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Immigration - November 2016

Proposition: "The total benefit of current levels* of migration to Australia will outweigh the total costs to Australia's economy."

* Based on Australian Bureau of Statistics data, net overseas migration to Australia was 168,000 people in 2014-15. The data can be found at http://www.abs.gov.au/ausstats/abs@.nsf/mf/

Overview of poll results by Professor Roger Wilkins

Immigration is a controversial issue in the Australian community. Social factors and moral considerations loom large in public discussions of the level and composition of the immigration intake, but there is also considerable debate over immigration’s economic costs and benefits.

Read more

In the media

There's nothing to fear in a big Australia (The Sydney Morning Herald) (7 November 2016)

Poll responses

Panellist responses

Panellist responses weighted


Responses (30)


 

Peter Abelson

Agree

8

A fair to high proportion of migrants are working age, moderately or well qualified and motivated to work.


 

Harry Bloch

Strongly agree

8


 

David Butler

Uncertain (neither agree nor disagree)

5

Depends in part on who the migrants are: skilled or unskilled and so on. Also may depend where they locate: inner cities or regional towns. Too rapid an influx can put a lot of pressure or congestion on services in particular areas. But done sensibly the overall impact should be positive.


 

Matthew Butlin

Agree

6

The time-frame for this net benefit depends on the composition of the immigrant population, including the demographic and skills make up of the intake.  Historically Australia has benefited from migration being a significant component of the population increase but it has required significant investment in infrastructure and government services.


 

Lisa Cameron

Agree

8

Immigrants provide benefits in the form of their labour and demand for domestic goods and services which leads to economic growth. There are many other non-economic benefits that also flow from having a more culturally diverse population. Many people who fear immigration do so on the basis that immigrants take jobs that would otherwise be available for Australians. However, most careful empirical studies of immigration find that the economic growth that accompanies immigration results in modest increases in employment opportunities for the rest of the population.


 

Bruce Chapman

Agree

7


 

Deborah Cobb-Clark2

Agree

8


 

Max Corden

Agree

8

There are many aspects to this issue. Clearly a crucial aspect is the need to preserve social harmony. Let us not have an Australian Trump! I am also in favour of taking more refugees for moral reasons. As an immigrant myself many years ago I regard  that as very important. Let me just discuss the relationship between the short-run and the long run. The future population, including the descendants of immigrants, will share both the  future cost of current public debt incurred and the future benefits of current investment in infrastructure. If the current population is expected to increase we can thus justify more debt-financed investment (both private and public, and especially public). This may be desirable in order to currently maintain aggregate demand if monetary policy becomes less or very ineffective in stimulating demand (as in many countries overseas and notably Japan).        Expected population growth also requires improvements in urban (and rural - environmental)  planning. Furthermore, widely expected population growth may actually also stimulate private sector demand as well as justifying more public investment. All this concerns the link between  expectations about the future and current demand  and hence employment.         One more thing. Prudence leads many of us to be cautious about budget deficits and hence increases in the public debt. After all, such deficits increase the liabilities of future taxpayers - both  the interest payments (which are low at present) and debt repayments. But this is only half the story. If the extra debt-financed spending increases the nations assets this could offset or more than offset the increased liabilities. Therefore, let us (and our governments) focus on the need to spend wisely (on infrastructure and other forms of  investment, such as education) and not necessarily to avoid such spending for the sake of keeping debt low.


 

Kevin Davis

Uncertain (neither agree nor disagree)

5

Historically, this issue was often discussed in terms of effects on aggregate demand and supply, employment/unemployment consequences and skill needs. I think currently the socio-demographic issues probably make this question of second order of importance currently, and it depends partly on the composition of the migrant intake. If the total benefits in the question are defined to include those accruing to migrants, I would anticipate that there are very substantive benefits if the composition was skewed more towards refugees. That would, I think, be much preferable to those getting residency status via the (in my view) silly, unjustified Significant Investor Visa (or other such) programs. Important influences on economic costs/benefits include migrant destinations and capacity of capital cities to absorb and provide infrastructure, and also effects of migrant age distribution on affecting rate of ageing of overall population.


