary visas in the first stage (demand driven) and the Government controls the second stage (human capital-based selection) through a points-based system. We compared earnings and employment outcomes between residents applying from offshore and those applying from temporary working visas. We looked at the extent to which skilled or highly paid migrants are reflected in selection and investigated whether there is any earnings advantage to pre-residence earnings over time, or whether there is a catch-up with time in New Zealand.

Changing family incomes in New Zealand

This work was conducted in collaboration with the Victoria University of Wellington. The work examined income mobility patterns in New Zealand over the short to medium term. We used a special dataset that tracked the Household Labour Force Survey over the period from 2007 to 2020, using 2013 census data. Just below half of those initially in the bottom decile remained either there or in the second-lowest decile over seven years, while about two-thirds of those initially in the top decile remained either there or in the second-highest decile.