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Regulatory Impact Statement - Essential skills: Supporting economic transformation through immigration temporary work policy

Executive Summary

It is proposed to increase the maximum permissible duration of a work permit from three years to five years for temporary migrants filling occupations listed at Level 1 on the Australia New Zealand Standard Classification of Occupations (ANZSCO) that pay at least the salary threshold for residence applications under the Accredited Employer (Talent visa) immigration policy.  This threshold is currently set at $50,000 and in future will be pegged at the average professional salary.  All other work permits will continue to have a maximum duration of three years.

No significant labour market impacts are expected to arise as a result of this policy measure, because the highly skilled workers who will qualify for this provision are unlikely to displace New Zealand workers.

Adequacy Statement

The Department of Labour has reviewed the Regulatory Impact Statement and considers that it is adequate according to the adequacy criteria.

Status Quo and Problem

The review of temporary work policy has revealed that the current maximum work permit duration of three years may not be sufficient to maintain a high standard of international competitiveness in immigration policy settings for the highly skilled.  These workers are in worldwide demand, and it is important that they perceive New Zealand’s policy settings as being facilitative in comparison with other countries, some of which (including Australia) offer a long permissible permit duration. 

It is also important that the policy settings are differentiated, to explicitly recognise the significant benefits that highly skilled workers bring to New Zealand.  The current policy framework does not achieve this end because all workers, regardless of skill level, are subject to the same maximum work permit duration.

Objectives

The objective is to position immigration temporary work policy so that it is highly facilitative towards highly skilled migrants, thereby assisting New Zealand’s economic transformation.

Alternative Options

One alternative option is to maintain the status quo (a maximum three year work permit duration).  A benefit of retaining the status quo is that a three year maximum work permit duration would allow for a shorter cycle before a renewed health check and labour market check are required.  This reduces health risks and the risk that New Zealanders might be displaced from job opportunities.

Another option would be to raise the maximum duration to four years, as this would make New Zealand’s policy settings more facilitative and competitive.

Preferred Option

Extending the work permit duration to five years is the preferred option, because a five year work permit duration would make New Zealand’s policy more facilitative than Australia’s, which allows for a four year work permit.  The health risks are not considered significant, because:

The labour market displacement risks are also not considered significant, because:

A further mitigating factor is that, in many cases, highly skilled workers transfer to residence (which requires a health check) before the maximum duration of their work permit is reached.  The extended work permit duration can be considered a marketing device – wide uptake of the maximum five year duration is not expected because many of these workers will gain New Zealand residence before this time.

Implementation and Review

If these proposals are agreed, the Department will issue Parliamentary Counsel with drafting instructions for the regulation changes.  The Department of Labour will fund the costs associated with any systems changes from baseline.  The measure would be implemented as part of the wider roll out of Essential Skills temporary work policy in the first half of 2008.

Consultation

The Ministries of Social Development, Economic Development, Health, Foreign Affairs and Trade, Education, the Tertiary Education Commission, Trade and Enterprise New Zealand, and the Treasury have been consulted and agree with this proposal.