The economics of migration

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Alan Kohler (0:39)

Well, with all the talk about migration at the moment, some of it, let's face it, not well-informed and all fairly emotional. At times, I thought it'd be a good idea to get someone who actually knows what he's talking about. That is Mark Cully, former Chief Economist of the Department of Immigration, also former Chair of the OECD's Working Party on Migration and also Head of Macroeconomy Policy at Treasury. And Mark has published a book right now called Waves of Plenty, Immigration and the Making of Australia.

So here's Mark Cully, former Chief Economist of the Department of Immigration.

Mark, I'm hoping that you can help explain to how we got to this point with migration in Australia. And I don't want to start with the first fleet and gold rush and all that, but perhaps a good place to start would be the end of the White Australia Policy in 1973 What was the impact of that on migration in Australia? And what are the echoes of it now 50 years later?

Mark Cully (1:43)

So the 70s is a really fascinating decade. Arthur Oaken came up with this concept of an economic discomfort index, which got renamed the misery index. And at the start of the decade, the misery index adds together the unemployment rate and the inflation rate. At the start of the decade, it was 5 percent.

By 1974, it had jumped over 10 percent, and a year later, it got over 20 percent.

So this was the start of stagflation in Australia, and it coincided with the formal ending of the White Australia Policy in 1973 And because prior to that, it had been the job of immigration officials who were dubbed arrogant gods or angels who would go around countries in Europe and personally select people who would be migrants and not select others. Really? Yeah. Well, there was a lot of prejudice and racism involved in who got the go ahead and who didn't. So when the Whitlam government announced that it was going to adopt a universal visa policy, which meant anybody in the world could apply for a visa. And if they met the eligibility requirements, they could get a permanent residence visa. But they needed a system to work out how they were going to go about doing that. So they started something called the Structured Selection Assessment System, which frankly was nowhere near as structured as what they called it. And then that morphed about six years later into something called another terrible title, the Numerical Multifactor Assessment System, which we nowadays call the points test.

Alan Kohler (3:25)

How did migration in the 70s then differ from what was going on or what had been going on in the 50s and 60s?

Mark Cully (3:31)

So the main thing that happened in the 1970s were you had the arrival of stagflation, you had heaps of manufacturing businesses shedding jobs. If you go back to 1974, nine in ten people working at the Broadmeadows factory for Ford were migrants. Literally, they would get off a boat and they would head into the Ford factory and start work the next day.

When all those manufacturing jobs started to be shed, so manufacturing employment in Australia peaked in 1974, and it's fallen since, and it's obviously fallen hugely as a share of the economy, and the main victims, as it were, of this restructuring of the economy were new migrants, particularly people from Yugoslavia, Lebanon, and Turkey. So they were thrown on the scrap heap. And what we saw was that during the 1970s and running all the way through the 1980s and into the mid 1990s, the labour force participation rate, that is the people who were either working or actively looking for work as a share of their cohort, so of the migrant cohort, started to fall. It had been well over two-thirds, and it fell over a two-decade period and reached about 50 per cent by the late 80s, early 90s.

Alan Kohler (4:59)

I guess the next big event was the Fitzgerald Report in 1988 Was that when economics first entered immigration policy, and what was the effect of that?