Skip to content

Fiscal impacts of immigration 2005/06

Previous Section | Table of Contents | Next Section

The Fiscal Impact

Overview

This section summarises the fiscal impact calculated for migrants to New Zealand. The summary includes commentary plus key tables. Appendix 12, contains a full set of impact tables, including the tables in this section for ease of reference.

Summary

Aggregate impacts of the migrant population are summarised below, with a numerical summary given in Table 7-1. ^[20]

The migrant population contributed:

• income tax revenue of $4,794 million (the comparable New Zealand-born figure was $15,284m, which is given in the left-hand column of Table 7-1).
• GST revenue totalled $2,741m.
• petrol, alcohol and tobacco excise revenue totalled $567m.

The total contribution of the migrant population to government revenue was $8,101m.

Government expenditure on the migrant population included:

• education spending of $1,036m, of which 58 percent was for primary and secondary education.
• health spending totalling $2,165m.
• New Zealand Superannuation spending of $755m.
• Work and Income benefit payments of $741m, including $151m for unemployment benefits, $197m for domestic purposes benefits, $117m for sickness benefits and $98m for invalids' benefits. Supplementary benefits amounted to $179m.
• student allowances of $115m.

The total impact of the migrant population on government expenditure was $4,813m.

The net fiscal impact of the migrant population was $3,288m. This indicates that the migrant population's contribution to government revenue exceeded government expenditure on the migrant population. This compares to a net $2,838m for the New Zealand-born population.

Table 7-1 details the fiscal impact of the total overseas-born migrant population, along with comparable figures for the New Zealand-born population.

The three right-hand columns of this table split total migrant fiscal impacts according to the length of residence in New Zealand, i.e. migrant groups recent (less than five years), intermediate (five to fourteen years) and earlier (fifteen years plus).

Table 7-1: Summary of fiscal impacts 2006 ($m)

	NZ born	Overseas born total			Overseas born: Years in NZ
					Less than 5	Between 5 and 14	15 or more
GOVERNMENT REVENUE
Income tax	15284	4794			1075	1189	2530
GST	7836	2741			723	709	1309
Petrol, alcohol & tobacco excises	1635	567			147	145	275
Income tax, GST & excises	24755			8101	1945	2043	4113
GOVERNMENT EXPENDITURE
Early childhood education	616	43			42	1	0
Primary & secondary schools	3101	560			310	239	11
Tertiary institutions	1250	433			177	130	126
EDUCATION	4967		1036		529	370	137
HEALTH	6870		2165		492	438	1235
NATIONAL SUPER	5660		755		0	59	697
Unemployment benefit	563	151			32	64	55
Other main benefits	2695	412			31	134	247
Supplementary benefits	927	179			21	66	91
WORK AND INCOME	4185		741		84	264	393
STUDENT ALLOWANCES	236		115		40	52	23
Education, Health, NS, Student allowances, Benefits	21917			4813	1145	1184	2485
Net Impact	2838			3288	801	859	1628

* The Net Impact refers to the revenue and expenditure categories explicitly identified in the table only.

Income tax from overseas-born people was the largest component of the fiscal impact of migrants during 2005/06. Income tax revenue alone would cover almost all (over 90 percent) of total government expenditure on the migrant population. Notably, while the migrant population's income tax revenue (in real dollar terms) increased between the 2003 study and 2006, GST revenue has just over doubled.

Overall, the 927,000 overseas-born residents contributed income tax of approximately $5,170 per head. This compares with income tax revenue of $4,929 per head by the 3.1m New Zealand-born population.

In contrast to BERL's 2003 assessment, however, the GST contribution has climbed to 34 percent from 21 percent of migrants' contribution to government revenue.

Table 7-2 spreads total estimated expenditure and revenue across the relevant population group to provide per capita ($pc) figures.

