Australia has a long and successful history of immigration. Migrants contribute economically, help fill labour shortages, improve the country’s demographics and provide important cultural diversity. But as countries like Sweden have learned, migration can also present significant challenges. For example, last week independent economist Chris Richardson claimed that “we’re doing truly generational damage in housing”, in part because:
Whether immigrants fuel inflation is a complicated question, in part because there’s no single, uniform “immigrant”. Immigrants can be students, skilled workers, entire families, refugees, retirees, or backpackers. Their ages also vary, as do their consumption, savings, and working patterns. Each of those features, and how they all come together in aggregate, will affect the role immigration plays on supply, demand and ultimately, prices.
The merchants of fear were out to get their clicks again on the weekend, jumping on the inevitable post-pandemic surge in migration to crack a headline: “Monthly long-term arrivals and departures data released by the ABS suggests that net overseas migration (NOM) has surged even higher, with around 500,000 net migrants expected to have arrived in Australia over the 2022-23 financial year.
According to this tweet (usual caveats apply), a new Deutsche Bank report implied that Australia’s housing crisis is about to get much, much worse: “[W]e estimate that net new migration will be around 530,000 for the financial year 2022-23, but only around 180,000 dwellings will be constructed. That is, a shortfall of 350,000 dwellings from the ‘equilibrium’ requirement.
Tuesday night’s federal Budget forecast a “surge in net overseas migration” over the next couple of years, as fewer people leave and many overseas students, skilled temporary visa holders and working holidaymakers return following the pandemic. The “surge” is expected to be temporary – a rebound from the huge decline in net migration during the pandemic – but never one to miss out on a headline, opposition leader Peter Dutton went on the attack:
There is no doubt that Australia has plenty of problems. Inflation is still running hot, rental properties are expensive and ridiculously hard to find, and profits for some companies – especially those in the mining sector – are, or at least were recently, at/close to record highs. Meanwhile, real wages are declining and the nation’s productivity over the last decade (the key driver of long-run real wages growth) was at a 60-year low.