 

Brian Dollery

Disagree

7

Despite the vaunted Australian 'points system', in practice legal migration to Australia is subject to severe 'gaming' by means of forged qualification certification, falsified English language proficiency tests, extensive 'family reunion' often involving false claims of family connections, serial arranged marriages, and the like. The net outcome of these and other practices is evident in both crime and social security statistics for different migrant groups, with some groups way above national averages. This serves to raise the 'hidden' external costs of the migration program.


 

Uwe Dulleck

Agree

8

Migrants are, by and large, highly motivated people. As such they are very likely to contribute to society if we let them.


 

Mardi Dungey

Strongly agree

8

The current level of immigration to Australia is relatively small as a proportion of our population. And if we look at the available evidence the effects of immigration on economic production in the longer term are almost always positive - immigrants provide us with an increase in a factor of production and in many cases a wealth of talent and innovation. There is no doubt in my mind that our "economic" experience of immigration has been positive in the long term. However, these can be accompanied by large, complex and important social issues and redistribution of resources. Generally incumbents are (at least short term) less than happy about sharing (or having forcibly removed) the resources they currently enjoy to fund improvement in conditions for others - and issues of ownership are clearly evident. For example, it is not always the case that these redistribution's have been designed to reduce inequality. My overall opinion is swayed by my social view that current (non-Indigenous) Australians are on average well off, whether by accident of birth or by moving to this country, but with that comes with responsibility to consider the circumstances of others both inside and outside our current population, and, selfishly, what they and their descendants will contribute to our society. This means that immigration and education policies are intrinsically tied together.


 

Chris Edmond

Strongly agree

8


 

Saul Eslake

Agree

8


 

Gigi Foster

Strongly agree

9

Australia's strongly skill-biased immigration program creates a modest flow of mostly English-speaking immigrants that almost surely adds to the country's net economic capacity now and in the future. The only reason not to agree with the statement is if one took an alternative scenario in which we had higher levels of immigration - quite possibly more favourable to the country than the present level - as the counterfactual. As it is written, the question appears to assume a "no-immigration" scenario as the counterfactual. Arguably this is silly, however: have we ever had zero immigration? Australia is largely a nation of immigrants and we have built upon and benefited from their/our diversity and innovations over generations. Why stop now? The main priorities in this policy arena should be to keep the immigration flow reasonably skilled, and to support the cultural assimilation of immigrants in the medium run.


 

john freebairn

Agree

6

The answer involves trade-offs, endogenous public and private decisions, and more generally the composition of migrants can be important (even if the question refers to the current mix). On the benefit side, a larger and more diverse economy and society. On the cost  side, and to date Australia has been mediocre, require both private and public investment to support the larger economy and society. To date, public investment seems to be driven more by political opportunism than logical assessment of infrastructure and other investment options, and deficit fetishness has ruled against borrowing to finance good  investments and to be repaid by better-off beneficiaries.


 

Paul Frijters

Strongly agree

9

A no-brainer. The people we let in are well-adjusted, reasonably educated, reasonably healthy, very employable, and often come with a bag of money for houses, cars, tax evasion purposes, etc. We benefit from the prior investment their education and health represent, making a high level of migration in my opinion our most important macro-economic tool, easily worth 100 billion dollars a year. For more discussion on where these massive benefits come from, see this article.


 

Lata Gangadharan

Agree

8


 

Ross Garnaut

Agree

9


 

Stephen King

Strongly agree

9


 

Geoffrey Kingston

Disagree

6

For some time the main drivers of immigration policy have been MPs helping constituents to bring in family members, often at the expense of taxpayers rather than the reuniting family, along with the building and construction lobby, which benefits more from capital widening than capital deepening. There needs to be a bigger role for a more hard-nosed policy that emphasises skills in short supply to the Australian economy.


