New Zealand is addicted to low skill immigration, which puts pressure on rents and creates a dependence on migrant exploitation, according to economic commentator Bernard Hickey.
Hickey described the trend to Breakfast as the New Zealand economy’s “dirty little secret”.
“It’s fantastic if you are a small business and you don’t want to invest a lot of money in new capital to be able to use machines to do your work and it’s actually cheaper to employ more people to add to your production.
“[Low skill migration] is the best way to grow your business. It leaves you spare cash to invest in much more profitable ways… in New Zealand that means land, a mortgage, and then just waiting for house prices and land prices to rise. It’s much better.”
However, Hickey said: “We have come to rely on exploiting a group of people to keep this model going.
“We have become the Dubai of the South Pacific where we enable substantial migrant exploitation.
“In fact, large chunks of our economy depended on migrant exploitation… paying well below minimum wages… to have people working way longer than [businesses] say they are.”
He said cases of migrant exploitation are often missed due to a lack of checks by “under resourced” health and safety and work standard bureaucrats.
Hickey said the current immigration trend means businesses will be incentivised to put their money into land and property to create an income stream rather than investing in their workers.
This also means immigration is more temporary and short-term, which means rental prices are squeezed upwards, he added.