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Pacific Interactions

Pasifika in New Zealand – New Zealand in Pasifika

Edited by

Alastair Bisley

Institute of Policy Studies


Published in 2008 (online only)

http://ips.ac.nz

Institute of Policy Studies

School of Government

Victoria University of Wellington

PO Box 600

Wellington

© Institute of Policy Studies

ISBN 978-1-877347-27-6

IPS/Pub/159

This book is copyright. Apart from any fair

dealing for the purpose of private study,

research, criticism or review, as permitted

under the Copyright Act, no part may be

reproduced without the permission of

the Institute of Policy Studies.

Copy editor: Belinda Hill

Cover design: Alltex Design


Contents

List of Figures...............................................................................................................iv

List of Maps...................................................................................................................v

List of Tables.................................................................................................................v

List of Boxes.............................................................................................................. viii

Acknowledgements ......................................................................................................ix

Introduction –Alastair Bisley.........................................................................................1

1 Emerging Demographic and Socioeconomic Features of the Pacific

Population in New Zealand – Paul Callister and Robert Didham ....................13

2 Pacific People in the New Zealand Economy: Understanding linkages

and trends – Jean-Pierre de Raad and Mark Walton ........................................41

3 Pasifika Mobility: Pathways, circuits, and challenges in the 21st century

– Richard Bedford .............................................................................................85

4 Pacific Island Economies: Role of international trade and investment

– Bob Warner...................................................................................................135

5 Why Don’t Pacific Island Countries’ Economies Grow Faster

– John Gibson and Karen Nero.......................................................................191

6 Border Management in the Pacific Region – Michael Moriarty .....................245

Appendix A: Thought Leaders Dialogue, Auckland, New Zealand, 2007................289

Appendix B: Keynote Address by Greg Urwin, Secretary General, Pacific

Islands Forum Secretariat, at the Pasifika Project: Auckland Dialogue....................297

Collated References...................................................................................................307

© Institute of Policy Studies, Victoria University of Wellington, 2008 iii


Pacific Interactions

Figures

1.1 Pacific population in New Zealand, 1945–2006................................................15

1.2 Change in size of ethnic groups, total counts, 1996–2006 ................................16

1.3 Change in population by birthplace, 1996–2006...............................................17

1.4 Proportion of main ethnic groups who are aged under 20 or aged 65 or

over, total counts, 2006......................................................................................18

1.5 Age distribution of the New Zealand–born and overseas-born Pacific

populations, 2006...............................................................................................19

1.6 Percentage of each main ethnic group (aged 15 or over) employed,

unemployed and no in the labour force (total counts), 2006 .............................21

1.7 Percentage in each ethnic group (aged 15 or over) earning under $10,000

or over $50,000 per year, personal income from all sources, total counts,

2006 ...................................................................................................................22

1.8 Proportion of each ethnic group (aged 15 or over) who owned or partly

owned their house, total counts, 2006 ...............................................................22

1.9 Main single and combination ethnic responses for Pacific people by age,

2006 ...................................................................................................................36

2.1 Pacific population in New Zealand, 1945–2001................................................42

2.2 Net permanent and long-term Pacific migration, 1979–2007 (March years) ....43

2.3 Age distributions, 2006......................................................................................43

2.4 Birthplace of Pacific people, 2006.....................................................................44

2.5 Unemployment rate, 1987–2007 (March years)................................................47

2.6 Pacific unemployment, age and birth country ...................................................48

2.7 Labour force participation, 1987–2005 (March years)......................................48

2.8 Average weekly income by ethnicity, 2006 ......................................................49

2.9 New Zealand average weekly income by qualification, 2006...........................50

2.10 New Zealand average weekly income by age, 2006..........................................50

2.11 Annual income distribution of Pacific people, by birthplace, 2001 ..................51

2.12 Causal loop diagram ..........................................................................................56

2.13 Home ownership by ethnicity, 1991, 2001 and 2006 ........................................60

2.14 Sources of incomes............................................................................................60

2.15 Savings rates, 1987/88–1997/98........................................................................63

2.16 Ages shares – Pacific population, 2001–2101...................................................67

2.17 Ages shares – total population, 2001–2101.......................................................68

2.18 Dependency ratios .............................................................................................68

2.19 Immigrant share of the workforce .....................................................................69

2.20 Annual real wage income per employed ...........................................................72

2.21 Effect of migrant adjustment policy ..................................................................73

2.22 Net worth (actual and projected) – remittances as consumption, 2001–2101...74

2.23 Net worth – remittances as savings (actual and projected), 2001–2101............75

3.1 Pacific migration rates and major destinations for migrants, about 2006 .........89

iv

© Institute of Policy Studies, Victoria University of Wellington, 2008


Contents

3.2 Share of country population in urban areas and rural, urban and national

population growth rates, about 2006 .................................................................92

4.1 Relative openness of Pacific Island nations as measured by export and

import flows as a percentage of gross domestic product.................................139

4.2 Pacific exports by destination (by value), 2004...............................................140

4.3 Changes in the destination of Pacific exports, 1990–2004..............................141

4.4 Changes in the origin of Pacific imports, 1990–2004 .....................................142

4.5 Exports and imports differ by source destination and origin (by value)

2004 .................................................................................................................142

4.6 Contribution of natural resources to export earnings, 1992–2004...................144

4.7 Imports are dominated by heavy machinery, transportation equipment and

fuel, 1992–2004...............................................................................................146

4.8 Trade in services as a share of gross domestic product ...................................147

4.9 Tourism as a share of gross domestic product, 1995–2003.............................148

4.10 Share of visitor arrivals, 2000..........................................................................148

4.11 Foreign direct investment flows, 1990–2004 ..................................................149

4.12 Shares of foreign direct investment in-stocks across the region, 2004............150

4.13 Why Pacific economies’ growth is so poor .....................................................155

5.1 Pacific population and gross domestic product, ca 2004 and 2005.................194

5.2 Financial flows in the Pacific ..........................................................................205

5.3 Tongan ceremonial economy...........................................................................226

5.4 Elasticity of transfer receipts with respect to recipient income.......................231

5.5 Transactions costs (as percentage of amount remitted) for the New Zealand

to Tonga remittance corridor ...........................................................................233

Maps

5.1 Settlement of Near Oceania and Remote Oceania...........................................195

5.2 Pacific region by gross domestic product (GDP) per capita (US$).................198

5.3 Population density (thousands per square kilometre) by gross national

income per capita (US$) ..................................................................................199

5.4 Share of country population in urban areas and population growth rates .......199

5.5 Pacific region by gross national income (GNI) and urban–rural distribution .200

5.6 Population below poverty line on per capita gross national income (GNI)

base ..................................................................................................................201

5.7 Adult literacy rate by gender, on per capita gross national income (GNI)

base ..................................................................................................................202

5.8 Share of total emigrants by levels of educational attainment ..........................202

5.9 Migrant destinations on base of migration rate (emigrants per 100

residents)..........................................................................................................204

5.10 Average cost of air travel in the Pacific...........................................................208

v


Pacific Interactions

Tables

1.2 Size of main Pacific ethnic groups, total counts, 1996–2006............................16

1.3 Percentage of each Pacific group who were born in New Zealand, total

counts, 2006.......................................................................................................18

1.4 Proportion of each ethnic group (aged 15 or over) with formal educational

qualifications (highest qualifications), total counts, 2006 .................................20

1.5 Sex ratios of Pacific people, total counts (ratios of females to males),

1991–2006 .........................................................................................................24

1.6 Sex ratios of main Pacific groups, total counts (ratios of females to males),

2006 ...................................................................................................................24

1.7 Retention at age 16 as a percentage of those enrolled at age 14, 1996–2005....26

1.8 Percentage of each age and ethnic group participating in tertiary education,

2001–2006 .........................................................................................................27

1.9 Tertiary sector qualification completions, domestic students, total Pacific

students, 1999–2006 ..........................................................................................28

1.10 Number of Pacific males and females in each qualification group (highest

qualified attained) and females as a percentage in each group, 2006................29

1.11 Percentage of partners in each ethnic group for men, opposite-sex couples

(total counts), 2006 ............................................................................................31

1.12 Percentage of partners in each ethnic group for Pacific women, oppositesex

couples (total counts) 2006..........................................................................31

1.13 Percentage of partners in each ethnic group for Pacific males by age of

male, opposite-sex couples (total counts), 2006................................................32

1.14 Percentage of partners in each ethnic group for Pacific females by age of

female, opposite-sex couples (total counts), 2006.............................................32

1.15 Percentage of partners in each ethnic group for Pacific males by

qualifications of male, opposite-sex couples (total counts), 2006.....................33

1.16 Percentage of partners in each ethnic group for Pacific females by

qualifications of females, opposite-sex couples (total counts), 2006 ................33

1.17 Partners of Pacific women: ranked by whether their partner is from the

same level 3 ethnic group, opposite-sex couples, total counts, 2006 ................34

1.18 Partners of Pacific men – ranked by whether their partner is from the same

level 3 ethnic group, opposite-sex couples, total counts, 2006..........................35

1.19 Ethnicities of Pacific children born in 2000–2004 ............................................35

1.20 Ethnicity – percentage decline of Pacific population by prioritisation of

ethnicity, 1991, 1996 and 2001..........................................................................38

2.1 Highest educational qualifications, 2005 (June quarter) ...................................45

2.2 Attendance at low decile schools by ethnicity, as at July 2005.........................46

2.3 Net worth by ethnicity, 2001 .............................................................................52

2.4 Key health outcomes indicators.........................................................................54

2.5 Population projections used in the model, 2001–2101......................................67

2.6 Age group shares to total population, 2001, 2051, 2101 ...................................69

vi

© Institute of Policy Studies, Victoria University of Wellington, 2008


Contents

2.7 Resident mean personal annual income, 2006...................................................70

3.1 Pacific populations (size and change), 2000 and 2050......................................90

3.2 Youthful populations, 15–24 years, 2006, and percentage change 1995–

2015 ...................................................................................................................91

3.3 Arrivals and departures, citizens of Pacific countries, 1982–2006 (years

ended 31 March)................................................................................................94

3.4 Different Pacific arrival and departure populations, 2002–2006 (years

ended 30 June) ...................................................................................................96

3.5 Permanent and long-term arrivals, departures and net migration, Pacific

citizens, 2002–2006 (years ended 30 June) .......................................................98

3.6 Short-term movement, Pacific classifications, 2002–2006 (years ended

30 June)............................................................................................................100

3.7 Trans-Tasman migration: arrivals and departures, 2002–2006 (years ended

30 June)............................................................................................................102

3.8 Trans-Tasman share of Pacific migration, 2002–2006 (years ended

30 June)............................................................................................................103

3.9 Trans-Tasman share of Pacific-born permanent and long-term (PLT)

migrants ...........................................................................................................104

3.10 Approvals for residence, citizens of Pacific countries, 1982–2006 (years

ended 30 June) .................................................................................................107

3.11 Approvals for study, temporary work and residence, 2002–2006 (years

ended 30 June) .................................................................................................108

3.12 Approvals: study, temporary work, and residence, Pacific citizens, 2002–

2006 (years ending 30 June)............................................................................110

3.13 Transitions to residence from work permits, 1998–2005 (years ended

30 June)............................................................................................................112

3.14 Transitions from work to residence, Pacific and other citizens, 1998–2005

(years ending 30 June).....................................................................................114

3.15 Transitions from study to work and residence, 1997–2005 (years ended 30

June).................................................................................................................116

3.16 Transitions from study to residence, Pacific and other citizens, 1998–2005

(years ended 30 June) ......................................................................................118

3.17 Transitions from study to temporary work, Pacific and total, 1998–2005

(years ended 30 June) ......................................................................................119

3.18 Subsequent movement overseas of migrants approved for residence

between 1998 and 2004 (calendar years) who arrived during that period.......122

4.1 Trade shares and currency regimes..................................................................143

4.2 Principal export commodities..........................................................................144

4.3 Trade, aid, and remittances, around 2002–2003..............................................150

4.4 Implicit average tariff rates, 1994–1995..........................................................156

4.5 Importance of tariff revenues...........................................................................157

4.6 Lessons and checklist for ‘good’ preferential trading arrangements...............162

4.7 Characteristics of initiatives by type of initiative ............................................169

vii


Pacific Interactions

4.8 Employment and underemployment in Pacific Island countries, 2006 ...........175

4.9 Welfare changes for 1% Pacific Island country labour quotas........................176

5.1 Potential market remoteness measures for the Pacific and Caribbean

Islands..............................................................................................................207

5.2 Airfare measures of remoteness for Pacific and Caribbean Islands ................208

5.3 Ordinary least squares and spatial lag regression estimates of long-run

growth equations..............................................................................................212

5.4 Deviation of average level of governance and growth in Pacific Island

countries from overall global average, controlling for geography,

population and land area, trade and volatility and initial conditions...............214

5.5 Importance of remittance and private transfer receipts in the Pacific .............231

Boxes

4.1 Managing natural resource rents and aid in Solomon Islands .........................151

4.2 New unbundling of services and trade in tasks ...............................................153

4.3 At home and away ...........................................................................................172

4.4 Analysing the impact of liberalising labour mobility in the Pacific................177

5.1 Why guanxi networks operate so successfully in weak states.........................256

5.2 Combating corruption in the Pacific region.....................................................260

5.3 Does economic size matter ............................................................................282

5.4 Why high value jobs will stay mainly in metropolitan countries ....................284

viii

© Institute of Policy Studies, Victoria University of Wellington, 2008


Acknowledgements

I am grateful to many people and institutions for helping with the Pasifika Project, and

with its publication.

Andrew Ladley, then Director of the Institute of Policy Studies, invited me to

develop a topic for what became the Public Service Chief Executives Emerging Issues

Programme, and endorsed the topic I suggested. Nicola White, then on the staff of the

Institute of Policy Studies, helped me to get the project under way. Gary Hawke, as

Head of the School of Government, and Jonathan Boston, the current Director of the

Institute, have both in different ways supported the project.

Chief executives of the New Zealand public service allocated funding to the

project through their Emerging Issues Programme, and several government

departments offered additional and specific help. The Department of Labour, the

Ministry of Economic Development, The Treasury, and the Ministry of Social

Development all gave financial support to particular papers, as did the Pacific

Security Fund. Statistics New Zealand offered technical advice and free access to its

data, and the Ministry of Pacific Island Affairs also assisted. The New Zealand

Institute of Economic Research contributed funding from its annual budget for public

good projects.

The authors of the papers of which this book consists – Paul Callister, Robert

Didham, Jean-Pierre de Raad, Mark Walton, Richard Bedford, Bob Warner, John

Gibson, Karen Nero, and Michael Moriarty – have given life to the project, and

remained engaged through what turned out to be a lengthy process. They undertook

with panache the additional task of presenting their material to the Thought Leaders

Dialogue in Auckland. I owe a special debt to Paul Callister and Robert Didham who

perceived the need for a demographic survey of the Pacific population in New

Zealand, and provided the project with one as an unrequited gift.

Some others made special contributions to various papers: Geua Boe-Gibson

prepared the GIS maps for the chapter on the Pacific economies and Viliami Tupou

Futuna Liava’a contributed field research to the chapter on mobility. Leni Hunter,

Cluny Macpherson, Caren Rangi, Tofilau Kerupi Tavita, and Josephine Tiro met as a

group to offer advice for the chapter on Pacific peoples’ participation in the New

Zealand economy.

The members of the Project Steering Group were David Bartle, Ministry of

Economic Development; Paul Callister, Institute of Policy Studies; Gareth Chaplin,

The Treasury; Vincent Galvin, Statistics New Zealand; Arthur Grimes, Motu; Leni

Hunter, Reserve Bank of New Zealand; Sai Lealea, Ministry of Pacific Island Affairs;

Cluny Macpherson, Massey University; Brian Smythe, Ministry of Foreign Affairs

and Trade; Tofilau Kerupi Tavita, Department of Labour; and John Yeabsley, New

Zealand Institute of Economic Research. They brought knowledge and expertise to

the project, and gave generous amounts of their time.

Several members of the Ministry of Foreign Affairs and Trade helped me with

appointments, hospitality, and advice when I visited Samoa, Fiji, and New Caledonia

in the course of the project – especially John Adank, Mike Green, and Belinda Brown.

I am grateful to them for their insights and to the various people I met during my

© Institute of Policy Studies, Victoria University of Wellington, 2008 ix


Pacific Interactions

visits, including in particular Greg Urwin, then Secretary General of the Pacific

Islands Forum Secretariat, who discussed the project with me on more than one

occasion, and opened the Thought Leaders Dialogue in Auckland.

A large number of people, some of whom travelled to New Zealand for the

purpose, commented on the papers and joined in panels to discuss them at the

Wellington Symposium and the Thought Leaders Dialogue: Brenda Heather-Latu,

Wadan Narsey, Brian Easton, Geoff Bertram and Dennis Rose in Wellington; and in

Auckland Linda Aumua, Sefita Haouli, Chris Sola, Paul Muller, Sai Lealea, Viliamu

Sio, Hon Lisiate ‘Akolo, Manjula Luthria, Andrew Stoler, Chris Cocker,. Mary Anne

Thompson, Brenda Heather-Latu, Graham Fortune, Geoff Dangerfield, Colin

Tukuitonga, and Alan Williams. Around 300 representatives of the Pacific community

in Auckland also attended and offered their views on the papers and the issues that

they dealt with.

Barbara Gillespie and Maureen Revell have both at different times helped with the

administration of the project, including by arranging a symposium in Wellington and

the Thought Leaders Dialogue in Auckland at which its results were presented.

Belinda Hill has edited the text of the book. The Department of Labour funded and

organised the Thought Leaders Dialogue.

There are three people to whom I owe particular thanks. The first is Cluny

Macpherson, who was kind enough to let me show him an early version of the project

proposal from which this book has emerged. From then on, he has contributed more

of his time and his extensive knowledge than I could reasonably have expected. The

second is Tofilau Kerupi Tavita, who not only assisted as a member of the Steering

Group but also suggested, masterminded and, with his team, sustained the Thought

Leaders Dialogue. The third is John Yeabsley, that fountain of intellectual and

practical advice, who encouraged me when I flagged and re-framed my ideas when

they wandered into vacuity.

Alastair Bisley

Wellington, October 2008

x

© Institute of Policy Studies, Victoria University of Wellington, 2008


Introduction

Alastair Bisley

Contents

New Zealand and its neighbourhood.............................................................................1

Origins of the book........................................................................................................3

Pasifika in New Zealand................................................................................................4

New Zealand and Pasifika: Trade, investment and the movement of people................6

Pasifika economies ........................................................................................................8

Borders ..........................................................................................................................9

Conclusions .................................................................................................................10

References ...................................................................................................................12

New Zealand and its neighbourhood

The growth of the Pacific communities in New Zealand has fundamentally

changed our relations with the island countries of the Pacific, and it nudges us to

think about Pasifika in a different way. 1 It is not a new idea that Pacific Island

countries are important to New Zealand– that has been a theme in our foreign

policy because of colonial relationships and the continuing associations,

constitutional and other, that survived them; because of trade and tourism; and

because of geography. We saw that what happened in Oceania (‘our back yard’)

might affect New Zealand and impinge on our interests; and in the period of the

Cold War, we felt that a large part of our role as a small team-player in the

Western alliance was to help ensure that Oceania prospered within the Western

sphere of influence. We maintained what was for New Zealand a high level of

representation there, centred on Polynesia where our primary links were, and we

focused our development aid on the region.

Constitutional and diplomatic relationships have evolved over the last 50

years. More and more island states have become independent. By acquiring

1 The word ‘Pasifika’ is used from time to time in this book to refer to the Pacific Island

countries, including those in the northern hemisphere and Papua New Guinea. It is used in

preference to ‘the Pacific’ as it is hard to exclude the countries of the Pacific Rim from the

meaning of that phrase. Using it raises questions about the focus of this book and the project

on which it is based. The fact of the matter is that there is no single focus. For reasons

discussed in this introduction, our attention is most frequently drawn to the countries of

Polynesia and Melanesia; but it is also true that there are countries in Micronesia with which

New Zealand has important links, including through the movement of people; and a project

definition that a priori excluded those territories that have constitutional links with France and

the United States would make no sense.

A second sense in which the word is used is to refer to Pacific people collectively, as in the

phrase ‘Pasifika in New Zealand’.

© Institute of Policy Studies, Victoria University of Wellington, 2008 1


Pacific Interactions

Exclusive Economic Zones many times greater than their land area they have

increased their strategic significance. The Pacific Islands Forum has established

itself as perhaps the principal body for regional cooperation and broadened its

membership. There have been military coups, civil war and breakdown of

government in some Melanesian states. The anxieties of the Cold War have

largely been replaced by anxieties about transnational organised crime, pandemics

and terrorism, and indeed by environmental issues, most recently climate change.

Outside disputes, including the rivalry between China and Taiwan, have played

out in Oceania as well as in other parts of the world, and had consequences for its

members; and countries of the Pacific Rim as well as Australia and New Zealand

have pursued economic interests in Oceania, including in minerals, timber and

fish.

More profoundly, the peoples of the Pacific have again been on the move. The

flows are not evenly spread: from Melanesia, with the exception of Fiji, there has

been relatively little migration – until very recently, only the skilled and educated

have been able to gain more than minimal access to other countries’ labour

markets. But from Polynesian villages and – especially after the coups – from Fiji

families have travelled to New Zealand, as well as to other destinations on the

Pacific Rim, and settled there. By doing so, and in numbers, they have relieved

demographic pressures on the constrained resources of their countries of origin,

and in some cases even reduced their populations. They have also sent home as

remittances, through informal as well as formal transactions, money (and goods)

in significant volumes – in some cases equal to the flows of overseas development

aid, and in most cases far in excess of foreign direct investment. And remittances,

in the form of traditional goods and foods and ceremonial services have flowed in

the other direction, too.

Even leaving to one side the historic migration of Maori, migration is not a

new element in the relationships between New Zealand and its Pacific Island

neighbours. Access to New Zealand has been a critical question in the form and

evolution of the constitutional relationships between New Zealand and its former

dependent territories, Samoa, the Cook Islands, Niue and the Tokelaus. Disputes

over ‘overstayers’ in the 1970s were among the most difficult passages in our

relationship with Samoa. As long ago as 1985, Bertram and Watters directed our

attention to the significance of remittances to some Island economies, 2 and a

number of academics have analysed their implications since.

The point of departure for this project, however, is the shift in the nature of

our relationship with Pasifika that more than 50 years of immigration has brought

about. At the end of the Second World War the Pacific community in New

Zealand was around 2,000. By the 2006 census, it numbered just under 266,000,

or around 7% of the population – large enough to be significant in our economy,

our politics and our culture. Pacific New Zealanders have a younger demographic

2 It is worth noting that Bertram and Watters’ original 1984 report, ‘New Zealand and its Small

Island Neighbours: A review of New Zealand policy toward the Cook Islands, Niue, Tokelau,

Kiribati and Tuvalu’ was the first project the Institute of Policy Studies undertook, and shows

the Institute’s long-term interest in New Zealand and the Pacific.

2

© Institute of Policy Studies, Victoria University of Wellington, 2008


Introduction

profile than the country as a whole and a higher birth rate. More than 60% of the

Pacific community in New Zealand was born here, and intermarriage with other

New Zealanders is on the increase. But though it continues to change, links with

countries of origin remain vital; and migration from Pacific Island countries

continues, though sometimes by different pathways from earlier periods. New

Zealand Pacific communities are transnational communities. They dispose of

resources, and accumulate them not just in New Zealand (and other countries in

which they are living), but also in the island countries with which they are linked.

In short, this reflection on the relationships between New Zealand and its

Pacific neighbourhood stems from the realisation that Pasifika is here in New

Zealand and that its presence here is an essential element in the way in which

New Zealand and Pasifika interact.

Origins of the book

This book derives from a series of papers written for the Pasifika Project, which

was conducted under the auspices of what is now called the Emerging Issues

Programme, a programme public service chief executives set up to fund research

into complex and cross-cutting issues of key importance to the state services.

The original papers on which the book is based have been the focus of two

public discussions: a symposium at Victoria University in Wellington in February

2007 attended by around 80 academics, public servants and Pacific Island

representatives, and subsequently in Auckland at a much larger dialogue with

around 300 members of the Pacific community there. 3 The book has profited from

ideas and criticisms offered on both occasions.

The book consists of six chapters, which fall into four rough groupings. Two

discuss the Pacific peoples in New Zealand; two analyse the flows of people,

money, and goods between New Zealand and Pasifika and the regimes under

which these occur; one is about ways of considering economic growth in the

Pacific Island countries; and the last reflects on the borders across which money,

goods, people and ideas all flow, and the way these borders are managed.

The papers on which these chapters are based were not written to form a

seamless discourse. They overlap at various points and in various ways; they

adopt different frameworks of analysis and they are not written from a single

viewpoint. They do not purport by any means to constitute a comprehensive view

of New Zealand–Pasifika relations. 4

3 A report on the Auckland Thought Leaders Dialogue is in Appendix A.

4 Two issues that are not the subject of specific studies, although they are referred to in these

papers, are governance and overseas development aid. Governance is a topic on which New

Zealand has placed importance in its relations with Pasifika, and the Institute of Policy Studies

recently published a monograph on the topic (Ladley and Gill, 2008). Overseas development

aid, it seemed to us, was a question to be considered in the light of our findings, rather than a

primary driver of Pasifika interactions; but we recognise that it is possible to take a different

view. We have not dealt with environmental issues, either, including climate change and its

implications for Pacific Island countries.

© Institute of Policy Studies, Victoria University of Wellington, 2008 3


Pacific Interactions

A strong influence on the shape and scope of the project was Epeli Hau’ofa’s

remarkable 1993 essay, ‘Our sea of islands’. The author, searching for an

alternative to the prevailing view of hopelessness about the prospects of the

Pacific micro-states, based his analysis of their economic and cultural renewal on

twin recognitions. These were not, he asserted, the ‘islands in a sea’ of the

European imagination: small, resource-poor, isolated and constrained. In fact,

they were a ‘sea of islands’, endowed also with the riches of the sea, and their

inhabitants had voyaged among them to trade, to set up alliances, to expand and

maintain their social and commercial networks, and even to fight. Oceania was

huge, rich and boundless, not small, impoverished and constrained.

Hau’ofa’s second recognition was that within the modern Pacific, old

traditions were being revived, though of course in new forms. Island peoples were

again moving within the wider Pacific, uninhibited by the imperial boundaries

established in the 19th century; but much of this activity was informal, outside the

purview of bureaucrats and governments. There was a rich two-way traffic

between the island countries and the Pacific Rim, stemming from the movement

of the Pacific peoples themselves, involving both goods and services, traditional

and modern, based on the obligations of kinship and commercial acumen.

In ‘Our sea of islands’ notions of autonomy and secrecy are linked (Hau’ofa,

1994, p 156):

Although this flow of goods is generally not included in official statistics,

much of the welfare of ordinary people of Oceania depends on an informal

movement along ancient routes drawn in bloodlines invisible to the

enforcers of the laws of confinement and regulated mobility.

As they break out of their tutelage, Hau’ofa seems to imply, the peoples of the

Pacific need to operate below the radar, outside the observation of the

exercisers of power.

This book, then, does not begin with the transactions of governments, though

of course governmental and intergovernmental frameworks are important and

cannot be ignored. The movement of people and the behaviour of transnational

populations are at the heart of this study – their responses to the dilemma of living

in more than one place, and the implications that these responses have for the

political economy, for regionalism, and for the regional governments.

Pasifika in New Zealand

The first two chapters focus on Pasifika in New Zealand. Paul Callister and

Robert Didham’s chapter, ‘Emerging Demographic and Socioeconomic Features

of the Pacific Population in New Zealand’, shows that the Pacific community in

New Zealand comes from six principal island countries of origin, all but one of

which are in Polynesia. It is changing not only in ethnic composition, as the

relative flows from the main destinations change, but also over time, through its

members’ experience of living here. It is youthful by comparison with the rest of

New Zealand and it has a comparatively high birth rate. 60% of its members were

born here and have grown up in New Zealand (or are doing so now.)

4

© Institute of Policy Studies, Victoria University of Wellington, 2008


Introduction

Intermarriage with other New Zealanders, Pākehā and Māori in particular is

increasingly common. “More and more Pākehā New Zealanders’ families

routinely include Pacific people”, as Cluny Macpherson (2006, p 141) has

observed, and the reverse is also true. The community is now much more diverse

and more socially mobile than it was in its foundation period during the 1960s and

1970s.

National statistics, and sometimes national discourse, tend to ignore this

diversity of composition and outcomes – that the different ethnic groups that form

the Pacific community in New Zealand have significantly different levels, say, of

home ownership or educational qualifications. While socioeconomic indicators

for Pacific people as a whole, however, show some gains over time, including in

educational attainment and rates of employment, in a number of respects they are

disappointing; and in terms both of wages and wealth (net economic worth) the

Pacific community as a whole clearly does not do as well as the rest of New

Zealand. Jean-Pierre de Raad and Mark Walton consider this latter question in

their chapter, ‘Pacific People in the New Zealand Economy: Understanding

linkages and trends’.

De Raad and Walton examine the trends in Pacific participation in the New

Zealand economy by constructing a simple economic model whose objective was

to test the speed at which Pacific people might be expected to overcome ‘migrant

disadvantage’ and converge with the rest of New Zealand, first in respect of

wages, and second in respect of wealth. On wages, the model suggests that

convergence with the rest of New Zealand will continue, though on present

indications it will not be fast. On wealth, the model is more discouraging. It

suggests that convergence is happening very slowly if it is happening at all and

that on some assumptions the gap may actually be widening.

It is possible to identify factors that help to account for these results. The fact

that the Pacific community is relatively young means its average earnings are

likely to be lower. New migrants also tend to earn less. Furthermore, there seems

to be a direct and dramatic link between educational achievements and levels of

earnings; and in education the Pacific community’s outcomes are still poorer than

those of the rest of New Zealand, in spite of the recent improvements.

The results that the model throws up on wealth require careful interpretation,

however, including because the Pacific population is a transnational one. Most of

its members, including the majority who may not return to live in their countries

of origin, retain important ties there. As the continuing practice of remitting

shows, the community allocates resources between New Zealand and its countries

of origin; and many of its members are also subject to obligations, including

gifting to churches and extended family, which are different from obligations

other New Zealanders face. A key analytical question, therefore, is how to treat

remitting and gifting for modelling purposes (to what extent are they consumption

and to what extent savings), and it is one that we only partially solved. 5

5 The chapter contains an extended discussion of these points.

© Institute of Policy Studies, Victoria University of Wellington, 2008 5


Pacific Interactions

To some extent, this does not matter. The purpose of a simple model, such as

the one that we constructed, is not to make precise predictions about the future,

but to illuminate relationships and raise important questions. What the model

suggests, and suggests starkly, is that adjustment, both on the earnings front and in

respect of wealth, is slower that anyone wants, and that to some extent these two

things are connected. More thinking is clearly needed on Pacific assets and

attitudes to wealth; and more action to stimulate convergence. Education and

measures to ease migrant integration are two obvious areas for further discussion.

New Zealand and Pasifika: Trade, investment and

the movement of people

The next two chapters look directly at the flows between Pasifika and New

Zealand (and other partners) of goods, finance and people and at frameworks in

which they might take place.

Migration is central to Pasifika’s interaction with New Zealand, and of course

to these chapters. It affects the island economies (remittances are a substantial

element in many Pacific Island countries’ balance of payments) and families

(remittances are not mediated through governments); it bears on cultures and

politics (through the continuing interactions between migrant populations and

their countries of origin); and it changes demographics (easing population growth

in Polynesia, for example, and changing the demographic profile in certain New

Zealand cities).

Richard Bedford’s chapter, ‘Pasifika Mobility: Pathways, circuits, and

challenges in the 21st century’, provides new information on the flows of people

between New Zealand (and Australia) and Pasifika, the changing pathways they

take towards residence here, and the circuits by which they return. It shows that in

the early years of this century Pacific people have been coming and going

between their home countries and New Zealand in unprecedented numbers: nearly

816,000 people born in Polynesia, Melanesia and Micronesia arrived in New

Zealand between July 2001 and July 2006, and nearly 798,000 left New Zealand

for a variety of destinations.

At the same time, migration pathways are changing: policies introduced in the

late 1990s have made it easier for migrants who came to New Zealand on

temporary work permits or student visas to change their status after arrival – a

higher proportion of Pacific people who achieve permanent residence do so after

experience of life (and work and study) in New Zealand. We are also beginning to

understand more clearly the patterns of return. New data shows for recent years

how often, and for how long, different ethnic groups have been returning to their

countries of origin. The chapter suggests that we need new ways of thinking about

migration. Not only is it not always permanent, but communities in New Zealand

and some sending states overlap.

The flows of people are, of course, not even. They reflect to a large extent

historical and constitutional relationships. While on the face of it Melanesia is our

largest source – 66% of New Zealand’s net gains of Pacific citizens in the five-

6

© Institute of Policy Studies, Victoria University of Wellington, 2008


Introduction

year period 2002–2006 – 98% of those migrants come from Fiji (mostly Fiji

Indians moving to New Zealand in the wake of the coups). The number of

migrants from Melanesia excluding Fiji is in fact insignificant.

There is an irony in this. Of all the Pacific, it is Melanesia that is under the

greatest demographic stress. Its population is projected to more than double by

2050, rising from 6.5 million people to over 14 million. The populations of

Micronesia and Polynesia are also expected to rise, but by much more manageable

proportions during this period. Youth unemployment, with its concomitant social

unrest, is likely to be a particular problem in Papua New Guinea, Solomon

Islands, and Vanuatu where the World Bank estimates that participation rates in

the formal economy will change little from their current low levels – 5.6%, 9.3%

and 14.7% respectively – in the medium term. Bedford suggests (p 86):

The greatest geo-political challenge that New Zealand will face in the

region during the first half of the 21st century is how to address the

aspirations of a burgeoning youthful population in those parts of the

Pacific where there are low levels of economic growth and no wellestablished

outlets for migration.

In what framework is it best to deal with migration Is it easiest and most

effective to conceive of it as exclusively a bilateral question, as between the

sending and the receiving state Or is there merit in looking for a regional

solution 6 If so, which kind of instrument is likely to be most fruitful Bob

Warner’s chapter, ‘Pacific Island Economies: Role of international trade and

investment’, places migration in the context of the current debate on a free trade

agreement between New Zealand and Australia and the Pacific Island Forum

countries.

The chapter begins by looking at trade liberalisation. Pacific Island countries,

Papua New Guinea to one side, import far more than they export, but most have

high and uneven tariffs that raise the already high costs of their engagement with

the rest of the world. Removing the tariffs, however, is not politically

straightforward. The chapter scrutinises the arguments for some current

approaches, including the World Trade Organization (valuable rights but high

implementation costs) and regional preferential agreements (also complex, and

rewarding only with the involvement of major trading partners.) Since the primary

benefits of liberalisation in fact will stem from the removal of their own trade

barriers, the chapter asks whether unilateral liberalisation on a most favoured

nation basis is not the most straightforward approach for Pacific Island states.

Is there, however, a prize for Pacific Island country negotiators that might

make it worthwhile for them to liberalise trade with Australia and New Zealand

under the Pacific Agreement on Closer Economic Relations (PACER) Is

migration (important for countries that do have access to the Australian and New

Zealand labour markets, and arguably even more important for those that do not)

the key The chapter assesses temporary labour schemes from the point of view of

6 In point of fact, if only on account of the Trans-Tasman Travel Arrangement, Australia is

likely to be a necessary partner in any broad approach.

© Institute of Policy Studies, Victoria University of Wellington, 2008 7


Pacific Interactions

receiving as well as sending states, and discusses the relative benefits (and

practicalities) of moving people to jobs and taking jobs to people. It concludes

that trade negotiations provide too narrow a context for dealing sensibly with the

issue.

The pilot schemes for seasonal employment that the governments of both

Australia and New Zealand have announced – and New Zealand has implemented

– should test some of these propositions and build on experience of different kinds

of migration that now goes back some generations. How to place the movement of

people in the formal framework of regional relationships will continue to be

explored in the context of the PACER negotiations. Clearly, however, it is a

critical element on the wider regional agenda.

Pasifika economies

John Gibson and Karen Nero’s chapter, ‘Why Don’t Pacific Island Country

Economies Grow Faster’, explores the particularity of Pacific Island economies.

Gibson and Nero question the basis of our expectations of economic growth in

Pasifika. Against which countries are we benchmarking Pacific Island countries’

economic growth Are we taking into account the geography of Pasifika,

including the distance of Pacific Island states from the economic centres of the

world, their population density, and the numbers of languages spoken within

them Do we give proper weight to the patterns of growth in the neighbourhood,

including in countries with which they have had colonial links Does our data

allow us to understand significant sectors of their economies

The chapter shows that Pacific Island countries are in fact significantly more

remote from world economic centres than other small states – 40% further than

the island states of the Caribbean from the locations of world gross domestic

product, for example. It is to their advantage that the world’s centre of economic

gravity has moved closer to the Pacific over the last 20 years, as the power of East

Asian economies has increased. Against that, however, each economy’s growth

rates are affected by those of its neighbours; and Pacific Island countries are part

of a neighbourhood – a cluster of states – that is growing slowly. The research

suggests through regression analysis that distance and neighbourhood effects are

much stronger explanations of slow economic growth than governance issues:

economic growth must be looked at as a regional, not just a state-by-state,

question. The prosperity of Melanesia is an issue for Polynesia, and indeed for

New Zealand itself – a country with, as the chapter suggests, a higher propensity

to be a Pacific Island country than any other non-Pacific Island country in the

world.

Besides describing the nature of Pacific economies (including the importance

of their subsistence sectors, on which the data is still misleadingly poor) the

chapter describes particular ways in which Pacific people engage with the regional

and global economies. It notes the persistent usefulness of some traditional value

systems and modes of exchange to these transactions, and offers new research on

remittances, which are key to the links a number of these economies have with the

8

© Institute of Policy Studies, Victoria University of Wellington, 2008


Introduction

wider world (and to links between urban and rural areas in others). Remittances

have many purposes, and the chapter shows we need to be careful what we

assume about their effects. We cannot take it for granted, for example, that they

will increase economic equality among recipients in the way that a social welfare

system might. The chapter also draws our attention to an issue of central

economic importance to many Pacific economies: the cost of remitting in the

Pacific is far higher than in other areas of the world. Up to $60 million is being

lost to remitters each year from excessive charges made by banks and other

financial intermediaries. 7 There is no reason why this situation should continue.

Borders

The previous chapters dealt, directly or indirectly, with interactions that occur

across geographical space, including through the movements of people, goods,

and financial flows. Michael Moriarty’s chapter, ‘Border Management in the

Pacific Region’, reflects on how the governments of Pasifika manage these

transactions during a period of increased international anxiety, stemming in part

from fear of international terrorism.

In the age of globalisation, we think of ourselves as living in a borderless

world – one where, at least until now, technology has made it increasingly

possible to substitute transactions across borders for transactions within them. It is

equally true, however, that the border has remained the point at which states can

accept or reject, or place conditions on the traffic between them.

The chapter describes the complexity of 21st century borders, which co-exist

at ports and at airports, at 12-mile limits and round Exclusive Economic Zones,

and as points of initiation or reception of electronic messages. It also discusses

some of the problems, new in urgency if not in kind – threats to human health,

threats to plant and animal populations, threats to security through transnational

organised crime and its close relation, terrorism – that involve measures in front

of and behind the border (as well as at it) and require negotiation and

collaboration between governments, and between governments and senders,

receivers, and conveyers of goods, services and people.

Between the Pacific Island countries and other countries of the Pacific Rim,

there is as an asymmetry of resources and sometimes a divergence of

perspectives. Border management in the modern world requires high levels of

technical and operational sophistication, and comes at a price. Pacific Island

countries often find it difficult to find the financial or human resources required,

especially in the absence of the economies of scale that their larger neighbours

enjoy. The chapter discusses the responses they have made, including in

conjunction with New Zealand and other neighbours, to address these issues. It

also explores a range of ways in which they could make regional approaches more

effective – both specifically through enhancing the work of the regional

7 John Gibson’s original working paper on this topic can be seen on the Institute of Policy

Studies website (http://ips.ac.nz/events/Ongoing_research).

© Institute of Policy Studies, Victoria University of Wellington, 2008 9


Pacific Interactions

secretariats that operate in this area, and more generally through increased

harmonisation and joint action.

The chapter raises a critical underlying question – the question of community

of interest. Border management depends on a high degree of collaboration at a

variety of levels between the states involved. It will not be effective unless the

parties are broadly of a mind about its purposes. Border management will always

be awkward between the relatively rich and the relatively poor, not just because

the resources they can devote to it are not the same, but also because their views

of what is profitable to them may be different. Good fences do not only make

good neighbours – they require them. Border management leads us back to the

wider question of community.

Conclusions

The purpose of the Pasifika Project was not to generate a series of practical

recommendations but to focus attention on the dynamics of our relations with

Pasifika. These papers do make some specific suggestions, including for example

on ways of approaching the high cost of remitting in the Pacific, but more

importantly they suggest some broad conclusions.

Migration is central to New Zealand’s interactions with Pasifika – and indeed

to Pasifika’s interaction with the world. It has changed the political economy of

the region, or at least of a number of states within it. It has established the

substantial Pacific communities in New Zealand and in other cities on the Pacific

Rim, set up flows or remittances in both directions, and changed the

demographics of a number of countries. Through remittances, the coming and

going of people, and the flows of information that it has engendered, it has been a

force for change in Pacific Island societies and polities – and has changed New

Zealand and its image in the world.

For historical reasons, New Zealand has been accustomed to thinking that,

within the Pacific, Polynesia was its natural and primary concern. Our links with

Melanesia have been more limited and more recent, and at least as a matter of

public perception, they have recently developed around breakdowns of

government and of order. This project points to two things. One is Melanesia’s

importance, not just because of its size and resources, which are preponderant in

the region, but also because lines of demarcation do not work. Polynesia is

unlikely to prosper if Melanesia is impoverished. New Zealand may be larger,

more developed and more thoroughly linked into the global economy, but New

Zealand is a Pacific Island country too. Its economic fortunes are not wholly

separable from the economic fortunes of its region.

Relative to Polynesia, Melanesia is isolated. Melanesia has a rapidly

increasing population and rising youth unemployment is a key problem, but egress

is difficult for any but the educated and skilled members of the community – the

ones Melanesia can least afford to lose. Melanesia is less well linked into the

broader world than Polynesia because it is much harder for its peoples to move.

