Are we under-measuring our migrant numbers?

New data from Statistics NZ shows that migration, as we currently track it, is not always representative of true long-term migration.  Using this information, we know that net migration in 2003 was severely underestimated.  Given current labour market conditions and the attraction for both foreigners and returning New Zealanders to stick around, we believe that long-term net migration could currently be underestimated by 4,000-8,000 people.

Net migration was severely underestimated in 2003

New statistics on net migration show that there is a propensity for people to come to New Zealand as visitors but end up staying long-term.  On the flipside, people leaving New Zealand tend to do the same when they travel overseas, and New Zealanders tend to “overstay” to a much greater extent.  The net outcome shows that arrival card data was slightly overestimating the number of people adding to New Zealand’s population long-term between 2010 and March 2015. 

However, periods of underestimation can also occur and can be in the order of tens of thousands of people.  During the previous migration boom in 2003, net migration was actually 18,000 people per annum greater than initially indicated by arrival cards .  This underestimate added an extra 45% to the number of permanent migrants we thought were entering the country, and made half a percentage point difference to population growth at the time.

Graph 1

[1]

Are we underestimating net migration now?

In general, the count of arrivals at the gate underestimates actual long-term arrivals by about 10%.  But the extent of this undercounting has reduced over the past decade, representing tighter restrictions around long-term visas.  As a result, more people are moving to New Zealand with a long-term visa already in place (and are thus measured as such at the arrivals gate). 

In contrast, the absolute number of people leaving the country as tourists but staying overseas long-term has stayed about the same between 2007 and 2015.

For the first few months of 2015 (which is the last few months of available data), the number of departures was being underestimated by more than the number of arrivals, and the gap between the two was widening.  This widening gap means that at-the-gate figures were overestimating the effect of net migration on population growth in the March 2015 year, and the number of people coming into the country was a bit smaller than thought (by almost 4,500 people).

Graph 2

But how might at-the-gate migration be behaving relative to the actual long-term movements now? 

Tighter visa restrictions mean that fewer people are likely to come to New Zealand without a long-term visa already in place.  With a raft of new restrictions around student visas, and the increase in constraints for work visas, at-the-gate arrival figures for these visa categories are less likely to undercount true long-term arrivals going forward. 

However, an increase in the propensity for tourists to extend their stay in New Zealand could more than offset this change, at least for the 12/16-month period (see definition in footnote for Graph 1).  At the previous net migration peak in 2003, we estimate that just under 20,000 tourists opted to stay here long term, contributing to a 27% underestimation of long-term arrivals using arrival card data.

The undercount of departures from New Zealand has been relatively stable over the ten years to 2014/15.  But, instability in global politics within the last 18 months (eg, Donald Trump’s presidency, longer wait times to gain citizenship in Australia, and the Brexit decision) might undermine people’s ability to obtain solid job offers while on their OE.  Despite this risk, we continue to anticipate that 10,000-15,000 people per year will leave the country as tourists but ultimate becoming expatriates.

In summary, owing to the sharp lift in tourist numbers and the number of employment opportunities that entice people to stay, we’re likely to be underestimating net migration

The remainder of this article discusses the breakdown of arrivals by migrant status (visitor, student, work, resident, and New Zealander or Australian).

Tourists that fall in love with New Zealand

Tourists who extend their stay in New Zealand are the biggest factor behind long-term arrivals being higher than at-the-gate measures suggest.  According to data from Immigration NZ, almost two million people arrived in New Zealand on a visitor visa during the May 2017 year.  However, fewer than 6,500 visitors are counted as migrants at the gate because they’ve indicated intentions to stay for at least 12 months on their arrival card.  The rest are generally considered to be tourists.

It appears that more tourists are extending their stays in New Zealand after they’ve arrived in the country.  The new data from Statistics NZ shows that, in the year to March 2015, an additional 15,000 tourists stayed in New Zealand long enough to be reclassified as migrants.  Furthermore, the difference between the number of tourists becoming migrants and the number of “visitors” who were first measured as migrants at the arrivals gate lifted since early 2013.

But a Statistics NZ report on the 12/16-month rule shows that this difference was even greater prior to the 2008 Global Financial Crisis, suggesting that tourists tend to stay in New Zealand for longer in times of economic plenty.  Given the strong growth in employment and economic activity we’ve seen since 2013, the number of tourists staying in New Zealand long-term is likely to have continued increasing over the past two years.

Graph 3

There may also be an additional lift in at-the-gate visitor arrivals as a result of recent rule changes.  The April 2017 round of rule changes for skilled migrants means that spouses and children will no longer automatically obtain work and student visas and must be eligible for these visas in their own right.  As a result, we could see an increase in at-the-gate visitor arrivals that might have otherwise been accounted for in at-the-gate work and student visa arrivals .  Spouses and children of skilled migrants can arrive on visitor visas but are likely to switch over to student or work visas once they’ve established themselves in New Zealand.

