SAUL ESLAKE

Economist

SAUL ESLAKE

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I’m an independent economist, consultant, speaker,
and Vice-Chancellor’s Fellow at the University of Tasmania’

The pros and cons of cutting immigration


Australian Society and Politics, Economic Policies, Recent Media Interview, The Australian Economy | 7th June 2024

In the first week of June 2024, I spoke with the host of the ABC’s “News Daily” podcast, Samantha Hawley, about the pros and cons of proposals which have been made by both the Labor Government and the Liberal-National Opposition to cut Australia’s immigration intake (the latter by a lot more than the former).

Sam Hawley: The opposition leader Peter Dutton has set migration up to be a key issue as we head to an election next year. He says he’s going to slash numbers to help address overwhelming demand for housing, childcare and hospital beds. But what do the facts and figures actually tell us? Today, economist Saul Eslake on population growth and whether we really need it. I’m Sam Hawley on Gadigal land in Sydney. This is ABC NewsDaily. So, there’s been a fair bit of debate at the moment about migration policy. It’s been pushed along, of course, by a proposal from the opposition to slash the number of people coming here. And of course, there were comments by my colleague, Laura Tingle, at the Sydney Writers Festival that Australia is a racist country.

News Reader: The ABC’s managing director has defended the high-profile journalist, Laura Tingle, over comments she made about racism and the opposition leader. The ABC’s news director counselled Ms Tingle for not providing sufficient context, balance and supporting information.

Sam Hawley: So it’s been in the news a fair bit.

Saul Eslake: Well, it certainly has. The government, to be fair, has also proposed cutting the migration intake from where it’s been in the past year and in particular to reduce the number of international students coming to Australia. The opposition, for its part, proposes to go further, in some respects considerably further than the government has proposed. So it would seem highly likely that the level and perhaps the composition of our migration intake will be one of the issues that will be contested between now and whenever the next election is held.

Sam Hawley: Yeah, hot-button issue, alright, and it always really has been, hasn’t it? I think Laura Tingle, she was saying in her defence, I suppose she put out a statement saying that she wasn’t saying that all Australians are racist, but she is concerned about the way the political discourse is unfolding at the moment.

Laura Tingle: I think it is setting a tone which is very much, it’s just very slogan-driven. I think that sort of sets us up for some pretty ugly politics. It’s really appealing to people’s anger about things, escalating that sense that it’s all migrants fault.

Saul Eslake: And she’s right to be concerned about that. You only have to look at the way in which immigration has been weaponised in some other countries in the United States and several European countries to worry that that might become part of the political debate in Australia. Australia has been, in the words that John Howard made famous about 20 years ago, been able to determine who comes to this country and the circumstances in which they do. It is important that the public has confidence that the government is in control of the migration program. And one of the things that the current government’s obviously reacting to is the perception that the most recent surge in immigration has been beyond the control of the government. And if nothing were done about that, then the long-term broad consensus across most of the Australian population in favour of a relatively large immigration intake might be undermined.

Sam Hawley: All right, well, Peter Dutton says migrants at the moment are putting too much strain on things like health care, on education, on childcare, on surgery waiting lists and, of course, on housing.

Peter Dutton, Opposition Leader: It’s hard to get into a GP because the doctors have closed their books. It’s hard to get elective surgery. These factors have all contributed to capacity constraints because of the lack of planning in the migration program.

Sam Hawley: In the year ending June 2023, overseas migration contributed to a net gain of around 518,000 people to Australia’s population. So it was a big increase. And that rapid increase is what has Peter Dutton worried. That’s in part what is leading, he says, to the pressure on services, but also, of course, on housing, as we mentioned, that migration is worsening the housing crisis. So he wants to fix this, doesn’t he, by cutting migration. Just tell me what he wants to do.

Saul Eslake: Well, there’s a little bit of confusion over precisely what the coalition plans to do. I would have to confess that I’m not absolutely clear what the opposition’s intentions are beyond that they intend to reduce immigration by more than the government does.

Peter Dutton, Opposition Leader: We believe that by rebalancing the migration program and taking decisive action on the housing crisis, the coalition can free up almost 40,000 additional homes in the first year.

Saul Eslake: Mr Dutton is right to say that, at least in the short term, the surge in migration since our borders were reopened has added to pressure on housing costs, to traffic congestion, to demand for a range of public services such as health and health services and childcare. I mean, any unplanned surge in migration is likely to have that kind of impact. But the important thing is that the number of people who come to the country is managed and that sufficient effort is made to ensure that there’s an adequate supply of housing and that the capacity of the health system and other public services is sufficient to cope with the demands that migrants are going to make on it, in addition to the demands of the people who already live in Australia.

Sam Hawley: All right, well, I want to delve a bit further into whether or not we actually need migration. I know Peter Dutton’s not saying he’s going to cut it altogether, but he is arguing that we do need a big reduction to ease the pressure that we’re facing in all sorts of areas, including housing. So tell me, is there any nation in the world that has successfully shown that you can survive without migrants at all?