Table 7-2: Per capita fiscal impact, 2006 ($ per head)

	NZ born	Overseas born total			Overseas born: Years in NZ
					Less than 5	Between 5 and 14	15 or more
GOVERNMENT REVENUE
Income tax	4929	5170			3596	4799	6651
GST	2527	2956			2416	2864	3440
Petrol, alcohol & tobacco excises	527	611			492	585	722
Income tax, GST & excises	7984			8737	6504	8248	10813
GOVERNMENT EXPENDITURE
Early childhood education	199	46			140	4	0
Primary & secondary schools	1000	604			1037	966	29
Tertiary institutions	403	467			591	526	331
EDUCATION	1602		1117		1767	1495	360
HEALTH	2216		2335		1644	1770	3426
NATIONAL SUPER	1825		815		0	237	1832
Unemployment benefit	181	163			108	258	145
Other main benefits	869	444			104	540	648
Supplementary benefits	299	193			70	268	240
WORK AND INCOME	1350		800		282	1066	1033
STUDENT ALLOWANCES	76		124		133	211	61
Education, Health, NS, Student allowances, Benefits	7068			5191	3826	4779	6532
Net Impact	915			3547	2677	3469	4281
Population (000)	3101			927	299	248	380

Table 7.1 shows that all three migrant groups (by duration of residence) had positive net fiscal impacts and that the total net impact climbs as duration of residence increases. Table 7.2 shows a similar picture to the total estimates, but takes into account the difference in populaiton group size. The net fiscal impact per head for recent migrants was $2,677, for intermediate migrants it was $3,469 and for earlier migrants it rises to $4,281. The comparative net fiscal impact figure for the New Zealand-born population is also positive, although significantly lower at $915 per head. This reflects differences in population demography and benefit entitlement. For example, the proporition of the New Zealand-born population aged less than 18 years old was twice as high as for the migrant population (30 percent versus 15 percent).

Contribution to income tax revenues

Income tax revenue from the various sub-groups of the population reflects their respective incomes. A group's age profile typically underlies its income profile, as it reflects the proportion of working age people and where they are distributed along their lifecycle income path. A population group with a large proportion of working age people is likely to generate a higher per capita contribution (all other things the same). Further, income rises with age (due to experience) across a person's working lifecycle before declining with retirement (as labour force participation drops off).

Figure 7-1 shows the relative income earnings of the various migrant groups. This picture is broadly consistent with the age breakdown in Table 4-6. Migrants aged 15 to 25 years old accounted for 16 percent of the migrant population and 14 percent of migrants earned $20,000-$30,000pa. Migrants between 41 and 64 years old accounted for 34 percent of the migrant population and 38 percent of migrants earned $30,000+ per annum. The broader group of migrants aged between 18 and 65 years of age (reflecting a classic working lifecycle) accounted for 71 percent of all migrants resident in New Zealand in 2006, while 61 percent of migrants earned more than $15,000 per annum.

Figure 7.1 Proportions, by income, of each population group (age 15+), 2006

Long description for Figure 7.1

Key features of the income tax profile of migrant and New Zealand-born residents include:

• Per capita income tax by the overseas-born population was approximately $5,170, compared to $4,930 by the New Zealand-born population. The age structure of the two populations is one factor contributing to higher per capita income tax by overseas-born residents. Approximately 71 percent of overseas-born residents were in the conventional working lifecycle group of 18 to 64 years of age while the comparative figure for people born in New Zealander was 59 percent. This indicates that there was a greater proportion of earning and higher earning people in the migrant population than in the New Zealand-born population.
• After allowing for the difference in age structure, per capita income tax for migrants in the conventional lifecycle age range of 18 to 64 years old was approximately $7,280 and $8,400 for New Zealand-born residents.
• The difference in per capita tax revenue reflects a lower proportion of overseas-born residents in the higher income bands. Approximately 48 percent of migrants earned $20,000pa or less, while the comparable figure for New Zealand-born residents was 41 percent.
• The proportion of migrants in higher income bands increases with duration of residence, indicating that recent migrants may experience some disruption to their career or earnings, but this effect dissipates as they become established. Per capita income tax revenue rises from $3,600 for recent migrants to $6,650 for earlier migrants. This is similar to the finding in the 2003 study, where earlier migrants contributed approximately 35 percent more to income tax revenue per capita than the New Zealand-born.

Income tax revenues by region of birth

The fiscal impact on income tax revenues of migrants differ substantially by their region of birth and by duration of residence.

