Coronavirus has halted immigration to Australia and that could have dire consequences for our economic recovery

Will be interesting to watch Canadian numbers and plans over the coming few years, although Canada, unlike Australia, had been planning annual increases:

Australia’s migration intake this year is expected to plummet due to coronavirus-induced travel restrictions and shutdowns, creating a raft of economic and social headaches set to prolong its recovery from the pandemic.

Australia’s immigration program has played a key role in nearly three decades of essentially uninterrupted economic growth.

Due to border closures around the world, the total number of migrants who will make Australia home this financial year, both temporary and permanent, will be far lower than it has been in a long time.

Nearly 300,000 temporary visa holders have left Australia since the start of the year according to the federal government and there are predictions the country will miss out on another 240,000 would-be migrants by the end of the year.

Researchers say that could cause a “demographic ripple effect” to last for some time because Australia will be relying heavily on migrants to rebuild once the pandemic has passed.

“We need immigration to survive this next stage of our future,” Australian National University demographer Liz Allen told SBS News.

“We have an ageing population with more people retiring from the workforce than people entering the workforce. That means we have fewer people contributing to our tax base, which pays for our vital services: our roads, our infrastructure, our hospitals, our schools – everything.

“Our migrant intake will help fill the gaps.”

Intake ‘lower than envisaged’

Australia’s 2019-20 permanent migration program will now fall well short of the cap of 160,000 places set by the federal government.

Projections by sharemarket broker CommSec suggest around 240,000 fewer people could migrate to Australia over the next 12 months.

A spokesperson for acting immigration minister Alan Tudge said while COVID-19 will clearly have an impact on the 2019-20 program, it was still too early to say what the final outcome would be.

“It will be lower than we envisaged given our borders are closed to all but Australian citizens and permanent residents,” the spokesperson said.

Permanent residency visa invitations have fallen dramatically in the past month, Department of Home Affairs data shows.

Just 50 invitations for skilled independent subclass 189 visas – which allow holders to live anywhere in Australia – were issued in April, compared to 1,750 in March.

Invitations for the subclass 491 visa, which requires migrants to live in regional Australia, fell from 300 to 50.

There were 2.43 million temporary migrants in Australia in December 2019, a number which according to the federal government fell to 2.17 million – a drop of 260,000 – in early April.

That number is expected to fall even further, with many temporary visa holders excluded from the JobKeeper wage subsidy scheme.

Prime Minister Scott Morrison told them to instead return to their home countries if they were not able to support themselves in Australia.

With chief medical officer Brendan Murphy flagging last week that restrictions on international travel would not be lifted for at least three to four months, it could be at least that long until Australia starts welcoming migrants again.

University of Sydney migration expert Anna Boucher said the coronavirus crisis has laid bare how reliant Australia is on migrants, noting the 2019 federal budget papers showed the government’s much-touted surplus was predicated upon higher levels of net overseas migration.

“Without very high net overseas migration we would not have had a budget surplus,” associate professor Boucher said.

“There’s no way achieve that sort of net overseas migration this year with border closures and COVID-19.”

The pandemic-induced freeze on immigration comes after a record 298,200 migrants left Australia in the year to 30 June 2019 – seven months before Australia recorded its first coronavirus case on 25 January 2020.

Associate professor Boucher said the pandemic could trigger a rethink of how heavily Australia relies on its migrants to fill gaps in the workforce.

“We have caps on permanent migration, and they’ve become more stringent in recent years, but we don’t have caps on temporary migration. It’s possible in future years the government will look at that. A lot of it depends on how we redeploy Australians.”

“We are in competition with other countries for migration, so if other countries have closures for as long as we do and we are still seen as providing opportunities, we might be able to bounce back to pre-COVID-19 levels.”

Economy to bounce back slower

Economists say the drop in migration will have significant economic consequences for Australia’s coronavirus recovery.

Migrants are workers, taxpayers, consumers and big players in the housing market. Many economists believe they also play a role in driving long-term innovation and productivity.

Population growth and economic growth exist side-by-side and migrants have “historically played quite a big role” in both, Grattan Institute CEO John Daley said.

“Real economic growth in Australia over the last couple of years has been around 2 to 2.5 per cent. Of that, almost one per cent has simply been the effect of migration,” he said.

“Every year on average there’s one per cent more people born overseas living in Australia than there were last year, [causing] a one per cent increase in the total Australian population. When you have a one per cent increase in the population, you get a one per cent increase in GDP, more or less.

“In many quarters over the past couple of years Australia has had almost no economic growth apart from the growth in population, and of that growth, about two-thirds have been migrants.”

Mr Daley said economic recoveries were always slow and a shock “of this kind” means it’s likely to take the economy “several years” to completely bounce back.

“Absolutely that will be accentuated in Australia by the fact there will be fewer migrants,” he said.

Commsec senior economist Ryan Felsman said even just a 10 per cent reduction in overall migration numbers would remove a “significant tailwind” from the Australian economy.

“The longer our borders are closed, the more likely it is Australia will have a slower economic rebound than other countries,” Mr Felsman said.

Source: Coronavirus has halted immigration to Australia and that could have dire consequences for our economic recovery

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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