Peter McDonald attacks Coalition’s tiny immigration cut

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By Leith van Onselen

MB has gone to great lengths highlighting the many contradictions of vocal mass immigration booster, Professor Peter McDonald (for example here and here).

As expected, McDonald has attacked Prime Minister Scott Morrison’s tiny cut to Australia’s permanent migrant intake to 160,000. Let’s examine his arguments.

Professor Peter McDonald, told The New Daily that demand for labour was so strong in the two big capital cities that Mr Morrison’s plan to cut immigration to 160,000 would not work.

“I don’t think it will make a difference,” he said. “I think the demand is so strong for labour they will get it from somewhere, perhaps New Zealand.”

The Coalition’s policy won’t work because it represents only a tiny cut and has been offset by opening multiple pathways for foreign workers to gain entry into Australia, as explained in detail yesterday. Substantive immigration cuts are required – both to permanents and temporaries – not tokenism.

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Back to McDonald:

Professor McDonald warned that any new cap would also flow through to family reunion migration and could open the door to legal challenges that could cost taxpayers millions.

The number of people that can migrate to Australia each year under family reunion provisions is linked to the skilled migration intake. If the overall intake goes down, it will cause further blowouts to waiting lists.

“There’s currently 80,000 people who are waiting to become a permanent resident,” Professor McDonald said.

“They have paid $500 million in fees to the government and they are still waiting.”

Asked if he believed these people could consider a legal challenge against the government, Professor McDonald said: “Yes, I do”…

“As the pipeline continues to grow, it will blow out waiting times. People are already waiting for two years.”

This line of argument is asinine. The “blowouts in waiting lists” for permanent residency has arisen precisely because the federal government dramatically raised the skilled intake, as illustrated in the next chart:

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As skilled migrants have poured into Australia, this has led to increased claims for spouses and parents under the Family Stream, creating said backlog.

The solution to this backlog, therefore, is to lower the skilled stream back to historical levels (say 35,000) by reserving it only for truly world-class leaders in their field that Australia cannot foster internally, as well as setting an income pay floor at the 80th to 90th percentile of earnings.

Fewer skilled migrants also means fewer applications for permanent residency under the Family Stream.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.