James Campbell: Migrants may hold key to Morrison winning the election

The fate of the Morrison government now rests in the hands of Anthony Albanese and how he chooses to respond to its plan to turbocharge immigration, writes James Campbell.

The fate of the Morrison government now rests in the hands of Anthony Albanese and how he chooses to respond to its plan to turbocharge immigration.

On Thursday Josh Frydenberg will release the government’s Mid-Year Economic and Fiscal Outlook, an update to its budget forecasts that will show the economy is set to roar back to life as the pandemic disappears in the rear-view mirror.

Well that’s the Treasury’s view anyway. These things are, of course, a bit of a guesstimate.

The hospitality sector has struggled to find workers post-pandemic Picture: iStock

One number the government does have control of is the number of people it plans on allowing to settle here.

Back in May the government was predicting net overseas migration — the number of arrivals minus the number who leave — would be minus 77,000 in this financial year.

In May, the government was predicting net migration would be 96,000 in 2022-23.

This has now been increased to 180,000, which Frydenberg told The Australian “includes about 200,000 places for students, tourists and skilled workers to address skills shortages previously announced”.

What will be interesting to see in the budget update is whether the government has changed its mind about where these migrants are likely to go.

In its two pandemic budgets so far, the government has assumed that not only will migration levels return to pre-Covid levels, but that new arrivals will continue to go where they were going in 2018, which is mainly Victoria.

Treasurer Josh Frydenberg will announced a higher migrant intake to address skills shortages. Picture: NCA NewsWire/Nicki Connolly

In one sense the numbers are no surprise, the update merely brings forward the return of mass immigration by six months.

But in politics, timing is everything — and the government is running a big risk here for two reasons.

Firstly, because the decision to lock in turbocharged migration in the lead-up to next year’s election gives Opposition Leader Anthony Albanese the initiative in this space.

And make no mistake about it, he understands the opportunity.

Within hours of The Oz’s story landing, Albanese was saying: “Migration has always played an important role in the economy and will continue to in the recovery, but it’s important we take this opportunity to get the mix right.”

Anyone who has been looking closely at the trend in public opinion on immigration knows that there has been a long-term shift against high numbers of migrants.

In the Lowy Institute’s annual survey of attitudes to migration, the share of people saying they thought immigration levels were too high rose by 17 per cent between 2014 and 2018.

You might assume that attitudes to immigration have soured most heavily in the parts of the world where people are mostly likely to be competing with migrants for work, or the parts of Australia’s cities where quality of life is being impacted by growth.

And you’d be right.

Labor leader, Anthony Albanese says he won’t back mass immigration. Picture: NCA NewsWire/David Swift

A few years ago, when the Centre for Independent Studies surveyed 500 people who lived in the richest postcodes in Australia and 500 people who lived in the poorest, you will be unsurprised to learn they found people who were in poorer areas were keener on cutting immigration, stricter requirements to promote integration, and for strong border protection policies.

But, in fact, elite and non-elite views about immigration were “not as dramatically polarised as might have been expected” the report’s author’s found.

The second reason the government is running a risk now is because the pause in immigration caused by the pandemic is causing wages to rise at a pace we haven’t seen for ages.

The RBA is predicting unemployment will drop to 4 per cent by June 2023, at which point basically everyone who is employable will be employed.

That’s bound to have a big impact on wages growth — just look at cafes and the hospitality industry.

Economists may dispute that migrants drive down wages, what is not at issue in large parts of Australia at the moment is that if thousands of them suddenly go home, as students did last year, their absence will drive wages up.

Australia isn’t the only country with a labour shortage.

The UK is also short of skilled workers following the post-Brexit end of European migration.

The Tories, however, have decided to make a virtue of the situation, with UK PM Boris Johnson bluntly telling business in October he wasn’t going to turn that tap back on and the solution was to pay higher wages.

The economics of this matter might be complex, but the politics are simple.

Originally published as James Campbell: Migrants may hold key to Morrison winning the election