Migration is not a panacea, but it is a significant element in the political

10

© Institute of Policy Studies, Victoria University of Wellington, 2008


Introduction

economies of the Pacific; and, as New Zealand’s new Recognised Seasonal

Employer programme shows, innovations that involve new partners are possible –

and may be emulated by other neighbours.

It is possible to see Pacific regionalism as a Palagi project. 8 In fact, it has clear

advantages for small countries that need improved institutional structures, but find

the costs of statehood relatively very high. This book looks at opportunities to

strengthen regionalism, especially in the area of border management, and

approaches and techniques by which that might be done. Equally clearly,

however, Pacific regionalism will work only in so far as Pacific Island countries

want it to. If it does not address the interests of the whole community – Pacific

priorities as well as those of the metropolitan partners – their participation will be

cynical. Any regional architecture that makes sense from the point of view of the

Pacific Island countries is going to have to deal in some way with migration – the

movement of natural people – and no doubt some other topics as well.

In his opening speech at the Thought Leaders Dialogue in Auckland last

August, Greg Urwin, who was then the Secretary General of the Pacific Islands

Forum, addressed this issue directly. He suggested that the Pacific Plan provided

an opportunity “to develop a broad and durable expression of the nature of the

relationship between the island countries on the one side, and the two proximate

metropoles on the other”. It would cover trade, and include “some general

understandings as to the movement of people around our region, not expressed

simply in services trade terms but in terms which recognise the inter-dependence

of our communities”. It would also have a development assistance dimension.

These ideas, Urwin suggested, seem worth exploring, not least because they

incorporate the principal interactions between us, and because at the same time

they acknowledge that for New Zealand and Australia, “the Pacific region is

special and like no other, and that it is not some kind of unavoidable

responsibility, but a community of which they are part, and which their own

destinies are intimately bound up with”. 9 Perhaps a “settlement” such as this is the

way to galvanise the project of regionalism in Pasifika; and perhaps it is easier to

do so now that not only New Zealand but also Australia have taken new initiatives

on labour mobility. 10

Certainly, the Pacific community in New Zealand is pivotal to our place in the

Pacific region. Its economic contribution affects the New Zealand economy, and it

contributes directly to the economies of the Pacific Island countries from which its

members come. So far, both in terms of the earnings and wealth of its members,

8 Crocombe, in The South Pacific (2001, p 610), acerbically remarks, “Most regional

cooperation was initiated by the retreating colonial powers, partly to secure their own

interests. Regional cooperation remains the most foreign subsidised activity in the region, not

because the Islands nations ask for that (they prefer resources going to national governments),

but because it gives the donors access and influence which they value”.

9 The full text of Urwin’s remarks, which were eloquent and contain a more detailed version of

his suggestion than this brief summary can show, are reproduced in Appendix B.

10 We need also to continue to review how the countries of the wider Pacific community fit in,

especially including those that are already linked to the Pacific through the movement of

people.

© Institute of Policy Studies, Victoria University of Wellington, 2008 11


Pacific Interactions

its progress towards parity with the rest of New Zealand is too slow. There are

understandable reasons for this, but there is clear scope for action, and no reason

to delay.

References

Bertram, G, and R Watters (1984) ‘New Zealand and its small island neighbours:

A review of New Zealand policy toward the Cook Islands, Niue, Tokelau,

Kiribati and Tuvalu’, unpublished.

Bertram, G, and R Watters (1985) ‘The MIRAB economy in South Pacific

microstates’, Pacific Viewpoint 26(3), pp 497–512.

Crocombe, R (2001) The South Pacific Suva: University of the South Pacific.

Hau’ofa, E (1994) ‘Our sea of islands’, The Contemporary Pacific 6, pp 142–162.

Ladley, A, and D Gill (2008) No State is an Island: Connected governance in the

South Pacific, Wellington: Institute of Policy Studies, Victoria University of

Wellington.

Macpherson, C (2004) ‘From Pacific Islanders to Pacific people: The past, present

and future of the Pacific population in Aotearoa’, in P Spoonley,

C Macpherson, and D Pearson (eds) Tangata, Tangata: The changing

contours of ethnicity in Aotearoa New Zealand, Victoria: Thomson Dunmore

Press.

12

© Institute of Policy Studies, Victoria University of Wellington, 2008


1

Emerging Demographic and Socioeconomic

Features of the Pacific Population in New

Zealand

Paul Callister and Robert Didham 1

Contents

Introduction .................................................................................................................13

Population....................................................................................................................14

Socioeconomic indicators of the New Zealand Pacific population.............................19

Pacific ‘man drought’ ..................................................................................................23

Educational enrolment and attainment ........................................................................25

Ethnic intermarriage ....................................................................................................29

Conclusion...................................................................................................................37

Annex: Prioritisation system for counting people in ethnic groups ............................38

References ...................................................................................................................38

Introduction

This chapter provides a brief set of background data on the Pacific population

living in New Zealand to help to contextualise the chapters that follow. However,

to set the New Zealand data in a wider context, it begins with a brief overview of

the relative population sizes of island nations within the Pacific. It then uses data

from the Census of Population and Dwellings to show changes through to 2006 in

the size of the New Zealand Pacific population. This includes data on the age

structure of New Zealand–born versus overseas-born Pacific people.

The chapter then provides some wider socioeconomic and demographic data,

including about employment and house ownership by the Pacific population. The

data, drawn primarily from the 2006 census, is also relevant to chapter 2, ‘Pacific

People in the New Zealand Economy’ by Jean-Pierre de Raad and Mark Walton.

Three important issues are then examined. First, there is a short section on the

changing ratio of Pacific men and women, popularly known as the ‘Pacific man

drought’. Some of the possible causes and implications of this change are

canvassed. The second issue briefly discussed is emerging trends in the gender

balance in educational participation and attainment by Pacific people living in

1 The opinions expressed in this chapter are those of the authors, and do not necessarily, nor are

intended to, reflect those of the organisations to which the authors are affiliated (the Institute

of Policy Studies and Statistics New Zealand respectively).

© Institute of Policy Studies, Victoria University of Wellington, 2008 13


Pacific Interactions

New Zealand. Finally, there is an exploration of the levels of ethnic intermarriage

within the Pacific community and, as a result of this intermarriage, the growing

number of Pacific people who record more than one ethnic group. The analysis of

intermarriage relies on 2006 census data, while the data on multiple ethnicities are

drawn from birth registrations. 2 Possible implications of intermarriage are noted.

Much of this overview focuses on recent trends. For those wanting a longer

term understanding of trends, there is a growing literature on Pacific migration to

New Zealand and life in New Zealand for Pacific people (Cook et al, 1999;

Fairburn-Dunlop and Makisi, 2003; Macpherson, 2004, 2006; Anae et al, 2006).

Population

When Australia and New Zealand are included, there is quite a major difference

in population sizes among countries in the Pacific. Table 1.1 sets out the

populations, ranked from largest to smallest, of the main Pacific countries with

which New Zealand has connections.

The data shown in Table 1.1 is for the total resident population and do not

differentiate between ethnic groups living in each nation. Figure 1.1 shows the

size of the Pacific population, based on ethnicity, living in New Zealand from

1945 to 2006.

In 1945 the Pacific population was just over 2,000 but it has been steadily

increasing since the 1960s. The population was 202,233 in 1996, rising to 231,801

in 2001 and increasing further to 265,974 in March 2006. It is worth noting that

the data represents the population at one point in time. As is shown in other

chapters, people move continually between Pacific nations and New Zealand so

the actual long-term resident population in New Zealand will fluctuate around

census night numbers. 3

Figure 1.2 shows the size of the Pacific population in New Zealand relative to

the other main ethnic groups in 1996, 2001 and 2006. 4 This data is based on total

counts (ie, if a person records more than one ethnic group they are counted in each

group), so there is some overlap between groups. After the Asian group, the

Pacific ethnic group had the second-largest increase from the 2001 census. In

2006, Pacific people represented 6.9% of the New Zealand population.

2 Our analysis of ethnic intermarriage includes both formal marriage and de facto relationships.

3 See chapter 3, ‘Pasifika Mobility: Pathways, circuits, and challenges in the 21st century’, by

Richard Bedford.

4 The ‘Other’ category in 2006 includes the significant number of people who gave a ‘New

Zealander’ type ethnic response. It also needs to be noted that people born in Fiji, or had

ancestors who lived in Fiji, but record themselves as Indian or another Asian ethnicity will be

recorded in the Asian group. This is despite some of them considering themselves to be

‘Pacific people’.

14

© Institute of Policy Studies, Victoria University of Wellington, 2008


Emerging Demographic and Socioeconomic Features of the Pacific Population

Table 1.1: Estimated resident populations

Country

Estimated resident population

Australia 20,600,000

Papua New Guinea 5,931,769

New Zealand 4,140,000

Fiji 931,741

Solomon Islands 581,318

New Caledonia 224,824

Western Samoa 217,083

Vanuatu 215,446

Tonga 119,009

Kiribati 110,356

Cook Islands 21,923

Tuvalu 12,177

Niue 1,444

Tokelau 1,433

Note: Some data is based on 2008 estimates and some uses 2006.

Source: New Zealand data is sourced from resident population estimates from

Statistics New Zealand. Australian data is sourced from the Australian Bureau

of Statistics. The remaining data is from the Central Intelligence Agency’s The World

Factbook (https://www.cia.gov/cia/publications/factbook/countrylisting.html).

Figure 1.1: Pacific population in New Zealand, 1945–2006

300,000

250,000

200,000

Number

150,000

100,000

50,000

0

1945 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006

Census year

Source: Census of Population and Dwellings, Statistics New Zealand.

© Institute of Policy Studies, Victoria University of Wellington, 2008 15


Pacific Interactions

Figure 1.2: Change in size of ethnic groups, total counts, 1996–2006

3,000,000

2,500,000

Number

2,000,000

1,500,000

1,000,000

1996

2001

2006

500,000

0

European Māori Pacific

people

Asian

Other

ethnicity

Ethnic group

Source: Census of Population and Dwellings, Statistics New Zealand.

Table 1.2 focuses on the size of the main ethnic groups within the wider New

Zealand Pacific community. It shows that Samoans continue to be the largest

single group and, in absolute terms, showed the strongest growth between 2001

and 2006. The Tongan group showed strong growth from 1996 to 2006, rising

from just over 31 thousand to over 50 thousand. However, in percentage terms the

strongest growth was among ethnic Fijians with a 40% increase in numbers

between 2001 and 2006. In the census, this group excludes Fijian Indians who are

counted within the Asian group.

Table 1.2: Size of main Pacific ethnic groups, total counts, 1996–2006

Main Pacific ethnic

groups 1996 2001 2006

Change

from 2001

to 2006

Samoan 101,754 115,026 131,103 16,077

Cook Islands Māori 47,019 51,486 58,008 6,522

Tongan 31,392 40,716 50,481 9,765

Niuean 18,477 20,154 22,476 2,322

Fijian 7,695 7,041 9,861 2,820

Tokelauan 4,917 6,198 6,822 624

Source: Census of Population and Dwellings, Statistics New Zealand.

When Tables 1.1 and 1.2 are compared, it can be seen that New Zealand

based Tokelauans and Niueans substantially outnumber Tokelauans and Niueans

living in Tokelau and Niue. The comparison also shows that, despite Melanesia

having by far the highest populations, there has historically been little migration

from this part of the Pacific to New Zealand. This issue is revisited in other

chapters of this book.

16

© Institute of Policy Studies, Victoria University of Wellington, 2008


Emerging Demographic and Socioeconomic Features of the Pacific Population

Figure 1.3 switches the focus to changes in population by country of birth. It

demonstrates that the Samoan population is also the largest when birthplace is

considered. But second place goes to those born in Fiji, with very strong growth

between 1996 and 2001 and again through to 2006. However, well over 85% of

those born in Fiji identify as Indian, so this does not represent a strong growth in

Melanesian migration. Much of this migration has been prompted by political

events in Fiji.

Figure 1.3: Change in population by birthplace, 1996–2006

60,000

50,000

Number

40,000

30,000

20,000

1996

2001

2006

10,000

0

Samoa Fiji Tonga Cook

Islands

Niue

Tokelau

Country of birth

Source: Census of Population and Dwellings, Statistics New Zealand.

The numbers in Figure 1.3 are significantly smaller than those in Figure 1.2,

but 60% of Pacific people living in New Zealand were born in New Zealand. The

proportion of the Pacific population born in New Zealand has been steadily

increasing. In 1976, 38% were born in New Zealand. By 1991 this had reached

50% and by 2006 60%. But as Table 1.3 shows, there are differences in the

proportion born in New Zealand when specific groups are looked at. The ethnic

group with the largest proportion born in New Zealand is Niuean (74%). The

smallest is Fijian, at less than half (44%).

The Pacific population living in New Zealand is young, particularly those of

its members born in New Zealand. Figure 1.4 shows that of the main ethnic

groups, Pacific people have the greatest proportion of their population aged under

20. Like Māori and Asian people, Pacific people have a much lower proportion of

their population aged 65 or older. There are some small differences in age

structures between Pacific groups. For example, 53% of the Tokelauan population

was aged under 20 in 2006, but only 42% of Fijians were.

© Institute of Policy Studies, Victoria University of Wellington, 2008 17


Pacific Interactions

Table 1.3: Percentage of each Pacific group who were born in New Zealand, total

counts, 2006

Pacific ethnic group Percentage New Zealand born (%)

Niuean 74.1

Cook Islands Māori 73.4

Tokelauan 68.9

Samoan 59.7

Tongan 56.0

Fijian 43.6

Total Pacific ethnic group 60.0

Source: Census of Population and Dwellings, Statistics New Zealand.

Figure 1.4: Proportion of main ethnic groups who are aged under 20 or aged 65 or

over, total counts, 2006

60

50

40

% 30

Under 20

65 and older

20

10

0

European Māori Pacific people Asian

Ethnic group

Source: Census of Population and Dwellings, Statistics New Zealand.

Figure 1.5 shows marked differences in age structures between those Pacific

people born in New Zealand and those born outside New Zealand. 5 Just under

70% of the New Zealand–born Pacific population was aged under 20 compared

with just 17% of those born overseas. However, it is worth noting that these are

not two separate populations. In many households there will be parents or

grandparents who were born overseas and children or grandchildren who were

born in New Zealand.

5 A small number of those born outside New Zealand will have also been born outside of

Pacific countries (eg, Pacific people born in Australia).

18

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Emerging Demographic and Socioeconomic Features of the Pacific Population

Figure 1.5: Age distribution of the New Zealand–born and overseas-born Pacific

populations, 2006

25

20

%

15

10

New Zealand born

Overseas born

5

0

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80-84

90-94

100+

Age (years)

Source: Census of Population and Dwellings, Statistics New Zealand.

Socioeconomic indicators of the New Zealand Pacific

population

After each census, Statistics New Zealand publishes detailed information about

Pacific peoples, including profiles of Cook Islands Māori, Fijian, Niuean,

Samoan, Tokelauan, Tongan and Tuvaluan peoples. These profiles contain a wide

range of information including about language, religion, the structure of families

and households, education attainment, work and income, housing, and access to

amenities such as cars and the internet. The 2006 profiles are available from

Statistics New Zealand’s website (see Statistics New Zealand, 2007). Given that

such detailed information is available, the following graphs and tables simply

provide some key demographic data for the Pacific population living in New

Zealand.

The indicators shown are education, employment, personal income and home

ownership. There is also some brief information on fertility. All the data is drawn

from the 2006 census and all tables and graphs are for people aged 15 or over.

No breakdown is given between those Pacific people born in New Zealand

and those born overseas. However, other researchers have shown some

differences between the two groups, for example, that New Zealand–born Pacific

people have higher median incomes than Pacific people born overseas. In part,

differences in outcomes for the New Zealand–born and overseas-born populations

reflect the different age structures of the two groups.

© Institute of Policy Studies, Victoria University of Wellington, 2008 19


Pacific Interactions

Educational qualifications

Table 1.4 shows the highest educational qualification achieved within each main

ethnic group. The table shows that, as is the case for Māori, Pacific people are

over-represented among those with no formal educational qualifications. Of all

groups, Pacific people have the smallest proportion with degrees or higher

qualifications. Given that higher education is closely linked to income-earning

potential, this places the Pacific population at a disadvantage.

Table 1.4: Proportion of each ethnic group (aged 15 or over) with formal educational

qualifications (highest qualifications), total counts, 2006

European

(%)

Māori

(%)

Pacific

peoples

(%)

Asian

(%)

No qualification 23 36 31 11

Certificate to diploma (levels 1–6) 53 47 42 33

Bachelors degree or higher 15 7 4 28

Overseas secondary school

qualification 4 0 9 23

Other 6 11 13 7

Total 100 100 100 100

Source: Census of Population and Dwellings, Statistics New Zealand.

There are some differences in qualifications between Pacific groups. For

example, 27% of Samoans had no formal qualifications compared with 39% of

Cook Islands Māori. The group with the lowest proportion having no

qualifications was Fijian (16%).

Employment patterns

Figure 1.6 shows overall employment patterns of Pacific people. Rates of both

full-time and part-time work are higher for Europeans and Māori than for Pacific

people. However, Pacific people have a higher full-time employment rate than the

Asian group has.

Both Māori and Pacific people have higher rates of unemployment than

Europeans and Asian people have.

In terms of those not in the labour force, a group that includes parents (usually

mothers) looking after children full time at home but also those who cannot work

for various reasons, the Pacific community has rates higher than those for Māori

or Europeans.

Some of the poorer outcomes for Pacific people in the labour market can be

linked to lower levels of qualifications.

There are some small differences in employment patterns between Pacific

groups, for example, while 52% of Fijians worked full time, the rates were lower

for Samoans (48%) and Tongans (44%).

20

© Institute of Policy Studies, Victoria University of Wellington, 2008


Emerging Demographic and Socioeconomic Features of the Pacific Population

Figure 1.6: Percentage of each main ethnic group (aged 15 or over) employed,

unemployed and no in the labour force (total counts), 2006

Not in the

labour force

Unemployed

Employed

part time

Asian

Pacific people

Māori

European

Employed

full time

0 10 20 30 40 50 60

%

Source: Census of Population and Dwellings, Statistics New Zealand.

Personal income

Figure 1.7 shows personal income from all sources. This includes incomes from

employment, investment and any benefit income. When main ethnic groups are

considered, Pacific people have the second largest proportion earning under

$10,000 per year. Further emphasising that Pacific people are over-represented

among New Zealand’s lower income earners, Pacific people have the smallest

proportion earning more than $50,000.

In terms of individual Pacific groups, Fijians have the smallest proportion

earning under $10,000 and also the largest proportion earning $50,000 or more

per year. Tongans have the highest proportion earning low incomes followed by

Samoans.

House ownership

Figure 1.8 shows the proportion of each main ethnic group who owned or partly

owned the house they lived in. Of the main ethnic groups shown, Pacific people

have the lowest rate of home ownership. As is shown in chapter 2, home

ownership is an important component of personal wealth, and the low level of

Pacific home ownership has meant only a small proportion of the Pacific

population gained benefits from the recent increase in housing prices.

There are some differences in home ownership within the Pacific group. Of

the main groups, Tongans have the lowest rate of ownership (19%) while Fijians

have the highest rate (28%). However, the Fijian rate is still below the rates of

Māori and Asian people and is significantly lower than the European rate.

© Institute of Policy Studies, Victoria University of Wellington, 2008 21


Pacific Interactions

Figure 1.7: Percentage in each ethnic group (aged 15 or over) earning under $10,000

or over $50,000 per year, personal income from all sources, total counts, 2006

45

40

35

30

25

%

20

15

10

% under $10,000

% over $50,000

5

0

European

Māori

Pacific

people

Asian

Source: Census of Population and Dwellings, Statistics New Zealand.

Figure 1.8: Proportion of each ethnic group (aged 15 or over) who owned or partly

owned their house, total counts, 2006

70

60

50

40

%

30

20

10

0

European Māori Pacific people Asian

Ethnic group

Source: Census of Population and Dwellings, Statistics New Zealand.

Linkages

The key indicators have been examined individually. However, there are clearly

linkages between factors such education, income and home ownership. In

addition, as already discussed, differing age structures between ethnic groups are

a factor in some of the differences in ethnic outcomes.

22

© Institute of Policy Studies, Victoria University of Wellington, 2008


Emerging Demographic and Socioeconomic Features of the Pacific Population

Pacific ‘man drought’

Over the last two years there has been much discussion about the possible

existence of a ‘man drought’ in New Zealand (Callister et al, 2005a; Laugesen and

Courtney, 2005; Salt, 2005). While this has involved much media hype, including

the misleading name given to the phenomenon, there are nevertheless important

underlying issues.

In New Zealand historically males have outnumbered females in all age

groups under 20. This reflects a naturally occurring ratio by which the number of

boys born is about 5% higher than the number of girls. 6 However, census data

from the early 1980s shows that among prime working-age groups this ratio has

reversed, and there is an apparently increasing imbalance between the numbers of

women and men in the age group 20–49 (Callister et al, 2005b). This is the age

group where couple formation and childbearing and rearing most commonly take

place.

Table 1.5 shows the ratio of Pacific women to men in five-yearly age groups

from birth to 64 years. As is the expected pattern, the younger age groups have

about 5% more boys than girls. By ages 15–19 there are about equal numbers of

men and women, but by the early 20s census data suggests there are more Pacific

women than men. For example, in the age group 25–29, there were 17% more

women than men in 1991 and 12% more women in 2006. In the older age groups,

the greater number of women is due primarily to differences in life expectancy

between women and men, with women living longer. However, the reasons for

the greater number of women in the age group 20–49 are more complex.

Table 1.6 looks at sex ratios within the main Pacific ethnic groups. It suggests

major differences between groups. For instance, while in the age group 30–34

years there were 11% more Samoan women and 18% more Cook Islands women

than men in 2006, there appears to be about 5% more Tongan men than women.

Explaining census-based ratios favouring women over men in the age group

20–49 requires consideration of four possibilities.

Differential mortality rates between men and women.

The emigration from New Zealand of more Pacific men than women.

A higher number of female Pacific immigrants.


A trend towards larger undercounts of Pacific men in censuses and other key

statistical series.

6 This ratio holds across all ethnic groups, except in places such as China and India where there

are significantly more boys born than girls.

© Institute of Policy Studies, Victoria University of Wellington, 2008 23


Pacific Interactions

Table 1.5: Sex ratios of Pacific people, total counts (ratios of females to males),

1991–2006

Age (years) 1991 1996 2001 2006

0–4 94 93 97 95

5–9 94 94 94 97

10–14 98 97 95 96

15–19 101 100 101 99

20–24 114 106 108 107

25–29 117 117 109 112

30–34 109 113 114 109

35–39 101 110 110 111

40–44 99 102 108 108

45–49 100 100 100 107

50–54 102 104 103 102

55–59 104 102 106 104

60–64 112 110 109 108

Source: Census of Population and Dwellings, Statistics New Zealand.

Table 1.6: Sex ratios of main Pacific groups, total counts (ratios of females to males),

2006

Samoan

Cook

Islands

Māori

Tongan Niuean Tokelauan Fijian

0–4 0.95 0.93 0.93 1.01 0.86 1.03

5–9 0.95 0.94 0.97 1.04 0.97 0.93

10–14 0.97 0.92 1.00 0.94 0.99 0.90

15–19 1.01 0.99 0.92 0.99 1.12 0.99

20–24 1.08 1.06 1.07 1.00 1.36 0.97

25–29 1.13 1.12 1.08 1.14 1.05 1.03

30–34 1.11 1.18 0.95 1.11 1.07 0.91

35–39 1.14 1.16 1.00 1.09 1.14 1.15

40–44 1.08 1.12 0.99 1.13 1.10 1.08

45–49 1.03 1.18 1.01 1.11 1.05 1.07

50–54 1.01 1.09 0.94 1.02 1.23 0.97

55–59 1.01 1.07 0.95 1.25 1.38 1.20

60–64 1.04 1.09 1.08 1.08 1.15 1.17

Source: Census of Population and Dwellings, Statistics New Zealand.

24

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Emerging Demographic and Socioeconomic Features of the Pacific Population

While some exploratory research on the total New Zealand population

suggests that mortality and migration appear to be having an influence on sex

ratios, there seems to have been a growing undercount of men among some New

Zealand populations. This may be important in the Pacific population where it

creates several problems. 7 First, it simply means there may a larger Pacific

population than the data suggests. Second, if those not completing their census

forms have different characteristics from those who do, then we will have an

incomplete understanding of the Pacific population. It is important Statistics New

Zealand works closely with the Pacific communities to ensure the Pacific

population is well represented in official statistics.

An initial analysis of 2006 data indicates that there are some differences in

ratios when the overseas born are compared with the New Zealand born, perhaps

reflecting gendered migration flows. More research is needed to understand why

there appear to be a greater number of Pacific women than men living in New

Zealand.

Educational enrolment and attainment

Despite some impressive gains in recent years, there continues to be attention

given to the need to increase the levels of participation and attainment in

education by Pacific people. For instance, the Ministry of Education has published

a Pacific educational plan and now monitors progress towards reaching specified

goals (Ministry of Education, 2007). The call for more qualified Pacific people

also comes from particular sectors of the economy. For instance, there has been

identified a need to increase the number of Pacific health professionals in New

Zealand (Goodyear-Smith et al, 2006). However, another important social trend

that was identified in 2006 was the significant imbalance between educational

participation and attainment of New Zealand women and men (Callister et al,

2006). While historically more men than women have participated in tertiary

education, this has now reversed. This reversal has been particularly strong within

the Pacific population.

Participation in schooling (retention rates)

Differences in the educational performance of women and men begin in school.

For example, Table 1.7 shows retention rates at age 16 for the total population as

well as for Māori and Pacific peoples.

Two key issues stand out. First, Pacific retention rates are significantly higher

than Māori retention rates at age 16. But secondly, while even in 1996 the

retention rates for young Pacific females were higher than for young Pacific

males, by 2005 the gap between Pacific females and males had increased. In 2005,

nearly 90% of Pacific females had stayed at school to age 16 where it was just

7 However, even when official undercount data are factored into calculations of New Zealand’s

resident population in 2006, more Pacific women than Pacific men remain in the overall age

group 15–39 (Statistics New Zealand, 2008).

© Institute of Policy Studies, Victoria University of Wellington, 2008 25


Pacific Interactions

under 80% for Pacific boys. The reasons a group of boys is not doing as well as

girls are not fully understood.

Table 1.7: Retention at age 16 as a percentage of those enrolled at age 14, 1996–

2005

Year

Total

male

Total

female

Māori

male

Māori

female

Pacific

male

Pacific

female

1996 81.7 85.8 64.1 67.3 79.2 83.5

1997 80.9 86.6 60.6 68.0 81.8 87.5

1998 83.6 88.6 67.2 74.8 83.5 86.8

1999 82.1 87.2 66.7 70.9 84.1 86.7

2000 79.7 85.0 63.9 69.0 80.5 86.2

2001 76.5 83.2 59.8 65.5 80.1 88.1

2002 76.5 83.3 57.9 65.2 79.2 83.7

2003 78.6 85.5 59.3 66.1 79.8 88.5

2004 77.9 84.6 59.7 67.7 78.5 86.1

2005 77.1 83.9 59.2 66.2 78.2 89.6

Source: Ministry of Education.

Participation in tertiary education

As a background to the differences between Pacific women and men in tertiary

education, Table 1.8 shows how the participation in schooling translates into

participation in tertiary education. 8 It indicates that participation rates for Pacific

people have been increasing. This includes older people returning to education or

upgrading their qualifications. The table also shows that in some age groups and

years, Pacific participation rates are behind those for Europeans and Māori. In

particular, older Māori are participating in tertiary education at a much higher rate

than older Pacific people are participating. The participation of older people in

education is an important factor in the upgrading of skills across the whole

population. One factor behind the higher rates for older Māori appears to have

been the growth of wānanga (a type of tertiary institution that provides education

in a Māori cultural context). 9

8 These data do not include Modern Apprenticeships where male participation is significantly

higher than female participation. However, while important, Modern Apprenticeships

represent only a small part of tertiary education.

9 However, a significant number of Pacific people are enrolled in wānanga courses.

26

© Institute of Policy Studies, Victoria University of Wellington, 2008


Emerging Demographic and Socioeconomic Features of the Pacific Population

Table 1.8: Percentage of each age and ethnic group participating in tertiary education,

2001–2006

Ethnic

group

Age

group

2001 2002 2003 2004 2005 2006

European 18–24 35.9 37.1 37.0 36.9 37.2 37.2

25–39 11.9 13.2 13.7 14.2 14.6 14.4

40+ 3.7 4.4 4.9 5.2 5.8 6.1

Māori 18–24 30.6 34.3 33.7 33.6 32.0 30.9

25–39 20.1 26.4 26.8 26.8 25.2 22.6

40+ 10.0 15.4 16.5 16.7 16.6 15.6

Pacific 18–24 26.5 29.2 30.0 30.7 30.8 31.1

25–39 12.0 14.3 15.5 17.2 16.6 15.2

40+ 4.8 6.3 6.9 8.9 8.7 7.5

Source: Ministry of Education.

Tertiary education completions

Not all those participating in tertiary education complete their qualification.

Overall, women are more likely to complete than men. Both differences in

participation and completion show up in Table 1.9. This table shows completions

by domestic Pacific students (ie, foreign students are removed) in each level of

qualification from 1999 to 2006. It shows an increase by both men and women in

tertiary education completions, but it also shows that in all areas there are now

more Pacific women than Pacific men completing tertiary qualifications. For

example, two-thirds of Pacific degree graduates are female. 10

Qualification levels

As an indication of how education enrolments and completions, both in New

Zealand and in overseas educational institutions, flow through to the education

level of the overall population, Table 1.10 uses 2006 census data to show Pacific

women as a proportion of each qualification level. In only three areas do men

outnumber women: no qualifications, level 4 certificates, and doctorates. In terms

of level 4 certificates, these are traditionally male qualifications such as

mechanics and building.

10 Detailed data on the tertiary education outcomes for the main Pacific groups are published in

two Ministry of Education reports (Wensvoort, 2008a, 2008b).

© Institute of Policy Studies, Victoria University of Wellington, 2008 27


Pacific Interactions

Table 1.9: Tertiary sector qualification completions, domestic students, total Pacific

students, 1999–2006

Year

Levels 1–3 Level 4

(certificate) (certificate)

Levels 5–6

(diploma)

Level 7

(bachelors)

Level 8

(honours,

postgraduate

diploma and

certificate)

Level 9

(masters)

Pacific female

1999 567 62 234 418 35 33

2000 1,064 249 274 439 70 34

2001 1,394 308 262 491 88 29

2002 1,403 365 374 477 73 44

2003 1,547 945 427 528 77 40

2004 2,004 680 490 543 99 45

2005 2,030 778 409 555 111 41

2006 2,098 716 467 607 154 63

Pacific male

1999 441 44 93 215 36 23

2000 682 134 172 226 54 28

2001 924 155 175 258 48 16

2002 961 240 244 244 39 20

2003 858 348 259 270 47 24

2004 1,023 341 294 315 41 19

2005 1,251 420 288 305 57 26

2006 1,165 381 299 344 52 33

Females as percentage of total completions (%)

1999 56 58 72 66 49 59

2000 61 65 61 66 56 55

2001 60 67 60 66 65 64

2002 59 60 61 66 65 69

2003 64 73 62 66 62 63

2004 66 67 63 63 71 70

2005 62 65 59 65 66 61

2006 64 65 61 64 75 66

Source: Ministry of Education.

28

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Emerging Demographic and Socioeconomic Features of the Pacific Population

Table 1.10: Number of Pacific males and females in each qualification group (highest

qualified attained) and females as a percentage in each group, 2006

Qualification group

Number of

males

Number of

females

Percentage

female

(%)

No qualification 26,628 23,946 47

Level 1 certificate 10,488 12,270 54

Level 2 certificate 7,851 9,156 54

Level 3 certificate 6,483 9,213 59

Level 4 certificate 4,677 3,309 41

Level 5 diploma 1,401 1,992 59

Level 6 diploma 1,293 2,382 65

Level 7 (bachelors degree) 2,598 3,909 60

Level 8 (postgraduate diploma or

certificate, bachelors with honours) 309 474 61

Level 9 (masters degree) 372 381 51

Level 10 (doctorate) 57 39 41

Overseas secondary school qualification 6,603 7,533 53

Other 10,953 11,310 51

Source: Census of Population and Dwellings, Statistics New Zealand.

Impact of differing educational outcomes

What effects might the changes in education outlined above have First, it needs

to be kept in mind that if Pacific people are to increase their participation in the

labour market and, as importantly, increase earnings, participation in tertiary

education for both men and women needs to continue to increase. We can

speculate on the long-term changes the differing educational outcomes for women

and men might have on:







outcomes in the labour market; increasingly, it will be Pacific women rather

than men who can fill the higher income jobs that require higher-level

qualifications

decisions about ethnic intermarriage (education influences partner choice)

choices about the number of children to have or whether to have children

migration (out of New Zealand) (well-educated people have more choices

about where to work in the world)

power balances within marriages

who fills leadership positions in Pacific institutions.

Ethnic intermarriage

Throughout history when previously isolated ethnic groups have come into

contact with each other there is some amount of ethnic intermarriage (Leroi,

© Institute of Policy Studies, Victoria University of Wellington, 2008 29


Pacific Interactions

2005). 11 Historically, there have been, and continue to be, at least three potential

impacts of ethnic intermarriage: genetic mixing, cultural mixing and resource

mixing. This mixing can occur at any one point and can continue

intergenerationally. Resource mixing may be an important factor in determining

future outcomes for Pacific people.

Ethnic intermarriage has been used as an indicator of ‘social distance’ between

groups (Bogardus, 1925; Muttarak, 2003). Muttarak suggests the study of ethnic

intermarriage is important because intermarriage is an important measure of

intergroup relations, and it acts simultaneously as a primary cause and an

indicator of social and cultural integration.

Ethnic intermarriage has also been seen as a site through which future

generations become either assimilated into a dominant culture or acculturated. 12 It

has been described as both an indicator and a final outcome of acculturation (Blau

et al, 1982; Pagnini and Morgan, 1990). While this contact with others can occur

in a variety of ways, intermarriage provides a particularly intense and intimate site

for potential cultural exchange. While it is often considered that the acculturation

will ultimately be assimilation to the dominant culture, intermarriage research has

already shown that intermarriage often has complex outcomes in terms of cultural

sharing and ethnic identity.

Several factors influence intermarriage rates, with many of these

interconnected. Level of education is important, with better-educated people more

likely to marry outside their ethnic group (but more likely within their educational

group). Other factors include attitudes, time in a country, level of residential

segregation, relative sizes of ethnic groups, and whether there is an imbalance

between the number of men and women in the main couple-forming age groups.

All of these factors will be influencing marriage choices by Pacific people in New

Zealand. While there has been no detailed study of Pacific intermarriage in New

Zealand, Keddell (2006) touches on this topic in relation to Samoan identity.

Ethnic group of partners

Table 1.11 uses 2006 census data to show the ethnic group of the partners of men

from each main ethnic group. Given that these are total counts (if a person records

more than one ethnic group they are counted in each group), row totals add to

more than 100. An example of this is where a male records a Pacific ethnic group

as well as an European group. He is be counted as a Pacific male as well as a

European male. 13 Table 1.12 shows ethnic marriage patterns for women.

Table 1.11 shows that 69% of Pacific males had a partner who recorded a

Pacific ethnicity, while Table 1.12 shows a slightly higher rate for Pacific women

11 This section of the paper draws heavily on Callister et al (2005b).

12 Acculturation is the process of acquiring a second culture. Assimilation is the process of

replacing one’s first culture with a second culture. Assuming that cultures are dynamic rather

than static, the process of acculturation may nevertheless alter original cultures.

13 For more discussion around issues of using total counts when studying ethnic intermarriage,

see Callister et al (2005b).

30

© Institute of Policy Studies, Victoria University of Wellington, 2008


Emerging Demographic and Socioeconomic Features of the Pacific Population

at 73%. Twenty-five percent of Pacific men had a European partner compared

with 21% of Pacific women. In terms of partnerships with Māori, 16% of Pacific

men and 10% of Pacific women had a Māori partner.

Table 1.11: Percentage of partners in each ethnic group for men, opposite-sex

couples (total counts), 2006

Female

Male

European

(%)

Māori

(%)

Pacific

peoples

(%)

Asian

(%)

MELAA

(%)

Other

(%)

Total

(%)

European 89 7 1 2 0 6 107

Māori 56 52 5 2 0 5 120

Pacific peoples 25 16 69 2 0 2 114

Asian 6 1 1 92 0 1 102

MELAA 26 3 2 4 67 3 105

Other 43 4 1 2 0 58 109

Note: MELAA = Middle Eastern, Latin American, African.

Source: Census of Population and Dwellings, Statistics New Zealand.

Table 1.12: Percentage of partners in each ethnic group for Pacific women, oppositesex

couples (total counts) 2006

Male

Female

European

(%)

Māori

(%)

Pacific

peoples

(%)

Asian

(%)

MELAA

(%)

Other

(%)

Total

(%)

European 87 7 2 1 0 9 106

Māori 51 50 8 1 0 7 117

Pacific

peoples

21 10 73 2 0 3 109

Asian 16 2 1 80 0 3 103

MELAA 27 2 1 1 68 5 105

Other 35 4 1 1 0 67 108

Note: MELAA = Middle Eastern, Latin American, African.

Source: Census of Population and Dwellings, Statistics New Zealand.

Rates of intermarriage

Tables 1.13 and 1.14 give some indication of whether intermarriage is increasing

for Pacific men and women. While the numbers are small in the youngest age

group, the data indicates that intermarriage is much more common among young

people than among older people, suggesting that as this group ages overall rates

will be become higher. For example, among the 45 and older age group, 77% of

Pacific men had a Pacific partner, while for women this was 75%. But in the age

group 15–24 years, within-group marriage rates are just under half for men (48%)

© Institute of Policy Studies, Victoria University of Wellington, 2008 31


Pacific Interactions

and 64% for women. This suggests Pacific men are out-marrying at a faster rate

than Pacific women. The rates of marriage between Pacific people and Māori

increase among younger age groups, especially for men. In the age group 15–

24 years, the proportion of Pacific women with a Māori partner (22%) is not that

much lower than the proportion with a European partner (25%).

Table 1.13: Percentage of partners in each ethnic group for Pacific males by age of

male, opposite-sex couples (total counts), 2006

Female

Male

European

(%)

Māori

(%)

Pacific

peoples

(%)

Asian

(%)

MELAA

(%)

Other

(%)

% of

total

Total

number

15–24 43.6 35.1 47.8 3.8 0.2 2.1 133 2,661

25–44 28.2 18.1 65.0 2.7 0.2 2.5 117 20,460

45+ 16.4 9.2 77.0 1.5 0.1 2.1 106 15,027

Note: MELAA = Middle Eastern, Latin American, African.

Source: Census of Population and Dwellings, Statistics New Zealand.

Table 1.14: Percentage of partners in each ethnic group for Pacific females by age of

female, opposite-sex couples (total counts), 2006

Male

Female

European

(%)

Māori

(%)

Pacific

peoples

(%)

Asian

(%)

MELAA

(%)

Other

(%)

% of

total

Total

number

15–24 25.2 22.4 64.3 4.5 0.6 2.1 120 2,961

25–44 20.5 10.9 72.4 2.7 0.4 2.8 110 20,202

45+ 20.8 4.9 74.6 1.7 0.1 2.8 105 12,870

Note: MELAA = Middle Eastern, Latin American, African.

Source: Census of Population and Dwellings, Statistics New Zealand.

Education and qualification levels

Higher levels of education are associated with higher rates of intermarriage, and it

is likely that both age and changes in education are influencing the patterns shown

in Tables 1.13 and 1.14. Tables 1.15 and 1.16 show the effect of education on its

own.

Tables 1.15 and 1.16 show that half of Pacific men and just over half of

Pacific women who hold a degree or higher qualification have a Pacific partner.

This contrasts with over 70% for those with no formal qualifications. However,

there is some complexity in this data. For instance, a poorly educated Pacific male

is more likely to have a Māori partner than if they were well educated, but the

opposite pattern is evident for Pacific women.

32

© Institute of Policy Studies, Victoria University of Wellington, 2008


Emerging Demographic and Socioeconomic Features of the Pacific Population

Table 1.15: Percentage of partners in each ethnic group for Pacific males by

qualifications of male, opposite-sex couples (total counts), 2006

Female

Male

European

(%)

Māori

(%)

Pacific

peoples

(%)

Asian

(%)

MELAA

(%)

Other

(%)

% of

total

Total

number

No

qualifications 19.9 17.6 71.7 1.3 0.1 1.6 112 14,424

School 28.3 16.2 65.6 2.8 0.2 2.7 116 19,752

Vocational 35.5 14.4 58.7 4.7 0.2 3.8 117 1,953

Degree 43.8 12.2 50.4 4.7 0.7 4.5 116 2,382

Note: MELAA = Middle Eastern, Latin American, African.

Source: Census of Population and Dwellings, Statistics New Zealand.

Table 1.16: Percentage of partners in each ethnic group for Pacific females by

qualifications of females, opposite-sex couples (total counts), 2006

Male

Female

European

(%)

Māori

(%)

Pacific

peoples

(%)

Asian

(%)

MELAA

(%)

Other

(%)

% of

total

Total

number

No

qualifications 17.5 9.1 76.1 1.7 0.2 2.0 107 10,494

School 22.1 10.7 71.4 2.9 0.4 2.9 110 18,849

Vocational 28.4 11.0 65.1 2.3 0.1 4.6 112 2,472

Degree 36.4 12.0 54.4 3.3 0.7 5.4 112 2,730

Note: MELAA = Middle Eastern, Latin American, African.

Source: Census of Population and Dwellings, Statistics New Zealand.

Country of birth

Earlier research shows that country of birth, which at times can be linked to

education and attitudes, but also potentially to where the partnership was formed,

has a strong association with rates of intermarriage. Marriage outside of the

Pacific group is much stronger for those born in New Zealand (Callister et al,

2005b).