Figure 7.2 Proportions of income according to region of birth (age 15+), 2006

Long description for Figure 7.2

Overall, migrants from Australia, the UK and Ireland have a similar income profile to New Zealand-born residents. Migrants from Asia and the Pacific Islands tended to have a lower income profile with 61 percent and 48 percent, respectively, earning $20,000pa or less. The finding for Asian migrants is likely to reflect the high proportion of Asian migrants engaged in study. The finding for Pacific Island migrants is consistent with the occupational analysis in section 6, which showed that these migrants mainly tend to hold elementary or service jobs involving lower skill levels with proportionately fewer holding professional jobs.

Duration of residence, however, has a strong effect on the earning profile of each regional group. For example, per capita income tax revenue from recent Pacific Island migrants was $2,770 and for recent Asian migrants it was $2,680. Once these groups reside in New Zealand fifteen years or more and become established, however, the level is almost two thirds higher for Pacific Island migrants to $4,510 and more than doubles for Asian migrants to $6,380.

These changes may reflect skill accumulation by Pacific Island migrants, and post-study employment by Asian migrants. This pattern also appears to reflect a stronger increase in labour force participation relative to other migrant groups as duration of residence increases, particularly for Asian migrants. For example, the proportion of Asian migrants with no occupation drops 12 percent (from 50 percent to 44 percent of the population group) between being a recent migrant and a intermediate migrant.

Census figures also indicate that the proportion of people unemployed or not in the labour force fall consistently for Pacific Island and Asian immigrants as the duration of residence increases, while for migrants as a whole this rate falls and then rises (as people move into retirement). Census figures also show that approximately 31 percent of recent Pacific Island migrants and 32 percent of recent Asian migrants had no income or did not state their source of income. These rates drop to 17 percent and 16 percent, respectively, for intermediate migrants from these regions of birth, and to 9 percent and 7 percent for earlier migrants.

The per capita income tax contribution of UK and Ireland migrants rises rapidly between arriving ($9,840) and residing in New Zealand for 5 years or more ($8,250). Migrants from this region appear to settle in to the labour market relatively quickly, however, as the contribution for a intermediate migrant is similar to that for an earlier migrant (at $7,320). The change between these two groups is likely to reflect differences in age composition rather than how long they have resided in New Zealand. Approximately 36 percent of intermediate migrants from the UK and Ireland were aged 41-64 while the comparable figure for earlier migrants was a third higher at 48 percent.

Impact on GST revenue

GST accounted for just over one third (34 percent) of migrants' contribution to fiscal revenue, which is slightly higher than the proportion by the New Zealand-born population (32 percent). This proportion falls with duration of residence from 37 percent for recent migrants to 32 percent for earlier migrants, which is approximately the same proportion as that for New Zealand-born residents.

GST per capita was $2,960 for the resident migrant population and $2,530 for the New Zealand-born population.

GST revenue rises substantially as migrants become established, which reflects the increase in average income, and therefore purchasing power, with duration of residence. GST per capita for recent migrants sat at approximately $2,420, rising to $2,860 for intermediate migrants and doubling to $4,940 for earlier migrants.

The proportion of fiscal revenue from GST rises less quickly than income tax. This is partly a reflection of the regressive nature of GST (and the progressive nature of income tax). That is, consumption expenditure tends to use a larger proportion of income the lower the person's income. Therefore, the incidence of GST tends to be higher for people on lower incomes.

Impact on fiscal expenditure

The analysis of fiscal spending covers education, health and welfare benefits. The impact of migrants on fiscal spending is driven by underlying demand factors such as age, family status, and participation in education and labour markets. The fiscal impact of these demands, however, is mediated by eligibility constraints which tend to reduce their impact in the early years of their residence in New Zealand relative to their New Zealand-born cohorts.

Education and student allowances

Table 7-1 outlines education expenditure estimated for migrants. Total education expenditure for overseas-born New Zealand residents was $1,036m. This was comprised of $529m for recent migrants, $370m for intermediate migrants and $137m for earlier migrants. Total education expenditure for the New Zealand-born was almost five times greater at $4,967m.

