‘Ringing alarm bells’: Business panic mounting on Dutton’s migration numbers

Employers are voicing their alarm at Coalition plans to slash migration after Opposition Leader Peter Dutton vowed to make deeper cuts than Labor to the annual intake, sparking fears of a shortage of skilled workers.

The concerns heighten the political dispute over population and housing after the federal government revealed plans to cut net overseas migration from 528,000 last year to 260,000 next year. Dutton said he would drive the number down to 160,000.

From left: The Australian Industry Group’s Innes Willox, Business Council of Australia’s Bran Black and Australian Chamber of Commerce and Industry boss Andrew McKellar.

Australian Chamber of Commerce and Industry chief Andrew McKellar said the Coalition target could not be achieved without having a severe impact on the economy because of the need for skilled workers and overseas students.

“It’s ringing alarm bells for business because we think it would be mathematically very difficult to achieve the sorts of numbers that they’ve set out,” McKellar said.

“It would have to have a very material impact across a range of areas where we have still very severe skill shortages.

“So that means areas like engineering and nursing, teaching, hospitality professions. All of these areas would have to be facing, I think, further challenges in terms of securing the skill requirements that we need.”

Business Council of Australia chief executive Bran Black said rather than reducing migration, the priority should be on releasing more housing in federal deals with the states to overhaul planning laws.

“I’m concerned about any proposal to further reduce temporary skilled migration, through a cut in net overseas migration, due to the negative impact it may have on the economy,” Black said.

“It may also compound our existing skill shortages and make it harder to do business.”

Australian Industry Group chief executive Innes Willox said the migration program should be about encouraging skilled migrants who could help to grow the economy.

National Farmers’ Federation president David Jochinke.Credit: Paul Carracher

“The last area to cut in the overall program is the absolute number of skilled migrants welcomed to Australia,” he said.

“To cut the skilled component of the migration program would be a momentous act of economic self-harm. If governments want to cut the migration program for whatever reason, they should look elsewhere beyond the skilled pathway.”

National Farmers’ Federation president David Jochinke said agriculture was one of Australia’s top 10 industries for skilled workers, which meant any cuts to migration would undermine the sector.

“Instead of taking away the workers we badly need, the government can create policies allowing farmers to be part of the solution to the housing crisis,” he said. One way, he added, was to offer tax incentives for farmers to offer more housing.

Former Immigration Department deputy secretary Abul Rizvi.Credit: Liv Cameron

Dutton stood by his policy on Tuesday and accused the government of planning a “big Australia” with its migration forecasts, even though both major parties are promising cuts.

“I absolutely celebrate every day our great migration story in this country, and I want to see international students come to Australia, but it needs to be done in a managed way,” Dutton said.

The business concerns have grown since Dutton said in a radio interview on Friday that his plan, if the Coalition was elected, would reduce net overseas migration to 160,000 a year, a figure 100,000 places fewer than the federal budget forecast for next financial year.

Dutton’s radio comments went further than the opposition leader’s budget reply speech on Thursday night, when he said he would cut permanent migration to 140,000, down from the budget forecast of 185,000.

The permanent intake covers those who are given permanent residency each year, while net overseas migration measures the total number of arrivals who increase the population.

University of Melbourne professor of demography Peter McDonald warned that it would be extremely difficult to target the net intake to a particular number, saying a big cut to overseas students would be a “formula for chaos” at universities.

“A substantial cut to international students would also have implications for future recruitment of skilled permanent residents because international students are the main source of new skilled workers,” he said.

Net overseas migration was 528,000 last financial year and included 265,000 overseas students, 71,000 working holidaymakers, 12,740 permanent humanitarian places, 25,000 New Zealanders, 44,000 temporary skilled workers and 30,000 permanent skilled workers.

Former Department of Immigration deputy secretary Abul Rizvi said it was difficult to see how Dutton would cut net overseas migration because he had provided little detail other than capping student numbers, which would eventually lead to fewer nurses and other skilled workers.

“Some of the changes would be ugly,” Rizvi said of the cuts under the Coalition’s plan.

Rizvi estimated that an intake of 160,000 would mean cutting student numbers to just 5000 a year if there were no changes to visas for families, skilled workers and backpackers, who are a source of temporary workers on farms.

McKellar said the student intake was very important because education was a large export industry. It is estimated by Universities Australia to be worth $48 billion annually.

“We shouldn’t be capping an export industry like that – we’re not talking about capping iron ore exports, or LNG exports, or something like that,” McKellar said.

“And I think in terms of the impact on housing affordability issues, the international students would be having a relatively muted impact in that space.”

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