Saul Eslake: There are certainly lots of countries in the world that have never had the sort of immigration program that Australia, New Zealand, Canada have had. To take Japan as an example, it’s never had an immigration program of any sort. It’s one of the most ethnically homogeneous countries in the world. Each population peaked about 15 years ago and has been declining ever since. But Japan is still a wealthy, prosperous and, as far as one can tell, happy economy, which, among other things, has people enjoying the longest life spans in the world. So it’s possible. But even Japan reports that they have difficulties, for example, attracting people to care for the growing proportion of their population that is elderly and in need of aged care. And even Japan, which has long resisted having migrants, has in the last decade or more started to open itself up to immigration. So most countries nowadays rely to some extent on migrants to do tasks that native-born people don’t want to do or to provide skills that they’re not able to generate for themselves.

Sam Hawley: I know we’re not going to copy the Japanese model or anything like that, and we will always have some migration. But so can we actually survive if we really scale it back? Do we really need big growth in migration? Is growth always good?

Saul Eslake: Well, it isn’t always and it can carry costs. Although I would say, first of all, that the desire for at least some economic growth is a national reflection of what is really a deep-rooted human instinct that our children and grandchildren should have better lives than we’ve had ourselves. After all, unless you’re an Indigenous person, the reason you’re here in this country is because one or more of your ancestors thought that they and their descendants would have better lives in Australia than in Europe or Asia or whichever part of the world they originally hailed from. So that’s a very strong human instinct. And the thought that we can simply stop expecting that our living standards and those of our descendants will be better over long periods of time, I think, runs against some pretty deep-rooted things that make us human beings. So I mean, I recognise that there are inevitably limits which nature imposes to the consumption of finite resources. There’s probably a stronger case for seeking to reorient the sort of growth we have than to say, you know, we can solve the problems that we have and we do have significant challenges, not least of them climate change, that we can solve those challenges by giving up what is a deeply rooted human instinct to wish that our children and grandchildren have better lives than we’ve had.

Sam Hawley: So that’s the risk, is it? If we slash migration by too much, our lifestyles going forward will suffer here in Australia.

Saul Eslake: Well, they will. And of course, so will the lifestyles of those who might otherwise have been accepted into Australia’s community. I mean, if we were to stop migration for, say, five years or reduce it to, say, less than 50,000 a year, we would encounter shortages of a significant range of both skilled and unskilled workers. And there’d be consequences for that. Some people might say that among those consequences would be that we’d have to pay more for people to do some of the things that at the moment most Australians are not prepared to do for the pay that’s on offer. And that could include things ranging from picking fruit through to caring for elderly and frail people, either in their own homes or in supported accommodation. And those have traditionally been poorly paid occupations. And perhaps if we weren’t able to rely on migrants and backpackers from other countries, we’d pay those people more. And that might not necessarily be a bad thing. I’d also argue that one of the reasons why we’ve come to rely on migrants for such a wide range now of skilled occupations, ranging from doctors and nurses to accountants to skills tradespeople, tells us something about the failures of our both university and vocational training programs to produce people with the skills that Australia’s economy and Australia’s society needs. So, you know, if we made serious attempts to improve the way our education and training systems work over time, we might not be as dependent on immigration as we’ve currently been. But that just underscores that there are no simple solutions here and there are almost certainly no cheap solutions either.

Sam Hawley: Tell me, Saul, if we do cut migration, as Peter Dutton has suggested, can that allow us some time, though, to kind of catch up with this housing problem that we’ve got? We don’t have enough houses. So if we just do that for a while, could that fix that problem at least?

Saul Eslake: Well, it would contribute to solving the problem, but it wouldn’t be a costless solution because it would also entail cutting off the supply of, for example, people who might build more houses. That cutting migration would do something, obviously, in the short term to reduce the demand for housing, but it would probably also have an adverse impact on the supply of housing and hence isn’t a magic bullet.

Sam Hawley: So this idea of cutting migration from the Coalition, of course, from Peter Dutton and from Labor, is that the right move at this point, do you think? What do you make of it?

Saul Eslake: It’s not unreasonable for the government to want to curtail the extent of immigration we’ve seen in the last couple of years. I can understand and sympathise with the concern that politicians on both sides of the aisle will have that uncontrolled immigration, and that’s what the public perceives it to have been in the last two years or so, threatens to undermine the consensus which we’ve had in Australia for something like 80 years that a well-controlled and structured migration program is good for Australia as a society, good for the Australian economy, and of course, good for the people that we welcome into our community. And that’s something that you only have to look at the US and so many European countries today to see that if that consensus is undermined, the consequences can be very ugly indeed.

Sam Hawley: Saul Eslake is an independent economist. This episode was produced by Bridget Fitzgerald, Jess O’Callaghan and Sam Dunn. Audio production by Anna John. Our supervising producer is David Coady. I’m Sam Hawley. ABC NewsDaily will be back again on Monday. Thanks for listening.

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