Allowing for the differences in population group size, the expenditure differences remain apparent in the per capita estimates, as shown in Table 7-2. Total education expenditure per person overall was approximately $1,120, with splits of $1,770 for recent migrants, $1,500 for intermediate migrants and $360 for earlier migrants. The equivalent figure for people born in New Zealand was $1,600.

One factor behind the difference in per capita levels is the age structure of the three duration categories of overseas-born and New Zealand-born residents, and the corresponding impact on education participation rates. Overall, 15 percent of the migrant population was under 18 years old versus 30 percent of the New Zealand-born population. Those aged 18 or less accounted for 27 percent of recent migrants, 20 percent of intermediate migrants, and only 1 percent of earlier migrants. This structure reflects the absence from the earlier migrant category, by definition, of people aged under 15 years old.

The New Zealand-born had higher per capita education expenditure of $1,600. The difference between the overseas-born and New Zealand-born levels reflects the proportion of people in the age groups where education is compulsory. As a result, the New Zealand-born had substantially higher early childhood and primary/secondary education expenditure per capita, which tends to raise the per capita education figures for the New Zealand-born. This effect pulls up the New Zealand average despite the higher participation by migrants in post-compulsory education.

Table 7-2 indicates that student allowances were highest for recent and intermediate migrants, with per capita levels of $133 for recent migrants and $211 for intermediate migrants. Taken alongside the estimates of tertiary education expenditure, these figures suggest that a large number of migrants may come to New Zealand to study or move into tertiary education shortly after settling in New Zealand. Due to high participation in tertiary education amongst migrants overall, the per capita student allowance figure for migrants ($124) was greater than that for the New Zealand-born ($76).

Health and New Zealand Superannuation expenditure

Health care and superannuation expenditure is closely tied to the age structure of a population. This reflects underlying demand factors and eligibility criteria. Health expenditure tends to fall after the first few years of life before rising rapidly towards the end of a person's lifecycle. Relative to young to middle aged adults, health expenditure per person for 0-4 year olds is almost three quarters higher. It is over five and a half times higher for those aged 65 plus.

Due to these expenditure relativities, the impact on health spending from the overseas-born population group totalled $2,165m (comprising $492m, $438m and $1,235m for recent, intermediate and earlier migrants, respectively) compared to $6,870m for the New Zealand-born, as detailed in Table 7-1.

The large proportion of total migrant health expenditure by the earlier migrant group translates through to the per capita estimates of health expenditure, as shown in Table 7-2. Per head health expenditure for earlier migrants was $3,250. This is almost two fifths higher than the overall average for the overseas-born of $2,340. Taking all three migrant groups together, the overall average for overseas-born is slightly higher than the figure for the New Zealand-born population of $2,220.

Overall, New Zealand Superannuation expenditure for immigrants was $815 per person. ^[21]This expenditure, however, was concentrated in the earlier migrant group (at $1,830) compared to intermediate migrants ($237) and recent migrants^[22] ($0). This concentration reflects the older age structure of earlier migrants and that earlier migrants are more likely to meet New Zealand eligibility requirements than the intermediate migrant group (recent migrants are not eligible). The figure for earlier migrants is comparable to that for the New Zealand-born ($1,830), as shown in Table 7-2.

Work and Income benefits

Overall, total benefit expenditure on immigrants was $741m compared with just under $4,185m from the New Zealand-born population (Table 7-1).

The largest expenditure component was on other main benefits ($412m), which conflate the Sickness Benefit ($117m), Domestic Purposes Benefit ($197m) and Invalids Benefit ($98m). Supplementary benefits to migrants accounted for $179m of expenditure, and migrants received $151m of Unemployment Benefit payments.

Other main benefit expenditure shows rising per capita levels as migrants become established. The levels are $104, $540 and $648 for the three duration categories, respectively.

The per capita expenditure pattern is mirrored for supplementary benefits, which includes Accommodation Supplement and Disability Allowance. The comparable per capita figures rise from $100 for recent migrants, to $362 for intermediate migrants and then fall slightly to $344 for earlier migrants.

