Opinion article

We need more nuance in the migration debate

The migration debate whether in the media, in parliament or around the barbecue all too often moves to the negatives, perceived or real, of a larger population. It should come as no surprise therefore to see headlines saying that closing the borders has made 26 million Australians richer. Headlines like this obscure the nuances behind the impact of migration on Australia’s economy.

The federal government has deployed more than $300bn of direct spending on the economy during the pandemic to date, creating huge demand at a time when our population has virtually stood still. 

In that situation, the arithmetic of GDP per capita and the success of that stimulus made it inevitable that GDP per capita would rise in the short-term.

The benefit of closed borders for the domestic economy was that Australians redirected part of their regular spend on international tourism back onshore.

Maintaining GDP per capita growth year in and out without migration is not sustainable.

It’s not as simple as migrants taking jobs and increasing infrastructure needs.

Migrants bring skills and experience, create demand in our economy and underpin services exports such as international education.

And they add to, not detract from, our fiscal position. According to the 2021 Intergenerational Report, skilled migrants make a positive net contribution to the budget’s fiscal position over the long run of around $318,000.

This reflects the fact that migrants are younger and on average more highly skilled, and therefore help to combat impacts of population ageing.

On the supply side, now more than ever we need the skills and capability migrants bring to our workforce to lift productivity and deliver our investment pipeline.

It is productivity that has been responsible for 80 per cent of the lift in Australian incomes over the last three decades.

Australia needs to lift the depth and calibre of its managers and deploy new technologies such as artificial intelligence right across the economy. This will not be achieved without a strong skilled migration program into the future.

Currently unemployment is low largely because demand and jobs growth are strong. In a recent roundtable with CEDA members, one CEO described demand being “as strong as ever”.

This is reflected in the employment data, which shows around 250,000 additional jobs created since March 2020. It is the demand for labour, underpinned by tremendous economic stimulus, that is a key factor here – not just border closures.

According to the NAB business survey for the December quarter, 85 per cent of businesses reported that labour shortages are holding back output – the highest on record.

CEDA’s own survey of CFOs found that almost 70 per cent of respondents suggested that access to appropriately skilled workers would be important or very important for driving their investment decisions in the next 12 months.

These labour pressures have been experienced across all industries, including health, technology and aged care. Without access to skilled migrants over the last 18 months, there have been delays to projects and investments in Australia.

Importantly, this is not just a story of inward migration. Multinational organisations manage their teams across many borders and the opportunity to work and live in different locations is very attractive to employees.

After two years of immobility many are hungry to pursue these opportunities and experiences. So much so that one firm reported to me that one in four of its global workforce have indicated a desire to move locations.

Their concern: it is far easier to leave Australia than to get in. CEDA has long pushed for the government to fast-track visas for multinational company transfers to quickly fill our skills gaps. This should be a priority now.

Australia now has the opportunity to reset its long-term migration strategy.

To be successful we need to move beyond simplistic arguments of either a Big Australia or no migration positions and instead accept the need for more nuance in the national debate.

This article was originally published in The Australian.

About the authors

Melinda Cilento

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Melinda Cilento is Chief Executive of CEDA, a company director, economist and experienced senior executive. She is a non-executive director of Australian Unity and Co-Chair of Reconciliation Australia. Melinda is also a member of the Parliamentary Budget Office panel of expert advisors.

Melinda was previously a Non-Executive Director with Woodside Petroleum, Commissioner with the Productivity Commission and Deputy CEO and Chief Economist with the Business Council of Australia. Melinda has also previously held senior roles with the Federal Department of Treasury, Invesco and the International Monetary Fund.

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