Migration Mythbusting

September 18, 2018
Editor(s): William Chen
Writer(s): Maggie Tan, Nathan Peters, Divya Marwaha

Immigration at large

Has seen that in Scott Morrison’s ascension into the Prime Ministership, he has brought with him his tough stance on migration, as seen in his previous role as the immigration minister. Australia’s immigration laws are expected to tighten, given Morrison’s memorably firm backing of the “Stop the Boats” regime.

In particular, Morrison aims to put a twist onto former PM Malcolm Turnbull’s regional visa plan, increasing Turnbull’s proposed lockout from 18 months to up to five years, as the new Prime Minister looks to reduce congestion in Australia’s main cities. With the majority of incoming migrants choosing Melbourne or Sydney as their ideal place to settle down, Morrison looks to ease infrastructure and employment issues through this new proposal, hoping that skilled migrants will fulfil factors such as the demand for work, reduce the amount of infrastructure being built before time and lower pressure on housing prices.

For many, detention centres have been a omnipresent feature of Australia’s migration policy. These facilities detaining asylum seekers have unfortunately been shrouded by a cloud of scandals involving sexual abuse, suicide and poor condition, and are widely considered, a terrible and inhumane place. The detention of children has been especially controversial.

Considered a crime against humanity, detention centres are Australia, and Morrison’s way to deter illegal immigrants, using these facilities as almost jails for individuals trying to “queue-jump” into Australia. In this criminal pursuit, the economic costs since 2012 have skyrocketed towards $5 billion, not even to mention the enormous human cost, with the draining of skill, talent and life extending to many, immigration detention peaking at around 13,000 people in 2013.

Immigration, actually

Immigration is actually a blessing to the Australian economy. Immigrants as a group are actually net contributors to the economy. They help in raising the country’s GDP levels. Additionally, there is a positive impact on the per capita income as well. 70% of the country’s immigrant population is skilled and of working age which is a crucial factor in determining the impact on the economy.

According to a report by the Department of Home Affairs of Australia, migration contributes heavily to slowing the ageing population, by providing a buffer of time to adjust. The Australian community has been enriched by the presence of migrant groups, who brought diversity to the country. The migrants have been sustaining and fostering economic growth of the country. Migration has an impact on both the supply and demand side of the economy. Permanent migrants overall consumption by enlarging the pool of consumers and encouraging flows in the economy. On the supply side, migration adds to the supply of goods and services through population, participation and productivity.

A migrant – fuelled housing affordability crisis?

Many would attribute the housing affordability crisis to Australia’s (perceived to be) slack immigration policy. It is easy to think with that the Australian Population Research Institute reporting that migrants are the premier cause for rapid population growth in major cities, it is thereby increasing the demand for housing and causing prices to increase. However, while migrants do contribute to the increasing demand for housing, the federal government’s policies such as negative gearing and capital gains tax exemptions coupled with the failure of state governments to increase supply are the real issues behind Australia’s housing affordability crisis.

The most prevalent problems in Australia’s overheated housing market are two-fold. Firstly, there is a level of consumption driven demand, for a family home, and a level of investment demand. The benefits of immigration should be offsetting to their increase in the demand for housing. It is the artificial policy drivers of investment demand that is driving inefficiency in the housing market, evident in the slump in the rental market. It is this extra demand that is not being met by supply. For example, the rapid population growth in Australia post both World Wars was met with record rates of residential housing construction, meaning house prices barely moved.

Over the past decade, however, housing construction did not match the increases in demand, which led to a rise in prices. Only in the past couple of years, with tightening laws around foreign property ownership, has construction started to match population growth, most notably in Sydney, which has experienced a moderation in house prices in the past six months.

Figure 1: Housing construction lagged population in the last decade, but has picked up. Source: Grattan Institute, 2018

But the effects of a decade of undersupply still remains. To address this problem, research from the Grattan Institute (2018) recommends that state governments should update town planning rules to allow more housing to be built in inner-city and fringe suburbs. In addition, more small-scale urban infill projects, such as the rededication of open spaces to residential dwellings, should be allowed without council planning approval. Furthermore, state governments should allow denser development along major transport corridors.

If governments across the country could fix our myriad policy problems regarding housing affordability, Australia can continue to enjoy the many economic and social benefits that immigrants bring to the country without concerns that house prices would be inflated.

Job-stealing immigrants?

There is a media and politically perpetuated belief that migrants are stealing the jobs of existing Australians, and can be most recently cited in Tony Abbott’s speech at the Sydney Institute, where he reiterated such views.

This is most definitely not the case. In the realm of small business, migrants are actually driving job creation. One in three Aussie small businesses are run by migrants. That’s at least 620,000 migrant-owned businesses, creating jobs for themselves all the while improving the quality of life for themselves, their families, and their employees.

According to the ABS, migrant business owners are were employing 1.41 million people and one in three planning on hiring more to grow their businesses. This is a significant proportion of Australia’s economy benefiting from the job creation. As expected in any population, there are some on the margins of the job market. However, it is important to recognise migrant-driven organisations created specifically to tackle the challenge of employability, to ensure that all migrants are net contributors in our economy. Some of these include Catalysr, the Good Shepherd, and Thrive Refugee Enterprise.

Unpacking some common misconceptions about the migrant economy, it is important to recognise that statistics and opinion are skewed in the media and in politics – it is important to read into objective, holistic and data driven analysis of the information we receive on a daily basis and have informed, educated opinions, to put the right foot forward and get the best out of society.

The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.

Meet our authors:

William Chen

Maggie Tan

Nathan Peters

Divya Marwaha