Only two-thirds of workers stay on board for more than 12 months

In contrast, a smaller proportion of the people that come to New Zealand on a work visa actually remain here for 12 months or more.  There is a gap of 25-39% between at-the-gate work visa arrivals and the number of people that ultimately stay here for 12 months or more in the following 16 months.  This result reinforces the idea that a good chunk of arrivals on work visas are essentially tourists doing a spot of holiday work to fund their travel.

Migrants on work visas have been a key driver of growth in migration for the past five years.  In the year to June 2017, work visa arrivals made up a third of total arrivals into the country.  If we readjust arrival numbers by people’s propensity to stay, long-term arrivals on work visas would be closer to 30,000 people per year, rather than 45,000pa, and make up only 18% of all arrivals.

Graph 4

Students know what they’re doing

Out of all the arrival statistics, student visa arrivals are the most representative of what transpires over the next 12-16 months.  Most students intending to stay in New Zealand for more than 12 months generally do so.  This result is unsurprising given that students often have their course plans in place, and therefore know the duration of their study, before arriving in New Zealand.

However, long-term migrant data has been diverging from at-the-gate arrival statistics since 2010.  This shift suggests that some students with short-term study plans are extending their stay in New Zealand.  These students will not be picked up as migrants initially, but will then be counted as per the 12/16-month rule.  In the year to March 2015, the difference between the at-the-gate count of student migrants and the number of students staying here for 12 months or more was 2,214 people.

Graph 1.5

Nevertheless, the tightening of English language requirements outlined in June 2015 and introduced in October 2015 looks to have curbed the number of short-term students extending their trips.  As a proportion of at-the-gate arrivals, the number of student migrants remaining in New Zealand for at least 12-16 months following their initial arrival date hit its peak in November 2015.  The timing of this peak aligns with the idea that, once the rules were changed in October 2015, those who arrived within the year prior (November 2014-October 2015) had more difficulty extending their study visas than previous applicants (see Graph 6).  We believe that the proportion of short-term student arrivals extending their stay (beyond 12 months) is sliding back to its 2013 level when regulations were more restrictive.

Graph 6

One limitation of the 12/16-month rule is that it only tracks a person’s travel for 16 months after their arrival in New Zealand.  Although this gives us a clear indication as to how many people are staying here for more than a year, it does not tell us whether they end up staying here for two years or more.

Secondly, this data categorises arrivals based on the visa category under which they first entered New Zealand.  Thus we don’t capture the subsequent pathways that arrivals take after they get their student visa.  The number of students (or visitors) that end up gaining employment in New Zealand and transitioning to a work or resident visa are not captured in the 12/16-month rule. 

Recognising these limitations, and the scope for migrants to enter the country on a student visa but to then transition to other visa types, we have looked further into resident visa data in another article here .

Permanent residents pump up otherwise on-the-money resident visa arrival data

Prior to 2011, when the permanent resident visa category was introduced, most resident visa holders arriving in the country tended to stay for the next 16 months – which is unsurprising given the restrictions around travel for resident visa holders.

A definitional change in 2011 and the introduction of the permanent resident category makes it difficult to compare 12/16-month stay data to arrival card data.  Permanent resident visas are available to people that have held a resident visa for two years or more .  The addition of this category resulted in an upward level shift in the total number of people arriving on resident visas.

However, whichever way we look at the data. we have noticed a general decline in the proportion of people still in New Zealand on their resident visas 16 months after arrival.  This trend really began to take hold in late 2014, despite at-the-gate arrival measures increasing further since. 

And then there’s New Zealanders themselves

According to Statistics NZ, New Zealanders visiting home often indicate a short length of stay when, in reality, they end up staying for good (or at least more than 12 months).  This trend might have blown out over the past year given favourable labour market conditions and some sectors crying out for workers, but it is unlikely to outweigh the overestimation of work visa arrivals.

Graph 7

By how much might we be underestimating population growth?

Given current labour market conditions and the attraction for foreigners and New Zealanders alike to stick around, arrival card measures are probably underestimating net migration’s contribution to population growth.  This result is most alarming given that at-the-gate measures already put net migration at 72,305 people for the year to June 2017.  Excluding the effects of recent changes to visa requirements, the difference between the at-the-gate measure and actual long-term net migration could be in the ball park of 4,000-8,000 people – not quite as big as the undercount in 2003, but still representing an additional 6-11% on current record-high net migration levels. 

Long-term implications of high net migration break down how high net migration can lead to higher numbers fo people gaining residency.  Most people gaining New Zealand residency are already here on other visas, and with the tightening of resident visa rules in October, resident visa approvals are now even more skewed toward onshore applicants.

This article was part of an in-depth report on migration.  Please find the full report here.

[1] (1) The 12/16-month rule defines a migrant arrival as someone who, from the time that they first arrive in New Zealand, spends at least 12 out of the following 16 months in New Zealand.  In contrast, someone departing New Zealand is classified as a migrant under the 12/16-month rule if they spend 12 or more months overseas from the point of their departure. 

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