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Migration cuts not a simple equation

6 June 20240 comments

With another election looming, there is talk and policy movement around reducing migration. And it’s a safe bet that the rhetoric will be ramped up once the poll date is announced.

Questionable narratives, from some commentators, around how migrants take homes and jobs from Australians are depressingly familiar but also demonstrably wrong and very damaging.

The government plans to reduce net overseas migration to 260,000 next year. The opposition plans to shrink the permanent migration number to 160,00.

But we need to remember permanent migration is only part of the picture. Most immigrants arrive in Australia on temporary visas and then some of these people later apply for permanent places.

About 60 per cent of permanent visas go to people already in the country on temporary or student visas. So, reducing net overseas migration is really about reducing temporary migration – the largest component of which are international students.

And most economists say cutting migration will have little effect on housing affordability but may damage economic growth while creating even greater skills shortages.

The Grattan Institute says the Opposition’s migration proposals would cost the Budget more than $30 billion in the decades ahead.

Indeed, housing unaffordability has been on an upward trend for decades and linking it to migration like the man who has lost his horse but is looking for the horseshoes. 

The Reserve Bank recently said the cause of high house prices was not an increase in migration but a shortage of housing supply, made worse by the pandemic.

Housing issues persisted during the pandemic, which also created supply chain disruptions and, importantly, rampant inflation which has further driven up construction costs.

Lower migration levels, especially in sectors like construction, could drive costs even higher thereby worsening housing affordability.

The idea that migrants will take people’s jobs is also farcical. New arrivals and their families add to the demand for labour and goods and services; and they add to the available supply of workers, especially skilled ones.

A lot has been said about the large number of migrants who have arrived in the past couple of years. This is just an adjustment stemming from the fact that migration numbers were in the negative during the COVID 19 pandemic; and many of these new arrivals are international students returning after being locked out of their studies during the pandemic.   

Overseas students, or ‘export education’ as the sector is now called, is one of Australia’s largest industries and Victoria’s largest service industry.

Scaling it back will obviously have a negative economic impact. This impact could be enduring if research and development, said to be vital to success in today’s globalised knowledge economy, and now largely subsidised by international students, is underfunded.

If migration is cut, and with research vital to Australia’s energy transition, whomever wins the next election may face a wicked dilemma; forced to choose between direct funding of research or watching as the energy sector and the economy, generally, face significant headwinds.

The opposition also says it will reduce Australia’s refugee intake from 20,000 to 13,750 a year, a number largely in keeping with his historical annual levels.

But with conflicts and displacement crises escalating across the globe with 114 million people currently forcibly displaced, there is an argument that if other countries follow Australia’s example, the ability of the global refugee system to aid refugees will be compromised.

Rhetoric around migration levels when linked to push-button issues such as housing, jobs and urban congestion are damaging to migrant communities.

These debates, of themselves, can generate palpable fear and apprehension in these communities.

We know from working with diverse communities that when divisive debates about migration surface, kids are reluctant to go to school and women fear walking to the shops alone.

One only has to think about the recent deadly, real-life consequences of these issues reaching a feral level of toxicity online to understand the risks involved.

The recent federal budget was pleasing in that it demonstrated the current government’s continued support for migration, refugee settlement, multiculturalism and strong social cohesion.

The budget included a commitment to 20,000 humanitarian places for the next two years and an increase in funding in recognition of the importance of providing specialist settlement services to ensure people can settle well.

But in an environment where migration becomes a divisive political issue, there are profound societal risks.

A well-functioning immigration program, and its humanitarian settlement cousin, have always been critical to Australia’s economic prosperity. There is no reason to believe this has changed.

Supporting successful settlement and harnessing the skills and experience migrants and refugees bring with them will make a strong contribution to our economy and to preserving the high levels of the indispensable social cohesion that we now enjoy.