Australia’s over-reliance on immigration at the expense of real productivity growth is costing everyday Aussies tens of thousands, says free-market think tank the Institute of Public Affairs (IPA).
IPA researchers modelled a scenario where population growth grew organically rather than with the assistance of immigration since the year 2000.
In this scenario, GDP growth was maintained because in the researchers’ view it’s likely productivity would have kept increasing as it did in the late 1990s.
In essence, this means Australians would be wealthier on a per capita basis under this scenario given that the population would be 7.9 percent lower.
GDP growth does not always indicate that individuals are getting richer on average. It does not account for factors like inflation or the number of people in the country, so it does not directly reflect changes in personal wealth like GDP per capita does.
The report also found that population growth, which in Australia is overwhelmingly driven by immigration, accounted for approximately 85 percent of economic growth in 2023, the highest year on record.
In fact, the report’s figures conclude an upward trend in the contribution of migration to economic growth.
Between 1990 and 1999, population growth accounted for approximately one-third of total economic growth. Between 2010 and 2019, that figure rose to two-thirds.
The IPA, in its conclusions, warned of ramifications should this trend continue.
“Australian governments have become addicted to migration-driven economic growth. This has severe consequences for a nation struggling with unprecedented housing and cost-of-living challenges. These challenges will become more pronounced if migration intake is increased further,” the report reads.
It also touched on what it believes to be a fundamental failure of governments to create a national economic composition conducive to bona fide wealth creation and growth.
A Big Australia
Australia’s population has grown exponentially in the past few years as a result of expansive migration policies implemented by the Albanese Government.Thirteen months after international borders were opened in December 2021, net overseas migration—immigrants minus emigrants—accounted for 81 percent of population growth or an additional 454,400 people.
The annual natural increase reported was 106,100 while net overseas migration was 518,100.
Australia’s national unemployment rate has risen to an 18-month high of 3.9 percent amid what seems to be an economic downturn and loosening labour market. A loose labour market is where there are less job openings than jobseekers.
The Australian economy has in recent months begun to transition from a tight labour market to a loose labour market as a result of faltering business sentiment and increased rates of migration.
Immigration has also been placing upward pressure on Australian property prices in a pre-existing housing affordability crisis.
AMP Deputy Chief Economist Diana Mousina has this week voiced her concerns about the large disparity between population growth and the construction of new homes.
“If we had enough housing supply and infrastructure that went along with very high levels of immigration, then it could become sustainable. But what we’re seeing is that there’s too much pressure on the rental market, and that’s adding to inflation.”
The Albanese government has recently revisited its immigration policy.
Minister for Home Affairs Clare O’Neil has come out conceding that her government’s immigration strategy has not been working for most Australians, unveiling a new plan to significantly suppress levels of migration in the New Year.
On Dec. 11 the government officially announced its plan for arrivals of just 375,000 people next year and 250,000 in 2025, a significant reduction from the annual intake of 510,000 in 2022-23.
