This article is from the Australian Property Journal archive
IN the 20 years leading up to COVID-19 immigration contributed an estimated $172 billion in additional productive capacity to Australia’s economy but the total loss of new migrants during the pandemic will shrink the economy by $80 billion by 2025.
According to a new research paper by the Urban Taskforce and BIS Oxford Economics, Migration Matters – Immigration and the economy, net overseas migration accounted for 57% of Australia’s annual population growth on average, while over the same 20 year period new migrants were responsible for more than 20% of the increase in economy’s productive capacity.
“Migrants create jobs – they don’t take them. Migrants generate more tax revenue because of their high levels of tertiary education, income, skills and relatively low age. We need more migrants to improve the ratio of taxpayers to non-taxpayers, which is in long term decline across Australia,” said Tom Forrest, CEO of Urban Taskforce.
Skilled migrants made up the largest proportion of permanent arrivals, at 50%, with family and humanitarian migration following.
Skilled workers are typically under 40 years old, earning above average salaries, paying above average income tax and requiring below average levels of government support.
Skilled permanent migrants also have an employment participation rate of 92%, well above the 66% participation rate of the general working age population. International students also supported more than 240,000 local jobs for FY2019, almost 2% of all jobs.
“Price rises for new homes have been driven by low planning approval numbers and the resultant low levels of supply. Some local councils in Greater Sydney, with an eye on the upcoming local government elections in September 2021, have used the reduced immigration during the COVID-19 period to further reduce planning targets for more housing. It is this politically expedient myopia which has created the dangerous price bubble we see today.
“A reduction in the future pipeline for housing is a double whammy for the NSW and Australian economy. Lower supply will mean reduced affordability while reducing the economic growth potential for the nation,” added Forrest.
In line with current government projections, the report reveals the total loss of migrants as a result of COVID-19 will be the main contributing factor in the loss a forecasted 1.1 million people in the Australian population in the next decade.
“The policy imperative must be reversed. Change the planning system to build in flexibility to cater for a rapid return of migrants to our economy, thus giving us some chance to raise the revenue needed to pay off the COVID related government debt and fund the full range of services to ensure the baby boomer generation is properly cared for as they approach their senior years.”
This loss of 1.1 million people will lead to a smaller workforce, and a resulting slower economic growth, potentially by a total of 4% by 2025, shrinking the economy by $80 billion.
“The key is to return to the pre-COVID-19 levels of temporary and skilled migration numbers as soon as safely possible. The economic imperative is so great, pro-active measures should be considered to safely restore migration numbers,” concluded Forrest.