The pattern is mixed for per capita unemployment benefit expenditure. Total expenditure for the recent migrant group was lower than for the other duration categories. This is reflected in a lower per capita unemployment benefit payment of $108. An explanation for this lower level of expenditure for recent migrants is that generally, people have to reside in New Zealand for at least two years before they are eligible to apply for an unemployment benefit. This means that only a subset of recent migrants is eligible for such a benefit.^[23] In addition, it is likely a combination a recent strong economy, changes to immigration policy to better focus on skills and employment and the introduction of recent settlement support initiatives all contributed to the outcomes for recent migrants.

Unemployment benefit payments more than double for the intermediate migrant group to $258, reflecting the smaller number of people in the intermediate migrant group and greater eligibility. Although the total expenditure for the earlier migrant group ($55m) was similar to the intermediate migrant group ($64m), the larger cohort of earlier migrants pulls the per capita level for earlier migrants down to $145. Overall, unemployment benefit expenditure for the overseas-born (at $163 per person) was lower than the New Zealand-born (at $181 per person).

Fiscal impact and region of birth

Migrant groups from different regions of birth exhibit substantial diversity in their personal, family and social characteristics. Reflecting this diversity, the fiscal impacts across the groups differ markedly. The net impact per head ranges from $1,990 for Pacific Island migrants to $4,850 for migrants from the UK and Ireland. Appendix Table 31 to Appendix Table 33 provide detailed estimates of the fiscal impact by region of birth.

The relative differences in per capita fiscal revenue were smaller than the net impacts, with a range of $6,990 for Asian migrants to $11,050 for migrants from the UK and Ireland. Australian, North American, and Other migrants had similar per capita revenue impacts of between $8,860 and $9,960. Pacific Island migrants contributed $7,140, which is close to the Asian migrant level.

Table 7-3 reveals how differences in per capita revenue and expenditure contribute to the variation in net impacts. This figure shows that all migrant groups had a positive net fiscal impact (indicated by the circles in the figure).

Table 7-3: Per capita fiscal impact by region of birth 2006

-	Australia	Pacific Islands	UK & Ireland	Europe & North America	Asia	NZ born
Income tax	5,501	3,447	7,279	6,262	3,259	4,929
GST & excises	3,255	3,688	3,771	3,695	3,431	3,055
Education	-1,698	-1,046	-725	-937	-1,337	-1,602
Health	-2,068	-1,981	-3,131	-2,656	-1,830	-2,216
National super-annuation	-668	-412	-1,757	-1,180	-198	-1,825
Benefits & allowances	-894	-1,706	-589	-689	-970	-1,426
Net impact	3,429	1,991	4,849	4,495	2,355	915

The British group stands out as both the biggest source of income tax revenue and expenditure by migrants. This is likely to reflect both the earning profile and age structure of this group, resulting in the largest per capita net impact of $7,280 per person.

Pacific Island and Asian migrants had relatively similar per capita fiscal revenue profiles, and contributed $3,450 and $3,260 per capita, respectively. There is a marked difference in the expenditure mix for these two groups. The differences tend to balance out, however, so net impact overall was similar at $1,990 and $2,360, respectively.

Education expenditure for was lower for Pacific Island migrants than Asian migrants, at $1,050 versus $1,340 per capita. Early childhood expenditure was moderately lower amongst Asian migrants than Pacific Island migrants ($30 versus $41). The main wedge between these two groups is due to large differences in expenditure at the primary, secondary and tertiary levels. Notably, Asian migrants had the highest levels of tertiary education expenditure and student allowances out of all the migrant groups, at $631 per capita and $233, respectively. Section 5.1 showed that 47 percent of recent Asian migrants who were older than 15 years were studying; many of these people would be foreign fee paying students. This study does not capture revenue to the international education sector.

Pacific Island migrants received the largest amount per capita of all migrant groups from Work and Income (WINZ), at $1,600. The majority of this expenditure was distributed as other main benefits ($1,020), although the percentage of benefit expenditure on unemployment benefits for this group (18 percent) was lower than the overall average for the migrant group (20 percent). In contrast, Asian migrants received significantly less in total WINZ benefits ($737) relative to migrants overall, but they received a larger proportion of benefits via unemployment benefits (28 percent). The difference in benefit expenditure between these groups reflected, in part, the higher education participation rates of Asian migrants, and corresponding differences in education and education-related expenditure.