Wider Pacific ethnic group

Tables 1.17 and 1.18 focus on the main populations within the wider Pacific

group. Using more detailed Pacific ethnic groups, the two tables explore how

likely it is that a person will form a partnership with someone from their own

ethnic group, such as a Samoan marrying a Samoan (these again are total count

data, so the person may have also recorded other ethnicities). The tables also

© Institute of Policy Studies, Victoria University of Wellington, 2008 33


Pacific Interactions

show, if the person does not have a partner from the same level 3 ethnic group,

how likely it is that their partner will also be from the wider Pacific ethnic group.

Tongans and Samoans are the most likely to have a partner from the same

ethnic group as themselves. But for Tongans and Samoans, if a person from these

groups does not have a partner from the same level 3 ethnic group, it is more

likely that the partner will have an ethnicity from outside the Pacific group than

from within it.

Gender differences also underlie this data. For instance, Tongan and Samoan

women are more likely to have a partner from their same ethnic group than are

men (ie, men are less likely to have a partner from their own group).

The within-group marriage pattern, but also the pattern of marrying outside

the wider Pacific ethnic group, does not show up strongly among Tokelauans.

This may reflect the very small group size and therefore limited numbers of

potential marriage partners within their own group but greater choice within the

wider Pacific population.

This data indicates considerable variation in ethnic intermarriage rates within

the wider Pacific ethnic group. But the intermarriage data also indicates some

social distance between the subgroups within the wider Pacific ethnic group, for

example, some distance between Samoans and Tongans.

Table 1.17: Partners of Pacific women: ranked by whether their partner is from the

same level 3 ethnic group, opposite-sex couples, total counts, 2006

Male

Female

Same

ethnic

group #

(%)

Other

Pacific

(%)

European

(%)

Māori

(%)

Asian

(%)

MELAA

(%)

Total

couples

Tongan 74.6 8.8 12.8 5.0 1.3 0.1 6,711

Samoan 70.4 5.9 18.5 7.2 2.2 0.3 18,150

Tokelauan 44.0 33.2 17.9 6.3 2.2 0.4 804

Cook Islands

Māori 40.9 15.3 28.5 20.6 2.0 0.4 6,825

Niuean 38.1 26.5 25.8 14.7 2.7 0.5 2,535

Fijian 38.2 8.6 38.2 8.8 13.2 0.4 1,569

Notes: MELAA = Middle Eastern, Latin American, African.

# The partner may have also recorded other ethnic groups.

Source: Census of Population and Dwellings, Statistics New Zealand.

34

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Emerging Demographic and Socioeconomic Features of the Pacific Population

Table 1.18: Partners of Pacific men – ranked by whether their partner is from the

same level 3 ethnic group, opposite-sex couples, total counts, 2006

Females

Male

Same

ethnic

group #

(%)

Other

Pacific

(%)

European

(%)

Māori

(%)

Asian

(%)

MELAA

(%)

Total

couples

Tongan 67.6 11.0 15.8 11.3 1.2 0.2 7,407

Samoan 65.5 6.5 23.1 12.5 2.2 0.2 19,512

Tokelauan 40.5 26.5 26.8 22.3 1.7 0.0 873

Cook Islands

Māori 41.2 8.5 34.0 29.4 1.8 0.2 6,780

Niuean 35.2 21.2 31.8 23.6 2.7 0.1 2,748

Fijian 40.0 12.8 35.0 12.8 13.4 0.2 1,500

Notes: MELAA = Middle Eastern, Latin American, African.

# The partner may have also recorded other ethnic groups.

Source: Census of Population and Dwellings, Statistics New Zealand.

Multiple ethnicities

One of the outcomes of ethnic intermarriage can be multiple ethnicities among the

children of intermarriage. Using the data of 42,160 Pacific children born in 2000–

2004, we can see that over half (54%) of all Pacific children have at least one

other ethnicity (Table 1.19). While over half (53%) of the births report only

Pacific ethnicities (22,605 out of 42,160), 30% report Māori as their ethnicity and

27% report at least one European ethnicity. These are, of course, not additive,

with nearly half (48%) the Pacific–Māori children also having a European

ethnicity. 14

Table 1.19: Ethnicities of Pacific children born in 2000–2004

Ethnic group

Number of births

Percentage with

more than one

ethnicity (%)

Percentage with

more than one

Pacific ethnicity

(%)

Samoan 21,194 53.6 19.4

Cook Islands Māori 9,890 72.0 25.5

Tongan 9,624 45.8 23.5

Niuean 3,722 84.8 48.6

Tokelauan 1,128 75.7 49.1

Fijian 1,481 84.2 28.4

Total Pacific 42,160 54.0 23.0

Source: Census of Population and Dwellings, Statistics New Zealand.

14 In the past, dual, and multiple ethnicities among Pacific people led to some undercount of the

Pacific population (see the Annex to this chapter).

© Institute of Policy Studies, Victoria University of Wellington, 2008 35


Pacific Interactions

While it is far more common among young people to have multiple ethnicities

reported in official surveys, Figure 1.9 shows that in all age groups there are

Pacific people who record more than one ethnic group. Particularly common

among Pacific people is a combination with Māori, either as one of two

combinations or part of the combination Pacific–Māori–European. How young

people view these dual or multiple ethnicities is only just starting to be researched

(eg, Keddell, 2006).

Figure 1.9: Main single and combination ethnic responses for Pacific people by age,

2006

100%

90%

80%

70%

60%

50%

40%

30%

Pacific and other combinations

Pacific, European and Maori

Pacific and Māori

Pacific and European

Pacific only

20%

10%

0%

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

Age group

55-59

60-64

65-69

70-74

75-79

80-84

85+

Source: Census of Population and Dwellings, Statistics New Zealand.

However, in some areas of research and policy-making, people with Pacific

and Māori ethnicities ‘disappear’ from Pacific statistics if the data has been

recorded using the old prioritisation system (Statistics New Zealand, 2006), which

results in this group being included within the Māori ethnic group but not in the

Pacific group.

One of the common themes of intermarriage among Pacific people is that this

has historically tended to occur primarily, although not exclusively, in New

Zealand. When we look at selected Pacific ethnicities, we can see that the size of

the community affects the degree of connectivity between communities. While

not explored here, it can be shown that the subnational distribution of

communities, birthplace, the number of years since arrival in New Zealand for

those born overseas, and the ethnicities of mother and father are all significant to

these outcomes.

One challenge that ethnic intermarriage and the multiple ethnicities of children

provide for researchers and policy-makers is the targeting of services. For

example, when thinking about immunisations for Pacific infants, some of the

mothers who need to be targeted are Māori or European not Pacific. Therefore,

36

© Institute of Policy Studies, Victoria University of Wellington, 2008


Emerging Demographic and Socioeconomic Features of the Pacific Population

ideas such as ‘by Pacific, for Pacific’, while clearly having strengths in many

situations, may not always work. In addition, the mixing creates challenges in

defining what might be a Pacific family (Callister et al, 2007).

Conclusion

When the wider Pacific is considered, Australia, New Zealand and Papua New

Guinea are the largest centres of population. But a small, and growing, proportion

of the New Zealand population is made up of migrants, or the children of

migrants, from a wide range of Pacific Island nations. As yet, there has been little

migration from Melanesia to New Zealand. Historically, the majority of the

Pacific population living in New Zealand were born overseas. Now the majority

were born in New Zealand.

The Pacific population in New Zealand is a young population. When key

indicators of outcomes of the adult Pacific population are considered, the data

shows that too many Pacific people are on low incomes, have low levels of formal

education and do not own their homes. It is important the young Pacific

population improves outcomes in all these areas.

Increased participation and achievement in schooling and tertiary education

will be critical factors in changing employment outcomes, generating income and

creating wealth, a topic addressed in chapter 2. There have been impressive gains

in educational participation by Pacific people in recent decades. This includes a

major increase in ‘second chance’ education by older Pacific people. However, as

indicated, further strong gains are needed. As part of this process, more research is

needed about how to lift Pacific educational participation and achievement.

The chapter then explored issues that have less commonly been considered by

researchers and policy-makers. We show that there is an imbalance between

women and men in the Pacific population, the reasons for which we do not fully

understand. We also show that Pacific women are participating at a higher rate

than Pacific men in education. While it is clear that Pacific educational outcomes

need to improve among both women and men, men seem to be facing additional

barriers. Again, we do not fully understand the reasons for this.

Finally, we have shown that ethnic intermarriage is important in the Pacific

community. Our data suggests this is likely to increase. We are seeing the

traditional pattern of marriage between Pacific people and the European

population, but also of increasing importance is marriage with Māori and with

Asian peoples. One result is an increasing number of children who can potentially

not only be proud of their Pacific cultures but can also draw on other cultures.

But, again, we have little understanding of the changing identities of Pacific

youth.

© Institute of Policy Studies, Victoria University of Wellington, 2008 37


Pacific Interactions

Annex: Prioritisation system for counting people in

ethnic groups

In the recent past researchers and policy-makers often used a system of ethnic

prioritisation when counting people belonging to ethnic groups. Under this

system, Māori had priority coding, followed by Pacific peoples, then Asian, then

other ethnic groups besides European, followed by ‘Other European’ and, finally,

New Zealand European. This prioritisation system meant that, for example, if a

person recorded himself or herself as belonging to both Māori and Samoan ethnic

groups, they were classified as belonging only to the Māori ethnic group. Given

the significant number of young Pacific people also recording Māori ethnicity,

this resulted in a significant loss of numbers of Pacific people (see Table 1.20).

Statistics New Zealand no longer recommends the use of prioritised data.

Table 1.20: Ethnicity – percentage decline of Pacific population by prioritisation of

ethnicity, 1991, 1996 and 2001

Age group (years)

Year Under 15 15–19 20–24 25–29 30–34 35–39 40–44 45+ Total

1991 18.4 9.5 5.0 4.4 4.1 2.5 1.7 1.0 9.2

1996 30.0 20.9 12.8 8.7 7.8 7.8 5.6 4.4 16.8

2001 29.5 18.5 14.4 9.1 6.4 6.4 5.8 2.6 15.8

Source: Census of Population and Dwellings, Statistics New Zealand.

References

Anae, M, L Iuli, and L Burgoyne (2006) The Polynesian Panthers 1971–1974:

The crucible years, Auckland: Reed.

Blau, P, T Blum, and J Schwartz (1982) ‘Heterogeneity and intermarriage’,

American Sociological Review 47, pp 45–61.

Bogardus, E (1925) ‘Social distance and its origins’, Journal of Applied Sociology

9, pp 216–226.

Callister, P, R Bedford, and R Didham (2005a) ‘Globalisation, gendered

migration and labour markets’, unpublished report to the Department of

Labour.

Callister, P, R Didham, J Newell, and D Potter (2007) ‘Family Ethnicity’: Is it a

useful concept and, if so, can we develop meaningful measures Wellington:

Statistics New Zealand.

Callister, P, R Didham, and D Potter (2005b) Ethnic Intermarriage in New

Zealand, working paper, Wellington: Statistics New Zealand.

Callister, P, J Newell, M Perry, and D Scott (2006) ‘The gendered tertiary

education transition: When did it take place and what are some of the possible

policy implications’, IPS Policy Quarterly, 2(3), pp 4–13.

38

© Institute of Policy Studies, Victoria University of Wellington, 2008


Emerging Demographic and Socioeconomic Features of the Pacific Population

Central Intelligence Agency (no date) The World Factbook.

https://www.cia.gov/cia/publications/factbook/countrylisting.html.

Cook, L, R Didham, and M Khawaja (1999) ‘On the demography of Pacific

people in New Zealand’, in Demographic Trends 1999, Wellington: Statistics

New Zealand.

Fairburn-Dunlop, P, and G Makisi (2003) Making Our Place: Growing up PI in

New Zealand, Palmerston North: Dunmore Press.

Goodyear-Smith, F, V Nosa, and L Aper-Esera (2006) ‘Scoping the future needs

of the Pacific primary health care workforce’, report for the Ministry of

Health, University of Auckland.

Keddell, E (2006) Pavlova and pineapple pie: Selected identity influences

on Samoan-Pakeha people in Aotearoa/New Zealand’, Kōtuitui:

New Zealand Journal of Social Sciences Online 1, pp 45–63.

http://www.rsnz.org/publish/kotuitui/2006/04.php.

Laugesen, R, and D Courtney (2005) ‘Where have all the Kiwi blocks gone’,

Sunday Star-Times 27 March, p A5.

Leroi, A (2005) ‘A family tree in every gene’, NY Times 14 March,

http://www.nytimes.com/2005/03/14/opinion/14leroi.html.

Macpherson, C (2004) ‘From Pacific Islanders to Pacific people: The past,

present and future of the Pacific population in Aotearoa’, in P Spoonley,

C Macpherson, and D Pearson (eds) Tangata, Tangata: The changing

contours of ethnicity in Aotearoa New Zealand, Victoria: Thomson Dunmore

Press.

Macpherson C (2006) ‘Pacific people in Aotearoa/New Zealand: From sojourn

to settlement’, in K Ferro and M Wallner (eds) Migration Happens: Reasons,

effects and opportunities of migration in the South Pacific, pp 97–126,

Vienna: Lit Verlag GmbH & Co KG.

Ministry of Education (2007) Pasifika Education Plan: Monitoring report 2006,

Wellington: Ministry of Education.

Muttarak R (2003) ‘Who intermarries in Britain Ethnic intermarriage’, thesis for

Master of Science, Department of Sociology, University of Oxford.

Pagnini, D, and S Morgan (1990) ‘Intermarriage and social distance among US

immigrants at the turn of the century’, American Journal of Sociology 96,

pp 405–432.

Salt, B (2005) ‘New Zealand in grip of man drought’, KPMG New Zealand.

http://www.kpmg.co.nz/pages/102743.html.

Statistics New Zealand (2006) The Impact of Prioritisation on the

Interpretation of Ethnicity Data, Wellington: Statistics New Zealand.

http://www.stats.govt.nz/NR/rdonlyres/8C3DACBC-5E9F-4BC7-8F2B-

BD5311961008/0/TheImpactofPrioritisationontheInterpretationofEthnicity.pdf

(accessed 20 August 2007).

© Institute of Policy Studies, Victoria University of Wellington, 2008 39


Pacific Interactions

Statistics New Zealand (2007) Pacific Profiles 2006. http://www.stats.govt.nz/

analytical-reports/pacific-profiles-2006/default.htm (last updated 31 August

2007).

Statistics New Zealand (2008) Population Estimates at 30 June 1996, 2001 and

2006. http://www.stats.govt.nz/tables/population-estimates.htm (last updated

16 July 2008).

Wensvoort, M (2008a) Pacific Peoples in Tertiary Education in New Zealand,

Wellington: Ministry of Education.

Wensvoort, M (2008b) Pasifika Tertiary Education Students by Ethnicity

Wellington: Ministry of Education.

40

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2

Pacific People in the New Zealand Economy:

Understanding linkages and trends

Jean-Pierre de Raad and Mark Walton 1

Contents

Introduction .................................................................................................................41

Pacific people’s participation in New Zealand............................................................42

The model....................................................................................................................55

Data..............................................................................................................................66

Scenarios......................................................................................................................70

Conclusions and implications......................................................................................76

Annex: Model in detail................................................................................................78

References ...................................................................................................................81

Introduction

This chapter investigates the trends and key developments in Pacific people’s

participation in the New Zealand economy.

The literature provides a rich picture of the social and economic circumstances

and development of Pacific people in New Zealand, the Pacific, and the Pacific

Rim. This chapter integrates some of this existing knowledge.

The chapter aims to:


explain how the Pacific age structure, migration patterns, education levels,

labour market outcomes, and consumption and saving patterns interact over

time

provide insights to assist communities and policy-makers in identifying and

selecting policy options for improving Pacific people’s outcomes.

Our focus is on the welfare of Pacific people in New Zealand. How Pacific

communities in New Zealand behave and prosper is of great significance to the

country as a whole – to the performance of the New Zealand economy, to the

health and well-being of New Zealand society, and to the shape of our culture.

It is clear, however, that the welfare of Pacific people in New Zealand cannot

be understood without considering the linkages back to the Pacific Islands, and

1 The authors prepared this chapter at the New Zealand Institute of Economic Research, and it

was reviewed by Dr Brent Layton. The contributions of Alastair Bisley, Paul Callister, Leni

Hunter, Cluny Macpherson, Caren Rangi, Tofilau Kerupi Tavita, Josephine Tiro, Ian Duncan,

and Statistics New Zealand are gratefully acknowledged.

© Institute of Policy Studies, Victoria University of Wellington, 2008 41


Pacific Interactions

indeed the wider Pacific Rim. The international mobility of Pacific people,

remittances, and overseas development aid affect, or are affected by, the economic

and social prospects in the Pacific Islands. Pacific issues are New Zealand issues

and vice versa.

Pacific people’s participation in New Zealand

A youthful, growing population

The number of Pacific people in New Zealand as measured has grown rapidly

since the mid-1950s, totalling 266,000 in 2006 (Figure 2.1).

Until the mid-1970s, immigration fuelled the growth of the Pacific population

in New Zealand. There was a period of outflow of Pacific people in the early

1980s due to return migration and chain migration to Australia (Cook et al, 1999).

Since the mid-1990s, net annual migration from the Pacific averaged over 3,000

people (Figure 2.2).

The proportion of New Zealand–born Pacific people to total Pacific people in

New Zealand grew from 45% in 1971 to 60% in 2006 (Cook et al, 1999).

Figure 2.1: Pacific population in New Zealand, 1945–2001

Source: Census of Population and Dwellings, Statistics New Zealand.

42

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Pacific People in the New Zealand Economy

Figure 2.2: Net permanent and long-term Pacific migration, 1979–2007 (March years)

Net annual migration gain

Source: Statistics New Zealand.

The demographic profile of the Pacific population in New Zealand has two

striking features. The first feature is the relative youthfulness of the Pacific

population compared with the total New Zealand population (Figure 2.3).

Figure 2.3: Age distributions, 2006

Source: Census of Population and Dwellings, Statistics New Zealand.

© Institute of Policy Studies, Victoria University of Wellington, 2008 43


Pacific Interactions

The median age of Pacific people is 21 years, compared with 36 years for the

total population. The second feature is the large difference in age structures

between Pacific-born and New Zealand–born Pacific people (Figure 2.4).

Figure 2.4: Birthplace of Pacific people, 2006

Number of Pacific people usually resident in New Zealand

Source: Census of Population and Dwellings, Statistics New Zealand.

Poor but improving education outcomes

In 2005, 42% of Pacific people had no qualifications compared with 25% of the

total New Zealand population. This was an improvement from 1986 when 56% of

Pacific people had no qualifications compared with 40% of the total New Zealand

population.

Growth in educational participation and qualification levels by Pacific people

has been rapid since 1991. Growth in qualification completions has been

particularly high in post-school certificates, but the proportion of Pacific people

with any tertiary qualifications still lags that of the total population (Table 2.1).

Ministry of Education data shows that Pacific female participation in tertiary

education has grown rapidly relative to that of Pacific males. In 1994, the ratio

was 1 : 1, but in 2004 the ratio was 1.45 : 1. Now the proportion of Pacific

females with degree and non-degree educational qualifications exceeds that of

Pacific males.

This trend reflects longer school retention and better performance by Pacific

females than males at school (a phenomenon also evident among the total New

Zealand population). The educational achievement of Pacific females may have

44

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Pacific People in the New Zealand Economy

implications for fertility rates and female labour force participation rates (as the

opportunity cost of childrearing and other non-paid work rises). 2

Table 2.1: Highest educational qualifications, 2005 (June quarter)

Proportion of population aged 15 and over

European

(%)

Māori

(%)

Pasifika

(%)

Other

(%)

All

(%)

No qualifications 24 41 42 17 25

School qualifications 1 24 22 27 31 25

Other tertiary

qualifications 2 38 31 26 22 35

Bachelors or higher

qualifications 14 6 5 31 15

Notes

1 School qualifications include years 11, 12, and 13 and overseas secondary school

qualifications.

2 Other tertiary qualifications include university certificates or diplomas, teaching

certificates or diplomas, nursing certificates or diplomas, New Zealand certificates

or diplomas, technician’s certificates, local polytechnic certificates or diplomas, and

trade certificates or advanced trade certificates.

Source: Household Labour Force Survey data, as produced in Education Counts.

Literacy and numeracy have an effect on earnings that is additional to the

effect of education levels (Treasury, 2001a). However, Pacific people lag in

literacy and numeracy skills compared with the total New Zealand population. In

1996, 54% of New Zealand’s population aged 16–65 had prose literacy skills at

level 3 or above, 50% had document skills at level 3 or above, and 51% had

quantitative skills at level 3 or above (Ministry of Social Development, 2005). 3

For Pacific people, the proportion was half that in each domain.

Differences in educational attainment between Pacific people and the total

New Zealand population are much greater at older ages than at younger ages, and

far greater for overseas-born than New Zealand–born Pacific people (Fletcher,

1995).

The educational attainment of Pacific children in aggregate lags that of non-

Pacific children. This lag could reflect the different home environments and

neighbourhoods of the two groups. The performance of children at low decile

schools tends to be lower than that of children at high decile schools. Table 2.2

shows Pacific children are heavily concentrated in low decile schools. For

example, 70% of Pacific children in primary schools are in decile 1–3 schools.

2 This issue is dealt with in greater detail in chapter 3, ‘Pasifika Mobility: Pathways, circuits

and challenges in the 21st century’, by Richard Bedford.

3 The International Adult Literacy Survey defines adult literacy level 3 as a “suitable minimum

for coping with the demands of everyday life and work in a complex, advanced society”.

© Institute of Policy Studies, Victoria University of Wellington, 2008 45


Pacific Interactions

Table 2.2: Attendance at low decile schools by ethnicity, as at July 2005

Proportion of children in decile 1–3 schools

Pacific (%) Total (%)

Primary school 70 28

Composite school 67 22

Secondary school 50 16

Special 67 45

Total 63 24

Source: Ministry of Education, Education Counts.

The lag may also reflect the link between educational attainment of parents

and children. The longitudinal Competent Children study in New Zealand shows

such a relationship between maternal education and children’s school achievement

(Wylie et al, 2006). Card (2005) found intergenerational correlation between the

average education of fathers and their children. Low parental qualifications and so

low family incomes may result in fewer resources to support children, lower

aspirations, and fewer role models of higher achievement in the New Zealand

education system. A review by The Treasury (2001b) concluded that

disadvantages have an important intergenerational effect, and that this effect is

stronger in areas where disadvantaged ethnic minorities are concentrated.

However, within deciles a strong difference remains in the attainment of

Pākehā and Pacific (and Māori) children (Hattie, 2003). Substantial parts of ethnic

differences can be explained by unmeasured individual differences such as

parents’ occupation, marital status, and child rearing and literacy practices in the

home (The Treasury, 2001b).

Sustained higher unemployment rates

In the late 1980s and early 1990s, the Pacific unemployment rate rose faster than

that of the rest of the labour force, as the result particularly of the structural

economic reforms that led to substantial job losses in sectors where many Pacific

people were employed. The Pacific male unemployment rate exceeded 30%.

There has been a progressive recovery in Pacific unemployment rates since their

peak in the early 1990s, but even since 2005 Pacific unemployment rates have

been 75% higher than those for the total population (Figure 2.5).

Age-specific unemployment rates of overseas-born Pacific people are

significantly higher than the rates for Pacific people born in New Zealand

almost twice as high in the age group 40–59 years. For young people (15–

24 years), however, the rates are similar for overseas and New Zealand born

(Statistics New Zealand and Ministry of Pacific Island Affairs, 2002, p 51).

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Pacific People in the New Zealand Economy

Figure 2.5: Unemployment rate, 1987–2007 (March years)

Percent of labour force (%)

Source: Household Labour Force Survey.

There is also an association between duration of residence in New Zealand

and unemployment rates of overseas-born Pacific people (Figure 2.6). In 2001, the

unemployment rate of very recent (less than one year) migrants was 31.5%, but it

was 20% for those who had been in New Zealand 1–4 years and 13% for those in

New Zealand for 10 or more years.

The higher unemployment rate among migrants may reflect a lack of English

literacy and numeracy skills, which hampers the adaptation of older recent

migrants or the retraining of those who became unemployed following the

structural and cyclical economic shocks of the late 1980s and early 1990s.

The unemployment rate gives an incomplete picture of ethnic differences in

the labour market. In the late 1980s, Pacific people’s participation in the labour

force exceeded participation by the total population. By the mid-1990s Pacific

people’s participation was below that of the total population. It has remained

below since: by an average of 5 percentage points for males and 8 percentage

points for females (Figure 2.7). High unemployment, the relative demise of

industries in which Pacific people worked during the 1980s, and low incomes

discouraged some working-age Pacific people from participating in the labour

force. The younger age structure of the Pacific population is also a factor.

© Institute of Policy Studies, Victoria University of Wellington, 2008 47


Pacific Interactions

Figure 2.6: Pacific unemployment, age and birth country

Percentage (%)

Source: Statistics New Zealand and Ministry of Pacific Island Affairs (2002).

Figure 2.7: Labour force participation, 1987–2005 (March years)

Percent of working age population (%)

Source: Household Labour Force Survey.

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Pacific People in the New Zealand Economy

Incomes are well below the national average

In June 2006, the average weekly income of Pacific people aged 15 and over was

$434, 29% less than the average for all ethnic groups. Eighty percent of that

income was derived from wages and salaries, 17% from government transfers,

and 3% from self-employment. By comparison, income from self-employment

and investments was 21% for all ethnic groups combined. This is reflected in

Figure 2.8.

Figure 2.8: Average weekly income by ethnicity, 2006

Dollars per person aged 15 and over per week ($)

450

400

350

European/Pakeha

Maori

Pacific peoples

Other

300

250

200

150

100

50

0

Wages and

salaries

Self-employment

Government

transfers

Investments

Other transfers

Source: New Zealand Income Survey, 2006.

Figure 2.9 shows that income increases with qualification levels. Figure 2.10

also shows the familiar relationship between age and income, reflecting

experience and productivity. This data provides some evidence that part of the

income gap between the Pacific and total populations is explained by the Pacific

population being relatively younger and Pacific people’s educational attainment

being lower than that of all New Zealanders.

Statistics New Zealand and Ministry of Pacific Island Affairs (2002) show that

within the Pacific ethnic group, those born in New Zealand had higher median

annual incomes ($15,600) than those born overseas ($14,400). The proportion of

New Zealand–born Pacific people in the higher income bands exceeds the

proportion overseas-born (Figure 2.11).

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Pacific Interactions

Figure 2.9: New Zealand average weekly income by qualification, 2006

Dollars per person aged 15 and over per week ($)

Source: New Zealand Income Survey, 2006.

Figure 2.10: New Zealand average weekly income by age, 2006

Dollars per person aged 15 and over per week ($)

Source: New Zealand Income Survey, 2006.

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Pacific People in the New Zealand Economy

Figure 2.11: Annual income distribution of Pacific people, by birthplace, 2001

Source: Statistics New Zealand and Ministry of Pacific Island Affairs (2002).

Net worth is a fraction of the national average

The 2001 Household Savings Survey indicates that the mean net worth 4 of

individual Pacific people is $35,800 and the median is $1,600. This compares to a

mean net worth of $163,700 and median of $86,500 for all individuals. The

survey shows that median net worth builds up with age, peaking (for couples) at

55–59 years, before running down (although not completely).

Table 2.3 compares the net worth of partnered and unpartnered individuals by

ethnicity. Statistics New Zealand and the Retirement Commission (2002) report

that couples’ median net worth depends on the ethnic group of each partner.

Where both partners were Māori, the median net worth of the couple was $18,000,

but mixed-ethnicity couples had a net worth of $79,900 compared with $193,600

were neither partner was Maori. A similar pattern can be assumed for Pacific

people, given patterns in other socioeconomic indicators.

The Household Savings Survey shows that houses are the single largest form

of asset-holding by New Zealanders (36% by value).

In 2006, 26% of households with a Pacific respondent owned their own home

(with or without a mortgage). This compares with 52% of households with a non-

Pacific respondent. In addition, 77% of Pacific owner-occupiers have a mortgage

compared with 54% of non-Pacific owner-occupiers. this contributes to Pacific

people’s net equity being relatively lower.

4 Net worth is a point-in-time measure of individual or household assets (such as housing,

shares in companies and deposits) less liabilities (such as mortgages, loans and credit card

debt). The measure used in this chapter excludes the lump sum equivalent of New Zealand

superannuation.

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Pacific Interactions

Table 2.3: Net worth by ethnicity, 2001

Dollars (excluding Māori trusts)

Unpartnered individuals

Couples (respondent’s

ethnicity)

Mean Median Mean Median

European/Pākehā 119,900 21,700 * 369,900 209,900

Māori 38,900 * 800 ** 138,800 34,700 *

Pacific peoples 46,400 ** 0 ** 58,500 * 11,100 **

Asian 59,900 ** 3,000 ** 224,600 * 120,100 **

Other 67,400 ** 0 ** 238,600 * 98,400 **

Total 97,900 10,300 322,300 172,900

Notes

* Relative sampling error of greater than 30% and less than 50%; use data with

caution.

** Relative sampling error of greater than 50% or the sampling error could not be

calculated for a median; data is too unreliable for practical purposes.

Source: Household Savings Survey, 2001.

Data from the 2006 census indicates that households with New Zealand–born

Pacific reference people are more likely to own their own home than are

households with a Pacific-born respondent.

Plausible explanations for the lower net worth of Pacific people include the

following.







Pacific people’s lower average incomes leave less for saving after

consumption expenses.

The Pacific population’s age structure is younger than that of the total

population. The rate of home ownership and people’s equity stake in homes

rise with age. More generally, the permanent income hypothesis holds that the

young and old save little or dissave, to be financed when disposable incomes

are higher when people are in their 40s and 50s.

Pacific people have a lower life expectancy than that of the total population.

This may mean Pacific people save less to maintain a given level of

consumption on retirement. Conversely, a lower healthy life expectancy might

motivate a quicker and larger build-up of assets.

Pacific people intending to move back to their birth country require less

wealth to maintain a given level of consumption, assuming the cost of living is

significantly lower in the Pacific Islands than in New Zealand.

Pacific people use alternative means to deal with unforeseen circumstances

such as in-kind and financial support from the community, church, or familyrun

credit clubs.

Pacific people build up individual or communal assets in ways that are not

measured in official statistics. Examples include Pacific people sending

remittances to their home country that secure their stake in the affairs of their

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Pacific People in the New Zealand Economy

community (for themselves or their children) or their temporary return to the

island to assist in crop harvesting without direct payment.

Among all these explanations, the younger age structure may be the most

important explanation for Pacific people’s lower net household wealth, and lower

incomes to a lesser degree. This was also the case for Māori (Scobie et al, 2005).

However, the net worth data presented here excludes Māori trusts. A third or more

of the estimated $9 billion worth of Māori assets (in 2004) were held in iwi-based

organisations. These assets tend to be put to productive uses (eg, agriculture,

fishing, forestry, and property and business services). Māori communities benefit

from returns on those assets in some form, but the wealth effects do not flow into

households’ wealth statistics.

The explanations listed above indicate that Pacific communities, like Māori

communities, hold assets in communal form. What is difficult to assess, however,

is whether they generate economic returns for individual households, although

they obviously serve other important social and cultural purposes (churches are an

example). (Pākehā communities also have some forms of communal ownership

such as churches and bowling clubs.) In short, it is not clear whether or to what

extent the communal ownership of assets (or the form they are held in) is a further

important explanation of low household measures of net worth for Pacific people.

Other measures of welfare show a similar picture

The 2004 New Zealand Living Standards Survey found that Pacific people on

average had the lowest living standards of all New Zealanders. The majority of

Pacific people indicated some degree of hardship in 2004. While the proportion in

hardship was similar to that in 2000 (58% compared with 56%), within that group

there has a sharp shift in the proportion of Pacific people in severe hardship (from

15% in 2000 to 27% in 2004).

Benefit dependence, the number of dependent children, and country of birth

are key factors in the degree of hardship. In 2004, of Pacific people born in New

Zealand 38% were in hardship compared with 57% of those born overseas. This

has been attributed to the cost of immigration and resettlement, adaptation

difficulties and discrimination, and remittances (Jensen et al, 2006).

Pacific people have a lower life expectancy and avoidable mortality and

hospitalisation rates that are 50–60% higher than the rates for the total population

(Table 2.4). Endocrine, nutritional, and metabolic diseases and immunity

disorders account for over twice the proportion of deaths in the Pacific population

as in the total population. Poorer average health status may also contribute to

differences in wages, if illness and disability impairs productivity.

Pacific people are also over-represented in justice statistics, with higher rates

of conviction and prosecution than among the total population, particularly for

violent offences.

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Pacific Interactions

Table 2.4: Key health outcomes indicators

Pacific

Total

Males Females Males Females

Life expectancy at birth 00–02 71.5 76.7 76.3 81.1

Independent life expectancy 61.8 63.1 64.5 67.6

Avoidable mortality 96–00 * 771 471 497 318

Ambulatory sensitive

hospitalisations 98–02 * 4,780 4,539 2,964 2,745

Injury related mortality 96–00 * 36 13 37 15

Unintentional injury

hospitalisations 98–02 * 3,411 2,141 2,852 1,945

Note

* Age standardised per 100,000 population.

Source: Ministry of Health (2005); Ministry of Health and Ministry of Pacific Island

Affairs (2004).

What are the prospects

The overwhelming picture is that, on average, Pacific people in New Zealand

have poorer outcomes than the rest of the population. The literature shows that

factors such as population age structure and migration status explain a great deal

of the differences in skill and education levels and the poorer income and wealth

outcomes of Pacific people compared with non-Pacific people in New Zealand

(Fletcher, 1995).

Lattimore et al (2005) found a wage penalty for Pacific people after

controlling for age, gender, highest qualification, and industry. They attribute the

‘ethnic wage penalty’ to discrimination or other unobserved characteristics. Using

the wage equation and other information they suggest wage outcomes would

converge over time, but this convergence would be slow and incomplete, unless

the ‘ethnic penalty’ is somehow eliminated.

Winkelmann and Winkelmann (1998) suggest migration status and English

literacy explain an important part of the ‘ethnic wage penalty’. The income of

recent immigrants is about 20% lower than that of New Zealand–born residents.

For migrants from the Pacific Islands the disadvantage is 45%. Generally, this

migrant effect disappears with time, but the erosion of the migrant effect is much

slower for low skilled immigrants from non-English speaking backgrounds such

as the Pacific Islands than for higher skilled immigrants from English-speaking

backgrounds.

This slower erosion suggests that language remains a barrier even for the

subsequent generation brought up and schooled in New Zealand. This hypothesis

appears supported by the fact 74% of Pacific students receiving English for

Speakers of Other Languages (ESOL) support were born in New Zealand

(Ministry of Education, 2005).

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Card (2005) concluded that children of immigrants to the United States

overcome the migrant gap and end up doing better than their native counterparts.

He also found a positive correlation between the average education of fathers and

that of their sons and daughters. This could stand in the way of a catch-up if this

correlation were also true for New Zealand–born Pacific children.

Humphris and Chapple (2002) also find strong connections between

employment outcomes and migration status, age, and educational attainment.

However, they argue that changes in the age structure or educational attainment

levels did not explain the deterioration of Pacific employment outcomes in the

1990s. They suggest that the main explanation was the decrease in labour demand

in low-skilled manufacturing and assembly occupations, combined with an

increase in Pacific immigration.

Taken together, it is conceivable that the gap in wages and net worth between

Pacific people and other New Zealanders would be eliminated over time as a

natural result of:

the integration of migrants into the New Zealand economy

a demographic transition of the Pacific population

the growing size of New Zealand–born and –educated Pacific population

relative to migrant flows from the Pacific.

If this convergence effect is true, it could affect policy problem definitions and

policy priorities. For example, the analysis could redefine income inequalities as

primarily a function of demographics (which would be difficult to influence or

which may suggest no specific interventions are called for) or perhaps draw

attention to the need for programmes that speed up migrant integration as a

strategy to reducing ethnic income inequalities. Alternatively, they could help

emphasise the impact of programmes that could strongly lift educational or health

outcomes or labour force participation.

The model

Our approach was to pull existing and new data and knowledge together using

systems dynamics software. Systems dynamics is a structured way to model

linkages between variables of interest and test their influences over time on some

objective function. Here we use the software mainly as a convenient way to trace

the impacts of demographic changes over time.

Hypotheses

The hypotheses explored are that:



average levels of incomes of Pacific people in New Zealand will converge to

the average incomes of non-Pacific people

average levels of net worth will converge to the average level of net worth of

non-Pacific people over time.

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Pacific Interactions

This convergence would be due to the changing demographic structure and the

shift in the mix of overseas-born and New Zealand–born Pacific people, which

has consequences for educational attainment, integration into New Zealand

society, remittances, and church donations.

The convergence hypothesis implicitly assumes the preferences and objectives

of Pacific people in New Zealand are broadly the same as those of other

population groups in New Zealand. Whether that is the case, and whether

convergence is desired or desirable, is of course open to debate.

Figure 2.12 stylises how the key demographic, social, and economic

characteristics of the Pacific communities are assumed to connect. (See the Annex

to this chapter for more details of the model.) It draws links between population

and migration patterns, financial, and human capital assets, sources of income,

and consumption and investment. The three main components of this figure are:

a population ageing chain

skills and wages

wealth model: incomes, consumption, and savings.

Figure 2.12: Causal loop diagram

Source: New Zealand Institute of Economic Research.

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Figure 2.12 is clearly a much simplified model of reality. Some important

details are not captured, such as differences in family structures, different Pacific

ethnicities, inter-ethnic partnering, and feedback loops between incomes, fertility

rates and timing of child bearing, life expectancy, family structure, and

educational success of future generations. It would not be a particularly great

challenge for future researchers to change or add further detail to the model shown

here. Data is the limiting factor.

The next sections describe the components and linkages, their economic

rationales, and the assumptions we made.

Population ageing chain

The population component distinguishes the flows in (births and immigration) and

flows out (deaths and emigration). Immigration has been an important source of

growth of the Pacific population in New Zealand.

Pacific population growth in New Zealand increased during the 1960s when

migration accelerated in response to population pressures in the Pacific nations

and demand for labour in New Zealand’s expanding secondary industries. Other

reasons have been advanced for this wave of immigration (discussed in Bedford,

2004). However, Pacific migrants’ motivation for migration is consistent with an

underlying theme of improving their own economic status and that of families and

communities left behind. For example, Tongan immigrants were found to

experience a 263% increase in average weekly labour income from immigrating

(Gibson, 2006).

In the model, we keep separate track of migrants, because the literature and

data indicate that migration status is an important element of understanding

economic and social outcomes.

Figure 2.12 shows a link between immigration and remittances. We discuss

this link in a later section. A more complex model might also build in feedback

loops between income or net worth and both immigration flows and life

expectancy.

The model presented here does not capture differences in family patterns,

families of mixed ethnicity, or fertility rates. Sole parenthood, number of

dependent children, and ethnicity of partner all have significant effects on

incomes and other measures of living standards. It is likely there are feedback

loops between these factors and levels of income, education, and net worth. For

simplicity, we assume there are no such effects in the base model.

Finally, we acknowledge differences between the demographic and economic

positions of various Pacific ethnic groups and differences in norms and

preferences. These can all make a difference, but to keep the model and exposition

tractable, we generalise behaviours and explanations for the Pacific population as

being that of one homogenous ethnic group.

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Skills and wages

The model considers labour force participation and wages. Labour force

participation is influenced by labour demand conditions, as well as the time–

income trade-offs individuals face. This model abstracts from structural or

cyclical demand effects. It also puts aside consideration of how labour supply

decisions might alter as average incomes change (including the interface with the

income support system). In the base model, we do not have a feedback loop

between wages and labour force participation. This could be added for a more

sophisticated analysis.

In the model we distinguish between people born in New Zealand (or at least

arrived young enough to have attended the New Zealand education system) and

those who migrated here. We make this distinction because in the data we have

seen so far, it is clear that, other than the age profile, the combination of skills,

English language proficiency, and migrant adaptation costs explains part of the

lower wages by Pacific workers. In the model, we also split the working age

population into low and high skill groups.

The causal loop diagram in Figure 2.12 shows a link from wage rates back to

education. This link reflects the idea that educational choices are likely to be

influenced by their returns; the cost of extra education (including wages foregone)

is pitched against the additional lifetime income it brings. This trade-off also

includes people in the workforce going back to school. Maani (2000) showed

there are significant private returns to earning and that these returns are higher for

Māori and Pacific people. Gibson (2000) estimated that postgraduate credentials

raise annual earnings for a Māori or Pacific worker by 153% from that of a

worker with no qualifications (compared with 77% for a Pākehā worker). For

simplicity, the base model does not make the education choice endogenous.

We also included in the model the household labour force participation and

unemployment rates for the Pacific and total populations. In this chapter, we use

the same rates for New Zealand–born and overseas-born residents.

Wealth model

The third component of the model consists of a basic loop where different sources

of income add to net worth. The assets portfolio can consist of various mixes of

financial, property, business, or human capital assets. The assets each generate

further income. Assets can also be consumed in the current period.

Income and net worth as proxies for well-being

We start with the standard working assumption in economics that measures of

incomes and wealth are reasonable proxies for well-being. Another basic working

assumption is that people’s actions are motivated by a drive to maximise their

wellbeing. For this chapter, the implication is that Pacific people will make

choices that will maximise incomes and net worth. The implication is that, faced

with similar incentives and opportunities and assuming similar preferences, the

incomes and net worth of Pacific people would converge over time with those of

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the total population as differences in educational attainment and other labour

market disadvantages erode.

The economic approach to measuring well-being may contrast with alternative

views on what constitutes well-being and how to measure it. Income and

measures of economic wealth may not be particularly good proxies. Happiness

surveys, for example, show that the proportion of people who say they are very

happy has changed little in the past 50 years, despite large increases in real

incomes (Layard, 2006). 5 Helliwell (2006) suggests relationships with family and

friends, participation in the wider community, unemployment and job satisfaction,

coping skills, and health and life expectancy might offer more suitable measures

of well-being.

While income and wealth beyond a level may not be complete indicators of

well-being, relative incomes and wealth are found to be important to people’s

perception of their well-being (regardless of the country in which such surveys are

conducted). On the margin, higher incomes and wealth allow people to do more of

the things that make them feel good (whether that is buying a bigger car or

contributing to build a community church). We assume this effect to be true for all

ethnic groups in New Zealand. Also, incomes and net worth (and disparities

therein) remain relevant headline indicators on which outcomes for different

groups in New Zealand society are judged, policy is made, and effectiveness is

evaluated.

