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New Zealand is grappling with significant challenges: an economic recession, high crime rates, and a coalition government cutting spending on essential services. Amid these issues, the country is experiencing an alarming flight of human capital, further exacerbating the economic downturn. In the past year, New Zealand has experienced a significant net migration loss of some 11,500 people, according to Stats NZ. This outflow is driven by economic and social factors, with many Kiwis moving to Australia for higher wages, a better climate and a perceived better lifestyle.

To make matters worse, the government’s erratic immigration policies are creating additional hurdles, impacting both migrants and the crucial education export industry.

New Zealand’s economic woes are stark. The country has entered its second recession in less than 18 months, with GDP shrinking by 0.1 per cent in the final quarter of 2023 following a 0.3 per cent contraction in the previous quarter. This downturn has resulted from aggressive interest rate hikes aimed at controlling inflation, which peaked at more than 7 per cent in mid-2022, since declining to 4.7 per cent by the end of last year​. The recession has been felt deeply, with private investment, government consumption, and household spending all slowing significantly​.

In response to labour shortages exacerbated by the Covid-19 pandemic, New Zealand initially opened its borders, resulting in record net migration of over 133,000 arrivals last year​. However, this influx was managed poorly, leading to numerous instances of migrants being stranded without jobs after accepting spurious job offers under a poorly thought out and even poorly vetted scheme for employers which saw a flood of questionable ‘employers’ making fake offers charging thousands of dollars in the migrants’ home countries. Consequently, the government has now swung in the opposite direction, imposing stricter immigration controls. This knee-jerk reaction is proving detrimental to the very sectors New Zealand relies on for recovery and growth.

The education sector, one of New Zealand’s vital economic pillars, is particularly affected. New Zealand has been a popular destination for international students, contributing significantly to the economy. However, the unstable immigration policies are making the country less attractive compared to other destinations like Australia, Canada, and the United Kingdom. Students are wary of investing in an education in a country where the future is uncertain, and visa policies can change abruptly. This uncertainty will undoubtedly end up causing a decline in international student numbers, directly impacting the education export industry.

New Zealand’s handling of immigration is not just a problem for the education sector; it affects the broader economy and society. Migrants are essential for filling labour shortages in various industries, from agriculture to technology. By making it harder for skilled workers to enter and stay in the country, New Zealand greatly risks exacerbating these shortages, hindering economic recovery. The perception of instability can deter potential investors and skilled professionals from considering New Zealand as a viable option.

The current government’s cuts in spending on vital services like education, healthcare, and public transport add to the sense of instability and decline in living standards. These cuts were deemed necessary to manage the economic downturn and address the deficits created by the previous government’s profligate spending. However, these austerity measures are likely to have long-term negative effects, reducing the quality of life and increasing the strain on public services. This scenario creates a vicious cycle: as services decline, more people, including skilled professionals and recent migrants, are likely to leave, further shrinking the talent pool and weakening the economy.

The government must recognise the critical role that stable and well-considered immigration policies play in economic recovery and growth. Instead of abrupt changes, a more measured approach is needed—one that balances the need to control borders with the necessity of attracting and retaining talent. New Zealand’s future depends on its ability to offer stability and opportunity to both its citizens and migrants.

Erratic immigration policies are wreaking havoc on both migrants and the education sector, exacerbating the country’s economic and social challenges. The government’s knee-jerk reactions—first flooding the country with migrants and now clamping down harshly—have created instability and uncertainty. To reverse the brain drain and attract essential talent, New Zealand must urgently implement strategic, consistent immigration policies and invest in key sectors to attract the best possible talent to live and work in the country to reverse the brain drain.

First appeared in the 16 May 2024 edition of the Indian Weekender