Australian migrants stand out from other migrant groups in terms of early childhood, primary and secondary education expenditure. Total expenditure for this group was $5,330 per capita differs from the average level for all migrant groups of $5,190. It remained below the level for the New Zealand-born of $7,070. Expenditure on health, New Zealand Superannuation and benefits was lower for the Australian group than the New Zealand-born. The net per capita impact of the Australian group of $3,430 was lower than the average migrant ($3,550) but was over three and a half times higher than that for the New Zealand-born ($915).

Comparison with previous fiscal impact studies

This section compares the estimated impacts from the three studies BERL has completed. The earlier studies estimated the fiscal impact of immigrants for the years ended June 1998 (measured in $1997/98) and June 2002 (measured in $2001/02).

All figures in this section are reported in $2005/06 terms. The figures from the earlier studies have been inflated to current values using appropriate GDP inflators. This conversion removes the effects of inflation to provide a time-consistent unit of measure. For example, in nominal dollar terms total income tax rose between 2002 and 2006 from $19,799m to $20,077m. However, after allowing for the effect of inflation, income tax revenue in 2002 was equivalent to $21,495m in $2005/06 terms, indicating a fall in real income tax revenue.

Table 7-4 summarises the estimated fiscal impacts from the three studies, reporting the figures for the New Zealand-born and the overseas-born.^[24] Appendix Table 5 and Appendix Table 6 convert the figures in Table 7-4 to total and per annum percentage changes between each study period.

The positive net fiscal impact of migrants grew by $1,465m between 2002 and 2006. This change represents an increase of 80 percent in real terms over the four-year period. The growth reflects increases in both revenue and expenditure. The former grew by 29 percent and exceeded expenditure growth of 8 percent.

Table 7-4: Comparison of fiscal impacts: 1998, 2002, 2006 ($m)

-	NZ born
-	1997/98	2001/02	2005/06
GOVERNMENT REVENUE	-	-	-
Income tax	16365	17021	15284
GST	4616	4954	7836
Petrol, alcohol & tobacco excises	1883	1839	1635
Income tax, GST & excises	22865	23814	24755
GOVERNMENT EXPENDITURE	-	-	-
Early childhood education	314	371	616
Primary & secondary schools	2613	2851	3101
Tertiary institutions	1055	1097	1250
EDUCATION	3982	4319	4967
HEALTH	5235	5664	6870
NATIONAL SUPER	4683	4543	5660
Unemployment benefit	941	836	563
Other main benefits	1872	1776	2695
Supplementary benefits	555	552	927
WORK AND INCOME	3368	3163	4185
STUDENT ALLOWANCES	320	329	236
Education, Health, NS, Student allowances, Benefits	17588	18019	21917
NET IMPACT (*)	5277	5795	2838

Table 7-4:b Comparison of fiscal impacts: 1998, 2002, 2006 ($m)

-	Overseas born
-	1997/98	2001/02	2005/06
GOVERNMENT REVENUE	-	-	-
Income tax	4083	4474	4794
GST	1376	1311	2741
Petrol, alcohol & tobacco excises	553	485	567
Income tax, GST & excises	6012	6271	8101
GOVERNMENT EXPENDITURE	-	-	-
Early childhood education	15	17	43
Primary & secondary schools	323	430	560
Tertiary institutions	200	286	433
EDUCATION	539	733	1036
HEALTH	1258	1583	2165
NATIONAL SUPER	1378	1374	755
Unemployment benefit	330	194	151
Other main benefits	286	315	412
Supplementary benefits	153	143	179
WORK AND INCOME	768	651	741
STUDENT ALLOWANCES	88	107	115
Education, Health, NS, Student allowances, Benefits	4031	4448	4813
NET IMPACT (*)	1981	1823	3288

The picture of a growing positive net fiscal impact by overseas-born migrants between the latest two studies contrasts with the picture for the New Zealand-born. The net fiscal impact of the New Zealand-born has been positive across all three studies. However, growth in tax revenue from the New Zealand-born has been constant (although there have been changes in the underlying tax components) while fiscal expenditure for the New Zealand-born accelerated. As a result, the net impact of the New Zealand-born climbed between 1998 and 2002, but declined between 2002 and 2006.