Incomes and the build-up of assets

In principle, net worth is added to by income from different assets. The four types

of assets shown in Figure 2.12 are:

deposits with banks and other financial institutions, returning interest income

property, returning rent (actual or imputed), and capital gain

business interests, returning dividends, and capital gains.

human capital 6 and returning wages. 7

5 Happiness surveys suggest that, beyond the median income, further increases in real incomes

add little to happiness. This is thought to be because people get used to the higher levels of

income (the addiction effect) and because happiness is defined by perceived relative incomes

(the envy effect). While this may suggest the futility of the ‘rat race’, happiness surveys do not

give insights into the impact on happiness if people were asked to forego some of the spoils of

the rate race. Furthermore, the survey results do not adjust happiness ratings for the increases

in the quantity of life bought with these increases in real incomes.

6 Wage rates are a function of individuals’ human capital. The Treasury (2001a, p 3) defined

human capital as “acquired human capabilities, which are durable traits, yielding some

positive effects upon performance in socially valued activities”. Human capital is acquired

through a range of processes in a variety of settings (family, school, firms and the

community).

7 An extension of the model would be to separate out social capital. This can be defined as a

community’s collection of skills, community networks, values and norms, and other

institutions that not only contribute directly to well-being but also influence the output of

goods and services (The Treasury, 2001c).

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In this report, we do not model the asset portfolio split. However, it is worth

noting that Pacific people’s home ownership rate is lowest among the different

ethnic groups shown in Figure 2.13.

Furthermore, income from self-employment or investments is noticeably

lower among Pacific people than among other ethnic groups (Figure 2.14).

Figure 2.13: Home ownership by ethnicity, 1991, 2001 and 2006

Percent of household by ethnicity of the respondent (%)

Source: Statistics New Zealand.

Figure 2.14: Sources of incomes

Source: Statistics New Zealand.

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Pacific People in the New Zealand Economy

Instead of looking at different asset classes, the model acts as if there is just

one asset class. This asset generates a rate of return on the net stock of wealth at

each period. We assume a real rate of return of 4.5%. 8 This is the 15-year

consumer price index–adjusted average rate on six-month bank deposits. 9

There are striking similarities in the large differences in net worth and the

asset portfolio composition between Pacific people and European/Pākehā and that

of White Americans and African-Americans (see Gittleman, 2000). In the United

States, much of the difference appears to be attributable to differences in ethnic

age structures and incomes (noting also that saving rates increase with income).

This accords with New Zealand research.

In the United States research, low home-ownership rates among African-

Americans were linked to a lack of collateral to invest in, for example, education

and business. Similar reasons may hold for Pacific people’s investment in

business. In New Zealand, there may also be cultural (structural) reasons why

wages and salaries are the dominant source of income. For example, the Pacific

expert group convened for this study provided anecdotes about Pacific businessowners

being expected to gift stock or services, and Pacific owners of rental

property being expected to let at concessional rates to family members or

community. These in-kind gift practices reduce profitability and may put the

whole asset at risk. Salaried employment does not do away with the practice of

gifting, but does not always pose the same risk. (The implications of gifting – and

remittances – for the wealth of Pacific people living in New Zealand is discussed

further below.)

We have not modelled changes in asset holdings over time, but some of these

‘structural’ reasons might be expected to fade with interethnic marriage and

integration. For example, Callister et al (2005) show a relatively high propensity

of interethnic partnerships by Pacific people and some evidence that future

generations are more likely to form interethnic partnerships than current

generations. Of Pacific males aged 45 and over, 78% have a partner of the same

ethnicity, but only 52% of males aged 15–24 do so. For Pacific females the

proportions are 75% and 68% respectively. This ‘out-marriage’ is more common

among Pacific people with higher qualifications and born in New Zealand.

However, Callister and Didham (see chapter 1) also find that ethnic

intermarriage is associated with levels of education. If partners tend to have

similar education levels and if people with low levels of education are less likely

to get married (and are over-represented as sole parents, which makes saving

difficult), then this would hinder the speed of convergence.

There is also a connection between net worth and education. Increases in net

worth enable larger investments in education (such as private schooling, after-

8 Note that all our data and calculations are gross (before tax). The model does not include a

government sector, with taxes and transfers. This simplification is appropriate at the

population level. It assumes no net transfers between ethnic groups.

9 Arguments can be made for using higher or lower real rates of return. The choice affects the

ultimate level of net worth at the end of the simulation period, but it does not alter the broad

pattern or conclusions.

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Pacific Interactions

school tutoring, and tertiary education). Hence, some of the poorer educational

achievement of Pacific children might be linked back to both the low starting

level of wealth assumed for overseas-born Pacific people in New Zealand and its

slow build-up due relatively low incomes and savings. The student loan scheme

should help to overcome such disadvantages post-school. While state schooling is

‘free’ in New Zealand, having equity would given parents greater opportunity to

improve educational outcomes of their children (by paying for tutoring or renting

or buying homes closer to better quality schools). For simplicity, we have not

included such a feedback loop in the model.

Consumption, saving and remittances

In the model used for this chapter, net worth is affected by saving and dissaving.

There is considerable debate about what the actual savings rate is: different

approaches, each with its own weaknesses, result in different measures. 10

Data from the Household Expenditure Survey suggests the average savings

rate during the 1990s was 12%. The New Zealand Institutional Sector Accounts

documents the savings rate at the end of the 1990s as 2% (Coleman, 2006). Data

from the Household Income and Outlay account suggests households have been

dissaving since the mid-1990s; the savings rate was -15% in 2005 (Bollard et al,

2006). However, households’ net worth did increase over that time. Van Zijll de

Jong and Scobie (2006) derive a measure of household saving rate from net worth

estimates, and find that the long-run average annual household savings rate is

12.4% of disposable income.

In this model, the savings rate is treated as the remainder of current income

after consumption and after remittances and gifting. The issue of the role of

remittances and gifting in Pacific societies – whether and to what extent they

constitute forms of consumption or forms of savings – is complex and delicate.

The different views and their implications for savings and net worth are discussed

below.

The permanent income hypothesis suggests that people will smooth their

consumption over their life-time. Given the usual income profile over a person’s

lifetime, younger and older age groups consume more than their current income

(and thus run down their stock of wealth). Middle age groups save and add to the

stock of wealth. Figure 2.15 shows Coleman’s (2006) estimates of savings rates

by age groups drawn from the Household Expenditure Survey from 1987/88 to

1997/98. It also shows imputed savings rates where tax and transfers related to

retirement income are counted as saving (and dissaving for those over the age of

65). We use the age-specific savings rates for people in the working age

population reported by Coleman (2006).

There are two key reasons why the savings rate might be lower for Pacific

people than for many others. First, people on lower incomes consume a larger

proportion of their income, so may save little and possibly dissave. Second, many

10 See Le (2007) for a discussion.

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Pacific people allocate a portion of their incomes to remittances and church

donations.

Figure 2.15: Savings rates, 1987/88–1997/98

Percent of income (%)

Source: Coleman (2006).

There was considerable debate in the Pacific expert group that was convened

to advise on this project about how remittances and gifting should be viewed. Are

remittances and gifts the equivalent of current consumption (whether it is to

support family or community members in New Zealand or the islands or to pay

for goods sent from the islands) or do they constitute a form of saving (as they

build individual and communal assets not captured by financial and physical

measures)

The Pacific expert group provided anecdotes to illustrate the different ways in

which it was possible to view the redistribution of money in at least some Pacific

communities. There was the example of the woman who had made no savings in

the traditional Palagi (Pākehā) sense, but who had devoted all her spare income to

buying gifts – food, appliances, clothes, furniture – for her relations. Now, at 80,

she was able to move from family to family, and to be looked after by them in

exactly the way that she wished. One perspective (simplifying no doubt

complicated motives and customs) is that she had been effectively saving for her

retirement by making these gifts all her life.

There was also a conversation about how money given to the church could be

regarded as either saving or consumption. Some suggested that gifting to the

church was a form of redistribution. Others thought it contributed to the

community’s resources and built up an asset from which, in future, the relevant

community would draw a variety of benefits, including material ones. That, at

least to some extent, could be seen as a form of savings.

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Pacific Interactions

There are also forms of savings that do not show up in the statistics. Some

Pacific people, for example, use rotating credit systems, whereby a small number

of people set aside a convenient monthly sum to create a kitty from which

members of the group can borrow.

Remittances sent outside New Zealand could be regarded as providing

immediate (consumption) benefits (like fine mats, ceremonial assistance, and

produce), but also as securing future benefits (including and associated with a

person’s right to return, their status in their home village, and their right to share

in the ownership of land and resources), which are more like savings. Remittances

might also constitute the recognition of family or wider community support for

education (and so be akin to repaying a student loan for the investment in human

capital).

McKenzie (2006) lists motivations for remitting, including to:








raise living standards of family in the islands by providing for daily grocery

needs and minor church, school and family obligations (80–85% of remitters

identify this purpose) or after a crisis or natural disaster

donate to churches overseas

repay the family (eg, for financing the migrant’s education)

maintain an interest in land or family assets or build prestige and other social

assets in the home country (eg, payments for weddings and funerals and other

‘social uses’) 11

build up savings that will be available on the person’s return to their home

island (in which case remittances would be higher in the years immediately

before return)

pay for goods and services imported and sold in the host country

invest in commercial interests in the home country such as corner stores, taxis,

fishing (although less so in the 1980s than today).

Motivations appear to differ between ethnic groups. Connell and Brown

(2005, p 18) note, “In Tonga regular donations are expected from and allocated to

church members, and substantial donations bring considerable respect and status”.

A series of remittance targets were identified in the Samoan community (repaying

family loans, building a family house, paying for weddings and funerals, and

bestowing chiefly titles). Overall, though:

11 Connell and Brown (2004) found that of Tongans and Samoans in Sydney and Brisbane 30%

of the heads of the household owned land and 39% owned non-land assets in their country of

origin.

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Pacific People in the New Zealand Economy

about 85% of Pacific people send remittances overseas 12

remittances are in the order of 5–13% of disposable income (Connell and

Brown, 2005)

two-thirds of Pacific women interviewed made donations to the church by

tithing 10% of their income or making an annual offering (Koloto and Sharma,

2005)

gifting and other forms of assistance can be extensive and for a range of

expected and unexpected life events

some evidence suggests remittances increase with income, a 10% increase in

income being associated with a 6% increase in remittances (Simati and

Gibson, 2001).

Remittances (and gifting) may decay as bonds with the Pacific Islands and the

church loosen and consecutive Pacific cohorts brought up in New Zealand are

exposed to different practices and social support systems. Affiliation with a

religion is high among Pacific people, but the affiliation increases with age and is

also higher among overseas-born Pacific people than New Zealand–born Pacific

people, hinting at remittance decay.

Evidence of remittance decay is mixed. Many studies find the intuitively

appealing result of remittance decay. With the benefit of a larger sample than

other similar studies, Connell and Brown (2004) did find not find a statistically

significant decline in remittances linked to duration of absence. But variables that

did impact on remittances were income, hosting a visitor from home, intent to

return, ownership of assets in the host and home countries, and surviving parents

or spouse in the home country. Some of these were correlated with duration of

absence.

Two things are clear. The first is that, in conventional terms, the effect of

remittances and gifting is to lower conventional measures of savings and net

worth of Pacific people in New Zealand compared with the rest of the population.

The second is that alternative interpretations of the role of remittances and gifting

would alter the perception of the economic performance of Pacific people.

Furthermore, no clear picture emerges that allows us to say with any

reasonable degree of certainty that remittances and gifting are either consumption

or savings. In this chapter, our base scenario treats remittances and donations as

consumption. Remittances and gifting are treated as additional calls on incomes

not faced by other ethnic groups (rather than simply different ways of consuming,

insuring, gifting, and saving).

However, given the difficulty in resolving whether remittances and gifting are

mainly consumption or mainly saving, and the extent of remittance decay, we also

provide a scenario that treats remittances and gifting as different forms of savings

12 Koloto and Sharma (2005) found in interviews with 230 Pacific women in New Zealand that

86% made economic contributions to family members in Pacific nations. McKenzie (2006)

reports that 80% of migrants expected to remit money in the year ahead, and Connell and

Brown (2004) report that 83% of Tongan and Samoan families in Sydney and Brisbane

remitted in the preceding year.

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Pacific Interactions

(which then also removes the relevance of remittance decay for domestic social

policy).

When modelling saving for the total population we use the age-specific

savings rates reported by Coleman (2006). 13 For Pacific people, we subtract for

the base scenario an allocation for remittances (and church gifting) from those

rates. We assume that on average Pacific people remit and gift 15% of their

income, based on the patterns reported in the literature. 14

Data

In this section, we briefly describe the data series that underpin the model.

Demographics

Population projections use as a starting point Statistics New Zealand’s ‘Projected

ethnic populations of regional councils: Medium series’ and ‘Projected Pacific

population by age and population change of regional councils: Medium series’.

Immigration projections are based on the population projections. Assumed net

annual inflows are:

2,500 for Pacific people

5,000 for all groups.

Birth rates come from Statistics New Zealand’s ‘Age-specific fertility rates by

ethnicity 2000–2002’. For this model, we converted the age-specific fertility rates

into an all-age groups fertility rate. This yields:

0.102 live births per Pacific female aged 15–44

0.065 live births per female (all groups) aged 15–44.

The New Zealand Census Mortality Study shows:

14 years of life expectancy at age 65 for Pacific people

18 years of life expectancy at age 65 for non-Pacific people.

Table 2.5 shows the results from the projections used out to 2101.

The projections are unconstrained; that is, birth, death, and migration rates are

constant over time, and there is no change in ethnic intermingling that may

systematically alter self-reported ethnicity. Despite the obvious weaknesses, the

projections suit the purpose of this chapter.

13 An earlier version of the model set consumption for the total population equal to 90% of total

income in any period. In addition, we assumed some gifting and remitting of income – the rate

set arbitrarily at 2%. This implies a saving rate of 8% of disposable income. The impact of

this different modelling approach for net worth is negligible.

14 Where the remittance and gifting rate exceeds the savings rate, we set the savings rate to zero.

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Table 2.5: Population projections used in the model, 2001–2101

Year Pacific population Total population

2001 232,000 3,587,000

2021 409,000 4,107,000

2041 635,000 4,435,000

2061 920,000 4,665,000

2081 1,288,000 48,50,000

2101 1,768,000 5,016,000

Source: New Zealand Institute of Economic Research projections.

Figures 2.16–2.18 show how the age shares in the population change. Age

distribution is one of two key elements driving the model (the other being the

assumption about skill and wage levels for New Zealand–born Pacific people

entering the workforce in this model).

Figure 2.16 shows the effect of the large 0–14 cohort shifting into the older

age groups over the next 20 years. It also indicates the gradual ageing of the

Pacific population over time.

Figure 2.16: Ages shares – Pacific population, 2001–2101

Source: New Zealand Institute of Economic Research.

Ageing is also prominent in the total population (Figure 2.17).

The most significant feature of Figures 2.16 and 2.17 is that the share of the

group aged 15–29 in the Pacific population remains about 5 percentage points

higher than that share in the total population. The Pacific median age remains

significantly lower than that of the total population. This is important given the

relationship between age, wages, and wealth.

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Pacific Interactions

Figure 2.17: Ages shares – total population, 2001–2101

Source: New Zealand Institute of Economic Research.

Figure 2.18: Dependency ratios

Ratio of non-working age population to working age population

Source: New Zealand Institute of Economic Research.

The dependency ratio for the Pacific population falls from 73% and eventually

settles at 62% compared with a rise from 53% to 64% for the total population

(Table 2.6). 15

15 The total population dependency ratio is somewhat lower than that currently projected by

Statistics New Zealand (see, for example, Statistics New Zealand, 2006). This is a function of

different population series being used.

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Table 2.6: Age group shares to total population, 2001, 2051, 2101

Population

0–14

(%)

15–29

(%)

30–44

(%)

45–64

(%)

65+

(%)

Pacific 2001 39 26 20 12 3

Pacific 2051 28 23 19 19 10

Pacific 2101 27 23 19 20 11

Total 2001 23 20 23 22 12

Total 2051 19 19 19 24 20

Total 2101 18 18 18 24 21

Source: New Zealand Institute of Economic Research.

The model also shows how the proportion of Pacific people in the workforce

who are born overseas will fall, from around 54% in 2001 to 37% in 2021 and

10% in 2101 (Figure 2.19). The proportion converges to that of the total

workforce. This pattern is significant given the relationship between immigrant

status and skills and wages.

Figure 2.19: Immigrant share of the workforce

Source: New Zealand Institute of Economic Research.

Labour force data

The model divides the labour force into high- and low-skilled workers. We follow

the approach the Department of Labour uses to assign labour to skill categories.

High-skilled and skilled occupations as in the Household Labour Force Survey are

combined as high-skilled occupations, and the remainder are defined as lowskilled

occupations.

High-skilled occupations include legislators, administrators and managers, and

professionals.

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Pacific Interactions

Skilled occupations include technicians and associate professionals, and trade

workers.

Semi-skilled occupations include clerks, service and sales workers, agriculture

and fisheries workers, and plant and machine operators.

Low-skilled occupations include elementary occupations.

The labour force participation and unemployment rates used in the model are

based on the annual average Household Labour Force Survey results for 2006.

Pacific people of working age are assumed to have a labour force participation

rate of 63% and an unemployment rate of 6.4%% compared with 68% and 3.7%

for the total working-age population.

Table 2.7: Resident mean personal annual income, 2006

All

Pacific

Skill

level

Age group

(years)

New Zealand

born

Overseas

born

New Zealand

born

Overseas

born

High

skill

15–29 32,934 31,997 29,736 27,633

30–44 53,030 50,998 46,028 38,429

45–64 54,951 53,531 49,525 38,006

65 and over 46,143 44,128 34,425 32,838

Average 49,362 48,508 39,113 36,039

Low

skill

15–29 19,125 15,995 19,881 19,575

30–44 34,059 29,199 33,106 26,895

45–64 33,622 29,588 33,544 26,540

65 and over 28,066 25,276 22,995 20,738

Average 29,037 25,558 25,164 25,114

Source: Census of Population and Dwellings, Statistics New Zealand and New Zealand

Institute of Economic Research calculations.

Scenarios

In this section, we take the insights from the literature and basic demographic and

labour market statistics to explore the hypothesis that over time the incomes and

net worth of Pacific people would converge to those of non-Pacific people.

We consider a small number of scenarios. The scenarios help to test the

sensitivity of results to our assumptions – often based on our own judgements –

but also serve as a broad-brush assessment of potential interventions.

The four scenarios consider:

incomes:

- persistent Pacific immigrant disadvantage in the labour market

- quick immigrant adjustment

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Pacific People in the New Zealand Economy

net worth:

- low savings rate (high remittances and gifting, which is treated as

consumption)

- high savings rate (due to remittance decay or because remittances and

gifting are best treated as investments).

These four scenarios can be considered broadly as upper-bound and lower-bound

projections.

In addition, we discuss briefly the effects of:

an intervention that raises labour force participation and reduces

unemployment

a drastic change to the rate of immigration (such as a time-limited halving or

doubling of permanent long-term immigration)

a policy that changes the birth rate (eg, by raising the opportunity cost of

childrearing).

Other scenarios that could be considered with further work include shifting

Pacific life expectancy and health life expectancy to that of the total population

between now and 2021, changing rules on the portability of New Zealand

superannuation, and the introduction of Kiwisaver.

Scenario 1: Immigrant disadvantage

Scenario 1 starts from the finding in the literature that immigrants experience a

wage penalty, and that this erodes only slowly for low-skilled non-English

speaking immigrants.

We assume that the proportion of Pacific immigrants with high skills (27%

compared with 49% of the total population) and the wage differences reported in

Table 2.7) persist through time.

We run this scenario with two different assumptions about the skill levels and

wages received by New Zealand–born Pacific people. Currently, around 39% of

New Zealand–born Pacific people of working age fall in the high-skill group

(compared with 49% of the total population). Table 2.7 shows the differences in

wages between Pacific people and the total population in the high-skill group.

Figure 2.20 shows that under this scenario Pacific annual real wages per

employed person would converge to those for the total population. However,

wages would never fully converge over a 100-year period because of the:

continued younger age structure of the Pacific population

continued higher immigrant share.

The detailed results from these broad-brush projections are of only limited

value. However, we present them now for completeness. If New Zealand–born

Pacific people receive the same incomes as other New Zealand–born workers,

then the Pacific average real wages would move from 86% of that of the total to

91% in 2021 and 96% in 2080; otherwise Pacific average real wages would be

72% of the total in 2001 rising to 75% in 2021 and 79% in 2085.

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Pacific Interactions

Figure 2.20: Annual real wage income per employed

Source: New Zealand Institute of Economic Research.

Scenario 2: Immigrant adjustment

Scenario 2 assumes there are more-effective policies available that could remove

the immigrant disadvantages. Such policies might focus on initial migrant

selection or on their rapid acculturation or adjustment once in New Zealand.

For this scenario, we assume the introduction of an acculturation or

adjustment policy that removes the disadvantages of scenario 1 over a period of,

say, six years. The effect is shown in Figure 2.21. We show the results as if the

hypothetical policy were applied to only Pacific migrants.

The policy starts in 2008 and is fully effective in 2014. Figure 2.21 shows that

this would mean that in 2014 Pacific people’s average incomes would be 99%

those of the total population, instead of 89%.

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Figure 2.21: Effect of migrant adjustment policy

Real average wage income per year

Source: New Zealand Institute of Economic Research.

Scenario 3: Remittances as consumption

Earlier we set out data on net worth by ethnicity, as well as the unresolved

discussion about remittances and gifting as either consumption or saving, and the

issue of remittance decay. In scenario 3, we assume that remittances and gifting

are equivalent to present-day consumption. 16 As explained above, the proportion

of income spent on remittances and church donations is subtracted from the

population’s age-specific savings rates.

The parameters used for the projections are as follows.

Initial real net worth is $193,000 per working age person in the total

population and $38,500 in the Pacific population. 17

The real rate of return is 4.5%. 18

The age-specific savings rates are 3.3% for the age group 15–29, 9.4% for the

age group 30–44, and 16.3% for the age group 45–64.

Remittances and donations are set at 15% of income for Pacific people.

Incomes are as per scenario 1.

16 In scenario 3 remittances and donations are transfers from earners to parents and communities,

or payments for goods and services imported from the islands or ‘purchased’ from the church.

17 This is an estimate based on $160,000 per person aged over 18 for the total population and

$36,000 for Pacific people aged 18 and over. On a per capita basis, this is broadly equivalent

to $112,000 and $18,500 respectively.

18 Varying this assumption makes only a minor impact on the main results.

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Pacific Interactions

A higher starting point and higher savings rate mean net worth for the total

population continues to grow, with the assistance of compounding interest

(Figure 2.22). The real net worth per working age person for the total population

grows from $193,000 to $218,000 in 2021 and $383,000 in 2101.

The total wealth held by Pacific people also grows. However, in the model

wealth per working age Pacific person reduces from $38,500 at the start of the

model to $22,000 in 2021, then stabilises at $12,000 toward the end of the

century. The gap in average net worth between the Pacific and total populations

would thus grow. This is because Pacific population growth exceeds the

increments to wealth from savings. The model could be improved with agespecific

starting levels of wealth, but it is unlikely to change the picture of a

persisting large wealth gap.

As an aside, an improvement in Pacific life expectancy (to converge with that

of the total population) would put downward pressure on wealth per capita (all

things being equal).

Figure 2.22: Net worth (actual and projected) – remittances as consumption, 2001–

2101

Net worth per working age person

Source: New Zealand Institute of Economic Research.

Scenario 4: Remittances as savings

Scenario 4 assumed:

remittances and gifting are simply alternative ways of saving (which happen to

flow out of the country) rather than an additional ‘cost’ faced only by Pacific

people, and/or

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Pacific People in the New Zealand Economy

gradually loosening bonds with the islands and aspects of Pacific culture

means there will be remittance decay (modelled in a rather extreme and

immediate form).

To do this, we set the remittances and donations by Pacific people equal to

those of the total population (ie, zero) and assume the same savings rate.

Figure 2.23 shows the results. Net worth per working age Pacific person

improves, but the gap with the rest of the population still widens over the period,

due to the factors described above.

It could be argued that, if remittances and church donations are a form of

savings (the accumulation of physical or metaphysical capital), in principle it

would be possible to derive the present day value of that net worth accumulated

from savings in the past. That would raise the starting level of net worth, but even

so, given lower incomes and different age structures, an gap would emerge in net

worth between the population groups.

Figure 2.23: Net worth – remittances as savings (actual and projected), 2001–2101

Net worth per working age person

Source: New Zealand Institute of Economic Research.

Other scenarios

Labour market policy

Underlying the above scenarios is the assumption that Pacific people of working

age have a labour force participation rate of 61% and an unemployment rate of

9.7% compared with rates of 66% and 4.6% for the total working age population.

We could thus consider the effect of a hypothetical policy that brings Pacific rates

to those of the total population, keeping all else constant. The policy is assumed to

start in year seven and reach full potential from year 12.

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Pacific Interactions

Once fully worked through, the policy would reduce the average ethnic

income gap per person of working age from 21% to 9% in 2021.

We also looked at the effect of the migrant adjustment (scenario 2) and labour

market policies together. These together would have the effect of converging

incomes.

While we have termed this a labour market policy, it could also be portrayed

as a health intervention, say, that raises the healthy life expectancy for that group

and so allows a higher rate of labour force participation or employment.

Temporary changes in Pacific migration

The analysis draws attention to the impact of the share of overseas-born Pacific

people on income inequality. This raises the question what would happen if there

were sudden shocks in the migration trend. We have modelled this by assuming

that at year 10 trend migration by Pacific working age people (a) reduces to zero

and (b) is twice as high for five years.

The effect is that, at the end of the five-year period, the migrant share of the

Pacific population is 5% below (above) the share in the base model. It would then

take another 40 years to converge to trend. This would change the wage income

per employed Pacific person by plus or minus 1 percentage point.

Fall in the Pacific birth rate

A final scenario looked at was to set the Pacific birth rate to that of the total

population. The reduced number of births has the effect of reducing the long-run

dependency ratio (by some 10 percentage points), holding up the share of

overseas-born Pacific people in the long run. It has a positive effect on wealth per

capita. The downward effect on per capita wage incomes of a higher migrant

share is offset by a reduced working-age population so there is no impact on

incomes.

Conclusions and implications

Key insights for policy

The modelling started out with the observation that the demographic structure and

the high immigrant share were an important part of the explanation of differences

in average levels of incomes and net worth between Pacific and non-Pacific

people in New Zealand.

The hypothesis was that measures of incomes and wealth would converge over

time. The scenarios presented here find some support for a degree of convergence

of Pacific people’s income to that of the total population. However, this made

some rather strong assumptions about the skills and incomes of New Zealand

born Pacific people.

A key finding is that, even with optimistic assumptions, incomes will

converge only a few percentage points over the next 15 years. This is simply due

to the continued difference in age structure and the high proportion of immigrants.

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The scenarios do not show support for a significant convergence in net worth,

despite the slow convergence of incomes. While assumptions about remittances

and the rate of saving have a significant impact, even if savings rates were to be

equalised a large gap in net worth remains. This is due to the differences in

incomes, particularly, the uneven starting points in the levels of net worth.

The implied continued low average levels of net worth for Pacific people have

important implications for progress in other areas of government policy, such as

home ownership and entrepreneurialism, and the investment opportunities that

wealth accumulation affords. If remittances and gifting are primarily a different

form of saving, then these assets (whether owned by individuals or Pacific

communities) have a value too. It would thus be interesting to impute the net

worth of these assets and see the extent to which that would alter the outlook and

policy implications.

Returning to incomes, the high ratio of Pacific immigrants to the total Pacific

population in New Zealand has an important effect on income inequalities. The

scenarios point to the potential of policies that might be able to eliminate the

‘migrant wage penalty’. However, the data on ESOL participation suggests that

integration policies may need to look beyond recent migrants (either that, or

ESOL is not particularly well targeted).

Next, and possibly related, are policies that encourage labour force

participation and reduce unemployment. These could be labour market policies

(relating to skills, incentives, or childcare) or other types of policies that may

address participation barriers (such as health promotion, treatment for injuries and

chronic diseases, or disability support). Prescription would require a deeper look

at participation and employment ‘barriers’.

The results suggest the importance of starting sooner rather than later with

effective policies that can reduce sources of wage and employment gaps.

Caveats

The model described in this chapter should be regarded as a prototype. Its main

value comes from being able to present some broad brushstroke trends and draw

attention to variables that matter most.

The model itself is primarily an (unconstrained) ageing chain. It does not

incorporate some of the feedback loops mentioned in the discussion of

Figure 2.12, for example. Variables of interest that would have been affected by

feedback loops are varied exogenously. In this sense, the model creates upper and

lower bounds for Pacific incomes and wealth over time. The model also relies

strongly on assumptions drawn from the literature and a range of data sources.

These obvious weaknesses provide fertile grounds for further research.

© Institute of Policy Studies, Victoria University of Wellington, 2008 77


Annex: Model in detail

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Pacific People in the New Zealand Economy

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© Institute of Policy Studies, Victoria University of Wellington, 2008 83


3

Pasifika Mobility: Pathways, circuits, and

challenges in the 21st century

Richard Bedford 1

Contents

Introduction .................................................................................................................85

Setting the scene..........................................................................................................88

Pathways and circuits: Arrivals and departures...........................................................95

Pathways to residence................................................................................................106

Circuits of movement and the promise of return.......................................................121

Towards a new Pacific population concept ...............................................................128

References .................................................................................................................129

Introduction

[H]eightened mobility by the Pasifika group of peoples more than any time

previously, [lends] support to the notion that when New Zealand

formulates its policies for its people, those policies must also acknowledge

the interests and the welfare of a group of citizens … who are neither here

nor there but are in both places simultaneously.

(Heather-Latu, 2007)

1 Population Studies Centre, University of Waikato, Hamilton. Financial support came from the

Foundation for Research Science and Technology–funded Strangers in Town programme,

which research staff in the Population Studies Centre, University of Waikato, are carrying out.

Assistance with the compilation of the data required for the study of contemporary Pasifika

mobility between the islands and New Zealand was received from Paul Merwood (Department

of Labour), Grant Browne and Robert Didham (Statistics New Zealand), and Margaret Young

(the University of Adelaide).

Colleagues in the Population Studies Centre (Jacques Poot, Elsie Ho, and Muriaroha Muntz)

and Department of Societies and Cultures (Tom Ryan) contributed in various ways to the

analysis and substantive ideas in the report. Viliami Tupou Futuna Liava’a, a member of

Tonga’s Ministry of Finance and a graduate student at the University of Waikato during 2006

and 2007, assisted with the extraction of information from Department of Labour data

matrices on subsequent movements of migrants who took up residence in New Zealand

between 1998 and 2004. I am also grateful to Viliami for providing results from his recent

field research into return migration to Tonga for inclusion in this chapter.

Finally, I would like to acknowledge the support provided by Alastair Bisley who has

coordinated the Pasifika Project. His enthusiasm for the project, his very useful advice, and

his enormous tolerance for what has been a rather protracted journey, have all been

appreciated. I remain responsible for the interpretations and any errors in the report.

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Pacific Interactions

Brenda Heather-Latu, Samoan lawyer and former Attorney-General of Samoa, has

neatly identified a very important challenge for researchers and policy-makers

addressing issues of Pasifika mobility if they are to acknowledge adequately “the

interests and welfare of a group of citizens … who are neither here nor there but

are in both places simultaneously”. The notion of international migration as a

process of permanent relocation of people from one country to another has never

really applied to the majority of immigrants to New Zealand from island countries

in the Pacific. Population movement between these countries is at unprecedented

levels in the first decade of the 21st century reflecting (Heather-Latu, 2007):

a strengthening of ties, affinity and loyalty between home islands and the

communities resident in New Zealand, [leading] to the transfer of

attitudes, approaches and experiences which changes what existed before

and blurs the boundaries of where one community starts and the other

starts.

The notion of a heightened circulation of people between places that can be

called ‘home’ in both the islands as well as in New Zealand is, however, only

relevant for some parts of the Pacific. Access to opportunities for work and

residence in New Zealand is highly uneven across the region, and generalisations

about the pathways and circuits of Pasifika mobility, as well as the policies that

facilitate movement between places, need to be interpreted with caution. The great

majority of the Pacific’s indigenous peoples, who inhabit the island region known

as Melanesia, do not have easy access to opportunities for work and residence in

countries on the Pacific Rim. The greatest geo-political challenge that New

Zealand will face in the region during the first half of the 21st century is how to

address the aspirations of a burgeoning youthful population in those parts of the

Pacific where there are low levels of economic growth and no well-established

outlets for migration.

Between 2000 and 2050 the total population of the island countries in the

Pacific is projected by the United Nations to more than double, increasing from

around 7.6 million to 16 million (Bedford, 2005). Of the 8.4 million projected

increase, 7.6 million (88%) will be in the Melanesian countries of Papua New

Guinea, Solomon Islands, Vanuatu, New Caledonia, and Fiji. Only Fiji has a longestablished

relationship with New Zealand relating to migration – a relationship

that has been tested several times since the late 1980s by military and civilian

coups d’état in Fiji. Most of the countries in question are not generating new

employment opportunities that come close to matching this increase in the

potential workforce. The challenge posed by this population growth in Melanesia,

as well as in several of the Micronesian countries, such as Kiribati, to the north, is

likely to be exacerbated by the impacts of climate change, especially in the small

islands of the central and eastern Pacific.

When an eminent group of Pacific politicians reviewed the Pacific Islands

Forum in 2004, they encouraged all of the forum participants to (Chan et al,

2004):

listen to the needs and aspirations of the burgeoning population of young

people in the region, and recognise the impact of bigger and more youthful

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populations on the resources required for education and vocational

training, healthcare and job opportunities.

The World Bank, amongst others, has picked up this challenge in its report At

Home and Away: Expanding Job Opportunities for Pacific Islanders through

Labour Mobility (Luthria et al, 2006), and New Zealand and Australia have both

taken steps, albeit in different directions, to recognise the growing demand for job

opportunities for Pacific peoples. New Zealand has developed a temporary work

scheme to address seasonal shortages of labour in its horticulture and viticulture

industries – the Recognised Seasonal Employer scheme – that prioritises

recruitment from Pacific Islands Forum countries. Australia, by contrast, has been

expanding training opportunities for Pacific peoples in their home countries, with

a view to improving the prospects for potential immigrants from these countries

meeting the points selection criteria for entry under Australia’s skilled migration

programme.

The Australian government moved during 2008 to re-evaluate the possibilities

of introducing a scheme like the Recognised Seasonal Employer scheme, and it is

likely that an Australian version of this sort of temporary work programme will be

announced at, if not before, the Pacific Islands Forum’s next scheduled meeting in

Niue (Maclellan, 2008). If this happens, it will be one of the most significant

shifts in Australia’s immigration policy since the early 1970s. Australia has not

had policies favouring the entry of Pacific peoples since the mid-19th century

when thousands of Melanesians from Vanuatu, Solomon Islands, and Papua New

Guinea were recruited to work on sugar plantations in Queensland (Corris, 1968,

1970; Bedford, 1973). A greater alignment between New Zealand’s and

Australia’s immigration policies relating to the temporary entry of low-skilled

Pacific labour would make a major contribution to more effective multi-lateral

responses to migration and development issues in the region.

This chapter addresses several aspects of contemporary mobility of Pacific

peoples. The first section sets the scene by introducing general features of Pacific

mobility ‘worlds’ and the debate that has arisen around population growth and

access to formal sector employment in the region. This is followed by three

sections that address dimensions of contemporary population movement between

countries in the Pacific and New Zealand:



Pathways and circuits of movement, including trans-Tasman migration, as

these can be measured through the arrival and departure statistics.

Pathways to residence as these can be assessed through analysis of the data

relating to approvals for study, work, and residence in New Zealand.

Circulation between Pacific countries and New Zealand, as this has been

assessed in a new database on subsequent mobility of immigrants, in the wider

context of the debate about role of return migration in contemporary Pacific

transnational societies.

The chapter draws on a much longer and more detailed analysis that was

prepared for the New Zealand–Pasifika: Interactions and Perspectives symposium

in Wellington in February 2007, where Brenda Heather-Latu was a commentator

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Pacific Interactions

on the presentation on Pasifika mobility, and the Thought Leaders Dialogue in

Auckland in August 2007. 2 The longer paper is available as a working paper on

the Institute of Policy Studies’ website (http://ips.ac.nz). Only a small selection of

the tables contained in the initial paper are included in the present version.

Setting the scene

In a paper that has become a classic in the literature on population movement and

development in the Pacific region, Tongan sociologist and novelist Professor

Epeli Hau’ofa (1994a, p 155) argued that since obtaining independence from their

colonial rulers, Pacific peoples have moved:

by the tens of thousands, doing what their ancestors did in earlier times:

enlarging their world as they go, on a scale not possible before.

Everywhere they go, to Australia, New Zealand, Hawai’i, the mainland

United States, Canada, Europe and elsewhere, they strike roots in new

resource areas, securing employment and overseas family property,

expanding kinship networks through which they circulate themselves, their

relatives, their material goods, and their stories all across their ocean.

It has not been an even process of ‘world enlargement’ for Pacific peoples,

however; some have had far more opportunities to move beyond their island

countries than others. It is important to establish more precisely the contours of

Pacific mobility worlds, and the links between these and some other dimensions

of population to provide a context for the contemporary mobility between Pacific

countries and New Zealand.

Pacific mobility worlds in the early 21st century

In the Pacific the three sub-regions of Melanesia, Micronesia and Polynesia have

become associated with distinctive stories about migration. Geua Boe-Gibson,

working with John Gibson and Karen Nero developed for this book an effective

series of maps of aspects of migration and development in the Pacific. Some are

reproduced in this section to help set the scene for the substantive discussion

about contemporary mobility between the island countries in the region and New

Zealand. One map shows what are, in effect, the distinctive ‘mobility worlds’ of

Melanesia, Micronesia and Polynesia (Figure 3.1).

Melanesia, which includes five independent countries (Papua New Guinea,

Solomon Islands, Vanuatu, and Fiji) and one French colony (New Caledonia),

contains around 85% of the Pacific’s estimated 8.5 million people in 2008. Three

of the independent countries have had limited outlets for emigration for the best

part of a century – only Fiji has an extensive diaspora, driven in recent years by a

series of military coups (Figure 3.1). Papua New Guinea, Solomon Islands, and

Vanuatu are clearly distinctive in Boe-Gibson’s map of mobility rates; if this map

had been drawn 130 years earlier when the recruitment of Melanesian labour for

employment in the Queensland sugar industry was in full swing, it would have

2 A report on the Thought Leaders Dialogue is in Appendix A to this book.

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been a very different map with much higher migration rates for Vanuatu and

Solomon Islands especially, and much lower rates for much of Polynesia.

Micronesia to the north has very strong links with the United States, largely

due to long-standing American military interests that were initially established

during a period of colonial administration following the First World War. The

exceptions are Kiribati and Nauru, the two Micronesian countries that stretch

south of the equator, which have been more closely linked to the United

Kingdom, Australia, and New Zealand. This link came about largely as a result of

the now exhausted phosphate deposits on Nauru and Ocean Island (Banaba – an

island in Kiribati) that were so important for the development of the Australian

and New Zealand pastoral economies (Williams and Macdonald, 1985).

Figure 3.1: Pacific migration rates and major destinations for migrants, about 2006

Source: Boe-Gibson in Gibson and Nero (2007).

Polynesia, to the east, has particularly strong links with New Zealand, partly

through the former colonial status of some of the island groups (one continues

today with Tokelau), partly through the actions of Christian churches and, after

the Second World War, as a result of the demands for cheap unskilled labour to

work in New Zealand’s primary and secondary production sectors (Gibson, 1983).

Several of the Polynesian countries now have more than 50% of their ethnic

populations living offshore – in the case of Niue it is 95%. The three major

concentrations of Polynesians on the Pacific Rim are New Zealand, the United

States, and Australia.

The question about how to contribute effectively to the development of Pacific

Island states has become one of the major concerns for governments in Australia

and New Zealand in the early 21st century. Contributing to the complexity of

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Pacific Interactions

these debates has been the heightened concerns over security in the region since

the events of 11 September 2001 (9/11) – concerns that have been exacerbated by

the increasing interest that businesses and governments in Asia have shown in

investment opportunities in Pacific resources, as well as the political stances of

Pacific governments. The production and transport of drugs, money laundering

and illegal migration have added to concerns in Australia and New Zealand about

some recent problems in ‘their’ neighbourhood. 3

For their part, the leaders of many Pacific states have challenged Australia and

New Zealand to open up their economies and societies to greater labour migration

from the islands. In this regard they have stressed the need for their southern

neighbours to (Chan et al, 2004, p 13):

Listen to the needs and aspirations of the burgeoning population of young

people in the region, and recognize the impact of bigger and more youthful

populations on the resources required for education and vocational

training, healthcare, and job opportunities.

Population growth, the ‘youth bulge’ and employment

United Nations forecasts of population growth suggest Melanesia’s population

will reach 14 million by 2050, more than double the 6.48 million estimated to be

in the sub-region in 2000. The growth in Melanesia’s population over the next

50 years (an increase of 7.62 million) could exceed the growth in the Australian

population (the increase is estimated to be 7.36 million between 2000 and 2050)

even though Australia’s resident population was three times the size of that in

Melanesia in 2000 (Table 3.1).

The populations of Micronesia and Polynesia will also increase significantly

(from around 516,000 to 1,080,000 in Micronesia and from 590,000 to 890,000 in

Polynesia), but it is the Melanesian ‘explosion’ that is going to pose the major

dilemma for politicians and planners, given the absence of migration outlets

(Bedford, 2005; Luthria, et al, 2006).

Table 3.1: Pacific populations (size and change), 2000 and 2050

Population (000s)

Population change (000s)

2000 2050 1950–2000 2000–2050

Melanesia 6,480 14,100 4,370 7,620

Micronesia 516 1,080 350 564

Polynesia 590 890 350 300

New Zealand 3,780 5,000 1,870 1,220

Australia 19,140 26,500 10,840 7,360

Source: Bedford (2005).

3 A useful overview of issues surrounding the concerns about border security is in chapter 6,

‘Border Management in the Pacific Region’, by Michael Moriarty.

