How green is Rudd's migration program

THE Rudd Government is pledged to a new political equation: resolute action on climate change and expanded immigration to Australia to meet labour shortages.

Kevin Rudd and Malcolm Turnbull have a shared commitment to this strategy and vision. Both leaders are pro-environment and pro-population growth. They seek sustainability on this basis and so does Ross Garnaut.

One of the Garnaut report's themes is that Australia's burden in climate change mitigation must take into account its growing population from immigration.

This is why Garnaut uses per capita measures to assess Australia's proposed emission reductions.

It reflects a bipartisan choice for Australia: to ensure its climate change policy is integrated into an expanding population. This is pivotal because, sooner or later (probably sooner), the anti-migration wing of the green-scientific lobby will renew its drumbeat for a smaller population by invoking climate change. Watch for the signal from Tim Flannery, whose anti-migration views are a bellwether of populist green extremism.

In the coming century rich nations will fall into two groups: those that tap into global skills via migration and succeed in maintaining economic growth; and those that sink into an introspective low growth migrant-resistant mindset. The US typifies the first model and Japan the second.

It is a choice about values and culture. It is fascinating that two areas where the Rudd Government is decisive are climate change and immigration. Rudd is pledged to an emissions trading scheme by 2010 and every sign is that he will deliver. On immigration policy, his decisions are startling.

The Rudd Government has presided over the biggest annual increase in the intake since the scheme's inception in 1945. The total intake this year is 190,000, more than double John Howard's first year. The scope of the program's transformation is immense. This year the skilled component is 70 per cent of the intake.

In addition, the class 457 visas for temporary skilled workers are running at 100,000 this year, compared with less than 40,000 five years ago.

Immigration Minister Chris Evans says that "the debate about temporary migration, quite frankly, is over".

As usual, immigration levels are being driven by the labour market. As Australia's economic growth slows, courtesy of the Reserve Bank and the global liquidity crisis, these pressures will ease.

But any easing will be brief. Australia is about to cross a structural fault line from July 2011, when the first of the post-World War II baby boom generation begins to retire. For the next two decades the baby boomers will move from the workforce into retirement and a new era of labour shortages will begin. This is not just an Australian phenomenon. It is a Western world phenomenon.

The impact is canvassed in a report, titled The Global Skills Convergence, issued this week by Bernard Salt, demographer and partner in KPMG's advisory practice.

The report says: "For 50 years global markets in the developed world have benefited from the generous supply of talent and labour provided by the wave of baby boomers following the smaller 'Depression and war' generation. The supply of talent and labour has been more or less on the rise for half a century."

This era is ending for the US, Britain, western Europe, Canada, Australia and New Zealand. It ended for Japan in the mid-1990s.

"The fault line is the time at which more baby boomers (born 1946-61) exit the workforce than generation Ys and millenniums enter the workforce," Salt says. "The developed world's response will be to take more skilled workers from the developing world and to take younger workers who arrive with the skills and who provide a production base and pay taxes for the next 40 years."

Australia has been preparing for this fault line since former treasurer Peter Costello released Treasury's Intergenerational Report six years ago. One part of the answer is to lift workforce participation and productivity, themes of the Howard and Rudd governments. But a more flexible and deeper commitment to immigration is essential.

Competition for skilled global talent will be intense. The trend works both ways.

Australian demographer Graeme Hugo estimates the number of Americans living offshore is seven million or 3 per cent of Americans. The proportion of Canadians is 7 per cent and of Australians 4 per cent or 900,000 people.

But the most extreme example is NZ, where nearly one-quarter of New Zealanders live beyond the land of the great white cloud.

"It is going to become a global talent grab," Salt argues. Australia is well positioned to compete given the skilled labour it imports from China, India and Malaysia, and its mechanism of student entry as a prelude to migrant status. At the same time, Salt predicts that multinational corporations will "expand their head offices out of the traditional Western headquarters and into the new territories of the developing world".

The task for Australia is to draw on and adapt its established migrant policy and traditions. The key, above all, lies in keeping domestic political support for ongoing entry of large numbers of permanent and temporary workers. This will be difficult given the legitimate concerns of the trade union movement and the risk of Hansonist or deep green extremism.

It depends on three conditions.

First, the migrant intake must be geared to the economy and labour shortages. The restructuring of the program under the Howard government towards skills is basic to thiscondition.

Second, cultural adaptation to Australia is critical. The Australian people will not accept immigration if the perception is that it is dividing or fragmenting the country.

The third challenge is environmental and it is the most unpredictable. The key here lies in the Garnaut report. Garnaut stresses that climate change is a global problem, which means, by definition, there is no national solution.

It follows, therefore, that Australia's task is to make a fully proportionate contribution to the global response. It is neither to cripple its own economy by succumbing to the moral vanity that it must do more nor to shirk its responsibility by becoming a free rider.

This is the only sound framework that will enable Rudd to harmonise his great aspirations for climate change and population growth, and the tide of opinion resisting this will be immense.