Australia should welcome more migrants and will need more than 250,000 a year by 2050 to raise living standards and boost the economy, according to a new analysis report.
Such a policy would add $1.6 trillion to the economy and should be regarded as a positive move at each migrant would be contributing around 10% more to Australia’s economy than existing residents.
The analysis from the Migration Council of Australia warns about the danger of reducing the number of migrants arriving in the country, pointing out that it has a profound positive impact not just on population growth, but also on labour participation and employment, on wages and incomes, on national skills base and on net productivity.
It is the first comprehensive analysis in almost a decade of the impact of migration on key economic indicators and the verdict is conclusive: migration is central to Australia’s future prosperity.
It says that Australia’s projected population will be 38 million by 2050 and migration will be contributing $1,625 billion (1.6 trillion) to Australia’s GDP. Moreover, migration will have added 15.7% to the country’s workforce participation rate, 21.9% to after tax real wages for low skilled workers and 5.9% in GDP per capita growth.
It also says that in the absence of such a migration programme, Australia’s population in 2050 would be 24 million and the economy would be less buoyant.
‘Over the next 35 years, migration will drive employment growth. As migrants are concentrated in the prime working age group and are relatively highly educated they have a positive impact on the employment rate,’ the report explains.
‘By 2050, the percentage gain in employment of 45.1% outstrips the population gain of 37%. Further, migration will ensure Australia remains a highly skilled nation, as it will have led to a 60.4% increase in the population with a university education’ it says.
It points out that migration in fact provides savings across the population in expenditures on education, transfer payments and government network infrastructure. Migrants who initially enter Australia on a student visa pay the full costs of their education, providing a saving to the government budget compared to the subsidised places offered to Australian born residents.
It also points out that as the elderly are underrepresented in the migrant intake, migrants generate only a limited increase in government payments. Finally, because of fixed costs, per capita expenditures on government network infrastructure fall as migrants boost the population. Overall, the gain in GDP per capita combines with the net fiscal benefit of migration to lead to a rise in household consumption, it points out.
‘Comparing this with the population gain, migrants offer a premium boost to the economy compared to Australian born residents. Importantly, this premium is shared with Australian residents. As the budget bottom line improves, personal income tax rates can be lower and this in turn supports higher household consumption. This research demonstrates that by 2050, real after tax wages would be significantly higher,’ it adds.
‘This report demonstrates the critical role that migration will continue to play in Australia’s economic future and wellbeing. This highlights the need to ensure policy remains dynamic and is able to respond to changing global circumstances,’ it concludes.
The research refutes the commonly held view that migration reduces the capacity of Australians to find work, showing little impact on the unemployed, according to Migration Council chief executive Carla Wilshire.
‘Critically, the report shows migrants contribute more than existing residents. Our report shows Australia’s skilled migration framework plays an important role in helping mitigate the worst effects of income inequality without punishing Australian job seekers’ she added.
Courtesy of AustraliaForum – RAY CLANCY