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For over a decade researchers have been highlighting an increasing problem of

youth and adult unemployment and underemployment in many Pacific states,

especially in Melanesia and Micronesia (Booth, 1993; Callick, 1993; Gannicott,

1993; Curtain, 2006). Despite considerable potential for the diversification of

domestic economies, especially in the large islands comprising Papua New

Guinea, Solomon Islands, Vanuatu, and Fiji, 4 all of the recent reports on economic

prospects for the Pacific highlight the problem of the underemployment and

unemployment of young people, and the potential for social unrest as a ‘youth

bulge’ increases in size and disaffection with the status quo (Ware, 2004, 2005;

Duncan et al, 2005; AusAID, 2006; Booth et al, 2006; Dobell, 2006).

Around 2006 the three Pacific Island sub-regions had approximately 19% of

their populations in the age group 15–24. This compared with around 14% in the

same age group in the populations of Australia and New Zealand. Over 1995–

2015, Luthria et al (2006) estimated that the size of Melanesia’s population aged

15–24 could increase by around 35%, while the ‘youth bulges’ in Micronesia

(26%) and Polynesia (19%) grow more slowly. However, growth in the youthful

population in all three Pacific sub-regions will be much more rapid than in New

Zealand and Australia (Table 3.2).

Table 3.2: Youthful populations, 15–24 years, 2006, and percentage change 1995–

2015

2006 1995–2015

Percentage of total (%) Percentage change (%)

Melansia 19.5 34.6

Micronesia 18.7 26.0

Polynesia 19.3 19.2

New Zealand 14.5 16.2

Australia 13.6 15.0

Source: Luthria et al (2006).

Luthria et al (2006) in At Home and Away examined both the population

projections and the estimates of formal sector employment growth in many of the

Pacific countries. They concluded (at p 44):

The results of these projections should be the least surprising but the most

worrying for the Melanesian and Micronesian countries. Fertility rates are

high and appear to be coming down only slowly, contributing to projected

population growth of as much as 2.5 percent per annum. We have also

simulated faster declines in fertility on the basis of experience elsewhere

… Even with such accelerated declines, however, significant population

growth will continue for many years because of the population momentum

that has been built up in the Micronesian and Melanesian countries

4 See, for example, chapter 4, ‘Pacific Island Economies: Role of international trade and

investment’, by Bob Warner.

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Pacific Interactions

because their fertility rates have remained high while mortality rates have

declined.

Formal sector employment is very low and, except for Fiji, is projected to

grow very slowly. Those countries with high fertility rates and low formal

sector employment will generate the most excess labour and have the

greatest demand for overseas employment [Papua New Guinea, Fiji,

Solomon Islands, Vanuatu, Federated States of Micronesia, and Kiribati].

The high projected levels of excess supply of labour for the formal sector

indicate the enormous challenge that the Papua New Guinea and Pacific

island country governments have in front of them. The other side of this

coin is that in the Pacific Region there will be an increasingly larger pool

of young people from which those countries with ageing populations will

be able to draw.

These pessimistic assumptions about formal sector employment growth,

especially in countries like Papua New Guinea, Solomon Islands, and Vanuatu,

reflect another basic characteristic of the populations of large parts of the Pacific

region – the comparatively low levels of urbanisation. In Papua New Guinea,

Solomon Islands, and Vanuatu, where urban populations are growing rapidly, the

great majority of people (over 80% in these three countries) still live in rural areas

(Figure 3.2).

Figure 3.2: Share of country population in urban areas and rural, urban and national

population growth rates, about 2006

Source: Boe-Gibson in Gibson and Nero (2007).

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Migration to New Zealand in the early 21st century

The year ended 31 March 2006 saw the highest permanent and long-term net

migration gain on record of citizens of Pacific countries to New Zealand. Leaving

aside the Cook Islanders, Niueans and Tokelauans, who all have the right of

residence in New Zealand, and the Pacific peoples from French and American

colonies who tend to travel on the passports of these countries, New Zealand

gained 4,224 Pacific nationals from Polynesia, Melanesia and Micronesia between

1 April 2005 and 31 March 2006, according to arrival and departure statistics for

moves of 12 months or more.

Over the five years between the New Zealand Census of Population and

Dwellings in March 2001 and the census in March 2006, there was a net gain of

15,898 citizens of Pacific countries as a result of permanent and long-term

migration. This exceeded the net gain from the same countries between the 1996

and 2001 censuses (11,114), and the gain that followed the major changes in

immigration policy in 1986, the Fiji military coups in 1987, and the increasing

demand for migrants in the late 1980s and early 1990s.

Migration between the Pacific and New Zealand has thus been gaining

momentum steadily since a lull in the early 1990s when there were net losses of

Pacific citizens back to countries in Polynesia especially. The restructuring of the

New Zealand economy in the late 1980s, especially the manufacturing industries

producing commodities that had relied on tariffs to protect them from competitive

imports, resulted in massive job losses among Pacific peoples especially (Bedford,

1994). By 2001, when the Pacific unemployment rate was clearly coming down, 5

the net gain had recovered to levels found in the late 1980s as Pacific peoples

found new pathways to residence in New Zealand. These included the possibility

for some of transitioning from study to work, from study to residence, and from

work to residence, as New Zealand, along with Australia, adopted more flexible

rules from the late 1990s relating to changes in visa/permit status while onshore.

By 2005, around 70% of the applications for residence in New Zealand were

being made onshore by people who were in the country as students, temporary

workers or visitors (Department of Labour, 2005).

In the year ended 30 June 2006, 14,433 citizens of Pacific countries were

approved for study, temporary work and residence in New Zealand – again a

record number of approvals for these three categories of entry. During the five

years between 1 July 2001 and 30 June 2006, 63,136 citizens of Pacific countries

were approved for study (11,653), temporary work (19,885) and residence

(31,598) – the equivalent of 6% of the 1.03 million people from all destinations

who gained one or more permits in these categories to be in New Zealand in the

period. If only the residence approvals are considered, the Pacific citizen share

(31,598) of the total (240,462) rises to 13%.

The evidence is clear from New Zealand’s main sources of information on the

international migration of citizens of other countries: although the flows are not

5 This point is discussed in chapter 2, ‘Pacific People in the New Zealand Economy:

Understanding linkages and trends’, by Jean-Pierre de Raad and Mark Walton.

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Pacific Interactions

large as a proportion of New Zealand’s total migration flows, citizens of Pacific

countries are coming to and going from New Zealand in unprecedented numbers.

A simple summary of total arrivals and departures for five-year periods since the

early 1980s shows this (Table 3.3). The largest flows continue to be between

island countries in Polynesia and New Zealand, accounting for 54% of the

363,268 arrivals and 58% of the 341,287 departures of Pacific citizens between

1 April 2001 and 31 March 2006. However, the Melanesian component of the

flow, which is heavily dominated by population movement between Fiji and New

Zealand, has significantly increased its share of the total since the early 1980s.

Table 3.3: Arrivals and departures, citizens of Pacific countries, 1982–2006 (years

ended 31 March)

Period Polynesia Melanesia Micronesia Total

Arrivals

1982–1986 79,383 34,610 1,106 115,099

1987–1991 126,822 71,283 2,793 200,898

1992–1996 112,195 88,456 3,700 204,351

1997–2001 167,734 115,591 4,514 287,839

2002–2006 196,041 163,051 4,176 363,268

1982–2006 682,175 472,991 16,289 1,171,455

Departures

1982–1986 68,338 32,981 1,071 102,390

1987–1991 109,101 59,914 2,651 171,666

1992–1996 109,300 83,898 3,655 196,853

1997–2001 146,967 104,542 4,117 255,626

2002–2006 186,481 150,958 3,848 341,287

1982–2006 620,187 432,293 15,342 1,067,822

Note: Excludes people travelling on New Zealand, French and American passports.

In the five years to 31 March 1986 (1982–1986), arrivals and departures of

citizens of countries in Melanesia accounted for 30% and 32% respectively of the

total Pacific citizen flows for the period. In the latest intercensal period (2001–

2006) these shares of arrivals and departures from Melanesia had increased to

45% and 44% respectively. The Micronesian component of the flows shown in

Table 3.3 was just over 1% of arrivals and departures between 2001 and 2006 –

only marginally larger than the share of citizens from this part of the Pacific

moving between the islands and New Zealand in the early 1980s.

The recent history of population movement by Pacific peoples within and

between countries in the region supports Hau’ofa’s (1994) claim that it is in their

blood to be mobile. He argues that Pacific peoples are not going to remain

confined in countries that are often artefacts of a short period (by Pacific

settlement standards) of colonial rule if it proves too difficult to obtain a

satisfactory livelihood in such countries, especially if better opportunities are

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perceived to be reasonably accessible elsewhere. Equally, they are not going to be

denied the opportunity of returning to countries where they have customary rights

to land and residence even if they were born in New Zealand. Pacific peoples

living in New Zealand have been reluctant to give away entitlements they have

back in the countries where they were born. Yet, a return to the islands to live has

proved to be a much less common process than the ongoing circulation of people

between homes in New Zealand and other Pacific Rim countries, and the island

countries that have access to overseas work and residence opportunities.

The heightened concern about national security in recent years has resulted in

a tightening of borders and closer scrutiny again of the movement that has built up

over the years between the people in the Pacific and New Zealand. But as the

arrival and departure statistics show, there has been no reduction in the volume of

movement since 2001, and there is no reason to assume that this movement will

decline in the future as Pacific populations grow and people living in the countries

on the southern rim are perceived to have better and more opportunities for

economic and social development than those ‘back home’ in the islands.

Pathways and circuits: Arrivals and departures

Ideally, an analysis of contemporary population movement between New Zealand

and the Pacific needs to be conducted with reference to three ways of defining a

Pacific mover population in New Zealand’s arrival and departure statistics: by

birthplace, by citizenship, and by country of last/next permanent residence. The

three approaches produce different perspectives on both the magnitude of the

flows between the islands and New Zealand. Table 3.4 compares the numbers of

arrivals and departures for people whose citizenship, birthplace and country of

last/next permanent residence is a Pacific country, for the years ended 30 June

from 2002 to 2006. June year figures are used in this section because they relate to

the same year of record as the approvals data discussed in the next section.

By far the largest numbers of arrivals in and departures from New Zealand are

recorded for people whose country of birth is in the Pacific (Table 3.4). The

arrivals (815,785) and departures (797,721) where a Pacific birthplace is stated are

more than double the arrivals (370,049) and departures (346,023) where a Pacific

citizenship is recorded. The country of last/next permanent residence Pacific

figures are bigger than the ones for citizenship, but also quite a bit smaller than

the ones for birthplace (Table 3.4).

The much larger numbers for the birthplace classification, especially in the

short-term flows, indicate the importance of Pacific-born visitors to New Zealand

as well as to the islands. Many of these visitors are either citizens of those

countries or are based there in the sense of having them as countries of last/next

permanent residence. There are now hundreds of thousands of Pacific-born people

who live in New Zealand, Australia, the United States and Canada. The fact that

they move into and out of New Zealand does not indicate that they are moving

from or back to Pacific countries.

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Pacific Interactions

The Pacific-born movers include a significant proportion (35%) of New

Zealand citizens. New Zealand citizens comprise a larger proportion of the total

arrival flows from Polynesia (40%) than from Melanesia (27%) or Micronesia

(12%). This reflects the fact that the peoples of certain island groups (Cook

Islands, Niue, Tokelau) are all New Zealand citizens by right, while from two

others (Samoa and Tonga) there is a history of increasing migration from the

islands and settlement in New Zealand since the 1950s (Gibson, 1983).

Table 3.4: Different Pacific arrival and departure populations, 2002–2006 (years

ended 30 June)

Arrivals

Departures

Region

CL/NPR

Citizenship

Birthplace

Citizenship

Birthplace

CL/NPR

Permanent and long-term movement

Polynesia 8,283 12,738 12,684 2,717 8,280 6,229

Melanesia 12,557 13,478 13,901 1,906 3,623 3,027

Micronesia 189 244 361 160 204 233

Pacific 21,029 26,460 26,946 4,783 12,107 9,489

Short-term movement

Polynesia 192,247 481,798 276,653 185,223 480,024 265,395

Melanesia 152,822 302,092 154,948 152,505 300,493 147,559

Micronesia 3,951 5,435 4,404 3,512 5,097 3,796

Pacific 349,020 789,325 436,005 341,240 785,614 416,750

Total movement

Polynesia 200,530 494,536 289,337 187,940 488,304 271,624

Melanesia 165,379 315,570 168,849 154,411 304,116 150,586

Micronesia 4,140 5,679 4,765 3,672 5,301 4,029

Pacific 370,049 815,785 462,951 346,023 797,721 426,239

Note: CL/NPR = country of last/next permanent residence.

Space precludes what becomes a rather complex examination of population

flows when the three definitions of mover are examined, so this chapter focuses

on the movement of citizens of Pacific countries. 6 The main advantage of the

citizenship classification, and the reason that it has been adopted as the primary

definition of a mover universe, is that it is consistent with the way in which

immigrants are identified in the study/work/residence approvals database that the

Department of Labour maintains. Linkages between the arrival/departure statistics

and the study/work/residence approvals database are best made via the citizenship

classification. It is also a critical classification for defining who has entitlement to

particular entry concessions in New Zealand, such as the Trans-Tasman Travel

6 A comprehensive examination of the differences between the birthplace, citizenship and

country of last/next permanent residence data on migration between the Pacific and New

Zealand over 2001–06 is in the February 2007 working paper (Bedford, 2007).

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Arrangement, visa-waiver for visitors (citizens of only two Pacific countries,

Kiribati and Tuvalu, retained their visa-waiver status granted in 1986 until 2002),

and eligibility for entry under the terms of special arrangements such as the

Samoan Quota and the Pacific Access Category.

The citizenship classification also makes it possible to differentiate between

New Zealand citizens and the citizens of other countries in the arrival and

departure flows, which is essential if there is a focus on ‘immigration’ as opposed

to all forms of movement in and out of the country. That said, this separation

between ‘immigrants’ (non–New Zealanders) and people who have the right to

reside in New Zealand is not particularly robust, though, given that people

approved for residence do not have to take out New Zealand citizenship. Many

thousands of New Zealand residents travel regularly on the passports of other

countries with approved multiple re-entry permits. New Zealand allows people to

retain their citizenship of other countries, and this can complicate an analysis of

migration using the citizenship classification.

Permanent and long-term arrivals, departures and net

migration, Pacific citizens

Table 3.5 summarises the arrival/departure statistics, by Pacific country of

citizenship, for the 12 months to 30 June 2006, and the five years to 30 June 2006.

The zero entries for the Cook Islands, Niue, Tokelau, Wallis and Futuna, French

Polynesia, New Caledonia, Guam, and Northern Mariana Islands reflects that

there are no separate citizenship statuses for people from these places – the

citizenship is New Zealand in the case of the first three, France in the case of the

second three, and the United States in the case of the latter two.

One country clearly dominates in the arrival and net migration statistics for

Pacific citizen movement, and that is Fiji. Over the five-year period, Fiji

accounted for over 93% of Melanesia’s citizen arrivals and net migration gain to

New Zealand, and over 55% of all Pacific citizen arrivals and net migration gain

from the region. It is important to appreciate that Fiji’s migrants are not all

Melanesians; the dominant flow from this country for at least the past 20 years has

been Fiji Indians. It is not possible in the arrival and departure records to

differentiate between ‘indigenous’ Melanesians and other groups (eg, Europeans,

Chinese and Indians) who have been in Fiji or any other Pacific country for

several generations. 7

7 See chapter 1, ‘Emerging Demographic and Socioeconomic Features of the Pacific Population

in New Zealand’, by Paul Callister and Robert Didham.

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Pacific Interactions

Table 3.5: Permanent and long-term arrivals, departures and net migration, Pacific

citizens, 2002–2006 (years ended 30 June)

2006 2002–2006

Country Arrivals Departures Net Arrivals Departures Net

Polynesia

American Samoa 0 2 -2 17 15 2

Cook Islands 0 0 0 0 12 -12

Niue 0 0 0 1 0 1

French Polynesia 0 0 0 0 0 0

Pitcairn 0 0 0 0 0 0

Tokelau 0 0 0 0 0 0

Tonga 760 238 522 3,154 1,145 2,009

Tuvalu 33 29 4 147 171 -24

Wallis and Futuna 0 0 0 0 0 0

Samoa 1,243 294 949 4,964 1374 3,590

Total Polynesia 2,036 563 1,473 8,283 2,717 5,566

Melanesia

New Caledonia 0 0 0 0 0 0

Papua New Guinea 114 35 79 380 263 117

Solomon Islands 80 38 42 338 291 47

Vanuatu 17 18 -1 118 90 28

Fiji 2,609 240 2,369 11,721 1,262 10,459

Total Melanesia 2,820 331 2,489 12,557 1,906 10,651

Micronesia

Federated States

of Micronesia 2 2 0 7 9 -2

Guam 0 0 0 0 0 0

Kiribati 52 12 40 162 138 24

Marshall Islands 1 0 1 5 0 5

Northern

Mariana Islands 0 0 0 0 0 0

Nauru 7 1 6 10 11 -1

Palau 1 0 1 5 2 3

Total Micronesia 63 15 48 189 160 29

Total Pacific 4,919 909 4,010 21,029 4,783 16,246

In Micronesia there is also one dominant country of citizenship in the flows –

Kiribati. Numbers of permanent and long-term arrivals are very small (52 for the

year ended 30 June 2006; 162 for the five-year period) by comparison with flows

from Fiji and parts of Polynesia but they comprise around 85% of the total flows

from Micronesia. In Polynesia, Samoa and Tonga stand out as the main sources,

between them accounting for 98% of the citizens who arrived in New Zealand

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during the five-year period. Their share of the Polynesian flow to and from New

Zealand is exaggerated because of the absence of the Cook Islands, Niue, Tokelau

and American Samoa as countries with separate Pacific citizenship. 8

Three countries (Fiji, Samoa, and Tonga) accounted for 93% of the permanent

and long-term arrivals and 99% of the net migration gain of Pacific citizens in

New Zealand between 2001 and 2006. Another four countries (Papua New

Guinea, Solomon Islands, Kiribati, and Tuvalu) accounted for the bulk of the rest

of the flows. The migration of people who have links through their passports to

countries in the Pacific remains heavily biased towards a small group of countries.

The main change that has occurred since the early 1980s is a significant increase

in the shares from Melanesia.

In the five years to 31 March 1986, 2,554 citizens of countries in Melanesia

entered New Zealand as permanent and long-term arrivals – 22% of the 11,534

permanent and long-term arrivals from the Pacific. By contrast, in the five years

to 31 March 2006, 12,496 citizens of countries in Melanesia were permanent and

long-term arrivals – 60% of the 20,626 who entered intending to stay for

12 months or more from the Pacific. This shift towards Melanesian sources for

Pacific migrants is likely to continue, especially given the sizes of the populations

in the western Pacific, and concerns about problems of the underemployment and

unemployment of young men and women in the region (Luthria et al, 2006).

During the year ended 30 June 2006, and in the five-year period ended 30 June

2006, citizens of countries in Melanesia accounted for 62% and 66% respectively

of the total net gain of Pacific citizens, with Fiji accounting for 95% and 98% of

the Melanesian gains. As previously noted, ongoing political instability in Fiji

continues to encourage emigration, especially of Fijians and Indians who meet the

requirements of New Zealand’s points system.

Short-term arrivals and departures, Pacific citizens

While data on permanent and long-term movements provides the best estimates of

‘migration’ that can be obtained from arrival/departure data, on its own it greatly

understates the volume of movement of Pacific peoples, however defined, in and

out of New Zealand. In this section the short-term flows, estimated from the

samples of arrival and departure cards that are processed for people entering or

leaving New Zealand for less than 12 months, are discussed briefly with reference

to the three classifications of Pacific movers. No attempt is made here to assess

the reliability of the estimates of the flows in terms of sampling error. The

information is provided simply for illustrative purposes to demonstrate two things:

the magnitude of the flows by country of citizenship, birth or last/next permanent

residence, and the obvious circulation that underlies short-term movement – over

95% of people leave again after their stay of less than 12 months (Table 3.6).

8 In the five years up to 30 June 2006, there were 2,263 permanent and long-term arrivals and

2,300 permanent and long-term departures of people who gave the Cook Islands, Niue and

Tokelau as their countries of last/next permanent residence.

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Table 3.6: Short-term movement, Pacific classifications, 2002–2006 (years ended

30 June)

Arrivals

Departures

Country

CL/NPR

Citizenship

Birthplace

Citizenship

Birthplace

CL/NPR

Polynesia

American Samoa 1,073 7,693 8,709 864 7,398 6,739

Cook Islands 17 65,356 44,132 99 64,430 44,664

Niue 0 12,625 5,831 25 12,465 5,602

French Polynesia 0 73,672 87,461 0 72,624 82,264

Pitcairn 0 162 66 24 298 23

Tokelau 18 2,671 962 36 2,527 741

Tonga 94,207 113,655 51,231 90,835 113,440 49,392

Tuvalu 3,633 2,793 2,202 2,991 2,154 1,694

Wallis and Futuna 0 309 843 0 623 646

Samoa 93,299 202,862 75,216 90,349 204,065 73,630

Total Polynesia 192,247 481,798 276,653 185,223 480,024 265,395

Melanesia

New Caledonia 0 27,590 47,801 0 29,030 45,615

Papua New Guinea 4,660 14,402 9,176 4,780 14,096 8,690

Solomon Islands 2,138 3,715 2,291 2,588 3,479 2,425

Vanuatu 4,078 5,504 7,452 3,871 5,170 7,251

Fiji 141,946 250,881 88,228 141,266 248,718 83,578

Total Melanesia 152,822 302,092 154,948 152,505 300,493 147,559

Micronesia

Federated States

of Micronesia 191 226 166 281 190 147

Guam 0 387 870 0 333 830

Kiribati 2,892 3,573 2,304 2,377 3,235 1,725

Marshall

Islands 110 135 388 79 124 365

Northern Mariana

Islands 0 39 111 0 86 34

Nauru 639 902 417 727 989 567

Palau 119 173 148 48 140 128

Total Micronesia 3,951 5,435 4,404 3,512 5,097 3,796

Total Pacific 349,020 789,325 436,005 341,240 785,614 416,750

Note: CL/NPR = country of last/next permanent residence.

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The numbers of short-term movements made by people classified as Pacific

vary enormously across the three classifications. The birthplace classification

generated over three-quarters of a million short-term arrivals (789,325) and

departures (785,614) between 1 July 2002 and 30 June 2006. The smallest shortterm

flows are recorded for the citizenship classification – less than half those

found when birthplace is the reference point (Table 3.6).

The 349,020 short-term arrivals of Pacific citizens exclude the movements of

people travelling on passports other than those issued by Pacific countries: New

Zealand citizens (such as Cook Islanders) who had been born in the Pacific;

French citizens from French Polynesia, New Caledonia, and Wallis and Futuna;

American citizens from American Samoa, Guam, the Northern Mariana Islands

and so on are all counted under the citizenship shown on the passports they use on

entry to New Zealand. The citizenship classification tends to understate the shortterm

movement of people with Pacific connections in and out of New Zealand, by

comparison with the other two classifications.

One of the features of short-term movement that is discussed more with

reference to the data on residence approvals in the next section is the significance

of mobility as a strategy for maintaining links between the island-based and New

Zealand–based components of ‘transnational families’. Transnational families

essentially rely for their livelihood on the maintenance of economic and social

activity in more than one country – they have secured long-term access to

resources in their various locations (land, employment, business interests) and are

not just absent from ‘home’ on a temporary basis. Short-term mobility for visits or

business purposes is critically important for maintaining links between the

components of these families. Short-term mobility, especially for visits, allows

members of Pacific societies that have sizeable communities in New Zealand to

become more familiar with opportunities for education, work and possible

residence. However, where few members of their communities are resident in

New Zealand, as is the case for several of the Melanesian countries, short-term

mobility is much less common: the numbers arriving from and departing for

Papua New Guinea, Solomon Islands, and Vanuatu are very small.

The figures discussed above for permanent and long-term and short-term

arrivals, departures and net migration of Pacific citizens are not restricted to

people who were resident in the Pacific Islands. One important dimension to

Pacific migration that is hidden in the analysis so far is the movement of people

between New Zealand and Australia. The trans-Tasman migration of Pacific

peoples has been a source of concern at times for Australia’s immigration

authorities and politicians; it was one of the factors that led to the re-introduction

of passports for people travelling between the two countries in the 1980s, and it

contributed to the debate about social security provisions for New Zealanders in

Australia in 2000 (Bedford et al, 2003, 2006a). In the next section, trans-Tasman

migration is reviewed briefly with specific reference to the Pacific components of

the flow.

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Pacific Interactions

Trans-Tasman Pacific population movement

Between 1 July 2001 and 30 June 2006 the equivalent of New Zealand’s total

resident population crossed the Tasman and gave Australia as the specified

country of last or next permanent residence. The vast majority of the 3.98 million

arrivals from Australia (98%) and the 4.02 million departures for Australia (96%)

were short-term movers. The permanent and long-term components of the flows

(68,321 arrivals and 143,859 departures) were heavily dominated by New Zealand

citizens (63% of the arrivals and 88% of the departures), which is hardly

surprising given the privileged access extended to citizens of the two countries

under the Trans-Tasman Travel Arrangement (Table 3.7).

Table 3.7: Trans-Tasman migration: arrivals and departures, 2002–2006 (years

ended 30 June)

Permanent and long-term

Total

Flow

Pacific

birthplace

All

birthplace

%

Pacific

Pacific

birthplace

All

birthplace

%

Pacific

Arrivals

New Zealand

citizens 1,233 43,314 2.8 33,201 979,663 3.4

Other citizens 535 25,007 2.1 54,185 2,906,134 1.9

Total 1,768 68,321 2.6 87,386 3,885,797 2.2

Departures

New Zealand

citizens 4,539 126,207 3.6 37,984 1,117,942 3.4

Other citizens 489 17,652 2.8 51,018 2,902,286 1.8

Total 5,028 143,859 3.5 89,002 4,020,228 2.2

Net migration

New Zealand

citizens -3,306 -82,893 4.0 -4,783 -138,279 3.5

Other citizens 46 7,355 0.6 3,167 3,848 82.3

Total -3,260 -75,538 4.3 -1,616 -134,431 1.2

Within the trans-Tasman flows of people who indicated Australia was their

country of last/next permanent residence were 1,768 permanent and long-term

arrivals and 5,028 permanent and long-term departures who had been born in the

Pacific (Table 3.7). There were also sizeable flows of Pacific-born movers

travelling for short periods – the total flows of Pacific-born approached 90,000 in

both directions during the five years. In the permanent and long-term flows of

Pacific-born across the Tasman, 90% of those heading for Australia were New

Zealand citizens, as were 70% of those arriving back in the country.

While the Pacific component comprised only a very small share of the total

trans-Tasman flow (2.2% of total arrivals and departures), it accounted for quite a

sizeable share of the permanent and long-term flow of people born in Pacific

countries in and out of New Zealand during the period, especially the New

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Zealand citizens (Table 3.8). A quarter of the Pacific-born permanent and longterm

arrivals between June years 2002 and 2006, who were New Zealand citizens,

had Australia as their country of last permanent residence, rather than a Pacific

country.

Table 3.8: Trans-Tasman share of Pacific migration, 2002–2006 (years ended

30 June)

Permanent and long-term

Total

Flow

Pacific

trans-

Tasman

All Pacific

% trans-

Tasman

Pacific

trans-

Tasman

All Pacific

% trans-

Tasman

Arrivals

New Zealand

citizens 1,233 4,967 24.8 33,201 285,267 11.6

Other citizens 535 21,493 2.5 54,185 530,518 10.2

Total 1,768 26,460 6.7 87,386 815,785 10.7

Departures

New Zealand

citizens 4,539 7,010 64.8 37,984 288,628 13.2

Other citizens 489 5,097 9.6 51,018 509,093 10.0

Total 5,028 12,107 41.5 89,002 797,721 11.2

Net migration

New Zealand

citizens -3,306 -2,043 .. -4,783 -3,361 ..

Other citizens 46 16,396 .. 3,167 21,425 ..

Total -3,260 14,353 .. -1,616 18,064 ..

Note: This table refers to movements by people born in the Pacific.

In the case of the permanent and long-term departures, the share in the trans-

Tasman flow was much larger – 65% of the New Zealand citizens born in the

Pacific, who left during the five years, had Australia as their next country of

permanent residence. The net loss of Pacific-born New Zealand citizens across the

Tasman (-3,306 permanent and long-term flow and -4,783 total flow) exceeded

the overall net loss to the country of Pacific-born people to all destinations

through both permanent and long-term (-2,043) and total migration (-3,361).

Pacific-born New Zealand citizens were not only moving back to the islands, they

were also moving to Australia. The trans-Tasman connection is a critical one for

any analysis of contemporary mobility of Pacific peoples who are moving in and

out of New Zealand.

The importance of the Australian connection in the permanent and long-term

arrivals and departures of Pacific-born migrants between 2002 and 2006 varied

considerably by country of birth. Not surprisingly trans-Tasman permanent and

long-term arrivals and departures accounted for much larger proportions of those

Pacific-born people who were New Zealand citizens by right (Cook Islanders,

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Pacific Interactions

Niueans, Tokelauans) or who had special arrangements that facilitated access to

New Zealand citizenship (eg, the Samoan Quota) (Table 3.9).

Table 3.9: Trans-Tasman share of Pacific-born permanent and long-term (PLT)

migrants

Arrivals

Departures

Country of

birth

PLT

trans-

Tasman

PLT Total

% trans-

Tasman

PLT

trans-

Tasman

PL

Total

% trans-

Tasman

Polynesia

American Samoa 2 176 1.1 40 161 24.8

Cook Islands 216 1,379 15.7 581 1,302 44.6

Niue 45 291 15.5 179 327 54.7

French Polynesia 9 189 4.8 15 73 20.5

Pitcairn 0 2 0.0 0 5 0.0

Tokelau 18 230 7.8 67 170 39.4

Tonga 164 3,338 4.9 335 1,457 23.0

Tuvalu 6 120 5.0 12 148 8.1

Wallis and Futuna 0 6 0.0 0 3 0.0

Samoa 739 7,007 10.5 2,452 4,634 52.9

Total Polynesia 1,199 12,738 9.4 3,681 8,280 44.5

Melanesia

New Caledonia 7 138 5.1 10 62 16.1

Papua New Guinea 84 565 14.9 98 421 23.3

Solomon Islands 14 366 3.8 12 312 3.8

Vanuatu 3 144 2.1 8 112 7.1

Fiji 452 12,265 3.7 1,199 2,716 44.1

Total Melanesia 560 13,478 4.2 1,327 3,623 36.6

Micronesia

Federated States

of Micronesia 0 8 0.0 1 9 11.1

Guam 0 5 0.0 0 1 0.0

Kiribati 3 173 1.7 11 158 7.0

Marshall Islands 0 13 0.0 0 1 0.0

Northern Mariana

Islands 0 4 0.0 1 1 100.0

Nauru 5 33 15.2 7 31 22.6

Palau 1 8 12.5 0 3 0.0

Total Micronesia 9 244 3.7 20 204 9.8

Total Pacific 1,768 26,460 6.7 5,028 12,107 41.5

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In addition, there were larger proportions of Papua New Guinea–born

permanent and long-term arrivals and departures in the trans-Tasman flow; a

legacy of the colonial period when significant numbers of Australians and some

New Zealanders were born to parents working in that country. The high

proportions of departures with Australia as their country of next permanent

residence who had been born countries like Niue (55%), Samoa (53%), the Cook

Islands (45%), Fiji (44%) and Tokelau (39%) indicates clearly that return

migration to the islands cannot automatically be assumed from the statistics on

Pacific-born leaving New Zealand for 12 months or more (Table 3.4). Indeed,

42% of all permanent and long-term departures from New Zealand who stated

they had been born in a Pacific country moved across the Tasman rather than to

the islands or other destinations between 1 July 2001 and 30 June 2006.

Characteristics of flows within the Pacific migration

system

The arrival and departure statistics provide a useful assessment of certain

dimensions of contemporary Pacific migration, particularly the magnitude of

different types of flows, the importance of people leaving as well as entering New

Zealand, and the critical role trans-Tasman migration plays in the flows of people

born in the Pacific out of New Zealand to Australia in recent years. Interpretation

of the flows is complicated by the different ways movers can be defined; the word

‘Pacific’ as an identifier of migrants does not have a single unambiguous

meaning.

Notwithstanding this problem of definition, a descriptive analysis of the

arrival/departure statistics reveals that mobility in New Zealand’s Pacific

migration system has eight distinctive characteristics that can be summarised as

follows.








The movement of Pacific peoples, as this can be captured on arrival/departure

cards, is now occurring at higher levels than at any time in the past.

Fiji has become the largest contributor at the country level to arrival, departure

and net migration flows.

The Polynesia sub-region (which does not include Fiji) remains the largest

source of total arrivals and departures.

The Melanesia sub-region is now the biggest source of permanent and longterm

arrivals, departures, and net migration gains, thanks to Fiji.

The Micronesia sub-region remains a very small contributor to arrival,

departure and net migration flows with Kiribati and Nauru the major

sources/destinations.

Three countries (Fiji, Samoa, and Tonga) account for 94% of the total arrivals

in and departures from New Zealand of people who travel on Pacific

passports.

Trans-Tasman migration accounts for just over 40% of the permanent and

long-term departures of all Pacific-born from New Zealand.

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Pacific Interactions

The Pacific birthplace and Pacific country of last/next permanent residence

statistics contain shares of the New Zealand citizen population, and thus larger

flows than the citizenship classification.

The picture is complex, and the flows of people between island countries and

New Zealand and Australia are not stable. Adding to the complexity is an

increasing array of moves from countries that have not been major contributors to

New Zealand’s migration system in the past. The system is adjusting as

Melanesians slowly get drawn into a variety of visas for study, temporary work

and permanent residence.

What these arrival/departure statistics do not tell us about, however, are the

conditions under which Pacific people enter New Zealand for their short-term or

long-term stays. They also give no indication of the pathways migrants might

follow to residence in New Zealand and some of the subsequent moves people

approved for residence make after settlement. These dimensions of contemporary

Pacific migration are the subject of the next section of this paper where data

collected by the Department of Labour, through its Approvals Management

System, is examined with particular reference to movements of citizens of Pacific

countries who obtained permits entitling then to spend time in New Zealand as

students, temporary workers, and residents.

Changes in immigration policy since the late 1990s have made it easier for

people seeking approval to reside in New Zealand permanently to gain this

permission while in the country as a visitor, studying or on a temporary work

permit (Bedford et al, 2005). Transitions to residence from study and temporary

work are becoming increasingly common and are favoured as routes to successful

long-term settlement. The links between different types of movement have always

been a very important part of Pacific migration to New Zealand, especially

migration from countries like Samoa and Tonga. Cluny Macpherson (1981) was

writing extensively about this process at least 25 years ago; by the early 2000s

policy had caught up with practice, and the acknowledgement that temporary

forms of movement are very much linked with permanent and long-term

migration is a defining feature of contemporary policy development in most

countries that are deliberately seeking to attract immigrants.

Pathways to residence

Over the 25 years between 1 July 1981 and 30 June 2006 New Zealand approved

752,123 people for residence, excluding Australians, Cook Islanders, Niueans and

Tokelauans who are entitled to reside in New Zealand. Just under 15% of these

approvals were citizens of Pacific countries, with Polynesia accounting for 63% of

the 109,848 Pacific approvals (Table 3.10). The numbers of approvals more than

doubled following the changes in immigration policy in 1986, and from the early

1990s the share of Pacific citizens fell as migration from Asia and other parts of

the world gained momentum under the points system introduced in 1991.

A sharp increase in the numbers of approvals from Melanesia followed the Fiji

military coups in 1987, but a significant contraction in unskilled and semi-skilled

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jobs linked with the restructuring of manufacturing industries resulted in a

reduction in residence approvals for Pacific citizens in the early 1990s, especially

from Melanesia (Table 3.10). The sharp increase in the small number of approvals

from Micronesia between 2002 and 2006 is due to the introduction of the Pacific

Access Category and the inclusion of Kiribati within this scheme, which is

discussed further below.

In the late 1990s, there was some recovery in residence approvals from the

Pacific and this growth accelerated through the first five years of the 21st century,

partly in response to the introduction of the Pacific Access Category in July 2002.

Although record numbers of Pacific citizens have been approved for residence in

the five years to 30 June 2006, their share of total approvals has fallen slightly to

13%. While the Pacific citizen total increased by 25% over the previous five-year

period, the total number of people approved for residence increased by 38% to

reach just over 240,000 – the equivalent of 32% of the 752,126 approved during

the 25 years (Table 3.10).

Table 3.10: Approvals for residence, citizens of Pacific countries, 1982–2006 (years

ended 30 June)

Period Polynesia Melanesia Micronesia Pacific

Total New

Zealand

%

Pacific

1982–1986 9,013 737 5 9,755 47,435 20.6

1987–1991 15,584 10,788 24 26,396 101,170 26.1

1992–1996 12,131 4,649 49 16,829 188,271 8.9

1997–2001 15,188 9,985 97 25,270 174,785 14.5

2002–2006 17,715 13,401 482 31,598 240,462 13.1

1982–2006 69,631 39,560 657 109,848 752,123 14.6

Movements for study, work and residence

Approvals for residence are only one part of the story, however, especially the

story since the late 1990s when it has become easier to transition to residence

from different types of temporary visas/permits. Transitions from temporary to

permanent residence have been possible under special circumstances for many

years, but a deliberate policy to encourage this pathway has only been articulated

clearly since the early 2000s (Bedford et al, 2005). Between 1 July 2001 and

30 June 2006 a total of 31,538 Pacific citizen students and temporary workers

were issued with their first permits to be in New Zealand for study or employment

– almost the same number as the 31,598 approved for residence (Table 3.11).

As with the residence approvals, the numbers of students and temporary

workers fluctuate from year to year, as do their shares of the respective New

Zealand totals (Table 3.11). The number of people approved for temporary work

rose sharply in 2005, with increases over the previous year of 21% and 31%

respectively for the New Zealand and Pacific totals (Table 3.11). While the

Pacific share of all people approved for temporary work (5.1%) is much smaller

than its share of people approved for residence (13.1%), it has become a pathway

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Pacific Interactions

to work in New Zealand that was almost as significant in numerical terms as the

approvals for residence in the year ending 30 June 2006. The 19,885 temporary

workers from the Pacific during the five years to 30 June 2006 was 31.5% of all

approvals of Pacific citizens (63,136) for the three types of entry permit; not very

different from the 38% share for the 390,000 temporary workers in the

1.03 million approvals from all countries (Table 3.11).

Pacific student numbers (2,725) were much smaller than the number of

citizens approved for residence (5,923) or temporary work (5,785) in the year

ending 30 June 2006, but they were starting to increase after a short-lived slump

between 1 July 2002 and 30 June 2004 (Table 3.11). By contrast, the number of

students on permits for study in New Zealand has been falling since its peak in the

year ended 30 June 2003. The 69,223 students approved in the year ended 30 June

2006 were down 21% on the 88,046 approved in the year ended 30 June 2003.

Table 3.11: Approvals for study, temporary work and residence, 2002–2006 (years

ended 30 June)

Year Study Work Residence Total

Pacific countries

2002 2,628 4,226 5,719 12,573

2003 2,063 2,657 6,101 10,821

2004 2,007 2,814 6,715 11,536

2005 2,230 4,403 7,140 13,773

2006 2,725 5,785 5,923 14,433

Total Pacific 11,653 19,885 31,598 63,136

% Pacific total 18.46 31.50 50.05 100.00

New Zealand

2002 73,763 63,514 52,856 190,133

2003 88,046 69,070 48,538 205,654

2004 87,166 75,306 39,017 201,489

2005 77,563 82,497 48,815 208,875

2006 69,223 99,674 51,236 220,133

Total New Zealand 395,761 390,061 240,462 1,026,284

% New Zealand total 38.56 38.01 23.43 100.00

% Pacific of New Zealand total

2002 3.56 6.65 10.82 6.61

2003 2.34 3.85 12.57 5.26

2004 2.30 3.74 17.21 5.73

2005 2.88 5.34 14.63 6.59

2006 3.94 5.80 11.56 6.56

Total Pacific 2.94 5.10 13.14 6.15

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Within the Pacific there are some significant variations in the relative

importance of study, temporary work, or residence permits for approvals in the

past 12 months or over the previous five years. Over half (54%) of the total

approvals in the three categories in Polynesia were for residence in the year ended

30 June 2006, rising to 61% for the five years (Table 3.12). Visas/permits for

study accounted for only 11% of the successful applications from this sub-region.

By contrast, 25% of those approved in the three categories from Melanesia

and Micronesia were coming to study in New Zealand, with shares in this

category dominating in Papua New Guinea, Solomon Islands, and Nauru.

Countries where temporary work was a prominent category during the five years

included Fiji (35%), Kiribati (40%), Tuvalu (38%) and Tonga (31%) (Table 3.12).

The overwhelming domination of three countries – Fiji, Samoa and Tonga – is

clear in the statistics on approvals for study, temporary work and residence in

New Zealand. Their shares of the total Pacific approvals in each category between

2002 and 2006 are 79% (study), 89% (temporary work) and 95% (residence).

Most of the remaining shares were accounted for by four other countries – Tuvalu,

Kiribati, Papua New Guinea, and Solomon Islands. They accounted for 17% of

the approvals for study, 9% for temporary work and 4% for residence. While

these are only small shares, they have the potential to increase significantly over

time, especially for temporary work and residence. The seasonal work policy,

which was trialled in 2005–2006, has been further developed and from April 2007

up to 5,000 temporary workers from Pacific countries were recruited for up to

nine months’ work in New Zealand, subject to certain conditions.

Initially, this guest worker scheme was facilitated in five Pacific countries

(Fiji was withdrawn from the list following the military coup) – Samoa, Tonga

and Tuvalu in Polynesia, Kiribati in Micronesia, and Vanuatu in Melanesia. It is

an employer-led programme in the sense that employers have to demonstrate that

they have seasonal labour shortages that cannot be met by local labour. The

selection of workers from the participating island countries is managed through

nominated government departments, and several safeguards are in place to

manage the employment conditions for the workers when they arrive in New

Zealand. The scheme is modelled on a Canadian scheme that has proved

successful in selected Caribbean countries for many years, and it builds on the

experience New Zealand had with what was arguably its most successful Pacific

temporary work programme in the 1970s and 1980s with Fiji (Levick and

Bedford, 1988).