Fiscal expenditure for the New Zealand-born rose by $3,899m (net) between 2002 and 2006. Increased health expenditure accounted for 31 percent of this net change. New Zealand Superannuation payments contributed a further 29 percent of the net increase, Work and Income payments 26 percent and education expenditure 17 percent while the fall in student allowance payments offset the increase in expenditure by 2 percent.

Table 7-5 shows the average change per annum between one study and the subsequent study. For example, it shows that the net fiscal impact of overseas-born migrants increased by an average of 16 percent per annum between 2002 and 2006. This annual average increase is equivalent to the total increase of 80 percent over the four year period as indicated in Table 7-4 (and which is shown in Appendix Table 5).

Across all three studies both fiscal revenue and expenditure have grown in real terms for overseas-born migrants. The net fiscal impact of migrants grew more quickly between 2002 and 2006, but fell slightly between 1998 and 2002. This acceleration reflects faster growth in tax revenue in the later period (7 percent versus 2 percent) and slower expenditure growth (2 percent versus 3 percent).

Table 7-5: Comparison of fiscal impacts: 1998, 2002, 2006 (%pa)

-	NZ born
-	1997/98	2001/02	2005/06
GOVERNMENT REVENUE	-	-	-
Income tax	-	1%	-3%
GST	-	2%	12%
Petrol, alcohol & tobacco excises	-	-1%	-3%
Income tax, GST & excises	-	1%	1%
GOVERNMENT EXPENDITURE	-	-	-
Early childhood education	-	4%	14%
Primary & secondary schools	-	2%	2%
Tertiary institutions	-	1%	3%
EDUCATION	-	2%	4%
HEALTH	-	2%	5%
NATIONAL SUPER	-	-1%	6%
Unemployment benefit	-	-3%	-9%
Other main benefits	-	-1%	11%
Supplementary benefits	-	0%	14%
WORK AND INCOME	-	-2%	7%
STUDENT ALLOWANCES	-	1%	-8%
Education, Health, NS, Student allowances, Benefits	-	1%	5%
NET IMPACT (*)	-	2%	-16.3%

Table 7-5b: Comparison of fiscal impacts: 1998, 2002, 2006 (%pa)

-	Overseas born
-	1997/98	2001/02	2005/06
GOVERNMENT REVENUE	-	-	-
Income tax	-	2%	2%
GST	-	-1%	20%
Petrol, alcohol & tobacco excises	-	-3%	4%
Income tax, GST & excises	-	1%	7%
GOVERNMENT EXPENDITURE	-	-	-
Early childhood education	-	3%	26%
Primary & secondary schools	-	7%	7%
Tertiary institutions	-	9%	11%
EDUCATION	-	8%	9%
HEALTH	-	6%	8%
NATIONAL SUPER	-	0%	-14%
Unemployment benefit	-	-12%	-6%
Other main benefits	-	2%	7%
Supplementary benefits	-	-2%	6%
WORK AND INCOME	-	-4%	3%
STUDENT ALLOWANCES	-	5%	2%
Education, Health, NS, Student allowances, Benefits	-	2%	2%
NET IMPACT (*)	-	-2%	16%

Some of the growth in New Zealand-born expenditure between 2002 and 2006 is due to the expansion of childcare subsidies benefiting the New Zealand-born. However, the average annual change in early childhood expenditure still climbed by 8 percent even after removing childcare subsidies provided by MSD. To put this in context, by excluding these subsidies the average annual change in the net impact of New Zealand-born would fall to -15.6 percent compared to -16.3 percent (see Appendix Table 6 and Appendix Table 7).

Table 7-6 gives the estimated per capita fiscal impacts from the three studies, reporting the figures for the New Zealand-born and the overseas-born.^[25] Overall, the net fiscal impact for migrants grew by 44 percent between the 2002 and 2006.

