This week, members of the Law and Economics Association were treated to dinner and a show. Or something close to it.

After the Association’s AGM, I argued with Michael Reddell, New Zealand’s most articulate immigration critic.

But we seemed to broadly agree on a few things.

First, the current surge in permanent and long-term arrivals overstates the longer-term increase. Many now arriving will depart in a few years, bringing an outbound surge.

Also, the evidence suggests migrants are less likely to be on benefit, less likely to commit crime, and far more likely to have children who pursue higher education than native-born Kiwis.

This should not be surprising. New Zealand has one of the world’s most skilled immigrant mixes, due in large part to the skills focus in the immigration points system. Those likely to commit crime or go on benefit are far less likely to be admitted in the first place.

Where we disagree is whether immigration is to blame for lower recorded productivity.

In Reddell’s view, New Zealand’s productive opportunities, largely restricted to agriculture, are barely sufficient to support the current population, let alone a larger one. Immigration demands more infrastructure, driving up interest rates and the exchange rate, and hurting productivity more generally.

Consequently, he argues permanent residence approvals should drop to 15,000 per year from recent averages of around 45,000.

Poor productivity growth is widespread, but New Zealand’s is especially bad. The trouble is that many hypotheses can explain the same data. Without clean ways of testing Reddell’s argument, it becomes less compelling. This is especially the case where the international findings on immigration suggest small but generally positive effects of migration on local wages.

Other potential explanations include the increasing importance of agglomeration – the productivity penalty applied to small places. If agglomeration is to blame, New Zealand’s productivity might have fallen further had population not grown.  

If New Zealand were limited to opportunities provided by the sheep’s back and the cow’s udder, Reddell’s hypothesis would be more worrying.

This week, Idealog highlighted the tech firms here pushing the boundaries of what’s possible, and how New Zealand’s better policy and regulatory environment helps it happen.

And Rocket Lab’s transforming a sheep paddock into a space base makes it hard to believe that agriculture is New Zealand’s only productive opportunity.

New Zealand can be bigger than that.