While the seasonal work scheme is specifically designed to promote the

circulation of labour between the islands and New Zealand, inevitably there will

be some flow-on from seasonal work to other types of temporary work permits in

the longer term. It is likely that the numbers of Melanesians from Vanuatu, and

later Solomon Islands and Papua New Guinea, will increase – these three

countries are already contributing to New Zealand’s pool of temporary workers

each year (Table 3.12).

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Table 3.12: Approvals: study, temporary work, and residence, Pacific citizens, 2002–

2006 (years ending 30 June)

2006 2002–2006

Country

Study

Temporary

work Residence Study

Temporary

work Residence

Polynesia

American Samoa 11 5 12 34 18 61

French Polynesia 1 2 1 22 20 7

Pitcairn 0 0 1 0 0 1

Tonga 269 912 968 1474 3,622 6,541

Tuvalu 108 202 160 453 700 698

Wallis and Futuna 0 0 0 0 0 0

Samoa 287 1,060 2,188 1,205 3,564 10,407

Total Polynesia 676 2,181 3,330 3,188 7,924 17,715

% Polynesia total 10.9 35.3 53.8 11.1 27.5 61.5

Melanesia

New Caledonia 2 0 1 18 3 2

Papua New Guinea 113 63 23 625 417 107

Solomon Islands 91 62 25 580 241 115

Vanuatu 25 29 4 191 104 41

Fiji 1,702 3,278 2,366 6,535 10,618 13,136

Total Melanesia 1,933 3,432 2,419 7,949 11,383 13,401

% Melanesia total 24.8 44.1 31.1 24.3 34.8 40.9

Micronesia

Federated States

of Micronesia 1 1 3 21 6 4

Guam 0 0 0 0 1 0

Kiribati 93 156 163 348 524 441

Marshall Islands 2 1 0 27 2 1

Northern Mariana

Islands 0 0 0 0 0 0

Nauru 19 14 8 107 41 35

Palau 1 1 0 13 4 1

Total Micronesia 116 173 174 516 578 482

% Micronesia total 25.1 37.4 37.6 32.7 36.7 30.6

Total Pacific 2,725 5,786 5,923 11,653 19,885 31,598

% Pacific total 18.9 40.1 41.0 18.5 31.5 50.0

Total all countries 69,223 99,674 51,236 395,761 390,061 240,462

% all countries total 31.4 45.3 23.3 38.6 38.0 23.4

% Pacific of New

Zealand total 3.9 5.8 11.6 2.9 5.1 13.1

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Transition from temporary work to residence

Between 1 July 1997 and 30 June 2005 just under 74,000 (21%) of the 346,539

people who had been granted a permit for temporary work in New Zealand

applied for and were approved for residence in New Zealand (Table 3.13). Only

the first permit applied for by any individual during this period is counted here –

some people have several work permits over the course of their time in temporary

work in New Zealand. In the case of citizens of Pacific countries, the share of

first-time work permit holders who transitioned to residence was much higher

than the national average. Just over half (55%) of the 15,890 Pacific citizens

granted work permits applied for and obtained approval for residence. Fiji, Tonga

and Samoa were the main sources of both temporary workers as well as people

moving from a temporary work permit to one entitling them to reside in New

Zealand (Table 3.13).

Tuvalu, Papua New Guinea and Kiribati also provided several hundred

temporary workers over the period, with Tuvaluans having a much higher

incidence of transition to residence (54%) than I-Kiribati (26%) or Papua New

Guineans (9%). The lowest transition rate for the holders of temporary work

permits from the Pacific between June years 1998 and 2005 was for citizens of

Papua New Guinea; all of the other countries in the region had rates above the

national average (Table 3.13). Clearly, some routes from work to residence during

this period were likely to favour Pacific peoples over those from other regions,

especially as temporary workers from the island countries tend to be in low skilled

and unskilled occupations. The skilled migrant category is not a common route to

residence in New Zealand for Pacific nationals. 9

The routes to residence from temporary work vary markedly by Pacific

country of citizenship with Fiji and the other Melanesian sources (Papua New

Guinea, Solomon Islands, and Vanuatu) having larger shares gaining approval as

skilled migrants (40%) and via marriage (around 32%) than applicants who were

citizens of other Pacific countries. 10 In the case of Fiji, this reflects the Indo-Fijian

dimension to migration from this country during a period when political

uncertainty remained high, especially after the civilian coup d’état in 2000. The

number of citizens of other Melanesian countries transitioning from temporary

work permits to residence is very small, but they comprise around 40% of the

small total – the most significant category of residence for this group.

9 An examination of the three main categories of approval for residence in New Zealand

(skilled/business migration, family sponsorship, and the international/humanitarian category)

for Pacific citizens is in the February 2007 version of this chapter (Bedford, 2007).

10 Detailed country-specific data relating to transitions to residence from work by Pacific

citizens and study is in the February 2007 version of this chapter (Bedford, 2007).

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Table 3.13: Transitions to residence from work permits, 1998–2005 (years ended

30 June)

First-time

work permit

approvals

Country 1998–2005

Polynesia

Transition to

residence

by 30 June

2005

% transition

to residence

by 30 June

2005

American Samoa 17 5 29.4

French Polynesia 23 8 34.5

Pitcairn 0 0 0.0

Tonga 3,805 2,479 65.2

Tuvalu 531 285 53.6

Wallis and Futuna 1 0 0.0

Samoa 3,200 2,028 63.4

Total Polynesia 7,577 4,805 63.4

Melanesia

New Caledonia 19 7 36.8

Papua New Guinea 410 37 9.0

Solomon Islands 174 51 29.3

Vanuatu 66 27 40.9

Fiji 7,256 3,768 51.9

Total Melanesia 7,925 3,890 49.1

Micronesia

Federated States of Micronesia 1 1 100.0

Guam 0 0 0.0

Kiribati 360 93 25.8

Marshall Islands 0 0 0.0

Northern Mariana Islands 0 0 0.0

Nauru 24 10 41.7

Palau 3 0 0.0

Total Micronesia 388 104 26.8

Total Pacific 15,890 8,799 55.4

Total all countries 346,539 73,984 21.3

% Pacific 4.6 11.9

Note: First-time work permit approvals are the numbers of clients from Pacific

countries whose first work permit application was approved.

The share of first-time temporary work permit approvals from the Pacific (5%)

is less than half their share of approvals for a transition to residence (12%),

reflecting the likelihood of particular categories of approval favouring Pacific

applicants. In Table 3.12 the distributions of residence approval categories for

Pacific citizens and citizens of other countries are compared. As expected, a much

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smaller proportion of Pacific citizens (20%) transitioned from a work permit to

residence between 1 July 1997 and 30 June 2005 via the skilled migrant category

than citizens of other countries (54%). Roughly equal shares transitioned to

residence via the regular family sponsorship categories (34% and 35%

respectively). The big differences were in some special family sponsorship and

international/humanitarian categories, especially under the 2000 Transitional

Policy for well-settled overstayers who could apply for a two-year work permit

and then transition to residence (Table 3.14).

The 2000 Transitional Policy was introduced by Minister of Immigration

Lianne Dalziel in October 2000 to allow well-settled overstayers who were

already contributing to New Zealand’s economy to regularise their residence

(Bedford et al, 2005, p 15). This was a controversial policy initiative as far as

Australia’s immigration authorities were concerned; they feared an increase in

movement of generally low-skilled Pacific people across the Tasman once they

qualified for New Zealand citizenship. In fact the policy was directed at

overstayers who were already well settled and in work in New Zealand, but who

were working illegally.

The 2000 Transitional Policy applied to all overstayers in New Zealand in

2000, but it is quite clear from Table 3.14 that much higher numbers of Pacific

citizens (3,341) in this situation applied over the subsequent five years for

approval to transition to residence from a temporary work permit than did

overstayers from other parts of the world (963). Despite the fact that this was the

largest single route to residence via temporary work for Pacific citizens (followed

by marriage and the skilled migrant category) the numbers of Pacific overstayers

seeking to regularise their presence via this route were smaller than the

Immigration New Zealand had expected, and one of the major groups was people

with children who had been born in New Zealand.

The 2000 Transition Policy accounted for just under 75% of the transitions

from a work permit to residence for Tuvalu citizens, and for 68% and 63%

respectively for the transitions by citizens of Tonga and Samoa. In the case of

citizens of Kiribati and Nauru, the 2000 Transition Policy was less significant,

accounting for 28% of those who were approved for residence via temporary

work. The skilled migrant category (17%) was a more prominent route for citizens

of Kiribati and Nauru than it was for those from the Samoa, Tonga, and Tuvalu.

Overall, the numbers of temporary workers from Pacific countries who had

been granted their first permit to work in New Zealand between 1 July 1997 and

30 June 2005 and used this experience to transition to a residence permit are quite

small. But, as already noted, as a share of all first-time work permit approvals for

Pacific citizens, the percentage seeking this route to residence is high – 55%

compared with 21% of first-time work permit holders from all countries

(Table 3.13). The 2000 Transitional Policy for overstayers explains a large part of

the difference, along with the Pacific-specific programmes such as the Samoan

Quota and Pacific Access Category. Both of these programmes were used by

some people on temporary work permits to transition to residence.

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Table 3.14: Transitions from work to residence, Pacific and other citizens, 1998–2005

(years ending 30 June)

Numbers Percent (%)

Category Pacific Others Total Pacific Others Total

General skills

Skilled migrant 1,683 34,984 36,667 19.4 53.6 49.6

Long Term Skill

Shortage List 0 14 14 0.0 0.0 0.0

Talent 8 212 220 0.1 0.3 0.3

Total general skills 1,691 35,210 36,901 19.5 53.9 49.9

Business

Investor 2 1,166 1,168 0.0 1.8 1.6

Entrepreneur 146 2,006 2,152 1.7 3.1 2.9

Other 0 48 48 0.0 0.1 0.1

Total business 148 3,220 3,368 1.7 4.9 4.6

Family

Marriage 2,387 14,500 16,887 27.5 22.2 22.8

De facto 159 3,242 3,401 1.8 5.0 4.6

Partnership 326 4,485 4,811 3.8 6.9 6.5

Other 95 861 956 1.1 1.3 1.3

Total family 2,967 23,088 26,055 34.2 35.4 35.2

Humanitarian

Humanitarian 92 174 266 1.1 0.3 0.4

Refugee 3 1,795 1,798 0.0 2.7 2.4

Total humanitarian 95 1,969 2,064 1.1 3.0 2.8

Other

Pacific Access Category 115 0 115 1.3 0.0 0.2

Samoan Quota 43 0 43 0.5 0.0 0.1

2000 Transitional

Policy 3,431 963 4,394 39.5 1.5 5.9

Ministerial discretion 179 828 1,007 2.1 1.3 1.4

Other 19 18 37 0.2 0.0 0.1

Total other 3,787 1,809 5,596 43.6 2.8 7.6

Total 8,688 65,296 73,984 100.0 100.0 100.0

Note: The Pacific total includes: Fiji, Samoa, Tonga, Tuvalu, Kiribati, Nauru, Papua

New Guinea, Solomon Islands, and Vanuatu. One hundred and eleven citizens of other

Pacific countries are not accounted for in the totals for the Pacific for each specific

category in this table.

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Transitions by students to work and to residence

In addition to the route to residence via a temporary work permit, there are

pathways for students who have been granted visas or permits to study in New

Zealand to transition to work and to residence. Familiarity with language, living

conditions, the social situation, and the labour market provides a sound basis for

good settlement outcomes should international students decide to stay on when

they have obtained their qualifications. Between 1 July 1997 and 30 June 2005

221,718 students gained their first permit to study in New Zealand – just over

9,000 (4%) from Pacific countries (Table 3.15). By 30 June 2005, 7% of the

students had been granted their first work permits, and 13% had been approved

for residence. The respective percentages for Pacific students were 11% and 32%

– higher than the national averages.

While only 4% of all students approved for study in New Zealand during the

period were from the Pacific, 6% of those who were subsequently approved for

temporary work permits, and 10% of those who were approved for residence were

citizens of island countries. Fiji had the highest percentage of students

transitioning from study to temporary work (14%), and American Samoa, Tonga,

Fiji and Samoa all had more than 34% of their first-time student approvals

transitioning to residence (Table 3.15).

There was considerable variability across Pacific countries in the shares of

their students seeking and subsequently obtaining temporary work permits and

approval for residence. Those countries with long-standing links through

migration generally had much higher percentages transitioning to work and

residence, while countries like Papua New Guinea, Vanuatu, and Solomon

Islands, all with reasonably sizeable numbers of students in New Zealand, had

much smaller shares moving to other permit statuses. Because there are two

discrete transitions involving students – study to residence and study to work –

these are examined separately, commencing with the categories of approval for

residence that were used by Pacific citizens.

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Table 3.15: Transitions from study to work and residence, 1997–2005 (years ended

30 June)

First-time

SP

approvals

Country 1997–2005

Transition

to work

by 30 June

2005

Transition

to

residence

by 30 June

2005

Transition

to work

(%)

Transition

to

residence

(%)

Polynesia

American Samoa 44 1 29 2.3 65.9

French Polynesia 27 2 1 7.4 3.7

Pitcairn 1 0 0 0.0 0.0

Tonga 1,419 138 613 9.7 43.2

Tuvalu 367 16 117 4.4 31.9

Wallis and Futuna 1 0 0 0.0 0.0

Samoa 1,127 109 391 9.7 34.7

Total Polynesia 2,986 266 1,151 8.9 38.5

Melanesia

New Caledonia 18 0 1 0.0 5.6

Papua New Guinea 639 32 27 5.0 4.2

Solomon Islands 643 66 46 10.3 7.2

Vanuatu 310 22 15 7.1 4.8

Fiji 3,937 566 1,569 14.4 39.9

Total Melanesia 5,547 686 1,658 12.4 29.9

Micronesia

Federated States

of Micronesia 34 0 0 0.0 0.0

Guam 0 0 0 0.0 0.0

Kiribati 318 18 63 5.7 19.8

Marshall Islands 29 1 1 3.4 3.4

Northern Mariana

Islands 0 0 0 0.0 0.0

Nauru 83 9 22 10.8 26.5

Palau 14 0 0 0.0 0.0

Total Micronesia 478 28 86 5.9 18.0

Total Pacific 9,011 980 2,895 10.9 32.1

Total all countries 221,718 15,675 28,853 7.1 13.0

% Pacific 4.1 6.3 10.0

Note: SP refers to a permit or visa to study in New Zealand. The numbers shown here

are for clients from Pacific countries whose first student visa or permit application was

approved.

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Transitions from study to residence

In Table 3.16 the categories of residence approval for the great majority of Pacific

students from the region are summarised and compared with the approval

categories for all students transitioning to residence between 1 July 1997 and

30 June 2005. In common with the finding for transitions from temporary work to

residence, Pacific citizens have much larger shares in the categories relating to the

2000 Transitional Policy and the special Pacific programmes (the Pacific Access

Category and Samoan Quota) than students from other parts of the world. Almost

22% of the Pacific student approvals for residence were linked to this policy, most

commonly as the child of a parent who was a New Zealand citizen.

The most prominent route to residence for Pacific citizens, in common with

those from other regions, was via the skilled migrant category (29%). The share of

Pacific students transitioning to residence as skilled migrants was larger than the

share of Pacific temporary workers transitioning to residence via this category

(19% – Table 3.14). A parallel situation applied in the case of students from other

countries, though the percentages are much higher – 64% qualified for residence

under the terms of the skilled migrant category (Table 3.14) compared with 54%

of those transitioning to residence from temporary work (Table 3.12).

Again, in common with the pattern found for the temporary work to residence

transition, family-related criteria were important for both the students from the

Pacific as well as from other countries. In the case of the Pacific, it was the

‘marriage’ and ‘other’ (including dependent children and siblings) categories that

were predominant, while for the others, it was the ‘marriage’ and ‘partnership’

categories that had the highest percentages in the ‘family’ categories (Table 3.16).

The main ‘business’ category for students from both the Pacific and other regions

was ‘entrepreneur’, especially the ‘entrepreneur (transitional)’ category.

As was the case with the temporary work to residence transitions by Pacific

citizens, the Melanesian countries had the highest shares of students (over 40%)

gaining entry via the skilled migrant category. Larger shares of students from

Samoa (6%), Tonga (12%), and Tuvalu (12%) also were approved for residence

as skilled migrants than was the case for temporary workers seeking residence

approval from these three countries. The compensating shortfall was found in

‘marriage’ under the family categories. The ‘other’ family category was more

prominent for Pacific students, especially as ‘dependent children’ and ‘siblings’.

The 2000 Transitional Policy for overstayers was an important route to

residence for students from Tuvalu (60%), Tonga (52%), and Samoa (34%). The

impact of this policy initiative on several dimensions of Pacific ‘migration’, as

this is recorded in approvals records, has been considerable. The word ‘migration’

is in inverted commas here because those who were approved for residence under

the 2000 Transitional Policy were already in New Zealand as overstayers. Their

migration occurred at an earlier time even if their approval for residence occurred

during the period under review. In this sense, the approvals data for Pacific

citizens overstates the volume of movement to New Zealand in the early 2000s.

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Table 3.16: Transitions from study to residence, Pacific and other citizens, 1998–2005

(years ended 30 June)

Number Percent (%)

Category Pacific Others Total Pacific Others Total

General skills

Skilled migrant 824 16,706 17,530 28.8 64.3 60.8

Long Term Skill

Shortage List 0 5 5 0.0 0.0 0.0

Talent 10 92 102 0.3 0.4 0.4

Total General skills 834 16,803 17,637 29.1 64.7 61.1

Business

Investor 14 688 702 0.5 2.6 2.4

Entrepreneur 142 1,584 1,726 5.0 6.1 6.0

Other 0 20 20 0.0 0.1 0.1

Total Business 157 2,291 2,448 5.5 8.8 8.5

Family

Marriage 339 3,101 3,440 11.8 11.9 11.9

De facto 32 458 490 1.1 1.8 1.7

Partnership 117 1,428 1,545 4.1 5.5 5.4

Other 335 870 1,205 11.7 3.3 4.2

Total Family 823 5,857 6,680 28.7 22.5 23.2

Humanitarian

Humanitarian 72 191 263 2.5 0.7 0.9

Refugee 2 393 395 0.1 1.5 1.4

Total Humanitarian 74 584 658 2.6 2.2 2.3

Other

Pacific Access

Category 223 4 227 7.8 0.0 0.8

Samoan Quota 39 6 45 1.4 0.0 0.2

2000 Transitional

Policy 621 122 743 21.7 0.5 2.6

Ministerial discretion 84 271 355 2.9 1.0 1.2

Total Other 8 52 60 0.3 0.2 0.2

Other 975 455 1,430 34.1 1.8 5.0

Total 2,863 25,990 28,853 100.0 100.0 100.0

Note: The Pacific total in this table includes Fiji, Samoa, Tonga, Tuvalu, Kiribati, Nauru,

Papua New Guinea, Solomon Islands, and Vanuatu. Thirty-two citizens of other Pacific

countries are not accounted for in the totals for the Pacific for each specific category in

this table.

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Transitions from study to temporary work

Between 1 July 1997 and 30 June 2005, 980 students who were citizens of Pacific

countries moved from their permits to study in New Zealand to temporary work

permits (Table 3.17). The great majority of them (976) were from nine countries:

Samoa, Tonga and Tuvalu in Polynesia; Fiji, Papua New Guinea, Solomon

Islands, and Vanuatu in Melanesia; and Kiribati and Nauru in Micronesia. There

are 77 specific categories of temporary work permit in New Zealand and students

from Pacific countries were able to access 34 of these, with 35% being approved

under what is called a ‘general’ category.

For simplicity, the main categories of approval for Pacific students seeking

temporary work permits are grouped into 10 clusters. The relevant statistics for

the 976 Pacific citizens from the nine countries listed above are shown in

Table 3.17 alongside those for citizens of all other countries, and for all students

who transitioned from study to temporary work between 1 July 1997 and 30 June

2005.

Table 3.17: Transitions from study to temporary work, Pacific and total, 1998–2005

(years ended 30 June)

Number Percent (%)

Category Pacific Others Total Pacific Others Total

General 337 5,448 5,785 34.5 37.1 36.9

Spouse/partner

related 283 4,543 4,826 29.0 30.9 30.8

Section 35A request 101 521 622 10.3 3.5 4.0

Vary conditions 81 456 537 8.3 3.1 3.4

Work experience 43 1,094 1,137 4.4 7.4 7.3

Medical personnel 14 116 130 1.4 0.8 0.8

Sports player/coach 36 9 45 3.7 0.1 0.3

Minister of religion 16 99 115 1.6 0.7 0.7

2000 Transitional

Policy 14 17 31 1.4 0.1 0.2

Other 51 2,396 2,447 5.2 16.3 15.6

Total 976 14,699 15,675 100.0 100.0 100.0

Note: The term Pacific in this table includes Fiji, Samoa, Tonga, Tuvalu, Kiribati,

Nauru, Papua New Guinea, Solomon Islands, and Vanuatu. A request made under

section 35A of the Immigration Act 1987 is for a permit for a person unlawfully in New

Zealand.

The main difference between the broad categories of approval for Pacific

citizens by comparison with those from other countries can be found under the

‘other’ category – a diverse array of country-specific working holiday schemes

accounts for most of the 11% difference between the two populations in the

‘other’ category (Table 3.17). None of the existing 20 working holiday schemes

are with Pacific countries. Larger shares of Pacific students transition to

temporary work as a result of dispensations under section 35A of the Immigration

© Institute of Policy Studies, Victoria University of Wellington, 2008 119


Pacific Interactions

Act 1987 (a grant of a permit for a person unlawfully in New Zealand) and

through the ‘vary conditions’ category. No further detail on the specific conditions

that have been varied is given in the Department of Labour’s published approval

statistics.

Just under 30% of Pacific citizens on study visas/permits obtain a temporary

work permit on the grounds of spouse/partner-related criteria. The most important

is spouse of New Zealand citizen or resident, followed by partnership,

spouse/partner of worker, fiancé(e) of New Zealand citizen or resident, and de

facto partner of New Zealand citizen or resident. Personal relationships, as well as

specific employment opportunities and skills, are critically important for securing

temporary work permits and building the employment experience in New Zealand

that is essential for securing residence.

Two other categories of approval stand out for Pacific citizens transitioning

from study to temporary work – ‘work experience’ and ‘sports player/coach’

(Table 3.17). Compared with students of other countries, a larger share of Pacific

students seeks work experience in New Zealand (8% compared with 3%). The

Pacific is well known as a source of sportspeople for New Zealand-based teams –

this is reflected in the higher numbers and larger shares of Pacific students

transitioning to temporary work as sports players than is the case for students

from other countries. There is also some ‘poaching’ of small numbers of medical

personnel and ministers of religion, but the numbers transitioning to residence

over the eight years are small (Table 3.17).

The relative importance of particular routes to temporary work permits from

study visas/permits varies quite markedly between groups of Pacific citizens.

Larger proportions of students from Fiji, for example, have transitioned to

temporary work permits via the ‘general’ and ‘spouse-related’ categories than

have students from the Polynesian and Micronesian countries or the other

Melanesian countries. By contrast, section 35A requests feature more prominently

for the Polynesian and Micronesian groups than for the Melanesian (including

Fiji) groups. For citizens of Papua New Guinea, Solomon Islands, and Vanuatu,

obtaining variations to the conditions of the student visa/permit has been the

single most important route to temporary work.

The shift towards an immigration policy that allows for transitions from one

type of entry permit or visa to another while onshore and the possibility of

prospective immigrants building up the points or relationships required for

residence approval through temporary work in appropriate employment in New

Zealand has been one of the most significant immigration policy developments

since the 1986 review. It has been a gradual transformation in policy rather than a

sudden innovation, reflecting changes in both demand and supply in the labour

and education markets, especially since the late 1990s.

The transition to residence approach to immigration contributes to blurring the

boundaries between ‘short-term’ and ‘permanent and long-term’ migration, as

these categories are defined in the arrival and departure statistics. The ability to

negotiate changes to visa/permit status while in New Zealand means the gap in

time between an immigrant arriving in the country and the time they are approved

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for residence in New Zealand can vary considerably. Arrival/departure statistics

and statistics on approvals for study, temporary work and residence in New

Zealand are not comparable, which can cause confusion in the interpretation of

migration trends.

Adding to the complexity in the contemporary statistics on migration in to and

out of New Zealand is the ongoing circulation of people to and from former

homes. It has been difficult to track this dimension to international migration in

New Zealand, partly because the focus of attention has always been on two quite

sharply defined groups: the new immigrants (citizens of other countries who have

moved permanently or for the long term to New Zealand) and the emigration of

New Zealanders. The circuits of movement maintained by both immigrants and

emigrants that have allowed them to maintain a physical presence in previous

places of residence have not been of much interest to policy-makers in New

Zealand until quite recently. New Zealand’s Talent Initiative, 11 and the growing

interest in the potential contribution the country’s sizeable overseas expatriate

population (the New Zealand diaspora) might make to economic transformation at

home has stimulated increasing interest in the circuits as well as the pathways of

movement.

Circuits of movement and the promise of return

Given the well-established links between New Zealand-based and island-based

Pacific populations, it is generally assumed that there is considerable circulation

of citizens of Pacific countries who are approved for residence in New Zealand.

The raw arrival and departure statistics for Pacific citizens are certainly suggestive

of this. As was shown in Table 3.1, there were 1.17 million arrivals and

1.07 million departures of citizens of Pacific countries between April 1982 and

March 2006 – more than the total population of Polynesia (740,000) in 2006.

Subsequent mobility of Pacific immigrants, 1998–2004

The Department of Labour’s innovative study of migrant movement patterns after

the migrants had taken up residence is the first substantive assessment of the

subsequent mobility of immigrants in New Zealand (Shorland, 2006). The

analysis involved producing a history of all the movements by migrants approved

for residence between 1 January 1998 and 31 December 2004 who took up

residence in the country during this period. A total of 257,230 migrants had

residence applications approved and took up residence, including 36,585 citizens

of Pacific countries (14% of the total) (Table 3.18). Almost two-thirds of all

migrants (65%) and a slightly smaller percentage of Pacific citizens (60%) had

made at least one move out of the country since taking up residence. However, the

majority (56% of all migrants and 62% of Pacific citizens) had made a small

11 The Talent Initiative is a joint undertaking between government and business to retain and

regain talented people and attract talented immigrants to New Zealand. For more information,

see LEK Consulting (2001).

© Institute of Policy Studies, Victoria University of Wellington, 2008 121


Pacific Interactions

number of subsequent moves (between one and four); only 8% had moved in and

out of the country more than five times (Table 3.18).

Table 3.18: Subsequent movement overseas of migrants approved for residence

between 1998 and 2004 (calendar years) who arrived during that period

Country

Arrived

1998–

2004

Never

moved

Moved

one to

four

times

Moved

five or

more

times

%

never

moved

%

moved

five or

more

times

Polynesia

American Samoa 80 42 36 2 52.5 2.5

French Polynesia 6 4 0 2 66.7 33.3

Pitcairn 1 0 1 0 0.0 0.0

Tonga 7,700 3,541 3,656 503 46.0 6.5

Tuvalu 548 437 109 2 79.7 0.4

Wallis and Futuna 0 0 0 0 0.0 0.0

Samoa 12,232 6,720 4,997 515 54.9 4.2

Total Polynesia 20,567 10,744 8,799 1,024 52.2 5.0

Melanesia

New Caledonia 4 0 2 2 0.0 50.0

Papua New Guinea 109 37 61 11 33.9 10.1

Solomon Islands 100 33 55 12 33.0 12.0

Vanuatu 38 16 19 3 42.1 7.9

Fiji 15,535 3,599 9,913 2,023 23.2 13.0

Total Melanesia 15,786 3,685 10,050 2,051 23.3 13.0

Micronesia

Federated States

of Micronesia 4 1 3 0 25.0 0.0

Guam 0 0 0 0 0.0 0.0

Kiribati 187 138 45 4 73.8 2.1

Marshall Islands 1 0 1 0 0.0 0.0

Northern Mariana

Islands 0 0 0 0 0.0 0.0

Nauru 38 18 15 5 0.0 0.0

Palau 2 2 0 0 100.0 0.0

Total Micronesia 232 159 64 9 68.5 3.9

Total Pacific 36,585 14,588 18,913 3,084 39.9 8.4

Total all countries 257,230 90,288 144,564 22,378 35.1 8.7

% Pacific 14.2 16.2 13.1 13.8

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Pasifika Mobility: Pathways, circuits, and challenges in the 21st century

The subsequent movement behaviour of Pacific migrants from different parts

of the region is summarised in Table 3.18. Three countries (Fiji, Samoa and

Tonga) account for the great majority of the migrants (97%) who arrived during

the period, with Tuvalu, Kiribati, Papua New Guinea, and Solomon Islands

providing most of the remainder (3%). Information on the three big Pacific

sources can be found in Shorland (2006); the data on the other Pacific countries

was extracted from the data files created for the Department of Labour’s study

specifically for this report by Viliami Tupou Futuna Liava’a (2007).

There are differences in subsequent movement behaviour by migrants from

the different Pacific regions. The Melanesian countries generally had smaller

proportions in the ‘never moved’ overseas since arrival category (23%) and a

significantly larger proportion in the ‘moved five or more times’ category (13%).

Fiji’s overwhelming dominance of the migration figures clearly determines the

Melanesian pattern, but the percentages for ‘never moved’ and ‘moved five or

more times’ are similar for those for migrants from Papua New Guinea and

Solomon Islands (Table 3.18).

In the case of Polynesia, migrants from Samoa and Tonga were less mobile

than those from Fiji after settling in New Zealand, but more mobile than their

counterparts from more distant Polynesian countries: French Polynesia and

Tuvalu. Proximity to New Zealand and the ease of travel to and from the country

clearly has some impact on the subsequent movement of recent migrants. In the

case of Kiribati and Tuvalu, for example, over 70% of their citizens who had

taken up residence between 1998 and 2004 had not been out of New Zealand

again (Table 3.18). This is a much larger proportion than is found for Samoa and

Tonga and more than three times the Melanesian average of 23%.

When the summary figures for the total migrant population (257,230) that are

given in Table 3.18 are compared with those for the 36,585 Pacific citizens, it is

evident that Pacific migrants have been somewhat less mobile than the average for

the migrant population as a whole. A larger share (16%) of them had not moved

subsequent to taking up residence than their share of the migrant population as a

whole (14%), and a marginally smaller share had made five or more moves.

Of those Pacific citizens who did make at least one move overseas after taking

up their residence permit, a larger share (78%) had been absent for less than 25%

of the time between their arrival and 31 December 2004 than was the case for the

migrant population as a whole (67%). The Melanesian movers tended to have

spent less of their time since arrival in New Zealand overseas and had a smaller

share (11%) absent for 50% or more of their time since arrival than did the

Polynesian movers (18%) or the Micronesian movers (19%). In all cases, the

Pacific regions had smaller shares absent for 50% or more of the time since arrival

than did the mover population as a whole (23%). Of the major Pacific migrant

sources, only Samoa had a larger share (25%) than the national average absent for

at least half of the time between arrival and 31 December 2004.

The duration of each spell of absence from New Zealand for those who made

at least one move during the period also tended to be shorter for Pacific citizens

than for all migrants. Whereas 53% of migrants had spells of 30 days or less when

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Pacific Interactions

they moved offshore, two-thirds of Pacific migrants were in this category. Pacific

migrants tended to be under-represented in the category of spells of over six

months (10%) by comparison with their share of all spells for the mover

population (14%). However, there were some significant differences between

Pacific mover populations in this regard – the citizens of Samoan (22%) and

America Samoa (25%) and Vanuatu (20%) had much larger shares of spells in the

six months and over category than did the citizens of Fiji, Tonga, or Kiribati, for

example.

Citizens of Samoa are much more likely to be overseas for lengthy periods,

especially those approved in the skilled and business categories (26%), than are

those from Tonga (5%) or Fiji (7%). They also have much larger shares of

migrants in the long-term absent category who had been approved under the

family sponsorship and international/humanitarian categories than have Tonga or

Fiji. Samoans are thus more likely to be away for longer periods than are Tongans

and Fiji citizens, although the latter have larger shares of their movers in the

‘moved five or more times’ category (Table 3.18). The data on subsequent

mobility of Pacific citizens approved for residence in New Zealand in recent years

suggests migrants from Fiji and Tonga are more frequent circulators between the

islands and their new homes.

The promise of return

Migration back to island homes to stay has not been researched in depth. There is

considerable speculation about the extent of return but few detailed studies of

those who have made the decision to go back to their island ‘homes’ with the

intention of residing there. Yet, as the extensive research on the determinants of

remittances shows, an intention to return ‘home’ at some stage in the future seems

to be one of the most important reasons migrants working overseas give for

sending money and goods back to kin in the islands (Connell and Brown, 1995). 12

When household surveys seeking information on mobility behaviour have

been carried out among Samoans, Tongans, Fijians and other Pacific peoples

resident in cities such as Auckland, Hamilton, Sydney and Brisbane, it is often

found that most of the migrant adults have been ‘home’ at least once since arrival

and plan to take their children to the islands at some stage (this statement is based

on findings from several unpublished graduate research reports; see, for example,

Fuka, 1985; Tongamoa, 1987; Fauolo, 1993; Liki, 1994; Stanwix, 1994;

Mangnell, 2004). The return trips have tended to be in the form of visits, rather

than migration back to live in the village. However, similar types of surveys in

villages in Fiji, Samoa, Tonga, the Cook Islands, Niue and Tokelau reveal that

many adults, especially men, have lived and worked overseas at some stage in the

past (see, for example, Hooper, 1982, 1993; Bedford, 1985, 1988; Matheson,

1986; Douglas, 1987; Underhill, 1989; James, 1991, 1993; Felgentreff, 1999;

Connell, 2008). It is clear from retrospective mobility histories collected in homes

12 See the discussion in chapter 2, ‘Pacific People in the New Zealand Economy: Understanding

linkages and trends’, by Jean-Pierre de Raad and Mark Walton.

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Pasifika Mobility: Pathways, circuits, and challenges in the 21st century

in both the islands and on the Pacific Rim that international population circulation

is a common process, and there are several bases from which this circulation

emanates (Liava’a, 2007). These bases may change for particular individuals and

families at different stages of their lives.

Arguably, the most comprehensive accounts of the process of return migration

to a Pacific village setting from a city in New Zealand are contained in Albert

Wendt’s novels (1973, 1974, 1977, 1979, 1991). These books contain graphic

descriptions of the difficulties faced by Samoan migrants in New Zealand

adjusting to alien residential, working and social environments, as well as the

difficulties faced by families, especially the children raised in New Zealand, in

adjusting to village life when they make the ‘grand return home’. Connell (1994,

pp 272–275) summarises the reality of return to Samoa, drawing extensively on

Wendt’s work, and notes that while Samoans almost always return home at some

stage, this is usually for a visit rather than on the assumption of permanence.

Connell (1994, pp 274–275, citing Pitt and Macpherson, 1977) concludes:

Ultimately few definitely choose to return, and fewer succeed. Even those

who visit Samoa are often glad to return to New Zealand. “It seems that

the closer the contact with the reality of home, the stronger the migrant’s

resolve to consolidate his new life in New Zealand. Thus if the dream

remains, it seems likely that it is nostalgia for the past rather than a plan

for the future”. For the hero of Sons for the Return Home [(Wendt, 1973)],

return also proves ultimately impossible; he cannot adjust and returns to

New Zealand as a lonely exile. Others too re-emigrate to an established

community of New Zealand Samoans, to their place in the growing

diaspora. Dreams may be tarnished but they will remain, as the choice of

return is postponed indefinitely.

A study of Niuean retirees by Magnall (2004) confirmed that even with

pension portability few are likely to return from New Zealand to live permanently

on Niue. On the basis of a series of in-depth interviews with a group of longestablished

Niuean residents in New Zealand, Magnall suggests that ‘return to

live’ is not likely to be as common as was earlier assumed by those favouring

pension portability. More likely will be a dual residence strategy – residence for

part of the year in Niue and part of the year in New Zealand – or more frequent

circulation from a New Zealand base. One of the things that will prompt this more

frequent circulation is a resurgence of interest among Niueans living in New

Zealand in connecting with the place that is central to their cultural identity: the

Rock of Polynesia (Bedford et al, 2006a, p 7). Magnall (2004, p 93) observes with

regard to the Niueans she interviewed:

Participants saw their role in retirement as ensuring the survival of Niuean

culture in Auckland across the generations and the survival of Niue as

their homeland. They combined both goals through visiting and retiring to

live on Niue. Their various returns gave them personal enjoyment,

maintained family ties to their homeland and contributed to Niue’s

development through spending their superannuation and by attracting

younger generations or future repopulation.

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Pacific Interactions

Field research on return migration by Liava’a (2007) in Tonga in December

2006 and March 2007, supported by the Institute of Policy Studies’ Pasifika

Project, showed that long-established New Zealand residents, with years of work

experience in New Zealand, can successfully adapt back into a Tongan way of

life, especially if there are opportunities to create a successful business linked

with primary production in the islands. The four most important reasons for

coming back to Tonga to live were family reunification (65%), a sense of Tonga

as ‘home’ (54%), the availability of suitable employment (54%) and the

availability of land (46%). Retirement was not an important factor motivating

return among this group (only 15% said it was ‘very important’). The three

greatest challenges that the returnees faced were adapting to Tongan culture

(88%), missing people and places overseas (23%), and the different working

environment (19%). All except one returnee intended to travel overseas again

within the next 12 months.

The detailed case studies completed with some of these respondents make it

clear that Tonga remains an attractive place of residence for Tongans who can

obtain a good government or private sector job or who can access sufficient land

to create a successful commercial enterprise. For these people, New Zealand

becomes the place they visit; Tonga is their ‘home’. One New Zealand–born

Tongan resident in Nuku’alofa described the pattern of movements over his life to

Liava’a as follows:

All my life I was raised in Tonga and New Zealand. In 1966 when I was 4

we came here and stayed till the 1970s. I started primary school here. We

went back to [New Zealand (NZ)] in the 70s as I finished primary school

and started college. I came back here in the 70s to do two years’ college in

Tonga then back to NZ. In 1979 I finished college and then went to

University and then all sorts of years working and then came back here in

1993. So all my life I have been going backwards and forwards between

Tonga and NZ. I was here in the 60s, I was back here in the 70s, I came

around in the 80s, and then in the 90s we came back. Now this is home.

I’m living in Tonga but I visit other countries.

Successful return does occur, but it is difficult to get a meaningful estimate of

the magnitude of this process. In a sense it is not really important to prove that

return is ‘permanent’ or ‘lasting’. As Connell (1994, p 277) reminds us:

Migration is rarely absolute, unambivalent or final; it is not a cause and

consequence of a definite break with a cultural life that is part of history,

but a partial and conditional state, characterised by ambiguity and

indeterminancy … Uncertainty defines the experience of migration, even

in second generations.

Ambiguity of migration in transnational societies

Persistence of the ideology of return is, as Connell (1994, 1997) points out, just

one means of bridging and welding together many different lifestyles and

opportunities. Over the past three decades, the diversity of lifestyles experienced

by Pacific migrants in cities in New Zealand, Australia, and North America

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Pasifika Mobility: Pathways, circuits, and challenges in the 21st century

especially, as well as in the islands, has required inevitable acceptance of culture

clashes, discrimination and disappointment, notwithstanding the fact that there

will always be some individuals who move more easily between societies,

especially those endowed with networks of transnational families (Connell, 1994).

Much more cosmopolitan populations of Samoans, Tongans, Cook Islanders,

Niueans, Tokelauans, and Fijians now inhabit both the villages in the islands and

the cities on the Pacific Rim than was the case in the 1960s and 1970s when the

most recent Pacific diaspora commenced. These people are much more at ease

with the multiple identities that are required to cope effectively with living in

many locations.

There are costs associated with the increasing ambiguity of identity that

accompanies the successful cosmopolitan. As Wendt himself said (cited in

Connell, 1994, pp 276–277):

when you don’t belong completely to any culture … you will always be an

outsider and suffer from a sense of unreality … I know I can’t live away

from Samoa for too long. I need a sense of roots, of home – a place where

you live and die. I would die as a writer without roots; but when I go home

I’m always reminded that I’m an outsider, palangified [Europeanised].

Ambivalence about life in a Pacific Rim city and life in the islands remains the

norm for most Pacific migrants, and for many of their children living overseas.

Macpherson (1997, p 95) talks of new pan-Pacific identities beginning to emerge

among the second generation:

in the social space between their parent’s Pacific Island societies and the

predominantly European or Pakeha society. …. Known to themselves

variously as the ‘PIs’ or ‘Polys’ or ‘NZ-borns’, this group is creating a

new social space in which elements of their parents’ culture and society

are combined with elements of others found in the city to produce a new

patois, new music, new fashion, new customs and practices which mark

their distinctiveness.

An excellent doctoral thesis by Teena Brown-Pulu (2006) analyses how three

generations of a Tongan family living in Manukau City make sense of the

processes and outcomes of intergenerational change that influence their everyday

lives, including making sense of their connectedness to Tonga as an origin place

of belonging as it is reconstructed and relived in an Auckland, New Zealand,

landscape.

In a genre of writing that has become popular in the migration literature in

recent years and invokes a dialectic “where journeys have many meanings, many

endings and much inbetweenness” (Connell, 1997, p 217), it is appropriate to

recall Hau’ofa’s (2000, p 71) observation:

Wherever I am at a given moment, there is comfort in the knowledge

stored at the back of my mind that somewhere in Oceania is a piece of

earth to which I belong. In the turbulence of life it is my anchor. No one

can take it away from me. I may never return to it, not even as mortal

remains, but it will always be homeland.

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Pacific Interactions

At the root of Pacific peoples’ identities, including those born in other countries,

is an acknowledgement of a homeland in the islands. This acknowledgement of an

island home underpins the complex system of transnational social and economic

relationships at family and community levels that Ward (1997, p 179) suggests “in

some respects transcend the State as the primary socio-economic grouping for

whole peoples”.

