CEO Update: Changes to immigration need to consider economic trade-offs

Last week, immigration policy was once again in the spotlight as calls to reduce net overseas migration intensified. While it’s appropriate to debate our migration policy to ensure it delivers the best outcomes for Australians, a troubling hallmark of recent exchanges has been an implied assumption that changes to migration settings operate in a vacuum. 

Arguments to dramatically cut headline migration figures are seductive in that they promise to support other policy goals, like making housing more affordable. But changes at scale must also acknowledge and address the spillovers that are likely to follow in other areas, like the labour market.

The latest data available from the Australian Bureau of Statistics highlighted that in the 2022-23 financial year 6.9 million jobs were held by migrants. These workers are playing an important role in meeting gaps in labour supply that are unmet by domestic workers.

Around one in five construction workers are migrants; over one in three workers in healthcare and social assistance come from abroad. In the transport and logistics sector, already struggling with cost pressures from the conflict in the Middle East, nearly 40 per cent of workers are migrants.

Sweeping changes to our migration intake therefore involve real economic trade-offs, with impacts likely to be acute in certain industries. Promised benefits from reduced immigration may come with a sting in the tail for the cost of living if poorly designed policy means businesses are unable to access much-needed workers and increase prices accordingly.

And as analysis from the Scanlon Foundation Research Institute shared with CEDA trustees at our recent economic outlook series highlighted, it is inflation and economic conditions that are consistently the top-ranked issue for Australians – immigration, meanwhile, comes in as the eighth most important issue.

As CEDA economists argue in a forthcoming article, balancing the costs and benefits that come from any level of immigration is a challenging task. As the debate on immigration policy continues, transparency around what these trade-offs look like and how they will be managed needs to be the starting point for policymakers.

Join us as we hear from Premier Roger Cook in Perth on September 8, as he outlines his vision to make Perth a capital for the Indian Ocean Rim.

We are pleased to welcome Reserve Bank of Australia Governor, Michele Bullock, back to the CEDA stage to discuss inflation, interest rates and insights into Australia’s economic outlook, in Sydney on September 22. 

South Australia’s leading policymakers, educators and industry leaders will convene in Adelaide on October 8 for a timely discussion on the future of skills, training and workforce pathways in the state.