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Immigration nation

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Immigration is at the heart of Australia’s social and economic fabric – without it we will struggle to overcome the economic crisis brought on by COVID-19.

Diwa Hopkins

Senior Economist

The COVID-19 crisis lays bare Australia’s deep ambivalence towards immigration.

We rightly congratulate ourselves for being the most successful multicultural country on the planet. That ‘we’ve-all-been-in-this-together’ to squash new case numbers down to single digits is a shining example of this success. Yet already in response to the COVID-19 crisis, calls to restrict immigration once the pandemic has subsided are making their way to news headlines.

Strong immigration is a pillar of modern Australia’s social and economic fabric. It will be critical to a recovery from the current crisis, and any chance we have at being a thriving society with a strong economy.

Immigration is part of the very fabric of Australia’s modern building industry. The industry we know and recognise today is founded off the wave of immigration of the British, Greeks, Italians and other southern and eastern Europeans. It has since shifted in line with more recent changes to Australia’s demography, with a growing number of industry participants coming from Asian backgrounds.

History shows that when modern Australia has looked out to the rest of the world – openly and with optimism – we have flourished. Conversely, when we have turned inwards and sought to keep people out, this has only been to everyone’s detriment. It is a seductive but false logic that keeping people out protects local jobs.

'We are confronting the very real risk that Australia will have a surplus of housing over the next few years'

In fact, when immigration has been strong, the unemployment rate has been low – the share of people in the workforce who don’t have the stability and the sense of purpose, belonging, contribution and independence that all comes with a job has been small. Between 1982 and 2002, our immigration program was relatively weak averaging 95,851 thousand net overseas immigrants per annum, while unemployment averaged around eight per cent.

Since then, immigration has been strong, averaging 203,824 thousand people (net) per annum, and has been a key ingredient behind unemployment averaging 5.5 per cent. 

Success and enrichment from strong immigration is not automatic. In fact, if not managed and responded to adequately and appropriately, it can represent a source of social and political instability. The miserable situations in which the US and UK find themselves are sobering examples of how a fractured society – no matter how wealthy and powerful – is ill-equipped to respond to a crisis.

Proper management of immigration ensures that both newcomers and well-established residents can participate meaningfully in our social, civic and economic life – they can live affordably with adequate and appropriate amenity, nearby to jobs and community.

'Strong immigration will be critical to a recovery from the current crisis'

Cracks, strains and missteps in the management of our immigration program have emerged over recent years. There has been a strain on housing affordability and basic infrastructure in key markets such as Sydney and Melbourne – destinations where new arrivals tend to establish themselves. This highlights serious failings in the vitally important policy areas of planning and infrastructure.

Australia’s population growth has been consistent for much of the past 15 years. Despite this, the planning and delivery of infrastructure hasn’t kept pace leading to increased costs and reduced affordability.

What has been less visible, but still concerning, is the narrowing and lengthening of the path from temporary visa to permanent residency and ultimately citizenship. The consequence is that Australia has a bulging group of temporary visa holders who would otherwise call Australia home. This form of migration is in stark contrast to the previously well-established pattern that leads to residency and citizenship. It is contrary to principles of openness and inclusion, which have served to enrich modern Australia (and its building industry), and underpin its success in being a cohesive multicultural country with strong immigration.

A return to stable population growth driven by immigration will support Australia’s recovery from the COVID-19 crisis. To maintain our record as the most successful multicultural country on the planet requires renewed focus, attention and investment in housing and infrastructure, but also a return to established principles of migration and citizenship.
COVID-19’s immigration disruption
Since the start of 2018, the supply and demand for housing has been as close to balance as it had been for decades. The halt to migration in 2020 means that Australia’s population growth will fall woefully short of the weakest of forecasts all the while completion of new homes, particularly apartments, remains high.

The Australian Treasury has provided a guidance that net overseas migration in the next financial year is expected to drop to around 85 per cent below the level recorded in 2018/19. This could see Australia’s population growth rate drop to around 0.5 per cent per annum.

The most significant group of short-term arrivals – and therefore where the greatest disruption is occurring – is among international students. Those students who did not make it here for the 2020 academic year represent a significant sapping of overall demand (that would have ordinarily materialised) from the wider economy as well as for housing. Nationally, there were 74,380 fewer international student arrivals in February and March this year compared to the same two months in 2019 – a 28.9 per cent drop.

We are therefore confronting the very real risk that Australia will have a surplus of housing over the next few years.