This phenomenon is by no means unique to the Pacific; as Portes (1996,

p 151) pointed out in his attempt to give theoretical form to the concept of

transnational communities, “what common people have done in response to the

process of globalisation is to create communities that sit astride political borders

that, in a very real sense, are ‘neither here nor there’ but in both places

simultaneously”. These are what Macpherson (1997, p 96) refers to as “metasocieties”

– transnational societies that are formed to encompass highly dynamic

systems of free movement of people, ideas and practices between various

localities. As Ward (1997, p 180) goes on to note, echoing Hau’ofa’s and

Macpherson’s views about the interconnectedness of peoples and places in the

Pacific region:

these transnational linkages … may give us clues to the future sociocultural

developments and networks in other parts of the worlds as people

everywhere become more mobile and migration does not carry the old

implication of almost complete social and economic separation at the

household level.

Towards a new Pacific population concept

Repeated reference has been made to the circulation of Pacific peoples between

the islands and New Zealand, and often through New Zealand to Australia – the

maintenance of connections between people and places through physical mobility.

This applies especially to Polynesia, and the remarks in this concluding section

relate specifically to the Cook Islands, Niue, Samoa, and Tonga. The Pacific

populations, both in these islands and in New Zealand, contain large proportions

of people who have lived in villages or small towns in Polynesia as well as in

cities on the Pacific Rim. The island-resident and the New Zealand–resident

populations at any one time (such as a census) contain a mix of people who have

been resident in both places at different times during the preceding few years.

They are not discrete populations in the sense of one being just island-based

residents, and the other just New Zealand–based residents. They are both

relatively fluid populations in terms of the mobility between the islands and New

Zealand.

In order to capture the essence of this fluidity it is useful to consider the

concept of an ‘effective’ population – the population at any one time that draws

on the basic services and facilities (water, sewerage, commercial enterprises,

accommodation, health services, employment and so on) in a place (Bedford et al,

2006a, p 4). The ‘effective’ population is larger than either the de facto population

(the population in a place on census night, excluding absentees but including

128

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Pasifika Mobility: Pathways, circuits, and challenges in the 21st century

visitors) or the de jure population (the usually resident population, which excludes

temporary visitors, but includes those temporarily absent who usually live in the

place). Where there are high levels of circulation of people between places, the

effective population includes a share of those who move in and out of a place on a

temporary basis, as well as those who usually live there. In the Polynesian

context, it is a population that captures a part of the diaspora of Cook Islanders,

Niueans, Samoans, and Tongans and includes these people in the island-based

population because there is always some movement through the island of kin as

visitors and tourists, placing demands on island-based services and facilities and

being an essential part of the community through the year.

The concept of an ‘effective population’ has been outlined with reference to

Niue in a population policy scoping study (Bedford et al, 2006b). It is a difficult

population to measure because it requires information on the de facto population,

those temporarily absent from the island, a small share of the diaspora, and the

likely other visitors to the island through the year. Data to operationalise the

concept can be found for some components of the population; for others,

assumptions have to be made. A formal definition of the concept is in an appendix

to the February 2007 working paper (Bedford, 2007).

In the light of the extensive mobility of Cook Islanders, Niueans, Samoans,

and Tongans between the islands and New Zealand, and the sizeable diaspora for

all four Pacific populations on the Pacific Rim, further exploration of the concept

of ‘effective’ populations for island countries is warranted, especially in the light

of findings about contemporary Pacific mobility between the islands and New

Zealand in this chapter. The round of censuses that has been conducted in 2006 in

these islands, New Zealand, and Australia provides a useful statistical base on

which to experiment further with the concept. It has potential to contribute

another dimension to the analysis of the pathways, circuits, and challenges that are

associated with Pasifika mobility in the 21st century.

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4

Pacific Island Economies: Role of international

trade and investment

Bob Warner 1

Contents

Introduction ...............................................................................................................135

Trade and financial flows ..........................................................................................139

Impediments to trade .................................................................................................152

Trade liberalisation and regional integration.............................................................159

Temporary movement of natural persons..................................................................171

References .................................................................................................................185

Introduction

Features of Pacific Island countries

Pacific Island countries (PICs – here taken to mean the developing economy

members of the Pacific Islands Forum) and their engagement with the rest of the

world have features that are different from those of many other developing

economies. These features can be stylised as follows.





With the exception of Papua New Guinea, the countries are small isolated

islands or fragmented collections of islands: with relatively limited resource

bases, their economies are fairly undiversified and quite dependent on imports.

Quasi-subsistence agriculture and fishing are often important parts of the

economy.

Geography impedes domestic economic integration as well as integration with

the world and regional markets: high costs of internal transport constrain

market access and the development of services that would provide incentives

for specialisation and shifts away from subsistence production.

Aid has traditionally been very important and has underpinned large public

sectors: it has also supported a significant share of trade, either directly as

grants or indirectly through preferential trading arrangements: this has had

significant ‘Dutch disease’ consequences for both exporting and import

competing activities.

In some countries, outward emigration and inward remittance flows are very

important.

1 Director and International Projects Manager, Centre for International Economics (CIE).

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Pacific Interactions




For many countries exports involve the (sometimes unsustainable)

exploitation of natural resources (timber, fish) or minerals (oil, gold, copper).

Taxes on trade (exports and imports) comprise a large share of government

revenues, adding to the disadvantage faced by exports that are not associated

with significant rents.

Foreign investment is heavily regulated, and there are considerable ‘behind the

border’ constraints on investment, including complex customary land tenure

systems, obstructive regulation and the monopolisation of key sectors,

especially transport and communication. These constraints also impede

domestic investment in activities targeting international and domestic markets.

Role of trade liberalisation

Some of the trade preferences offered by developed countries that have provided

sheltered markets for exports of some commodities (such as sugar, textiles and

clothing and automobile components) have been or are being eroded. Long-term

trends in fuel prices look to exacerbate the transport cost problem of some Pacific

economies, although they are clearly improving the terms of trade of energy and

mineral exporters, and creating opportunities for the production of fuel substitutes

using local tree crops.

Enthused by the strong evidence of the critical role that openness to

international trade and investment is playing in the successful growth performance

of the more successful developing economies, donors are encouraging Pacific

economy governments to reduce policy and institutional barriers to international

trade and investment. At this stage, the principal vehicles for doing this appear to

be encouraging regional integration and, increasingly, reciprocal granting of trade

preferences. There is also continued support for participation in the multilateral

trade architecture of the World Trade Organization (WTO).

Given the particular circumstances of PICs, it is worth asking whether trade

liberalisation and the particular path being pursued make good sense for the

Pacific.

This chapter considers the following six issues.

Protectionism

Is protectionism a sensible long-term option While isolation and size might lead

Pacific economies to tend more towards autarky than other countries, it is not

clear that protectionism is a sensible long-term option: protectionism simply raises

the costs of engagement with the rest of the world even further. It is also not clear

that protectionism is an easy policy to implement. The ability of the larger Pacific

economies to control borders is limited by geography, resources, and culture.

Benefits and costs from international trade and investment

For some economies, international competition for access to their natural

resources and political support in international forums will continue. The question

then is: what is the best way to maximise the benefits from international trade and

136

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Pacific Island Economies: Role of international trade and investment

investment and to minimise the cost This requires thinking about what

complementary actions might be required to realise the gains from greater

openness, and what challenges pursuing such agendas might pose in the context of

Pacific Islands’ governance and social structures.

Unilateral, regional and multilateral approaches to liberalisation

What are the technical and political economy merits of unilateral, regional and

multilateral approaches to liberalisation and integration, and what leverage, if any,

can economies exert in linking trade and development issues in negotiations with

larger economies

From a purely economic point of view, current regional integration initiatives

in the Pacific do not seem to offer much return for the effort involved. What has

been, and what might be, achieved with the Pacific Island Countries Trade

Agreement, Pacific Agreement on Closer Economic Relations, Melanesian

Spearhead Group Trade Agreement, and Economic Partnership Agreement

Unilateral liberalisation of trade and investment from all sources would be the

best approach. But some Pacific economies may feel there are rents or mercantilist

gains to be achieved from preferential trade agreements with other parts of the

world.

What can Pacific economies hope to achieve from these agreements

Benefits of pursuing a World Trade Organization agenda

How much effort should Pacific economies make to engage with the multilateral

trade architecture Given limited capacity (and the higher priority demands for

use of this capacity), the ease with which many of the gains from trade can be

achieved from unilateral action, and the costs of implementing agreements, what

are the net benefits of pursuing a WTO agenda, individually or in concert with

other economies

Logic of starting regional institutional integration with market

integration

What is the logic of approaching broader regional integration initiatives, involving

the sharing of institutions, with market integration through trade and investment

agreements as the starting point

Liberalisation of the movement of natural persons

What are the benefits for Pacific Island and developed Pacific economies of

liberalisation of the movement of natural persons Does it help to see schemes to

allow such movements as related to the trade in services What is the case for

including such liberalisation in trade agreements

Principal positions

The principal positions put forward in this chapter are as follows.

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Pacific Interactions

Nothing to gain from retaining barriers to trade and investment

PICs have nothing to gain from retaining barriers to international trade and

investment.

Little to gain from binding liberalisation to progress on regional

trade and investment agreements

PICs can achieve nearly all of the standard gains from liberalisation on a

unilateral basis: it is not clear that anything much is gained from binding

liberalisation to progress on regional trade and investment agreements, even if

they include New Zealand and Australia or the European Union.

Policy barriers not binding constraints to investment and growth

Policy barriers to trade and investment are probably not binding constraints to

investment and growth in PICs.

For some PICs, geographic, resource and size constraints are critical, although

technological changes have the potential to reduce the burden of some of these.

For other PICs, livelihood strategies and informal institutional arrangements

that have served well to manage risks and optimise community well-being do not

readily lend themselves to a situation in which specialisation and formal

contractual behaviour are the keys to future development.

The costs of sovereignty are high for some PICs. This is not only because of

the resources that have to be allocated to running the apparatus of government. It

is also because some aspects of sovereignty distract communities from dealing

with critical development challenges. There is a strong case for assisting PICs to

reduce these costs, and a broader approach to regionalism is an important way to

address this. But this approach need not be tied to or preceded by market

integration, as has been the case in other such initiatives (such as the European

Union).

Temporary migration of Pacific people for employment is a

development issue

There is an appealing case for New Zealand and Australia to continue to work on

allowing temporary migration of Pacific people to take up work. But this is better

addressed as a development issue rather than as a trade in service issue to be

negotiated in a trade agreement.

Temporary labour migration schemes are too important to be subject to the

search for compensating concessions that pervades trade negotiations. It would be

much more relevant to discuss them in the context of how New Zealand and

Australia support development in the Pacific.

The challenge will be how, over time, to sort out the best mix of development

assistance aimed at improving job creation in PICs and migration schemes

targeting employment of Pacific peoples in the labour markets of New Zealand

and Australia.

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Pacific Island Economies: Role of international trade and investment

Both approaches are essentially attempting to match under-employed people

from PICs with the complementary factors of production (such as capital, modern

entrepreneurship, skilled labour, well-functioning institutions to support

investment and contracting and to protect property rights) that are prerequisites

for job generation. Development assistance tries to do this by fostering movement

of these complementary factors to PICs; temporary employment schemes try to

achieve it by moving people to places where these factors are already located. The

question is which approach (or mix of approaches) gives the best leverage on the

humanitarian, economic, and strategic concerns that drive New Zealand and

Australian interest in the prosperity and sustainability of their Pacific neighbours.

Trade and financial flows

Trade is part of the lifeblood of Pacific economies. While they do not contribute

much to world trade, PICs’ export and import flows are large compared with their

gross domestic product (GDP) (Figure 4.1).

Over the last decade, the value of recorded exports and imports for the Pacific

economies as a group has remained relatively stable, averaging US$2,921 million

and US$3,316 million, respectively, each year. With the exception of Papua New

Guinea, the economies all run significantly negative trade balances: returns from

exports finance often quite small proportions of national imports, although as

Figure 4.1 shows, the extent of the deficit varies significantly across economies.

Figure 4.1: Relative openness of Pacific Island nations as measured by export and

import flows as a percentage of gross domestic product

Cook Islands

Federated States of Micronesia

Fiji

Kiribati

Marshall Islands

Nauru

Niue

Palau

Papua New Guinea

Samoa

Solomon Islands

Tonga

Tuv alu

Vanuatu

Imports

Exports

0 20 40 60 80 100

Percent of gross domestic product (% )

Source: ADB (2006).

© Institute of Policy Studies, Victoria University of Wellington, 2008 139


Pacific Interactions

(Any conclusions about the structure, level, and direction of the trade of PICs

have to be qualified by recognition of the probable extent of unrecorded trade

flows. The infrastructure and institutional capacity to accurately monitor and

record trade flows in most PICs is limited, and some policies encourage the use of

informal channels. While aid donors do assist in funding both capacity-building

programmes and the costs of monitoring, a proportion of trade flows goes

unreported. Where bilateral trade is to or from a larger trading partner, commodity

composition and value can be estimated using counterpart figures. But where

flows are to a similarly institutionally weak or under-funded environment, the

probability that most transactions are recorded can be low.)

Historical and current trade flows

Historically, trade flows to and from Pacific Island nations have varied across

source, destination, commodity composition and relative importance to each

economy. The size of each economy, population and landmass and availability of

natural resources, including both aquatic and mineral-based resources, drives

some of these trade differences. Trading patterns built up under colonial systems

persist, and institutional arrangements, such as currency regimes, and preferential

trading arrangements – such as those determined under the European Union’s

treaty relationships with African, Caribbean and Pacific countries – help shape the

direction of trade.

Direction of commodity trade

Some of the factors discussed above probably help to explain why PICs export

more to Europe than to the United States. In 2004, Pacific Island nations’ exports

to Europe were eight times larger than exports by value to North and Central

America (Figure 4.2). Importantly, the value of formal trade between Pacific

Island nations is limited, accounting for around 2% of imports in 2004.

Figure 4.2: Pacific exports by destination (by value), 2004

Australia & New

Zealand

25.5%

Asia

27.2%

North & Central

America

4.9%

Other

7.3%

Pacific Islands

1.6%

Africa & Middle East

0.6%

Europe

40.1%

Rest of the world

0.2%

Note: ‘Pacific’ and ‘Pacific Islands’ mean Cook Islands, Federated States of Micronesia,

Fiji, Kiribati, Marshall Islands, Nauru, Palau, Papua New Guinea, Samoa, and Solomon

Islands. Source: ADB (2006).

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Pacific Island Economies: Role of international trade and investment

There have been some changes in the direction of trade in the last 15 years. As

Figure 4.3 shows, the share of exports going to Asia and Australia and New

Zealand has declined as the share destined to Europe has increased. However, the

share of imports from Australia and New Zealand and Asia has expanded at the

expense of the shares accounted for by Europe and North and Central America

(Figure 4.4).

The directions of trade vary significantly across Pacific economies. As

Figure 4.5 shows, Melanesian economies as a group export proportionately more

to Europe, while over 50% of the exports of Polynesian economies go to Oceania,

primarily Australia and New Zealand, which are much more important sources of

imports into Melanesia and Polynesia than for Micronesian economies.

One factor that might be thought to explain some of the variation in directions

of trade is the currency regime of each Pacific economy. Nauru, Kiribati, and

Tuvalu use the Australian dollar, Cook Islands and Niue use the New Zealand

dollar, and Marshall Islands, Federated States of Micronesia, and Palau use the

United States dollar, while Fiji, Papua New Guinea, Samoa, Solomon Islands,

Tonga, and Vanuatu have their own currencies. As Table 4.1 shows, however,

currency regimes may not be a strong explanator of which countries PICs export

to, but may have some influence on the origin of imports.

Figure 4.3: Changes in the destination of Pacific exports, 1990–2004

45

40

1990 2004

35

30

Share (%)

25

20

15

10

5

0

South

Rest of the

Africa &

Pacific

North &

Australia &

Asia

Europe

America

world

Middle

Islands

Central

New

East

America

Zealand

Note: ‘Pacific’ and ‘Pacific Islands’ mean Cook Islands, Federated States of Micronesia,

Fiji, Kiribati, Marshall Islands, Nauru, Palau, Papua New Guinea, Samoa, and Solomon

Islands.

Source: ADB (2006).

© Institute of Policy Studies, Victoria University of Wellington, 2008 141


Pacific Interactions

Figure 4.4: Changes in the origin of Pacific imports, 1990–2004

50

Share (%)

45

1990 2004

40

35

30

25

20

15

10

5

0

Rest of the South Europe Pacific North & Africa &

world America

Islands Central Middle

America East

Asia

Australia &

New

Zealand

Note: ‘Pacific’ and ‘Pacific Islands’ mean Cook Islands, Federated States of Micronesia,

Fiji, Kiribati, Marshall Islands, Nauru, Palau, Papua New Guinea, Samoa, and Solomon

Islands. Source: ADB (2006).

Figure 4.5: Exports and imports by source destination and origin (by value) 2004

100%

Ex ports by destination

75%

50%

25%

0%

M icronesia M elanesia Polynesia

Asia Europe North & Sout h America Oceania M iddle East, Africa & other

100%

Imports by origin

75%

50%

25%

0%

M icronesia M elanesia Polynesia

Asia Europe North & South America Oceania Middle East, Africa & other

Note: Data is not available for Niue. Source: ADB (2006).

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Pacific Island Economies: Role of international trade and investment

Table 4.1: Trade shares and currency regimes

Currency

regime/Pacific

Island countries

Australian dollars (A$)

Australia

Share of imports

New

Zealand

United

States

Australia

Share of exports

New

Zealand

United

States

Nauru 59.1 0.0 3.4 0.3 0.0 0.5

Kiribati 36.0 8.7 2.5 1.1 0.0 9.0

Tuvalu 10.6 4.0 0.0 0.1 0.0 0.0

New Zealand dollars (NZ$)

Cook Islands 4.3 82.9 0.8 2.6 18.9 4.3

Niue 0.0 97.6 0.0 0.0 100.0 0.0

United States dollars (US$)

Marshall Islands 14.0 3.5 68.1 0.0 0.0 0.0

Federated States of

Micronesia 8.3 0.0 61.9 0.0 0.0 33.4

Palau 3.0 0.0 0.0 0.8 0.0 0.0

Own currency

Fiji 27.7 17.8 2.3 19.2 3.7 23.6

Papua New Guinea 45.2 7.5 2.8 27.7 0.0 1.2

Samoa 9.6 23.1 5.3 60.7 1.6 4.9

Solomon Islands 25.3 5.3 1.9 2.2 0.0 0.0

Tonga 10.3 46.7 6.7 1.5 3.9 24.9

Vanuatu 15.5 6.0 0.0 1.2 0.0 0.9

Source: ADB (2006).

The Cook Islands and Niue purchase most of their imports from New Zealand,

the Marshall Islands and Federated States of Micronesia get around two-thirds of

their imports from the United States, and Nauru buys 60% of its imports from

Australia. However, other countries such as Tuvalu and Palau acquire quite small

shares of total imports from the country the currency of which they use. Some

countries with independent currencies seem to resort to Australia and New

Zealand as major sources of imports (eg, Papua New Guinea and Tonga).

Economies that are in some kind of association with metropolitan countries may

also receive significant transfers that are tied to importing from the source

country, so heavy reliance on that source may be less a function of the ease of

transacting in a single currency than of the obligations associated with aid flows.

Composition of commodity trade

Natural resources dominate exports, accounting for 54% of all export earnings in

2004 (Figure 4.6). However, this result is heavily influenced by Papua New

Guinea’s mining and oil extractions. On a sub-region by sub-region analysis, there

is only limited consistency of what is exported. Melanesian (excluding Papua

New Guinea) exports are influenced by Fiji’s sugar and garment exports and

Solomon Islands’ timber products, while Micronesian and Polynesian exports are

© Institute of Policy Studies, Victoria University of Wellington, 2008 143


Pacific Interactions

often skewed by the importation and re-exportation of equipment and capital

equipment such as ships and aircraft. That is, trade flows to and from Pacific

Island economies are not homogenous. Rather, large variations in the relative size

and composition of trade are apparent, even on a country-by-country basis.

Table 4.2 presents information on the principal export commodities of most

Pacific economies.

Figure 4.6: Contribution of natural resources to export earnings, 1992–2004

Pearls, stones and metals Mineral fuels and mineral oils Wood and articles of wood

Share of exports from Pacific Island countries xx

30%

20%

10%

0%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Source: Australian Department of Foreign Affairs and Trade Statistical Analysis and

Reporting System database; United Nations database.

Table 4.2: Principal export commodities

Economy and

commodities

Share of

exports (%)

Economy and

commodities

Share of

exports (%)

Cook Islands

Marshall Islands

Fish 38.9 Coconut oil 16.7

Pearls 34.2 Copra 15.0

Fruit and vegetables 2.5 Fish and trochus 8.0

Clothing and footwear 2.1 Re-export of diesel 61.6

Fiji

Samoa

Garments and textiles 21.7 Fish 47.3

Sugar and molasses 18.6 Garments 25.1

Fish 7.1 Beer 9.8

Gold 6.7 Coconut cream 7.3

Taro 3.0

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Pacific Island Economies: Role of international trade and investment

Economy and

commodities

Share of

exports (%)

Economy and

commodities

Share of

exports (%)

Federated States of Micronesia

Solomon Islands

Fish 65.4 Timber 65.3

Garments 22.1 Fish 17.7

Betel nuts 4.9 Cocoa 7.2

Copra 2.1

Kiribati

Tonga

Copra 27.6 Squash 41.4

Seaweed 11.9 Fish 21.7

Fish 9.0 Vanilla 1.0

Palau

Vanuatu

Garments 24.6 Copra 9.0

Fish 13.0 Beef 7.7

Papua New Guinea

Gold 35.2

Copper 17.8

Crude petroleum 21.0

Forest products 5.6

Palm oil 5.6

Coffee beans 3.8

Timber 9.0

Cocoa 1.2

Source: ADB (2006); Australian Department of Foreign Affairs and Trade Statistical

Analysis and Reporting System database; United Nations COMTRADE database.

While exports largely consist of minerals, fish, garments and tree crop

products, heavy machinery, transportation equipment and fuel dominate imports

into Pacific Island nations, accounting for almost 50% of all imports in 2004

(Figure 4.7).

© Institute of Policy Studies, Victoria University of Wellington, 2008 145


Pacific Interactions

Figure 4.7: Imports are dominated by heavy machinery, transportation equipment

and fuel, 1992–2004

Ships, boats and floating structures Mineral fuels Machinery and mechanical appliances

Share of imports into Pacific Island countries

40%

30%

20%

10%

0%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Source: Australian Department of Foreign Affairs and Trade Statistical Analysis and

Reporting System database; United Nations COMTRADE database.

Trade in services

The data available on trade in services in the Pacific region, although limited,

suggests foreign exchange flows from exports of services are significant for some

PICs. Figure 4.8 shows data for six of the Pacific region countries. Service exports

average 21% of GDP for these countries. As the figure shows, for Fiji, Samoa,

and Vanuatu, travel services dominate these exports. This largely reflects the

importance of tourism in these countries.

Tourism is an activity based firmly on comparative advantage, making use of

resources that are abundant and accessible in the Pacific Islands, including

spectacular scenery, a clean environment, isolation and seclusion. The high

transportation costs associated with Pacific tourism are offset by the remoteness,

which contributes to the rarity and pristine quality.

As Figure 4.9 shows, the estimated contribution of tourism to Pacific

economies varies from around 47% (Cook Islands) to around 3% (Solomon

Islands and Niue). As a recent study prepared for the South Pacific Tourism

Organisation stated, data on the economic contribution of tourism in the Pacific is

patchy (Milne, 2005), so it is difficult to get a sense of the full impact of tourism

on PICs’ economies.

Pacific tourism is growing, but slowly: the average growth in arrivals into the

economies shown in Figure 4.9 between 1995 and 2003 was 3.4% (AusAID,

2006a). Fiji accounts for nearly 40% of visitor arrivals into PICs (Figure 4.10).

146

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Pacific Island Economies: Role of international trade and investment

Figure 4.8: Trade in services as a share of gross domestic product

40

Percent of gross domestic product (%) x

35

30

25

20

15

10

5

Exports

Imports

0

Fiji

Papua New

Samoa

Solomon

Tonga

Vanuatu

Guinea

Islands

Percent of gross domestic product (%) xx

40

35

30

25

20

15

10

5

0

Transportation Travel Other commercial services

Fiji

Papua New

Samoa

Solomon

Tonga

Vanuatu

Guinea

Islands

Source: WTO (2007); ADB (2006).

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Pacific Interactions

Figure 4.9: Tourism as a share of gross domestic product, 1995–2003

Percent of gross domestic product (%) xx

50

40

30

20

10

0

Cook Islands Fiji Kiribati Niue

Papua New Guinea Samoa Solomon Islands Tonga

Tuv alu

Vanuatu

Source: South Pacific Tourism Organisation, reported in AusAID (2006a).

Figure 4.10: Share of visitor arrivals, 2000

Tuv alu

Vanuatu

0.2%

Tonga 7.8%

Solomon Islands 4.7%

1.4%

Samoa

11.9%

Cook Islands

9.9%

Federated States of

Micronesia

6.5%

Papua New Guinea

8.0%

Palau

Marshall Islands 7.9%

0.7%

Kiribati

0.6%

Niue

0.3%

Fiji

40.1%

Source: AusAID (2006a); Cleverdon (2003).

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Other flows

Most PICs run sizeable current account deficits: foreign investment, aid and

remittances contribute to varying extents to the financing of these deficits, as well

as directly and indirectly affecting the countries’ propensities to import and

capacity to export goods and services.

Foreign investment

Foreign investment is another source of financing of imports. Papua New Guinea

is the dominant destination for inward flows of foreign direct investment in the

region, but as Figure 4.11 shows, these flows have been somewhat volatile,

reflecting expectations of commodity prices and perceptions of the relative

riskiness of investing in the country. As Figure 4.12 shows, Papua New Guinea

accounts for 66% of the current stock of foreign direct investment in the Pacific.

Figure 4.11: Foreign direct investment flows, 1990–2004

Micronesia Other Melanesia Polynesia Papua New Guinea

800

600

US$ million xx

400

200

0

-200

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Source: UNCTAD (2006).

Aid flows, remittances and sovereignty-related rents

Aid and remittances are also significant sources of financing of imports into many

Pacific economies. Table 4.3 presents some of the available information that gives

a sense of the relative size of aid and remittance flows compared with the value of

merchandise imports and exports. The data is not, of course, directly comparable:

a significant share of aid flows funds technical assistance and other services, and

the remittance data is as recorded as net private transfers in balance of payments,

and almost certainly understates remittances in kind and non-registered flows.

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Figure 4.12: Shares of foreign direct investment in-stocks across the region, 2004

Micronesia

4% Polynesia

5%

Other Melanesia

25%

Papua New Guinea

66%

Source: UNCTAD (2006).

Table 4.3: Trade, aid, and remittances, around 2002–2003

Imports Aid flows Remittances Exports

Country % of GDP % of GDP % of GDP % of GDP

Cook Islands 46.0 3.5 0.7 4.9

Federated States of

Micronesia 47.3 49.7 1.0 6.5

Fiji 49.2 2.3 7.0 30.1

Kiribati 99.4 31.5 12.0 6.9

Marshall Islands 55.8 53.9 0.6 9.3

Nauru 71.0 35.5 n/a 25.5

Niue 68.7 15.1 n/a 1.5

Palau 71.5 20.5 n/a 7.3

Papua New Guinea 31.4 6.4 0.2 47.8

Samoa 51.3 10.4 14.2 5.2

Solomon Islands 28.6 25.7 0.0 25.2

Tonga 74.1 16.3 39.2 11.6

Tuvalu 75.6 38.6 35.9 0.9

Vanuatu 58.7 11.7 3.3 42.4

Note: The aid flow data for Solomon Islands is probably seriously understated, as

national accounts and balance of payments data does not seem to capture the effects

of the funding of the Regional Assistance Mission to Solomon Islands. Recent estimates

suggest aid-funded development expenditure may now be closer to 75% of measured

gross domestic product (GDP).

Source: ADB (2006); AusAID (2006b).

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An Asian Development Bank report on remittances presents time series data

that confirms remittances have long been significant in Tonga and Samoa and are

becoming increasingly important for Fiji (ADB, 2005).

The economic consequences of aid and remittances are quite different.

Remittances flow into private hands and fund private consumption and investment

(the authors of the Asian Development Bank report argue that a traditional view

that remittances are largely used to fund consumption is erroneous) (ADB, 2005).

An important share of remittances (although probably unrecorded) is in the form

of imports. Aid flows may directly fund import of goods and services: but they are

also used directly and indirectly to fund local expenditures, so may have

important influences on wages and the real exchange rate. Box 4.1 discusses some

implications of large aid inflows for Solomon Islands, which has had a large

increase in aid flows in the past few years.

Box 4.1: Managing natural resource rents and aid in Solomon Islands

Countries endowed with natural resources should have a greater potential for

growth and wealth than those without these resources. However, an inverse

correlation exists for numerous countries between their natural resources booms

and per capita growth. This signifies that these resources are often poorly

managed.

Several economic reasons are cited in the literature: the difficulty of managing

price volatility is one reason, another is the so-called ‘Dutch disease effect’. This

effect, given the title when considered in relation to the decline in the Dutch

manufacturing sector in the late 1960s in the aftermath of exploitation of natural

gas resources by the Netherlands, arises when a surge in foreign exchange

earnings from natural resource exports leads to an appreciation of the real

exchange rate and a depression of output and employment in other sectors

producing exports or competing with imports. These changes can be transmitted

through an appreciation of the nominal exchange rate or movements in the prices

of non-tradeables (goods the prices of which are not subject to the discipline of

international competition). It is likely that surging logging exports have had this

kind of effect in Solomon Islands. In the future, without careful management,

surges in international assistance could have a similar effect.

In Solomon Islands, where a significant proportion of natural resource revenues

accrue to the state, a ‘Dutch disease’ effect is not an automatic consequence of a

surge in foreign exchange earnings. When a ‘boom’ accrues to the public sector,

adverse consequences occur only if the government translates the surge in

foreign exchange income into a fiscal shock. Sterilisation (avoiding the monetary

effects of the surge) and stabilisation (avoiding the stimulus to domestic activity)

are technically easy to achieve – although politically daunting – since all the

government has to do is to decide not to spend the incremental revenues. the

government can reduce the impact on the exchange rate, while increasing

spending, if the foreign exchange revenues are not used to fund domestic

spending (ie, the revenues are used to purchase imports of goods and services).

Given the size of the foreign assistance inflows that are now targeted at Solomon

Islands, an aid-induced ‘Dutch disease effect’ is a serious risk, with serious

consequences for rural activities. The problem is, of course, that the government

has less room to manoeuvre with respect to donor funds because it may have less

control over the time path of expenditures and their composition.

Source: Warner et al (2006).

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Pacific Interactions

A naive view of aid flows is that they are to a fair degree exogenous from the

recipient’s perspective: they are influenced by need and performance and are

expected to diminish over time. But there are schools of thought that portray being

an aid recipient as part of an overarching, if not explicit, long-term strategy to

finance a significant part of the consumption of some Pacific populations. The

MIRAB (migration, remittances, aid and bureaucracy) model presents a way of

describing the observed behaviour of some Pacific societies and how the pursuit

of transfer payments to fund government and household recurrent expenditures

could be seen as a strategy to manage the risks that these societies face and exploit

the full set of resources that they control (Bertram, 1986, 1999). As several

analysts have pointed out, aid is just one of the flows that can be generated from

the fact of sovereignty. Statehood has given some PICs valuable services to trade

for aid flows: competition for votes in international organisations and the ability

to provide locations for military bases both form part of the geo-strategic services

described by Poirine (1995) that trigger relatively significant aid flows. For some

PICs, the foreign exchange inflows associated with these sovereignty-related

services are significant. Boland and Dollery (2006) explored the rental incomes

accruing to Tuvalu that were associated with the licensing of fishing vessels from

distant-water fishing nations; the leasing and marketing of Tuvalu’s top-level

domain of ‘.tv’; philatelic sales; the leasing of blocks of excess telephone

numbers; and passport sales. These rents accounted for up to three-quarters of

recurrent revenue in some years, and levels of recurrent government expenditure

were strongly correlated with these volatile flows.

Impediments to trade

Costs associated with trade

Significant costs are associated with trade to, from and between Pacific Island

nations. Explicit tariff and non-tariff barriers, the inefficient regulation of

transportation and communication services, the obstructive regulation of private

sector activity, and the risks and uncertainty created by poor macroeconomic

management and political instability impede the increases in specialisation and

investment that are necessary for the nations’ growth and expanded engagement

with the rest of the world.

Many Pacific economies are small, relatively isolated, and geographically

fragmented, with their population spread over many islands. Others are simply

very small. The largest, Papua New Guinea, faces considerable challenges from

the terrain of its largest land mass. Subsistence agricultural production is often the

most significant source of livelihood for the people.

These economies face daunting constraints to achieving the kinds of economic

transformation that have accompanied the improvements in the economic wellbeing

of the populations of less-developed countries in Asia. Intrinsically high

internal and external transport costs mean it is difficult to achieve the scale needed

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to provide returns to expanded industrial activity. They also raise the costs of

further processing to add value to existing primary products.

Institutional and government policy constraints

The ‘objective’ constraints to economic transformation discussed above and a

continued transition out of subsistence activities are compounded by a range of

institutional and government policy factors. Further, these institutional and policy

factors are constraining PICs’ ability to take advantage of developments that are

reducing the relevance of the objective constraints, at least with regard to trade in

services (see Box 4.2).

Box 4.2: New unbundling of services and trade in tasks

Geography and size have considerably limited the extent to which Pacific Island

countries can participate in the international division of goods production

processes that characterised much of the growth in exports of goods from

developing countries in the late 20th century. However, changes in information

and communication technologies are reducing the ‘tyranny of distance’ constraints

with respect to the trade in services. Technology has so reduced the costs of

communications and coordination that it is now possible to unbundle and

outsource tasks in the service production chain, facilitating a revolutionary growth

in the trade in services.

Grossman and Rossi-Hansberg (2006) argue that the transformation brought

about by changes in communications and information technologies mean the

international division of labour should now be thought of as driven by the trade in

tasks rather than in goods. Firms in developed countries are offshoring tasks that

use information technology intensively, where the output is transmittable using

this technology, where it is possible to codify what is required, and that require

little face-to-face interaction (Baldwin, 2006). Physical location and transport

costs no longer matter in determining the scope for participation in this trade:,

but an ability to acquire new skills and an openness to the changes that

technology facilitates are critical (Friedman, 2006).




Five key self-imposed constraints are as follows.

Poor macroeconomic policies and natural resource management increase the

risk and uncertainty of the transition out of subsistence production, and is a

deterrent to investment in cash-generating activities that are not cushioned by

access to large resource rents or protection from competition.

Poor public investment in, and poor management and maintenance of,

transport and communications infrastructure exacerbate the costs of doing

business. They also make it difficult for rural people to get information about

market opportunities and technical and managerial innovations. They also,

quite importantly, reduce rural people’s access to saving and consumption

opportunities that might provide them with stronger incentives to engage with

the cash economy.

Trade and taxation policies impose large direct and indirect taxes on exports.

The main thrust of the countries’ efforts in trade policy – participating in

regional preferential trade agreements – is having little impact on this impost.

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The limited reach and impact of legal and judicial underpinnings of a market

economy in some Pacific economies make it difficult for such economies to

enter into and enforce contractual arrangements that span space and time.

Traditional institutions may make these kinds of interaction feasible within

closely knit communities, but some Pacific countries are islands that are

ethnically and linguistically heterogeneous, and trust between communities is

typically and historically low. People find ways to deal with the limitations of

these institutions, but the absence of widely accepted norms about contractual

behaviour add to the risk, uncertainty, and costs of doing business.

Customary land tenure arrangements have proved flexible with respect to

transactions within communities: but the lack of finality and certainty

associated with these arrangements deters larger scale investments with long

pay-back periods. Capacity and other constraints in the government agencies

responsible for land management also impede investment that might use

alienated land that is not (in theory) subject to interactions with customary

tenure processes.

These constraints mute the incentives for households and domestic and foreign

firms to invest in new activities or productivity enhancements. They exacerbate

the conditions that limit the spread of financial services and access to credit that

would facilitate the development of the cash economy and intermediate between

savers and investors. The cumbersome, non-transparent, and inconsistent

regulation of business further reduces incentives; this is not helped by continued

perceptions of political corruption and incompetence (Figure 4.13).

A further challenge to economic growth and increased trade in the Pacific

may, paradoxically, come from the international community’s efforts to help the

countries develop. Aid commitments and disbursements are quite high for most

economies. The use of the foreign exchange inflows to purchase local goods and

services stimulates demand, but it also impacts on the competitiveness of all

exporting and import-competing activities through its effect on the real exchange

rate. As discussed in Box 4.1, Pacific economies face the challenge of dealing

with an aid-driven ‘Dutch disease’ problem.

Many Pacific people, thus, face an environment in which the returns to the

kinds of specialisation that would have to accompany increasing production for

domestic as well as international markets are low or uncertain. Therefore, they

have adopted a range of strategies to manage the risks and unpredictability

associated with their geographic and geo-strategic circumstances. At the

household level, diversified quasi-subsistence livelihoods and communal

insurance structures (such as the Melanesian wantok system) form one part of

these strategies, as do migration and the perception of migrants as “part of a

transnational corporation of kin” aimed at maximising extended household

incomes across different continents (Marcus, 1981, cited in ADB, 2005).

Similarly, the investment in maintaining aid flows, as characterised in the MIRAB

model, is a state or political class strategy. The continued success of these

strategies attenuates the incentives that Pacific societies might face to change the

institutional structures that impede specialisation.

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Figure 4.13: Why Pacific economies’ growth is so poor

Low incomes, negative growth, vulnerable communities

Low productivity

=> high costs

Weak production

systems and low

quality

Slow transition from

subsistence

Limited off-farm

employment

generation

Low investment:

Low and uncertain returns, high costs

Limited access to markets – domestic

and international – and information about

opportunities, technologies

Limited access to business and

agricultural services – finance,

utilities, farmer inputs

Inadequate transport

and communications

infrastructure,

restricted entry =>

poor, expensive

services

Burdensome

investment and

business regulation

Distorting taxation

Poor natural

resource

management

Destabilising macro

management

Poor targeting of

public spending

Weak, underdeveloped and corrupt institutions

Limited reach and

functionality of market

institutions:

• Land tenure

• Contract enforcement

Lack of social capital,

sense of community at

national level – low levels

of trust

Poorly performing public

institutions:

Governance

• Accountability

• Transparency

Source: Derived from Warner et al (2006).

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Pacific Interactions

Barriers to increased trade and investment

Tariff barriers

Import tariffs are an important barrier to trade in many PICs. Average tariffs are

quite high (Table 4.4), and some countries have highly differentiated and

dispersed tariff structures that do not apply uniformly across goods or classes of

importer. For example, Kiribati has tariff rates as high as 80%, with an average

tariff rate of 22%. Niue exempts government-owned firms from paying tariffs,

and in Solomon Islands, the implementation of the tariff regime is characterised

by widespread discretionary granting of exemptions and concessions. In addition,

tariff rates in some countries are highly dispersed.

Table 4.4: Implicit average tariff rates, 1994–1995

Country Merchandise tariff barrier (%)

Cook Islands 10.1

Federated States of Micronesia 1.0

Fiji 11.2

Kiribati 22.1

Marshall Islands 15.3

Nauru 0.1

Niue 8.7

Palau 4.4

Papua New Guinea 13.9

Samoa 17.8

Solomon Islands 10.9

Tonga 15.0

Tuvalu

Vanuatu 22.5

Source: Centre for International Economics (1998).

Tariffs have traditionally been a major source of revenue in the Pacific. As

Table 4.5 shows, tariffs have accounted for up to nearly a half of all revenues in

Vanuatu and over 20% in the Federated States of Micronesia, Fiji, Marshall

Islands, and Tonga.

The impact of tariffs as a tax on imports and hence on exports is compounded

in some countries by the way the tariffs interact with other indirect taxes. Samoa,

Fiji, Vanuatu, Cook Islands, and Papua New Guinea operate taxes similar to the

United Kingdom’s value added tax, while other countries such as Solomon Islands

use cascading commodity taxes that provide limited relief on imported inputs that

are used in the production of exports

n/a

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Table 4.5: Importance of tariff revenues

Revenues as a share

of tax revenue (%)

Revenues as a share

of total revenue (%)

Cook Islands n/a n/a

Federated States of Micronesia 24.0 3.3

Fiji 32.8 21.9

Kiribati 64.1 22.2

Marshall Islands 35.3 23.70

Nauru 1.0 0.0

Niue n/a n/a

Palau 20.0 5.0

Papua New Guinea 22.3 18.0

Samoa 34.0 16.4

Solomon Islands 23.7 14.3

Tonga 30.7 21.2

Tuvalu 45.8 6.7

Vanuatu 57.5 48.1

Source: Scollay (2001).

Non-tariff barriers

It is difficult to get a sense of the extent of non-tariff barriers in the Pacific.

Analyses of the impacts of trade liberalisation seem to focus on tariff reductions,

but this does not mean trade licensing and other restrictions may not be in place.

However, one of the most significant non-tariff barriers to trade imposed by

many Pacific governments occurs through transport and communications policies.

As the Asian Development Bank private sector assessment for the Pacific stated

(ADB, 2004, p 47):

One of the consequences of smallness and remoteness experienced by all

Pacific countries is the cost of air and surface transportation. Unit costs are

high because of distance from international markets, and small volumes

often put freight carriers and airlines in a position of monopoly. In

addition, low volumes of inter-island traffic within a country make road

transportation and coastal shipping costly. High transport costs are

equivalent to a tax on all products. They raise the costs of doing

business—costs that must be overcome if island economies are to compete

effectively with others.

Because of these disadvantages, Pacific economies must do all they can to

keep transport costs low. Currently, several states own and operate

airlines, a business that is often high cost/low margin, provides unreliable

service, and drains the country’s treasury. If an airline is required for

strategic reasons, a more efficient way to provide the service might be to

auction off the rights for the provision of a specified level of service to

existing private airlines. Likewise, regulations that restrict coastal shipping

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to domestic companies raise the cost of shipping goods between the

remote islands of the region’s countries, harm development in the rural

areas, and encourage migration to already crowded towns. The public

policy issue is how to provide the least cost shipping services to outer

islands, not how to protect local shipping interests. Poorly run ports and

airports with monopoly rights further contribute to transport costs.

