Economists claims that the federal government’s plan to cut the permanent migrant intake by 30,000 annually over four years will reduce economic growth by 0.13% and put further downward pressure on house prices. They also contend that the cut in permanent migration could lead to a tighter skilled labour market, with the Reserve Bank having suggested that less skilled labour could lead to higher wages in some areas. From The AFR:
“A reduction in net migration would have important implications for the economy,” Morgan Stanley analysts led by Chris Nicol said in a note to clients. “A slowing in net migration of 50k would reduce GDP by 0.2 percentage points, all else equal.
“It is also important for housing demand. If migration slows then this will put further pressure on house prices”…
Credit Suisse has also noted that high immigration has added to the pool of skilled labour but more so in the part-time market, which can take away from wage growth.
“These trends have supported an increase in ‘precarious work’, where firms have made greater use of contractors and casual workers willing to take lower benefits and wages. In turn, casualisation of the workforce has undermined the wage-bargaining power of full-time employees.”
Higher wages, cheaper housing, less congestion pressures. What’s not to like?
Sure, lower population growth would also reduce economic growth, since less inputs in people means less outputs in goods and services. But so what? It’s the per capita share of the economy that counts, not the aggregate figure.
This is all academic of course, since the Morrison Government hasn’t actually cut immigration. Rather, he’s announced a tiny cut in the permanent intake to 160,000, while at the same time opening multiple pathways for temporary foreign workers to gain entry into Australia and allowing an explosion of migrants on bridging visas (explained in detail here).
Australia needs substantive immigration cuts – to both permanents and temporaries – not tokenism.
