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2019 OECD Economic Surveys: New Zealand 2019

image of OECD Economic Surveys: New Zealand 2019

Well-being in New Zealand is generally high, although there is room for improvement in incomes, housing affordability, distribution, water quality and GHG emissions. Economic growth is projected to remain around 2½ per cent. The main risks to the outlook are rising trade restrictions and a housing market correction. Labour market reforms have been initiated to increase wages for the low paid but will need to be implemented cautiously to minimise potential adverse effects. Substantial planned increases in bank capital requirements should reduce the expected costs of financial crises but might reduce economic activity. To improve the well-being of New Zealanders, the government is amending legislation to embed well-being objective setting and reporting, developing well-being frameworks and indicator sets and using well-being evidence to inform budget priority setting and decision-making. Immigration increases well-being of both immigrants and most of the NZ-born, although associated increases in housing costs, congestion and pollution have had negative effects. A raft of measures is underway to make housing supply more responsive to demand. However, strict regulatory containment policies, which impede densification, need to be replaced by rules that are better aligned with desired outcomes and alternative sources of finance found to relieve local government infrastructure funding pressures.

SPECIAL FEATURES: WELL-BEING; MIGRATION; HOUSING

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Improving well-being through migration

New Zealand’s immigration system aims to enhance well-being by promoting economic development, reuniting families and meeting humanitarian objectives. Immigration is high and residence admissions are focused on the high skilled to enhance economic outcomes. Empirical evidence suggests that immigration has had small positive effects on per capita incomes and has not adversely affected the wage or employment outcomes of the average NZ-born worker. However, temporary migration has had small negative impacts on new hires of some groups of people, notably social welfare beneficiaries not in the (16) most urbanised areas. Immigrants have high well-being outcomes on average but suffer an initial shortfall in employment and wages relative to the comparable NZ-born. New Zealand has refined the migration system over the years to attract those who are more likely to ease labour shortages and, should they apply for residence, have better earnings prospects. It has also deployed settlement and integration programmes to improve labour market and other outcomes that affect well-being. This chapter looks at further adjustments to the system to enhance its well-being benefits for both the NZ-born and immigrants.

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