The same report presents evidence on the very high costs of international

telecommunications and internet access that result from monopolisation (often by

a state-owned enterprise) of the telecommunication sector. The cost of telephone

calls to the United States from Pacific economies ranges from six to 20 times

higher than the comparable charge from Australia (ADB, 2004). These constraints

almost completely exclude PICs from participating in the ‘trade in tasks’ that

information and communications technology is making possible. Fortunately, in

the last couple of years some PICs (particularly Tonga and Samoa) have been

opening up telecommunications and air services to new entrants. This is having a

significant positive effect on the cost, volume and quality of services.

Other trade impediments might fall under the heading of weaknesses in trade

facilitation. Financial and capacity constraints make it difficult for PICs to address

the standards requirements of international markets. Customs administration and

the management of border formalities are often weak, and customs staff have to

deal with the enormous challenges created by the geography of PICs.

Barriers to investment

Policy barriers to foreign investment fall into two broad categories: policies that

discriminate against foreign investors relative to domestic investors and policies

and institutional weaknesses that impede domestic and foreign investment.

Barriers to foreign direct investment typically fall into the three categories of

(Centre for International Economics, 2006):

limits on foreign ownership of businesses in particular sectors


screening requirements for foreign direct investment such as meeting a public

benefits test

operational restrictions that affect, for example, a firm’s ability to use foreign

directors and bring foreign workers into the country.

These kinds of barrier are quite widespread among PICs. As the ADB report on

private sector development in the Pacific stated (ADB, 2004, p 54):

Most countries in the Pacific understand the importance of foreign

investment but control it quite closely to avoid repeating unfortunate

experiences with foreign investors. Controls are based on the

understandable desire to limit the number of dubious—and at times

fraudulent—projects that have occurred in the Pacific. There is the

common phenomenon of the so-dubbed ‘two dollar investor,’ a small

foreign investor who comes to a country in the Pacific with limited capital

and attempts to raise most capital locally for a project of dubious viability.

To combat this problem, many countries have established complex, costly,

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and time-consuming vetting and approval systems, which discourage both

legitimate investors as well as the less credible investors among them.

But these directly discriminatory barriers may not be as problematic as the

impediments that apply equally to domestic investment. These impediments

include complex customary land tenure systems, obstructive regulation, the

monopolisation of key sectors, underdeveloped institutional mechanisms to

underpin commercial contracting, unhelpful labour regulations, unclear property

rights, weak legal and judicial systems for the enforcement of contracts,

inappropriate or badly managed regulations, burdensome and highly discretionary

taxation, and destabilising macroeconomic management. For some PICs,

uncertainty about political stability and the maintenance of law and order are

significant deterrents to investment.

These impediments affect formal sector investors and constrain the incentives

for many quasi-subsistence rural households to shift into more specialised

commercial activities. Poor policies and weak institutions add to some of the more

objective constraints Pacific people face to make the returns from investment, be

it physical or in human capital, uncertain.

Trade liberalisation and regional integration

It is hard to identify compelling economic arguments for PICs to maintain barriers

to international trade and investment, but there will be political costs – including

adjustment costs – for PICs who reduce these barriers. Therefore, it is pertinent to

ask whether there are preferred ways to approach the challenges of eliminating

these barriers.

Some PICs have attempted a unilateral liberalisation of trade (eg, Fiji

successively reduced tariffs from 1989 to 1997, Papua New Guinea initiated a

tariff rationalisation process following a comprehensive tariff review in 2002, and

Samoa has undertaken tariff reductions in its comprehensive programme of

economic reforms.) However, the main vehicles for strengthening integration with

the rest of the world have been preferential trading arrangements. These

arrangements are now absorbing a lot of attention in the development of the trade

policy architecture of the Pacific. In this the Pacific is little different from the rest

of the world. The WTO reports that as at July 2007, it had received notification of

some 380 such agreements, and that 205 of these were in force as of that date. It

estimates that close to 400 agreements are scheduled to be implemented by 2010

(WTO, 2008).

Pacific members of the Pacific Islands Forum are parties to several

preferential trading arrangements, some of which have been in force for a

considerable period. The 14 developing economies in the forum are parties to the

Cotonou Agreement, under which the European Union provides non-reciprocal

preferential access for nearly all imports from developing economies in Africa,

the Caribbean, and the Pacific. The 14 economies also receive non-reciprocal duty

free access into Australia and New Zealand under the South Pacific Regional

Trade and Cooperation Agreement. (Papua New Guinea is also party to a

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reciprocal agreement with Australia, the Papua New Guinea Australia Trade and

Commercial Relations Treaty.) Papua New Guinea, Fiji, Solomon Islands and

Vanuatu provide each other preferential access on some goods under the

Melanesian Spearhead Group Trade Agreement.

The most recent developments in relation to trade agreements have been as

follows.

In late 2002, the Pacific Agreement on Closer Economic Relations came into

force between all 16 members of the Pacific Forum. The agreement contains no

substantive trade liberalisation provisions, but establishes a framework for the

gradual trade and economic integration of the economies of the forum members.

The agreement provides for the negotiation of a trade agreement to start in 2011,

or earlier if developing economy members negotiate a trade agreement with nonforum

developed countries before then.

In 2003, the Pacific Island Countries Trade Agreement came into force

between the 14 developing country members of the forum. The agreement

provides for tariffs on member country imports to fall to zero by 2012 (or, for

items on negative lists, by 2017). Work has started on extending the agreement to

cover services and include some or all of the French and United States Pacific

territories. Not all signatories to the agreement have completed the ratification

process, and only the Cook Islands and Fiji have completed domestic

requirements and are ready to trade under the agreement. The Pacific Islands

Forum Secretariat described progress on the implementation of the agreement as

‘unsatisfactory’ (PIFS, 2006).

In 2003, it was agreed to revise the Melanesian Spearhead Group Trade

Agreement and adopt a negative list approach to the coverage of tariff preferences

by 2005. This has the potential to significantly expand the coverage of the

agreement.

In 2004, negotiations started with the European Union for an Economic

Partnership Agreement to replace the trade provisions of the Cotonou Agreement.

The new agreement is needed because the WTO waver for the trade provisions of

the Cotonou Agreement expires in December 2007 (Scollay, 2005). It will provide

for reciprocal preferential access between the economies and the European Union,

but will continue the linkages between trade arrangements, development policies

and development assistance. The European Union has signalled, however, that it

will negotiate a preferential agreement with interested PICs only if they are

members of an operating regional trade agreement (effectively, the Melanesian

Spearhead Group Trade Agreement or Pacific Island Countries Trade Agreement).

In 2005, the leaders of the Pacific Islands Forum endorsed the Pacific Plan for

Strengthening Regional Cooperation and Integration as a regional strategy for

development (PIFS, 2005). The strategy encompasses increased regional

provision of services as well as market integration. The plan aims to strengthen

regional cooperation and integration in areas where the region can gain the most

by sharing governance resources, aligning policies and delivering practical

benefits. The plan also aims to strengthen support for current programmes and

advocate for the needs of small island states, given their limited capacity and

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fragile and vulnerable environment. The plan supports the expansion of trade in

goods under the South Pacific Regional Trade and Cooperation Agreement,

Pacific Island Countries Trade Agreement, Pacific Agreement on Closer

Economic Relations, and Economic Partnership Agreement. It aims to integrate

trade in services, including the temporary movement of labour, into the Pacific

Island Countries Trade Agreement, Pacific Agreement on Closer Economic

Relations, and Economic Partnership Agreement.

What has been, or is likely to be, the impact of these initiatives, and do they

constitute a sound strategy for removing barriers to international integration

Evaluating Pacific preferential arrangements

Whether preferential trading arrangements are welfare enhancing for members is

essentially an empirical question – it all depends on the characteristics of the

economies and the arrangement.

Broad rules of thumb for an arrangement that simply encompasses trade in

goods are that a trade arrangement is more likely to bring gains to participants,

the:





higher the initial levels of protection – higher protection means larger gains

from the displacement of high cost domestic production when protection is

reduced, and it also means that pre-arrangement imports are lower, reducing

the scope for trade diversion relative to trade creation

more intensive is trade with other economies participating in the arrangement

– with fewer imports from other countries, the potential for trade diversion is

smaller

more competitive are the participating countries compared with nonparticipants

– the costs of any trade diversion will be lower, because the costs

of goods produced inside the arrangement are closer to world prices

larger the number of participating countries – this increases the probability

that lower cost producers are in the arrangement

larger the partners –this increases the probability that the arrangement includes

lower cost producers, and preferential access to larger economies increases the

scope for scale economy gains and export price increases.

A paper prepared for the Australian Rural Industries Research and

Development Corporation built on lessons from successful and unsuccessful

preferential arrangements to create a checklist of features that increase the

likelihood that a preferential agreement will have positive impacts on members

(Table 4.6) (Humphreys and Stoeckel, 2005).

Putting all of these guidelines together, it is hard to avoid the conclusion that

the preferential arrangements so far implemented by Pacific economies are

unlikely to provide much in the way of direct economic benefits. This negative

conclusion is supported by more detailed evaluations.

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Table 4.6: Lessons and checklist for ‘good’ preferential trading arrangements

Lesson

Trade benefits are maximised when the

price change is maximised

Increased competitive pressures can

lead to additional benefits, especially for

‘problem’ industries

Comprehensive preferential trading

arrangements create fewer distortions

and lower administrative and compliance

costs

Complex and inflexible rules of origin

increase the costs of preferential trading

arrangements

Significant benefits can be gained by

increasing the certainty of the trade and

investment environment

Preferential trading arrangements can

achieve investment liberalisation to the

benefit of participating countries

Although important, domestic issues

should be excluded from preferential

trading arrangements as they can

prevent trade liberalisation and provide

questionable benefit

Preferential trading arrangement

negotiations should be as transparent

and inclusive as possible and detailed

independent analysis of the costs and

benefits should be published

Member countries of preferential trading

arrangements should reinforce their

commitment to successful multilateral

liberalisation

Preferential trading arrangements should

extend beyond regional agreements and

preferential trading arrangement

members should be open to expanding

membership and merging preferential

trading arrangement groupings

Checklist question

Is the price reduction maximised

Are ‘problem industries included in the

preferential trading arrangement

Is the preferential trading arrangement

comprehensive, including substantially

all trade that would have occurred under

free trade

Is the rule of origin simple, consistent

and flexible

Does the preferential trading

arrangement increase the certainty for

trade and investment

Does the preferential trading

arrangement also liberalise investment

rules

Is the preferential trading arrangement

free of any ‘new protectionist’ measures,

such as unnecessary environment,

labour, and market or competition law

requirements

Are the details and consequences of the

preferential trading arrangement well

understood following a transparent

process and independent analysis

Have preferential trading arrangement

countries reinforced their commitment to

the World Trade Organization, and is

there a sunset clause to multilateralise

the preferential trading arrangement

Does the preferential trading

arrangement allow for expansion with

new members and potential integration

Source: Humphreys and Stoeckel (2005).

Because the South Pacific Regional Trade and Cooperation Agreement is a

non-reciprocal arrangement, requiring no reductions in trade barriers by the

participating Pacific economies, the probability of benefits would always be

small. A 1992 evaluation of the Papua New Guinea Australia Trade and

Commercial Relations Treaty concluded that while the treaty was reciprocal in

principle, it led to limited reduction in trade barriers in Papua New Guinea and

failed to deliver any of the intended benefits (Borrell et al, 1992).

Some Pacific countries have benefited from access to rents associated with

preferential access to import markets in the European Union. Fiji, Solomon

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Islands, and Papua New Guinea have benefited from a margin of preference on

canned tuna (World Bank, 2002), and Fiji benefited from participation in the

Sugar Protocol. (European Union sugar transfers have been estimated to have

amounted to around 3.5–5% of GDP in the late 1990s.) However, this preferential

access does not seem to have helped create a viable sugar industry, as rents have

been dissipated via expansion of cane production on to marginal lands and farms

distant from processing centres (Chand, 2005). Some countries also benefited

from access into the quota-protected garment markets in the European Union

while the Multi-Fibre Agreement was in place, but that source of rent is

disappearing, and it is probable that allocation systems helped to dissipate some of

this rent.

An evaluation of a free trade agreement along the lines of what has become

Pacific Island Countries Trade Agreement suggested that welfare would decline in

four economies (the Cook Islands, Kiribati, Samoa and Tuvalu) and that the gains

in the other economies would be very small (Scollay and Gilbert, 1998). A

companion evaluation of a free trade agreement that included Australia and New

Zealand suggested that the net benefits for the Pacific Island economies would be

considerably larger (40 times larger), and that all economies would have net gains,

if the welfare effects of replacing forgone tariff revenues with alternative taxes

were ignored (Stoeckel and Davis, 1998).

These evaluations all assume that the governments of the participating

economies accept the logic of reducing barriers to imports – to subject local

production to increased competition. This often poses difficult political economy

challenges in small economies: it can be difficult to resist pressures for special

treatment in small societies. Governments in the Melanesian Spearhead Group

have been reluctant to expose local producers to competition, and the selection of

commodities on which to provide preferences has focused heavily on goods that

member countries do not produce. Where preferences have involved goods that

are locally produced, governments have often moved to limit competition from

imports.

World Trade Organization and multilateralism

Only three of the Pacific members of the Pacific Islands Forum are members of

the WTO (Fiji, Papua New Guinea, and Solomon Islands). Tonga, which applied

for membership in 1995 has completed the accession process and will join the

organisation when it ratifies the terms of accession. Samoa applied to join in

1998, and consultations are continuing. Vanuatu, which applied in 1995, was due

to accede in 2001, but withdrew its application just before the Doha Ministerial

Conference, citing ‘technical reasons’.

Vanuatu’s withdrawal has prompted interesting discussions on the

implications of the accession process for small developing economies. Some have

argued that it highlights the inherently flawed nature of the process, that it is

biased and gives incumbent members enormous powers to extract concessions

that would be impossible in a more appropriately balanced and rules-based system

(Grynberg and Joy, 2000). Others have argued that, while some members (as is

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Pacific Interactions

their wont) aggressively pursued strong commitments from the government, most

of the demands would have represented sensible policy commitments, looked at

from the perspective of what would be good policy for Vanuatu (Bosworth and

Duncan, 2002).

What Vanuatu’s experience does highlight, however, are some of the

problems inherent in pursuing liberalisation by negotiating trade agreements with

other countries.

Many commentators have identified benefits that would accrue to new

members from membership of WTO, beyond the gains to be achieved from

unilateral liberalisation (eg, Anderson, 1998). These benefits include:





greater and more secure market access for the country’s exports because of the

commitments to accord new members the same treatment with regard to

market access and treatment of inward investment as all other members

availability of the WTO’s dispute resolution mechanism

disciplines on domestic policy-making to resist claims from special interest

groups

assistance in strengthening and modernising the regulation of trade and

investment

an opportunity to influence global approaches to multilateral trade and

investment liberalisation.

However, the largest benefits derive from any support that membership gives to

the ongoing pursuit of free trade and deregulation of the domestic economy.

There are potential downsides to pursuing integration solely through

international agreements. One downside is the impression that accession processes

and international agreements give that the scope and pace of policy changes are

being driven more by the interests of other countries than the domestic

imperatives for economic development.

This impression is reinforced by the ‘concessions’ approach to trade and

investment liberalisation that is part of many negotiation processes linked with the

agreements. Under the ‘concessions’ approach, other countries ask acceding

countries to make policy changes on the grounds of what might seem good for

their economies, and not necessarily on the grounds of what might be good for the

acceding country. This creates a situation where it may appear logical for the

acceding country to defer doing things that are in the nation’s best interest

because doing them may seem to offer unnecessary concessions. The logic of

trade negotiations fosters the perception that reducing barriers to trade and

investment is a concession to be reluctantly granted, in return for similar

concessions made by the other parties to the negotiation. This distracts attention

from the fact it is the country that reduces the barriers that gets the big gains. Most

of these gains can be achieved by actions taken to reduce barriers to trade and

investment on a unilateral basis, independent of any agreements.

One further problem with all trade agreements is their tendency to

institutionalise mercantilism – the misleading idea that exports are the end

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objective of trade and imports are costs of trade. This has happened as attempts to

make the notion of trade reform more politically acceptable have stressed the

concept of reciprocity.

It has been argued that this focus on mercantilism and reciprocity has created a

serious flaw in the WTO (more precisely in the General Agreement on Tariffs and

Trade) – the flaw being a misstatement of the case for free trade (Tumlir, 1983).

Tumlir argues that the people accepted the argument that when every country

protects its economy, all countries suffer. But instead of drawing the correct

conclusion – that ‘liberal (free) trade is the best policy for all countries’, an

alternative that ‘liberal (free) trade is the best policy when all countries practice it’

was put forward, which was ultimately corrupted to ‘liberal (free) trade is a good

policy only if all countries practice it’. It is the corrupted conclusion that underlies

the ‘concessions’ approach described above. As several commentators have

pointed out, the ‘fruitful lie’ – that the gains from trade come primarily from

being able to export rather than from being able to import – no longer seems to

work. The problem seems to be that governments have come to believe the

propaganda (Crook, 2006).

Membership of the WTO poses significant institutional challenges for

developing economies. Many of the new agreements reached during the Uruguay

Round place strong requirements on domestic policy and administrative and

regulatory institutions. This in turn has meant the accession process has become

more demanding and time consuming.

Few developing economies, especially the small and less developed

economies of the Pacific institutions, have developed well-functioning institutions

to deal with aspects of international trade in goods and services, such as

intellectual property rights, standards, sanitary and phytosanitary controls, and

procurement. However, WTO membership requires that policies and institutions

dealing with these issues be brought into line with the provisions of the main

agreements of the organisation.

Meeting this requirement can be costly to low income countries. A recent

study examined how developing countries have addressed the challenge of

implementing certain obligations of WTO membership, namely the General

Agreement on Tariffs and Trade customs valuation agreement, Agreement on

Sanitary and Phytosanitary Standards, and Agreement on Trade Related Aspects

of Intellectual Property (Finger and Schuler, 1999). Finger and Schuler made the

following observations.



Implementation of these agreements involves considerable investment in

human and physical capital. This investment can cost more than the annual

development budget in some low-income countries.

The content of the obligations the WTO imposes take little cognisance of the

circumstances and reform needs of developing countries. The obligations can

be “characterised as the advanced countries saying to the others, Do it my

way!” (Finger and Schuler, 1999, p 8).

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Pacific Interactions


In many developing countries, there is little domestic ownership of the

reforms, reflecting in part the limited capacity many low income countries

have for full participation in WTO negotiations.

Within the mercantilist framework within which trade negotiations are

viewed, developing countries got very little in return in the market access parts

of the Uruguay Round Agreement in exchange for their commitments on trade

rules. (This was largely because the Agreements on Agriculture and Textiles

and Clothing involved little in the way of immediate reductions in trade

barriers by developed economies.)

The evidence on accession to the WTO shows that it can be a time-consuming

and institutionally challenging exercise. Applicant countries are often expected to

enter into stronger commitments under the various WTO agreements than those of

existing members. While provisions allow developing countries additional time to

implement certain agreements, the tendency is to regard the time taken in the

accession process as sufficient additional time for new applicants.

Broadening the approach to regional integration

The challenges faced by developing economies with respect to the implementation

of WTO agreements have reinforced perceptions that developing economies may

have to implement significant agendas of complementary actions to maximise the

benefits of integration. Attention is often focused on the development of safety

nets to soften the adjustment of groups negatively affected by liberalisation.

However, the larger challenge is usually with respect to developing institutions to

underpin market transactions and facilitate the specialisation that accompanies

trade.

The WTO in concert with the World Bank, International Monetary Fund,

United Nations Development Fund, United Nations Conference on Trade and

Development, and International Trade Centre have developed a mechanism, the

Integrated Framework for Trade-related Technical Assistance to Least Developed

Countries, to mobilise support for eligible economies to mainstream trade into

their development strategies. This framework has evolved to address many of the

broader institutional and policy issues that effective pursuit of integration exposes.

No PICs have participated in the framework (although Solomon Islands,

Kiribati, Tuvalu, and Vanuatu are notionally eligible to be beneficiaries).

However, other regional integration initiatives are attempting to deal with the

capacity and complementary action challenges, and are broadening the agenda of

integration beyond the ‘traditional’ issues of trade and investment liberalisation.

The Pacific Plan for Strengthening Regional Cooperation and Integration has

brought the issue of reducing the costs of sovereignty for the small states of the

Pacific into the mix, by proposing the development of shared institutions (PIFS,

2005).

A 2005 report to the Pacific Islands Forum Secretariat Towards a New Pacific

Regionalism supported an approach to regional integration that goes beyond the

previous focus on cooperation and market integration to address some of the

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problems of governance confronted by PICs (ADB-CS, 2005). The report argued

(at p xix):

A Pacific regionalism that speaks to Pacific needs must focus on easing

capacity constraints for governments through increased regional provision

of services, and on creating opportunities for Pacific citizens through

increased regional market integration.

The report evaluated a regional economic and technical assistance facility, a

regional customs agency, a regional panel of auditors, a regional ombudsman,

a regional nurse training facility, the joint procurement of petroleum products, a

Pacific aviation security office, a regional sports institute, a regional statistical

office, a regional office to protect intellectual property rights, and a police training

facility for external peace keeping.

In another initiative, the European Union is engaged in negotiations with

Pacific states on an economic partnership agreement under the Cotonou

Partnership Agreement, which replaces the Lomé Convention treaties with

African, Caribbean and Pacific states. An economic partnership agreement would

bring together issues of economic and trade cooperation, linking support for

regional integration, development assistance for improved governance, and

political engagement.

The focus on governance in the Cotonou Partnership Agreement is seen as a

challenge to the ways the WTO has tried to accommodate the particular

circumstances of less developed economies through ‘special and differential’

provisions. These provisions have tended to allow for delays in implementing

actions that are not institutionally demanding and where the benefits for

developing economies are reasonably unambiguous. But they offer little room to

manoeuvre on agreements such as the trade in services and intellectual property

rights, which are institutionally challenging and where the benefits are less readily

demonstrated.

Von Moltke (2004, p 16) suggests:

by embedding the [European Union – African, Caribbean and Pacific]

trade relationship in a substantial political, financial and institutional

framework the [Country Partnership Agreement] may lead to the

conclusion that economic liberalization without such a framework stands

little chance of promoting development, in particular in least developed

countries.

The Cotonou Partnership Agreement is placing much stronger emphasis on

regional cooperation and integration than its predecessor (the Lomé Convention)

did. (As indicated earlier, the European Union has effectively signalled that it will

negotiate a trade agreement only with PICs if they are members of a regional trade

agreement.) This may in part reflect a sense that the success of the European

Union integration project demonstrates the gains from market integration and that

developing countries could develop similar strategies. It also may also reflect a

view that the European Union needs partners of critical mass for its processes of

political engagement.

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Both the Pacific Plan for Strengthening Regional Cooperation and Integration

and the proposed Economic Partnership Agreement are grappling with the

challenges that face PICs because of the cost of statehood and maintaining

national boundaries for countries that are isolated from the main world centres of

population and markets and are geographically (and sometimes ethnically)

fragmented.

An examination of the proliferation of sovereign states after the Second World

War suggests that the resulting increase in the numbers of flags, borders, armies

and monies and the greater controls on labour flows and trade, an increasing

number of independent judiciaries and more independently determined economic

policies have not produced universally positive results (Braun et al, 2002). The

costs of sovereignty are not trivial. PICs face these costs, but have the additional

problem that the costs of running the institutions of state (however well or badly

they function) are large relative to the size of populations and national income.

Regional initiatives offer one way of spreading the institutional costs over a

larger income base, and perhaps increasing the constituency for better

performance of state institutions. (The following discussion draws on an informal

position paper the Centre for International Economics prepared for the Australian

Agency for International Development (Centre for International Economics,

2005).)

The many different types of regional initiatives require different contributions

and responses from the member countries. Initiatives that require few inputs or

responses are easy for countries to participate in, while those that require large

domestic policy changes or ceding policy-making to a regional body must

demonstrate large benefits to gain commitment. Participation in dialogue is at the

easy end of the spectrum, while establishment of supranational institutions is at

the hard end. The key characteristics of initiatives that shape the demands placed

on participants are the:



complexity of commitments and the implications they have for domestic

capacity – in terms of human, institutional and financial resources

degree of domestic adjustment required for compliance with commitments,

including legal, policy and institutional changes and the economic and social

adjustments that ensue

extent to which control over policy must be ceded – loss of sovereignty over

policy.

Table 4.7 presents a typography of regional initiatives and associated

characteristics. Those initiatives that do not overly tax member country capacity,

involve limited domestic adjustment, and do not require much ceding of

sovereignty are relatively easy to achieve. But these initiatives may have less

depth and generate fewer benefits.

Most integration initiatives are ‘works in progress’, so external engagement

can help with charting courses with the highest expected returns, but there are

certain prerequisites that are likely to be central to the probability of effectiveness

in the pursuit of objectives.

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Table 4.7: Characteristics of initiatives by type of initiative

Type of initiative

Capacity

required

Domestic

adjustment

required

Loss of

sovereignty

Dialogue, exchange of

views and ideas

Technical capacity

desirable

None

None

Co-operation on

regional issues,

including peer review

on domestic actions

that affect the region

Technical capacity

to engage

Areas to be of

common priority

Possibly some

adjustment

Very little risk of

loss

Common or collective

stances as a region in

global forums

Technical capacity

desirable

Possibly some

adjustment

Some risk of loss

depending on

issue

Harmonisation and

standardisation of

domestic policies,

ranging from mutual

recognition to

agreement on

common approaches

Technical capacity

to engage needed

Areas to be of

common priority

Potentially high

costs of

adjustment if

systems differ

Potential loss of

discretionary

power depending

on issue

Establishment of

regional bodies with

authority for regional

functions

Funding

mechanisms

required

Technical capacity

to engage needed

Possibly required

to align with

regional

approaches

Some loss due to

commitment to

regional approach

Authorising regional

bodies in the

development of

policies to which

member countries

have to commit

Funding

mechanisms

required

Capacity to

ensure voice in

decisions

Potentially high

costs of

adjustment to

comply

Sovereignty

ceded in the

areas of

commitment

Source: Centre for International Economics (2005).







Regional initiatives are more likely to be successful, if:

the countries involved have a common interest and the problem or opportunity

is amenable to a regional solution or approach

the institutional capacity of the members is commensurate with the complexity

of the solution or approach (or can create manageable pressures to boost

institutional capacity);

the size of the group (membership) is appropriate to what needs to be achieved

(eg, dialogue based on informal discussion must have limited members)

independent expert advice is available, and there is a willingness to use the

resource

there is a well-functioning physical secretariat to organise the logistics or

effective virtual forums for exchanging information and members are willing

to take on specific logistics

there is internal demand for the initiative – political imperatives and/or market

driven imperatives

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the partners are willing to share information and discuss what may be sensitive

matters; in some cases they are willing to cede sovereignty over some areas of

former national control

levels of economic and institutional development are commensurate with the

complexity of the matters covered by the initiative

financial resources are adequate for the task in hand.

It is clearly not within the scope of this paper to evaluate the Pacific Plan for

Strengthening Regional Cooperation and Integration or the Economic Partnership

Agreement initiative. But one question that does seem pertinent is the extent to

which success in these initiatives depends on liberalising regional trade and

investment. Clearly the European model was one in which market integration was

the critical entry point into the regionalism project. The adoption of regional

institutions, and the ceding of broader powers of policy formulation and law

making, was facilitated by the demonstrable gains from integration. It is not

immediately clear that the same path would be logical for the Pacific. As the

earlier parts of this chapter suggested, the gains from formal regional market

integration may not be great and, in particular, they may not yield the mercantilist

dividend that could soften political opposition to more ambitious regional

initiatives. Therefore, the move from regional cooperation to shared institutions

will probably have to be sold on its own merits, which seem strong.

Unilateralism for trade, regionalism for everything else

No plausible case exists for PICs to retain barriers to trade and investment. So the

questions are: what is the best way for PICs to approach reducing their barriers

Will regional trading agreements help How can New Zealand and Australia help

PICs to move towards deeper integration with the world economy

Regional agreements covering trade in goods that include only PICs offer little

prospect of economic benefits and do not offer much of an appeal to the

mercantilism that might help lubricate the politics of liberalisation. It is true that a

trade agreement that includes New Zealand and Australia would deliver more

benefits than an agreement that just includes the PICs, but the gains will not come

from increased market access into New Zealand and Australia, since most Pacific

states already have duty free access into these markets. Rather, the big gains will

come from reducing the Pacific’s own barriers to imports from New Zealand and

Australia.

However, much larger gains could be secured if barriers to all imports were

reduced, regardless of country of origin. This would ensure imports come from

the most efficient suppliers in the world and consumers’ choices are not distorted

by policy-induced wedges that affect the relative prices of imports from different

sources. Pacific Island countries could get all these gains right now without the

pain of negotiating with Australia and New Zealand. This said, the overall gains

from liberalising trade, and even foreign investment, are unlikely to be large

unless the ‘behind the border’ impediments to both foreign and domestic

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investment are addressed. Given the deep-seated constraints to specialisation and

investment in many PICs, a strong supply response to liberalisation is unlikely.

The gains from stronger forms of regionalism that target the costs of statehood

for small PICs look to be more attractive. But, as mentioned above, many PICs

earn revenue by trading services that sovereignty enables. Foregoing these rents

and sharing the private benefits that they entail will not be straightforward choices

for PICs. The limited gains to be reaped from preferential trading arrangements

also suggest that they would not, on their own, provide a strong platform from

which to develop support for stronger regionalism; nor, with one important

caveat, does it seem that New Zealand and Australia could offer strong

inducements to PIC governments to confront the challenges of regionalism by

granting market access to PICs under preferential trading arrangements. This

caveat, access to labour markets under an agreement that includes services, is

addressed in the next section.

Temporary movement of natural persons

Most of the discussion so far in this chapter has dealt with issues concerning flows

of goods, services, and finance in the form of international trade, investment, and

remittances. One further flow, of labour, has been placed in the spotlight in recent

years. Governments of some PICs, regional institutions, international financial

institutions, and academics have argued for New Zealand and Australia to

introduce schemes to allow for temporary migration for work purposes for

residents of PICs. Some researchers have suggested that future WTO negotiations

on trade in services should be broadened to liberalise the movement of unskilled

workers from developing countries under the category ‘movement of natural

persons’ (Winters et al, 2002).

In 2006, the New Zealand government announced a seasonal work scheme

(the Recognised Seasonal Employer Policy) to let Pacific workers fill horticulture

and viticulture jobs when no New Zealanders are available (Minister for Social

Development and Employment and Minister of Immigration, 2006). While past

Australian governments have resisted suggestions to do something similar, a

senate standing committee inquiry into seasonal contract labour from the Pacific

has kept the door open on the subject (Senate Standing Committee, 2006), and the

current Australian government has indicated that it intends to adopt one.

A World Bank report brought together some of these themes with an

examination of the linkages between potential temporary movement of unskilled

Pacific workers and the Australian market for seasonal workers in the

horticultural sector (World Bank, 2006).

The World Bank report argues that seasonal labour migration programmes that

target the unskilled have the potential to make a material difference to the wellbeing

of significant numbers of PIC workers, their families, and communities. It

argues that these programmes have the potential to significantly ease the seasonal

labour shortages that are seen to constrain horticultural industries in Australia and

New Zealand and, perhaps just as importantly, it suggests that such programmes

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would have symbolic value as a gesture of good will by the region’s two major

powers towards their Pacific neighbours (Box 4.3).

Box 4.3: At home and away

The key points made in the World Bank (2006) report on labour mobility and the

Pacific are as follows.






Migration can improve the welfare of migrants, their dependants, and the

economies of host and sending countries.

Potential global welfare gains of liberalisation of movement of people could

outweigh gains from any remaining trade liberalisation.

The Pacific youth population is now 40% of the total population, with high

unemployment and under- utilisation of labour resources. Pacific Island

countries have not been successful at creating sufficient employment in the

formal labour market.

Industrialised countries with labour shortages (due to ageing populations and

low fertility rates) can draw on the pool of young people from Pacific Island

countries.

Pacific labour mobility favours skilled workers, whereas higher benefits would

flow from greater mobility by unskilled workers.

Source: World Bank (2006).

The World Bank (2006) report points to evidence to suggest shortages of

seasonal labour lead to significant crop losses for the horticulture industry. It goes

on to consider factors that could shape the construction of a seasonal labour

scheme for the Pacific that could ameliorate these shortages, provide significant

benefits to workers and their families, and mitigate some of the potential costs for

New Zealand and Australia. These factors include the following.





A choice of workers would ensure hiring is skill-appropriate. The World Bank

argues that this could reduce the risk that over-qualified workers are hired who

then use the scheme as a stepping stone to permanent migration.

A circular movement of workers would allow good employees to return in

subsequent years rather than be offered a one-time only chance at offshore

employment. This could reduce the risk of participants violating the

arrangement, especially not leaving the country at the end of the employment

period.

Cost-sharing on travel-related costs with employers would reduce the fixed

costs borne by migrants. This would reduce incentives to overstay.

Commercial viability means the scheme remains private-sector driven. This

allows the scheme to adjust to changing labour market conditions in

destination countries.

Working through the arguments

The arguments in favour of seasonal labour migration programmes have not gone

uncontested. At least one submission to the senate inquiry contended forcefully

that these arguments are fundamentally flawed (Hughes and Sodhi, 2006).

The debate on these proposals is complex and involves a range of economic

arguments and political judgments. It may help to identify the propositions that

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seem to have become entangled in the discussion. The underlying propositions

seem to include the following.





Liberalising migration into New Zealand and Australia would improve

aggregate welfare in these countries.

Increasing flows of unskilled workers from the Pacific to New Zealand and

Australia would increase the aggregate welfare of all Pacific people, including

those who stay behind. However, increasing flows of skilled workers would

reduce the welfare of those who stay behind.

A case exists for favouring the participation of Pacific people over unskilled

workers from other parts of the world in temporary work schemes, because:

- temporary work-related migration from the Pacific is a desirable adjunct to

domestic Pacific policies aimed at improving development outcomes

- allowing temporary work-related migration from the Pacific is a desirable

adjunct to Australian and New Zealand aid programmes for the region.

It could make sense to bring temporary work schemes into the negotiation of

regional trade agreements, including the Pacific Agreement on Closer

Economic Relations.

Liberalising migration into New Zealand and Australia

Standard economic analysis assuming unregulated factor markets suggests that

liberalising migration increases the aggregate welfare of the liberalising country.

Immigration increases the productive capacity of the economy and increases

returns to land, capital and those categories of labour whose services complement

the labour supplied by migrants. While real wages of those categories of labour

whose numbers have increased may fall, the aggregate gains outweigh these

losses.

While migration for temporary work schemes is not the same as permanent

migration, many of its effects on destination countries are similar. That means

temporary migration is subject to the same caveats that apply to conclusions

drawn about migration from a simple framework. For example, factor markets,

especially labour markets, are, in practice, regulated, and welfare systems allow

considerable numbers of able people to maintain certain standards of living

without being employed or earning returns on savings. Governments are not

indifferent to the distributional effects of changes that increase aggregate welfare.

As Hughes and Sodhi (2006) point out, for Australia important ethical and

efficiency questions are raised about increasing the migration of unskilled workers

when large numbers of current residents are unemployed.

How well is the economic case for temporary work schemes enhanced by

linking it to notions of seasonal labour shortages in horticulture and viticulture

industries

The Australian senate committee inquiry into Pacific region seasonal contract

labour questioned some of the claims concerning shortages of labour (Senate

Standing Committee, 2006). It argued that on the basis of the evidence it

uncovered, producers usually found sufficient labour to harvest crops and the

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annual claim of shortages was more a form of job advertising. The report seemed

to suggest that producers did not enjoy meeting the costs involved in finding labour.

One could argue that the seasonal labour ‘shortages’ horticultural industries

complain about are consequences of labour market regulation, taxation and

welfare policies. Reasonably generous welfare schemes make the reservation

price of unemployed workers quite high relative to the net returns they might get

from being involved in temporary work in rural areas.

Alternatively, one could argue that the issue is primarily one of price and

comparative advantage. If horticulture and viticulture producers are unable or

unwilling to pay a price high enough to attract seasonal workers, then this

probably raises questions about the underlying viability of this kind of activity.

(The senate committee report expressed a degree of puzzlement that firms

involved in the heavy investments in these sectors in Australia had not seemed to

pay much attention to the issue of labour supply. It noted that favourable tax

treatment of managed investment schemes seemed to have played some role in the

amount of recent investment.)

Some of the constraints governments place around migration – permanent and

temporary – to address labour market ‘needs’ can erode the gains from migration.

A particular example is that temporary migration schemes are often subject to

tests of the availability of resident labour to supply the specific services being

targeted by schemes. As Winters et al (2002, p 69) point out:

In goods markets, the practice of prohibiting imports when local supplies

were available, proved to be one of the very worst elements of import

substituting industrialisation. It fostered low quality production and

provided guaranteed markets for local imitators of imported goods. The

costs of such inefficiencies were mainly visited on other manufacturers,

who became uncompetitive because they had to use sub-standard local

components. Economic needs tests essentially do the same disservice for

services. Poor professional services pervade the economy, reducing

efficiency everywhere. The problems are less in very unskilled

occupations because foreign and domestic workers are more readily

substitutable. But even here, apart from the effects of the restrictions on

wage rates, there may be an effect through the fact that even among the

unskilled migration tends to select the more able and dynamic.

What this suggests is that migration schemes may well, for understandable

political reasons, be hedged by restrictions that could erode or limit the benefits

that destination countries could gain from them. Similarly, restrictions could

reduce the effectiveness of targeting within source countries. (As with quantitative

restrictions on imports of goods, the constraints may promote shifts towards

higher quality migrants; that is, schemes targeting lower skilled migrants may end

up being dominated by over-qualified participants.) But the fact remains that

migration generally has positive welfare implications for recipient countries.

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Pacific Island Economies: Role of international trade and investment

Increasing flows of workers from the Pacific

Most Pacific Island countries have large pools of underemployed and unemployed

people of working age. Hughes and Sodhi (2006) estimate that nearly 1.4 million

people in the labour force in PICs are unemployed or underemployed, about 13%

of the population (Table 4.8). Bringing these people into fully productive

employment would have a profound impact on national welfare. How significant

might the impact of temporary migration schemes be

Table 4.8: Employment and underemployment in Pacific Island countries, 2006

Country

Population

Formal

employment

Unemployment

and

underemployment

Annual

additions to

labour force

Papua New Guinea 5,500,000 220,000 1,000,000 150,700

Fiji 890,000 111,100 155,000 20,000

Solomon Islands 540,000 57,500 79,300 16,000

Vanuatu 200,000 23,800 35,300 4,900

Samoa 177,000 50,300 22,500 3,400

Tonga 112,000 15,600 17,100 2,900

Federated States

of Micronesia 108,000 15,600 16,400 2,900

Kiribati 103,000 9,200 25,000 2,900

North Marianas

Islands 80,000 6,000 20,600 1,100

Marshall Islands 59,000 10,100 8,300 1,600

Palau 20,000 9,300 1,500 390

Nauru 13,000 1,100 2,200 350

Cook Islands 12,400 5,800 n/a n/a

Tuvalu 11,600 2,000 1,800 260

7,826,000 537,400 1,385,000 207,400

Notes: Formal sector employment, unemployment and underemployment estimated

from working age population. It is assumed that only a third of the working age

population is available for work.

Source: Hughes and Sodhi (2006).

Analysis carried out for the Asian Development Bank – Commonwealth

Secretariat examined the welfare consequences of allowing skilled and unskilled

workers from PICs to temporarily migrate for work in Australia and New Zealand

(Walmsley et al, 2005).

Table 4.9 summarises the main results of the analysis. It suggests that the total

welfare gains to Pacific people and residents of New Zealand and Australia are

quite large. If the programme covers unskilled workers alone, the welfare change

for residents of the New Zealand, Australia, and the PICs is over US$1.1 billion.

If it is assumed that the work experience in New Zealand and Australia has a

© Institute of Policy Studies, Victoria University of Wellington, 2008 175


Pacific Interactions

beneficial impact on workers’ productivity back in their home country, the

benefits are larger.

Table 4.9: Welfare changes for 1% Pacific Island country labour quotas

Welfare increase under scenarios a

Group

Unskilled quota

(US$m)

Skilled quota

(US$m)

Skilled and

unskilled quota

(US$m)

Total welfare benefits

Pacific people

Working in Australia 775.1 611.1 1386.1

Working in New Zealand 104.1 63.9 168.1

Staying at home 22.0 -510.1 -488.0

All Pacific people 901.2 164.9 1066.1

New Zealanders

Working in Australia -4.9 -2.0 -6.9

Working in Pacific 0.0 0.9 0.9

Living at home 17.9 8.6 26.6

All New Zealanders 13.1 7.5 20.6

Australians

Working in New Zealand -0.4 -0.5 -0.9

Working in Pacific 0.1 1.7 1.8

Living at home 199.8 102.9 302.6

All Australians 199.5 104.0 303.5

Others -82.8 -4.0 -86.4

Benefits per thousand workers

All Pacific people 11.9 3.7 8.8

All New Zealanders 0.2 0.2 0.2

All Australians 2.6 2.3 2.5

Others -1.1 -0.1 -0.7

Note

a It is assumed that the relevant component of the workforce in Australia and New

Zealand is increased by 1%, supplied by workers from Pacific Island countries on

temporary work permit arrangements.

Source: Walmsley et al (2005).

The scenarios that generate these benefits involve large movements of people,

since they involve increasing the relevant workforce in Australia and New

Zealand by 1% (Box 4.4). In the case of the scenario involving skilled and

unskilled workers, it is assumed that just over 120,000 workers would participate

in the scheme, 20,000 of whom would be working in New Zealand. This amounts

to around 2.8% of the working age population of the PICs, but less than 10% of

the estimated pool of the underemployed. To give a better idea of the scale of the

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Pacific Island Economies: Role of international trade and investment

benefits, Table 4.9 also shows the total benefits to permanent residents of PICs,

New Zealand, and Australia for each 1,000 workers participating in the scheme.

Box 4.4: Analysing the impact of liberalising labour mobility in the Pacific

The main assumptions in the analysis of Walmsley et al (2005) are as follows.

Participation rates of temporary migrants are the same as in their home

region.

Temporary migrant labour has the same characteristics as the labour of the

home region in terms of the proportions of skilled and unskilled labour.

The wages of migrants are equal to the home wage plus 75% of the

difference between host and home wage.

Remittances remain a constant proportion of income, derived from past data.

All other income (from capital, land, and so on) accrues to permanent

residents.

Foreign and domestic labour are perfect substitutes.