Experts tell why migration may not be the best economic play

office front of australian department of immigration

With the end of lockdowns upon us and international borders reopening, the federal government is already looking to refuel Australia’s population with a steady flow of migrants.

Federal Treasurer Josh Frydenberg has been quick to blame economic stagnation on the lack of immigration. This week, he again drove a point about skilled migrants being key to driving economic recovery.

The Treasurer said that while Australia’s closed border policy saved lives, restricted population growth from a “drought of immigration” will have consequences for the economy.

“Net overseas migration has gone negative,” he told Momentum Media.

“And so, while we’ll pick up our immigration levels into the future, we may not necessarily pick up the numbers of people who otherwise would have come if the borders had remained open over the course of the pandemic, which means that our projections about the size of the Australian economy will have to change, and the size of the population will have to change.

“And the size of our population will not be as big as what we’d forecast previously pre-pandemic at a certain period of time.

“There were skilled shortages that we’re seeing across the economy and in construction, some of the mining sectors, engineering, I speak to a number of professional services firms in respect to IT, and some of those workers as well.

“So, we have seen labour force shortages across various sectors of the economy and, therefore, being able to bring in skilled migrants is going to be important for our economic growth into the future.”

Read: What Aussies think about migration

NSW Premier Dominic Perrottet also hopes opening international borders will plug the “general labour” shortage he claims is stymieing economic recovery.

“If we lose this opportunity, those skilled migrants will go to other countries,” he said.

While Coalition and Liberal governments spruik migration and population expansion as an economic saviour, many economists and experts disagree. Some call it the lazy option, hailing the recent population shrinkage as an opportunity to build a ‘cleverer economy’.

A smaller population doesn’t necessarily mean a smaller economy, and it could have a positive long-term impact, says emeritus professor of public policy and social economy at RMIT University, Professor David Hayward.

“If you have population growth it’s an easy way to drive consumer markets and for us to expand and have more jobs … but they’re low-paying jobs, so they’re not the sort of jobs we want if we want to have innovation or investment, critically, to put us ahead of the pack,” he told 3AW Breakfast.

Read: Ageing populations are an asset: report

He’s calling on the government to look to the UK, where Prime Minister Boris Johnson has told businesses to think smarter, pay staff fair wages and assist in creating a clever economy.

“If you took away that little easy lever of migration maybe we’ll force businesses to become cleverer in the way they invest and it’ll benefit Australia in the longer term,” said Prof. Hayward.

Advocacy group Sustainable Population Australia (SPA) sees the pandemic as an opportunity to rethink and reset Australia’s population future.

It says accelerated migration only benefits big retail and property developers, and comes with a hefty cost to infrastructure, housing costs, employment and the environment.

“As tough as the pandemic of 2020 and 2021 has been, there has been an unintended side-effect,” says SPA spokesperson Michael Bayliss.

“With international borders closed, we accidentally ran an experiment of what Australia would look like with a population growing more slowly. For once, big business could not demand ever more immigration-fuelled population growth.

“The result has surprised many. Economic commentators have noted that with virtually no immigration, the labour market has tightened and for the first time in decades, there is pressure for wages to rise and end a long period of wage stagnation.

“Similarly, the slowing of population growth has reduced pressure on the creaking infrastructure in our largest cities.

“The slowing of urban sprawl is taking some pressure off natural habitats and scarce agricultural land. This means less pressure to turn our bush and farms into brick and tile.”

Read: Will wage rise affect pensions?

Age pensioners could also directly benefit from general wage rises, as the Age Pension is benchmarked against a percentage of Male Total Average Weekly Earnings (MTAWE), meaning increased wages could translate to a higher pension base rate.

“Now we have seen that we can survive, and even benefit, with lower population growth, why not keep it that way?” says Mr Bayliss.

It would seem the majority of Australians agree, decisively rejecting returning to pre-COVID levels of population growth in the latest survey by The Australian Population Research Institute (TAPRI).

Seven in 10 Australians say the annual net migration of 240,000 people prior to COVID-19 is too high.

The same number (69 per cent) say Australia should not grow its population via immigration, citing concerns about congestion, overcrowding of hospitals and schools, deterioration of the natural environment and the high cost of housing as a result.

SPA president Jenny Goldie says the federal government would be wise to heed ordinary Australians when deciding post-COVID levels of immigration.

“The setting of migration targets has historically been a secretive process which has been overly influenced by big business and other vested interests that benefit from the downward pressure on wages and the endless consumer market produced by enormous volumes of immigrants,” she said.

“A number of prominent economists, such as Ross Garnaut, have confirmed the link between low wages and high immigration in the decade prior to COVID-19. We have had the lowest per capita income growth in the OECD.

“It is no surprise that business lobby groups such as the Australian Chamber of Commerce and Industry are calling for a doubling of pre-COVID-19 migration levels as borders reopen. They want to secure the cheap and easy bounty of the old days; but this does nothing for the average Australian.

“This intense focus on GDP and profit ignores entirely the substantial downside of this endless growth model. It is regressive, not progressive, and it is certainly not sustainable.”

Ms Goldie highlighted how 61 per cent want worker shortages addressed by raising wages and improving skills training for locals. Only 26 per cent believed the answer was to let in as many migrant workers as employers want.

“The old mantra of Big Australia does not wash any more,” Ms Goldie added.

“People are tired of the constant pressures created by incessant population growth and do not want to go back to that – especially after all the stresses of COVID-19. They want a future worth having.

“The federal government needs to listen to the wisdom of the Australian people.”

Ross Garnaut, University of Melbourne professor and author of Reset: Restoring Australia After The Pandemic Recession, shares these concerns.

“Increased immigration contributes to total GDP growth but detracts from the living standards of many Australian working families,” he told the ABC.

“Settling early on an immigration program that is moderate in size and strongly focused on valuable education and skills will help us to avoid contentious and divisive political debate at a time when our society and polity are under great stress.”

How do you feel about accelerated population growth once the borders reopen? Why not share your thoughts in the comments section below?

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Written by Leon Della Bosca

Publisher of YourLifeChoices – Australia's most-trusted and longest-running retirement website. A trusted voice on Australia's retirement landscape, including retirement income and planning, government entitlements, lifestyle and news and information relevant to Australians over 50. Leon has worked in publishing for more than 25 years and is also a travel writer and editor, graphic designer and photographer.

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