Wednesday 7th December 2016
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Reserve Bank Governor Graeme Wheeler said he accepts the central bank got its migration forecasts wrong but it was hard to know how much inward migration New Zealand would attract under current policies.
Migration forecasting was "tough, and we've been wrong in our forecasts, as I think pretty well every other forecaster has," Wheeler told the finance and expenditure select committee this morning. "If you look at net permanent long-term migration of working age population, it's been 173,000 people since 2012, that's a 5 percent increase in the labour supply and I don't think anyone anticipated that sort of growth. With certain degrees of uncertainty around it, we're saying it could be another 120,000."
Wheeler said the bank was reasonably well able to model departures as there's a reasonable correlation between emigration and the strength of the Australian labour market, but the bank isn't good at forecasting migrant arrivals due to returning New Zealanders, student visas and people coming on single work permits.
"If the government had clear limits, that might make it easier to forecast in that sense," Wheeler said.
New Zealand First leader Winston Peters asked whether the governor was saying that immigration policy was "so loose it's very hard to forecast what's actually happening. Is that what you're saying?"
"I'm saying it's difficult to forecast the arrivals because of the groups I mentioned. That's probably where I'd leave it," Wheeler said.
Grant Spencer, deputy governor and head of financial stability, said the nature of immigration policy was that you never knew how many people would meet the criteria, and over time policy could be gradually adjusted.
"Other countries fine-tune policies month after month on this matter. They are seriously focussed on it. Why aren't we?" Peters asked. Spencer said that wasn't the bank's area of responsibility.
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