Immigration cuts just like losing a city every 10 years, says economist

Cutting the immigration intake by tens of thousands a year would be the equivalent to losing a Wollongong every decade.

Imagine losing a city the size of Wollongong every decade. Picture: Jeff Darmanin

Cutting the immigration intake by tens of thousands a year would rob the country of massive economic benefits and clout — equivalent to losing a Wollongong or Gold Coast every decade.

Glenn Withers, a professor of economics at Australian National University, said reducing the migrant intake by 30,000 a year would prompt “big economic losses” for the nation and Australians individually.

“One measure of such a policy is we’d lose a Wollongong or a Gold Coast — 300,000 people over a decade, or 600,000 over 20 years. That’s a big economic loss compared to what we would have otherwise had,” Professor Withers told The Australian yesterday.

“Remember, migrants are more skilled and younger on average; broadly, GDP would be about $50 billion a year lower by 2040,” he added.

Home Affairs Minister Peter Dutton has proposed cutting the annual immigration intake by 20,000, which was reportedly rejected by Malcolm Turnbull and Scott Morrison. Former prime minister Tony Abbott in February recommended the level of annual immigration be halved to about 110,000.

“It would absolutely affect incomes per person — it isn’t just about the size of the whole economy,” Professor Withers added, estimating GDP per capita would be 1.2 per cent lower by 2040 if immigration were cut by 30,000 a year.

The annual ceiling for permanent visas has been fixed at 190,000 since 2012, but the limit has only been reached twice. A little over 183,600 skilled and family reunion visas were approved last financial year. Net overseas immigration, which includes residents on temporary visas, was 250,000 over the year to December.

“Studies suggest for every extra two million people your city average incomes go up by 8 per cent,” Professor Withers said, referring to the benefits in rates of innovation that come with denser populations.

Bob Birrell, a sociologist at the Australian Population Research Institute and critic of the immigration program, said it had been attracting immigrants whose skills were not scarce. “The government’s own department in some cases says this,” he said.

Professor Birrel said extra migrants worsened housing affordability and congestion.

“It’s high time to get a better balance between the government’s aim for so-called growth and the quality of life of residents,” he told The Australian.

A 2016 inquiry by the Productivity Commission found per capita incomes in Australia would be around $7000 higher by 2060 — when the population would be around 40 million, up from last year’s 24.5 million — compared with a scenario where immigration were slowed significantly.

“Skilled immigrants always pay more in taxes than they cost in services,” Professor Withers said, suggesting other classes of immigrants, such as refugees, could cost taxpayers more. “In other words, you can pay for the extra infrastructure needed with plenty left over,” he added.