New Zealand’s economy has grown strongly over the last two decades: experiencing significant and sustained GDP growth. But New Zealand’s productivity performance remains poor. Reconciling these facts might seem counterintuitive. Much of New Zealand’s economic policy and strategy – including immigration policy – has been focused on GDP growth rather than improvements in productivity. Yet it is productivity growth that matters most for improvements in living standards and wellbeing more generally.

This inquiry considers what working-age immigration policy settings would best facilitate New Zealand’s long-term economic growth and promote the wellbeing of New Zealanders.

The Commission’s overall conclusion is that immigration is not likely to be the solution to the productivity challenges facing 21st century Aotearoa, nor is it the cause or source of our productivity problems. This conclusion is consistent with what studies find overseas – mostly small positive effects of immigration on average levels of labour productivity.

Key findings:

• New Zealand’s GDP growth has kept pace with other countries in recent years, but it has done so by working harder, rather than working smarter. GDP growth has relied on adding more people to the labour force, and by those workers (both locals and migrants) working longer hours compared with other OECD countries.
• New Zealand’s labour productivity growth has been weak. Improvements to productivity require working smarter through innovation and the use of new technologies.
• The relationship between productivity and immigration requires a balance of trade-offs, and a consideration of short run and long run impacts. Migrants may increase the productive capacity of the economy in the long run, but this can take time to bear fruit. In the short run, there may be costs associated with the availability of appropriate physical and community infrastructure.