University of Western Australia
This article by Professor Shamit Saggar, director of The University of Western Australia Public Policy Institute, was originally published in The Australian on January 14.
The sudden halt to immigration is one way in which the global public health emergency has impacted Australia. About a million people never arrived or left abruptly, and population projections for 2040, if nothing changes, will mean we are going to be 2 or 3 million short. That spells danger for Australia’s prosperity and security.
Cast your mind back and Australia’s pre-pandemic levels of net migration neared 200,000 per annum – it had become, proportionately speaking, a major player in the global migration club. Boldly doubling that rate, as Premier Dominic Perrottet seeks to champion, is right but carrying public sentiment is not a given.
The economics of reverting to our earlier patterns is compelling. New workers, talent and unmeasured additional drive have driven productivity gains over the past two decades, fuelled domestic demand, allowed new sectors to flourish and, crucially, given Australia a fresh appeal to attract the aspirational classes across the Indo-Pacific region. The politics of increased immigration is trickier, requiring a careful reading of the public mood, and adopting a new vision for Australia at mid-century. Five particular traps will need to be overcome to get there.
Quantum. Political disputes mostly centre on the scale or quantum of fresh immigration. That is why Perrottet’s predecessor called for a slowdown in 2019, responding to some real infrastructure bottlenecks in NSW. Voters are sensitive to the rate at which their neighbourhood and schoolyard are changing, something anxious parties do not want to get on the wrong side of.
Remember also that every year Australia loses many of its own, in common with most other developed economies. There is a gloomy sense (epitomised by Judith Sloan earlier this week) that the “leavers” are somehow giving up on their home society, while, strangely, the “arrivers” are only driven by self-gain. Despite this, the latter’s role in securing gains for all is where the emphasis lies.
Composition. For a Big Australia vision to succeed, the composition of immigration is vital and this calculation already features in our human capital-focused programs. The sweet spot lies in attracting large numbers who are not like us (they have skills and motivations that are absent or in short supply). If people have come halfway around the world they are likely to have a drive and determination that will help to improve labour participation and productivity.
The friction stems from their cultural or linguistic diversity as compared with those who seem more “like us” (a bone that cultural conservatives cannot stop gnawing on). The danger is that some groups get linked with political disputes about the absorptive capacity of Australia, so that Australia gets known to have its favourites. That would be a disaster for our reputation globally.
Winners and losers. The big dispute among economists is about productivity gains brought about by immigration and whether you measure these overall or per capita. The former matters because it provides a decent snapshot of the size of the economic cake and what it can be once fresh migrants, who are younger and more likely to be economically active, are added. The dynamic effects of migrants have to be captured since they don’t just come to do existing jobs better, but, over time, help create new better ones as well.
The goal is a healthy mix between working and dependent populations that remains in line with public expectations about welfare entitlement and public services. The devil is to get it right because voters’ views on the matter are notoriously subjective and drawn from relatable anecdotes.
Acknowledging up front that there are downsides helps to maintain credibility – the last thing a Big Australia strategy needs is the stinging accusation that ramping up immigration is a fetish of out-of-touch elites living in Sydney and Canberra who are only affected by the upside.
Lessons learned. Brexit is the best example of the politics of mass immigration going awry. Five years on, and entirely predictably, Boris Johnson is defying business interests and opting for drastically reduced immigration and the vague promise of higher wages. Emma Duncan of The Economist says this is based on “the heroic assumption Britons can be persuaded to do hard and horrid jobs”. Sadly, the same is true of Australia.
Accusing business of being hooked on cheap immigrant labour will be a feature of the forthcoming federal election. Make no mistake: anti-immigration rhetoric can be combustible and has the potential to loosen blue-collar voters from their ALP loyalties.
Which is why Australia’s own immigration story should be invoked: many of its citizens recognise themselves in the ranks of the newcomers who have settled in large numbers since 1945. Moreover, those under 40, who are graduates living in major cities with young children, have especially warmed to the idea of Australia’s growing cosmopolitanism, and are eager to cast aside the monoculturalism of the past.
Fairness. Full-throated immigration sceptics are in love with today’s zero-immigration fantasy, and are looking for a guest worker system for low-skilled worker-ants accompanied by open access for US bankers and movie stars. Therefore, a radically different vision based on fairness is needed.
Expanding immigration will not only give us scale and ingredients to grow prosperity and security but also enable the country to develop its identity and character to become more of a cross-section of the world. It is built on an implicit promise: that immigrants’ hard work and willingness to accept sacrifices will allow Australia to get ahead – so long as they believe they are joining a fair society.
Professor Shamit Saggar is director of the University of WA’s Public Policy Institute and was a Blair government senior official.