Economic Prosperity Depends on Migration

The Australian Financial Review

By Graham Bradley
President, Business Council of Australia

Discussion of population growth and its effect on the Australian way of life has been a big feature of the first week of the 2010 election campaign.

What concerns the Business Council of Australia is that the electorate isn’t always provided with the information it needs to engage in a debate that is so important to our nation’s economic success and community prosperity.

The discussion needs to acknowledge that forces which are driving growth in our economy and in our population are, in all likelihood, here to stay. And what’s more they offer this country unprecedented opportunity to build on our advantages, shore up our resilience and generate prosperity for the benefit of all Australians.

Understanding the reality behind population growth numbers brings us a step closer to understanding its connection to economic growth. The bottom line is that increases in the size of our population run parallel with Australia’s success as a nation in economic terms and in many other layers of community life. A closer inspection of the population statistics is a good place to start because it reveals the elements to our population growth.

Much attention has been paid to the widely reported number of 457,000 additions to Australia’s population in 2008–9, a figure constructed by the Australian Bureau of Statistics that factors in both permanent and temporary migration numbers, as well as natural increases. The net impact of births over deaths in Australia, referred to as natural increase, was around 157,000 in 2008–9. The balance of the population growth figures reflects overseas migration of nearly 300,000 in 2008–9.

People categorised as permanent migrants are “settlers” who arrive in Australia under the skills, family and humanitarian programs. After deducting the number of people leaving Australia on a permanent basis, the net addition from permanent migration in 2007–8 was only 86,398 (the last available year of data).

The permanent migration program has grown only modestly in recent years and continues to help Australia meet demand for skilled workers. Skilled migration supports business investment and growth, aids productivity and offsets the impact on the labour market from Australians leaving to pursue opportunities overseas.

The largest contributor to population growth has been net, long-term, temporary migration - 186,528 in 2007–8. Even though they are not here on a permanent basis, this category of migrants is included in our population count and made up 44 per cent of the 2007–8 total growth figures. Some of these entrants are ultimately granted permanent resident status.

Long-term temporary migrants are people granted visas to stay in Australia for an extended period, and include overseas students and holders of working holiday and 457 business visas.

Overseas students, who are the largest group of temporary migrants, grew by 130 per cent from 2005–6 to 2007–8, directly contributing to the development of Australia’s $18 billion education export sector, now our fourth largest export. The rise in long-term temporary migrants reflects a worldwide trend for people to travel for study, work and business. Australia’s high net migration in this category demonstrates our success in attracting people to choose us over other countries as a good place to learn and to contribute.

We have emerged from the global recession with economic prospects shared by few other developed countries. We have worked hard over several decades to make ours an open and more productive economy with strong trading relationships among the expanding countries of our region. Migration trends reflect our positive economic outlook and our increasing engagement with the global economy.

We cannot grasp the opportunities for growth among our trading partners and expand our economy if we fail to meet the estimated 36,000 shortfall of tradespeople our resources sector will face in just five years’ time.

None of this is to say that Australians should be expected to support further population growth without reassurance that justifiable concerns are being addressed. Gaining support from citizens already worried about clogged roads, strained services, pollution and social cohesion means governments across the country have to do a better job in explaining growth, but, more importantly, in planning for it.

They need to integrate planning of urban centres and infrastructure, including roads, public transport, water and electricity supply, as well as schools and hospitals. We must make better use of the infrastructure we have and speed up reforms already under way for our freight, road, water, telecommunications and electricity sectors.

Without the right policies, Australians can’t be expected to support population growth. But the information they need to make a sound judgment includes the reality that standing still while the rest of the world grows is not a sustainable option for Australia.

The challenge for our political leaders is to lead an open, honest debate on the size and composition of Australia’s population and its link to economic growth and living standards. And to take responsibility for the planning and infrastructure policy needed to ensure Australians enjoy the nation’s prosperity.