Migration program will add up to 1% to annual average GDP growth because it limits the economic impact of the ageing population
Skilled migrants are adding to Australia’s wealth and are not living on welfare or robbing local workers of jobs, a report has found.
Joint research by Treasury and the Department of Home Affairs has quashed concerns about the need to cut immigration, showing migration is benefiting the country’s coffers.
The paper, released on Tuesday, cites International Monetary Fund estimates showing Australia’s migration program will add up to 1% to annual average GDP growth from 2020 to 2050 because it focuses on skilled migrants of working age, which limits the economic impact of Australia’s ageing population.
The release of the paper comes at a time of heated debate inside the Turnbull government on whether to cut immigration levels from the existing 190,000 annual cap.
Some conservatives in the government think cutting immigration would be politically popular and revive the government’s fortunes in the polls. The former prime minister Tony Abbott has called for a cut in immigration levels to about 110,000, and the home affairs minister, Peter Dutton, has raised the prospect of cutting the rate by 20,000 with his cabinet colleagues.
But the treasurer, Scott Morrison, has consistently cautioned against cutting the immigration level to ameliorate concerns about unemployment or stagnant wages, stressing the economic benefits of a program heavily skewed towards skilled migration.
Malcolm Turnbull and Morrison have made it clear they would like migration to remain near its long-run average level while responding to public concerns with a big infrastructure spend.
The Treasury and home affairs report said immigration increased GDP per person because the focus on skilled migrants of working age helped to improve Australia’s productivity.
“Migrants deliver an economic dividend for Australia due to current policy settings which favour migrants of working age who have skills to contribute to the economy,” the report found.
On the whole, it said, migrants were likely to contribute more to tax revenue than they claimed in government support.
It said Australia should be mindful of the type of migrants it accepted, which are classified as skilled migrants, family reunion, skilled 457 temporary migrants and humanitarian migrants.
It said the 2014-15 cohorts of the permanent migration program, the humanitarian program and the 457 temporary skilled visa program were projected to contribute a net fiscal benefit of $9.7bn over 50 years.
The fiscal impact of the permanent program and temporary 457 program for that cohort would be $12.4bn, while the humanitarian program would cost $2.7bn.
But the research acknowledged that high rates of population growth could exacerbate pressure on infrastructure and housing, and create congestion.
“Population growth – and the distribution and composition of the population – has a range of economic, environmental, infrastructure and social consequences,” the report said.
“This is especially true for Australia’s major cities where growth has been concentrated. Issues such as congestion and pollution are not new. These issues have concerned policy makers for decades and are the result of a range of legacy issues (such as environmental practices or town planning decisions) in addition to population growth.
“These issues would continue to be relevant for Australia even in the face of zero population growth. However, population growth tends to heighten existing challenges.
“To fully reap the benefits of immigration and population growth, Australia must continue to explore and address these issues.
“In the absence of migration, Australia’s workforce would begin shrinking in absolute terms by 2020.”