Immigration sweet spot to enhance skills and growth

A week ago at the National Press Club, Scott Morrison was asked what role migration would play in the recovery. The Prime Minister drew on the work of demographer Peter McDonald. He said “the great professor” envisaged a net overseas migration target of between about 160,000 and 210,000 — the number you need here to maintain per capita growth in gross domestic product. Last financial year, migration added 240,000 to our population. Next year the government expects this to drop to about 35,000, which would be the lowest intake in 40 years. “There’s obviously a big gap there,” Mr Morrison said. “Now, that’s a short-term gap, but it’s going to be one of the real impacts of this crisis because our borders aren’t opening up any time soon.”

We are a long way from what the Prime Minister, a former immigration minister and treasurer, has described as Professor McDonald’s “sweet spot” on migration. In recent years, migrants — including temporary visa holders such as students and specialist workers — have made up two-thirds of overall population growth, increasing demand in a sluggish economy, including for housing, financial services, education and consumables. As Stephen Lunn reported on Monday, the suspension of the immigration pipeline is shrinking the economy by up to $40bn a year. Migrants, or the “people power” behind our decades-long “economic miracle”, as Deloitte’s Chris Richardson put it, add around 2 per cent to our $2 trillion economy. Citing Treasury work, Population Minister Alan Tudge said about 20 per cent of our GDP per capita growth during the past 40 years had been due to population growth.

Yet it’s not only the sheer number; skilled, job-ready migrants boost both productivity and participation, key drivers of the government’s recovery plan. Economists and migration experts argue a staged return that prioritises migrants with in-demand skills could help revive industries crippled by shortages of skilled workers. This could also reinvigorate the housing sector, a focus of the Morrison government’s next round of fiscal stimulus. As well, as Professor McDonald tells Lunn on Tuesday, an underused pool of at least 150,000 workers already in the country could help fill, with a few policy tweaks, the skills gap being created by the international border closure. That number includes graduates and spouses of residents on temporary visas. We need to retain such high-value workers with the right skills for the revamped, post-COVID economy.

As recruiters point out, displaced workers in hospitality or retail can’t simply move into areas of acute need such as healthcare, social assistance, ICT, mining, professional, scientific and technical. Skills aside, and the time required to retrain, such workers may have neither the inclination nor ability. Bemoaning the lack of job training by universities in the face of mass underemployment will gather traction but is often beside the point. Spouting “Australia First”, as Labor and other chancers have done recently, is self-defeating at best, nativist at worst. The regions are crying out for people, especially the young and skilled. Towns offer affordable living and unique experiences. As the shutdown shows, hi-tech workers and specialists no longer need to be in CBDs. Some work, such as healthcare, is site specific; luckily, migrants are filling this need in remote and rural areas.

The crisis is a chance for us to lift our game in winning skilled migrants. Our success in dealing with coronavirus will increase our attractiveness for foreign students and young professionals. We just need to be strategic rather than haphazard in our approach. Not only to population but also to land-use planning, housing, transport and infrastructure provision. “Big Australia” is great for business because it means more customers; those with assets and capital receive a boost in prices. But for many living in outer suburbia, it has come to mean road congestion, long travel times and high housing costs. Getting the basics right for a higher population remains a challenge across all three tiers of government. But it is not a Ponzi scheme, as some sceptics aver. The pay-off from migrants is not simply in GDP growth and living standards, or even in a slowing of the ageing process. It’s all around us — in diverse and vibrant families and communities. As we emerge from the crisis, we have a fresh chance to embolden what we’ve built, take the heat out of the policy debate and beat the global competition.