Is cutting immigration good economics?

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Carrington Clarke (0:37)

Migration is dominating the political fight right now, with the coalition promising the biggest cut to immigration in Australia's history. Opposition leader Angus Taylor has called the framework budget neutral. But just what are the economics underpinning the numbers and what sort of economic questions should shape immigration policy? Welcome to ABC Business Daily.

I'm Carrington Clarke.

Robert Breunig (1:04)

And I'm Dr. Robert Breunig, Director of the Tax and Transfer Policy Institute at the Crawford School of Public Policy at the Australian National University.

Carrington Clarke (1:12)

Robert, thank you so much for joining us. It's nice to have the opportunity to dig deep into some of the implications in immigration. This is really, I think, at the moment, probably the most contentious debate in the political sphere here in Australia. I mean, connected obviously as it is to the economy as well. I want to start with the coalition's policy because that's the last one to be added to the mix. We've had labor come up with its policy, which would also, they're aiming to get immigration down, though they seem less keen on having it as a set target. One Nation actually promising to go into net migration in a couple of years. They say to rebalance the large numbers of immigrants who have come in more recently, and now the coalition kind of somewhere in between.

But what were your immediate thoughts, and how would you compare the three policies as they've been laid out?

Robert Breunig (2:05)

Yeah, first of all, I guess thanks for having me on.

And I think migration has become a really big issue.

Partly, it's not entirely clear why. I do think, you know, migrants get unfairly blamed for things like the housing crisis, when I think there isn't much evidence that they're actually impacting housing very much. We had a big spike in migrant numbers at the end of COVID. So net overseas migration basically was double what it had been. And a lot of that was just pent up demand, where backpackers, working holidaymakers and students who had wanted to come to Australia earlier couldn't, and then they suddenly all came at one time. So some of the migration numbers are just going to actually go down over time naturally of their own accord. A bunch of the people who came here post-COVID are now leaving and they're going to leave in the next couple of years. Where the migration program has probably gotten itself into a little bit of trouble is that there are a lot of people who've come here as temporary migrants, thinking that somehow by getting a foot in the country, they could then manage to stay here permanently. And the way they've been doing that is by jumping from visa to visa. We see students doing this, so people come here to study degrees. They finish the degree. They try to stay permanently. They can't. They just enroll in another degree to get another student visa.

And there's been a lot of talk about this kind of visa hopping. And then we even see people applying for protection visas and saying, oh, you can't send me back to my home country because I'm going to be at risk. Now, obviously, it's important that people are able to do that. But something like 98% of those applications get rejected. So people are abusing that system. And there's a whole network of migration agents who help people to basically exploit the system to stay here. And so we have this sort of permanently temporary phenomena. And I think everyone is trying to do something about that.

Carrington Clarke (4:07)

Can I get you on that point? There's a few things you said there that I want to pull apart a bit. One is when you say some migrants think that they can eventually stay here permanently, is that not the case? What usually happens if someone does hop from visa to visa?

Can they not then apply for permanent residency? Or is there a pathway for them if they just spend a certain amount of years in the country?

Robert Breunig (4:29)

So for many people, there's not.

So if you're a working holiday maker, that's a temporary visa. You come here with the understanding that you're going to leave. Now some of those people will switch on to other visas, such as temporary skilled visas or even permanent skilled visas, where there is a clear pathway to becoming a permanent resident, but many of them leave. Students come here, and again, there is no path to permanency for students. What students have is they have the opportunity to go on to a graduate visa, which allows them to work for a certain period of time when they are in the country. And we actually lengthen that graduate visa and allow people to stay for more years. So, you know, but that's being changed, and we're going back to a two-year graduate visa.