 

Rodney Maddock

Strongly agree

9

Immigrants have made Australia a much more interesting, dynamic and creative society than it was. Our society has proven able to accept and integrate the current level of migration without excessive tensions. Economically I also see migration as a net positive. Migrants add about the same amount to the demand for and supply of goods and services in the economy, but the increase in the resulting size of the economy creates new opportunities for us all.


 

Tony Makin

Agree

8

The Productivity Commission (2016) has estimated that immigration on present settings will increase GDP per person by around 7% by 2060. This is a very small macroeconomic gain over a long period. Scope exists for boosting the economic gain by attracting relatively more young, highly skilled entrants in the mix, who are well matched to industries expected to flourish in the future.        The significant long term fiscal costs associated with the family reunion dimension of immigration policy, notably the contributory parent visa scheme, also has to be addressed via significantly increased entry fees.


 

Flavio Menezes

Agree

9

About a decade ago the Productivity Commission looked at the impact of migration (and population growth) on economic growth. The modelling suggested that migrants made a large contribution to income levels in the long run. However, given their small numbers relative to Australia’s overall workforce and population size, the impact on per capita income was small.        The economic intuition underpinning this conclusion seems as clear now as it was then. Australia’s skilled migration program, accounting for the largest share of permanent visas, targets migrants that are well educated, have sound English language skills and relevant pre-migration labour market experiences. Education costs, including those associated with on-the-job training, have largely been incurred overseas, while the benefits are accrued in Australia.         The rationale for other types of permanent visas, such as family reunion and humanitarian, are of a non-economic nature, reflecting  societal values and our international obligations.


 

James Morley

Strongly agree

10


 

John Piggott

Strongly agree

9


 

Rana Roy

Strongly agree

9

As a general rule, immigration will increase the general welfare in the sense that the gains to the sum of winners will outweigh any loss to the rest of society. This is usually the result of reductions in both intra- and inter-national barriers to entry, be they for goods, services, capital or labour. We should therefore expect the benefits of current and/or higher levels of immigration to Australia to exceed any costs. There are however three addenda – not amendments but addenda – that I should like to record. First, it is best to specify precisely the subject, the “who”, to whom these benefits and costs apply: welfare gains and losses are enjoyed and suffered by sentient beings rather than abstractions such as “the economy”. On a related note, I would argue that the sentient beings whose benefits and costs need to be counted here are all the residents of Australia, including the new immigrants. Finally, I would urge those who are not content to live by the Hicks-Kaldor rule that the gains to the winners need only be large enough to compensate the losers but rather wish to insist that the losers must in fact be compensated to specify precisely who needs to compensate whom. This could prove enormously helpful: to take a topical example: it would enable the winners from the withdrawal of the recent proposal to over-tax “backpackers” – in this instance, the backpackers themselves as well as farmers, related producers, all Australian consumers, et al. – to compensate the losers – in this instance, the relevant politicians and their PR agents who doubtless experienced some degree of “pain and suffering” once the folly of their proposal was made plain to one and all.


 

Jeffrey Sheen

Agree

5

As an ageing and productivity-challenged economy, the Australian economy will have net benefits from the net migration to Australia of skilled and young people that want to make a positive contribution. So the quality of net migration is important. However beyond  the economy, there are also many important social benefits and costs that  need to be considered, which is why migration remains such a hot political issue.


 

Nigel Stapledon

Agree

6

While the economy should benefit, it is contingent on policy. In the case of cities, the increase in population means higher rents and prices. But this can be moderated by adequate investment in transport infrastructure and less restrictive policies on supply.


 

Joaquin Vespignani

Agree

10

* This response was submitted after the poll closed and was not counted towards the aggregate figures above and in Roger Wilkins' commentary piece.Migration has very important benefits for the Australian economy (although, are difficult to quantify). For example, migration is important in the process of transferring ideas and knowledge across countries. Ideas and knowledge are the engine of the economy in the long run.