Australia: a land built on immigration

The great challenge during the 2020s will be to ensure that globally unparalleled levels of new arrivals do not lead to a breakdown in social cohesion.

Migrants have swept across the Australian continent washing into every nook and cranny.

It is a topic that should interest all Australians as much as it does property developers and investors. It is the number of net new residents (as opposed to babies) that is added to this nation every year. It is the rate of immigration, the number of refugees and asylum seekers; it is the number of new permanent residents, all of which are very different concepts but together they drive demand for housing in this nation.

A shorthand way of thinking about this is that the level of net overseas migration has ranged from barely 30,000 in 1993 to ­almost 300,000 in 2009. Immigration rises and falls depending on government policy and the ­perceived attractiveness of a destination.

Generally, Australia is regarded as a desirable destination although in the post-recession era of the early 1990s many migrants went “back home” and fewer than usual arrived.

Using census and immigration sources the Bureau of Statistics ­estimates about 30 per cent of the Australian population (7.5 million) was born overseas. This proportion for the Sydney built-up urban area is 39 per cent, making Australia’s biggest city one of the world’s most cosmopolitan communities. This “born abroad” proportion for greater New York is 29 per cent, for Paris 22 per cent, for Berlin 13 per cent, for Tokyo 2 per cent, while for Shanghai it is less than 1 per cent.

Europeans get all angsty when the proportion of migrants approaches 20 per cent. Sydney is double that. Melbourne isn’t too far behind at 36 per cent.

Even in quite removed places like the Wimmera’s Horsham (population 20,000), the proportion of the local population born overseas is 10 per cent.

Migrants have swept across the Australian continent washing into every nook and cranny and creating a kind of fusion culture where local communities reflect a rich mixture of British, Mediterranean, Asian, Indian and increasingly Arabic cultures. Not necessarily immediately, but over time.

No other equivalent nation on Earth comes close to Australia’s generosity in absorbing migrants. In the US, for example, new figures published by the UN Department of Economic & Social Affairs in September show that migrants comprise 51 million of America’s 330 million, which is 15 per cent. Proportionately, Australia is twice as generous in accepting migrants as is the US.

Migrants comprise 21 per cent of the population in Canada, 20 per cent in Sweden, 16 per cent in Germany, 13 per cent in France and 2 per cent in Japan. Migrants comprise 27 per cent of the New Zealand population, which equates to 1.2 million people. For New Zealand to equal Australia’s migrant proportion (30 per cent), its migrant intake would have to be lifted by 200,000.

This is not to say there aren’t countries with a higher proportion of foreign-born residents greater than found in Australia. In Saudi Arabia, for example, 13 million or 38 per cent of that country’s population of 33 million are foreign-born residents. And in the nearby United Arab Emirates there are roughly eight million foreign-born residents in a nation of just nine million. In both of these countries, of course, foreign-born residents are little more than guest workers and as such they do not have the same sovereign rights as migrants in Australia.

France has about the same number of migrants as does Australia (about eight million) but over there the migrants are spread throughout a far larger population base (67 million) than they are in Australia (25 million). The same applies to countries like Denmark where 723,000 migrants live within a community of 5.6 million.

Whichever way the numbers are presented, the inescapable conclusion is that modern-day Australia is and has been for some time exceedingly generous in terms of the scale of its immigration program. I think this generosity flowed out of a “populate or perish” movement that gathered momentum after WWII, and which delivered waves of British and European migrants to Australia in the late-20th century.

More recently, the upscaling of immigrant numbers in this nation is seen as a driver of growth and prosperity. Plus, there is a genuine need for skills and labour in Australia as the baby boom generation exits the workforce. This option of offsetting structural decline in an ageing population is not possible in countries like Japan, for example, that do not have an immigration culture.

It is tempting to suggest that Australia’s unmatched generosity in accommodating migrants over decades, but especially over the past 10 years, is due to tolerance. And to some extent this might be true. But then Australia’s wide ­geography means immigrant groups are less likely to be directly competing for jobs and resources here than is the case, or would be the case, in Europe or Japan. Australia accommodates migrants ­because we can and it’s an easy ­avenue to economic growth. So, what are the implications for and threats to the Australian property industry flowing from our high rate of immigration?

Large inflows of migrants since WWII have shaped Australia’s consumer and housing market. Housing has absorbed many design features — such as indoor-outdoor living, found in Greece and Italy. And in due course it may well be that Asian and Indian features are incorporated into an Australian fusion housing design.

And as for the high rate of immigration or, more accurately, net overseas migration (includes students achieving permanent residency), this will remain elevated for as long as several conditions are met.

That Australia remains generally prosperous in the 2020s (migrants aren’t attracted to sluggish economies). That Australia remains a free and open community welcoming (for the most part) new arrivals. That there are no large-scale terrorist incidents in Australia tagged back to a specific immigrant group (and which might prompt a cutback in immigration numbers). And that politicians of all persuasions remain driven by the desire to grow the tax base by expanding the workforce.

Without any form of net overseas migration (no immigrants, no students, no refugees), Australia’s annual growth rate during the 2020s would hover around the 150,000-mark being the level of natural increase. However, bolt on 180,000 net overseas migrants per year and Australia’s annual growth rate rises to 330,000.

This latter figure converts to demand for say 130,000 dwellings per year (at 2.5 persons per dwelling), while the no-immigration scenario leads to demand for just 65,000 dwellings per year. Immigration delivers additional workers and, eventually, home buyers, both of which contribute to local prosperity.

The great challenge for Australia during the 2020s will be to ensure that these vast — globally unparalleled — levels of immigration do not lead to a breakdown in social cohesion. But rather, that they build a united, prosperous society that takes the best bits and pieces from the new arrivals and fashions a contemporary — but always tolerant — fusion kind of Australian culture.

Bernard Salt is managing director of The Demographics Group. Research by Hari Hara Priya Kannan.

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