Table 7-6: Comparison of per capita fiscal impact: 1998, 2002, 2006 ($pc)

-	NZ born
-	1997/98	2001/02	2005/06
GOVERNMENT REVENUE	-	-	-
Income tax	5350	5576	4929
GST	1509	1623	2527
Petrol, alcohol & tobacco excises	616	602	527
Income tax, GST & excises	7475	7801	7984
GOVERNMENT EXPENDITURE	-	-	-
Early childhood education	103	122	199
Primary & secondary schools	854	934	1000
Tertiary institutions	345	359	403
EDUCATION	1302	1415	1602
HEALTH	1711	1855	2216
NATIONAL SUPER	1531	1488	1825
Unemployment benefit	308	274	181
Other main benefits	612	582	869
Supplementary benefits	181	181	299
WORK AND INCOME	1101	1036	1350
STUDENT ALLOWANCES	105	108	76
Education, Health, NS, Student allowances, Benefits	5750	5902	7068
NET IMPACT (*)	1725	1898	915
Population (000)	3059	3053	3101

Table 7-6b: Comparison of per capita fiscal impact: 1998, 2002, 2006 ($pc)

-	Overseas born
-	1997/98	2001/02	2005/06
GOVERNMENT REVENUE	-	-	-
Income tax	6217	6038	5170
GST	2095	1770	2956
Petrol, alcohol & tobacco excises	843	655	611
Income tax, GST & excises	9154	8463	8737
GOVERNMENT EXPENDITURE	-	-	-
Early childhood education	23	23	46
Primary & secondary schools	493	580	604
Tertiary institutions	304	386	467
EDUCATION	820	989	1117
HEALTH	1915	2137	2335
NATIONAL SUPER	2099	1854	815
Unemployment benefit	502	262	163
Other main benefits	435	425	444
Supplementary benefits	232	192	193
WORK AND INCOME	1169	879	800
STUDENT ALLOWANCES	134	144	124
Education, Health, NS, Student allowances, Benefits	6137	6003	5191
NET IMPACT (*)	3017	2460	3547
Population (000)	657	741	927

The increasing net fiscal impact per capita between 2002 and 2006 was mainly driven by total fiscal revenue growing more quickly (29 percent) than the migrant population (25 percent). However, as total fiscal expenditure grew less quickly (8 percent) than the migrant population grew, per capita expenditure fell (-14 percent). This reflected falling total superannuation and unemployment benefit payments, modest growth in other welfare payments and relatively fast growth in education expenditure.

Table 7-7 shows the changes in migrants' net fiscal impact by the duration of residence and also the comparison with the New Zealand-born population (see Appendix Table 12 for the numerical estimates).

Table 7-7: Per capita fiscal impact by duration of residency: 1998, 2002, 2006 ($pc)

-Residence	1998	2002	2006
Recent	1,435	1,975	2,677
Intermediate	3,881	3,268	3,469
Earlier	3,381	2,301	4,281
All OSB	3,017	2,460	3,547
NZ Born	1,725	1,898	915

The net fiscal impact grew between 2002 and 2006 for all migrant categories. In the case of recent migrants, this reflected a combination of rising per capita fiscal revenue and falling per capita expenditure, so the net impact rose by 35.6 percent from $1,975 to $2,677. In fact, expenditure from Work and Income^[26] fell from $1,536 per head in 1998 to only $282 in 2006. For intermediate migrants, both per capita fiscal revenue and expenditure rose over this period, and the net impact rose by 7.3 percent ($3,268 to $3,469).

The largest proportional change came from the earlier migrant category, with a 90.9 percent increase in net fiscal impact between 2002 and 2006 from $2,301 to $4,281. This reflected a slower rate of population increase than the other two duration categories, rising fiscal revenue and a strong influence from declines in total expenditure for some line items. The largest contributor to the 19 percent fall in per capita expenditure for earlier migrants was a 52.3 percent fall in the estimated per capita superannuation payments.

Previous Section | Table of Contents | Next Section

---

• About this site |
• Site Map |
• Subscribe to emails |
• Disclaimer |
• Copyright |
• Privacy Statement |
• Official Information