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Fiscal Impacts of Migrants to New Zealand

Summary

An exploratory study in 1997/98 followed by a further study of the fiscal impact of migrants to New Zealand for the 2001/2002 fiscal year.

Migrants for this study were defined as all people born overseas and living in New Zealand, and therefore included people in New Zealand on student and work permits. The ‘fiscal’ impact of migrants is defined as the contribution of migrants to central government revenue less government expenditure attributable to the migrant population.

The findings of the 1997/98 study indicate that migrants generally had a positive net fiscal impact on government expenditure (in the categories described in the Summary), compared with their contributions to tax revenues.

Among other things, the research findings indicated (relating to the 1997/98 fiscal year):
- the fiscal impact of migrants was dominated by their impact on income tax revenue;
- migrants had a positive net fiscal impact, although the size of the impact varied by length of time in New Zealand (related to the income and expenditure items outlined above); and
- there was a positive net per-capita fiscal impact for migrants who were in New Zealand five years or less.

The 2003 study found that migrants had a positive net fiscal impact of $1.7 billion, comprising:
- $5.8bn to government revenue in the form of income tax, GST and petrol, alcohol and tobacco excises.
- $4.1bn of government expenditure comprising education, health, New Zealand superannuation, Work and Income benefits and student allowances.
On an age-adjusted (18 to 64 year-old) per-head basis the fiscal impact of migrants on both revenue and expenditure was similar to that of the New Zealand born. However, both revenue and expenditure for migrants were lower, leaving the net contribution of migrants slightly higher than that of the New Zealand born.

Author: Business and Economic Research Ltd - BERL


All publications in subject category: Immigration - Economic (including labour market)