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Experts split on whether boosting migration helps or hinders economy

She said immigration and economic growth were intrinsically linked and research had shown migrants add to the labour supply but also use more goods and services and so have a minimal effect on wages and jobs availability.

Corinna Economic Advisory founder Saul Eslake said the border closures have reduced the growth of working-age people, which has in turn lowered the necessary job creation to push the unemployment rate down.

“Of course we are not getting the demand from migrants that we would otherwise still be getting but that’s at least offset … by the greater number of Australian ex-pats that have returned, and by the diversion of the more than $50 million per annum that Australians would have spent overseas,” he said.

He was not in favour of reducing permanent migration when the borders reopen, saying they make a positive, if small, contribution to per capita economic growth and enrich society in many ways, but said there was a case for reducing temporary visas.

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Keeping immigration low is supported by Market Economics managing director Stephen Koukoulas, who instead wants the current pool of 1.75 million unemployed or underemployed Australians trained up to address skills shortages.

“Importing low-wage labour obviously depresses local wages growth and the current closed borders show that perfectly,” he said.

But RBC Capital Markets managing director Su-Lin Ong said migration had underpinned the nation’s strong population growth and helped bolster skilled labour and temper the effects of an ageing population.

“We think it is important to begin to safely bring back some key offshore cohorts as soon as possible before borders are fully opened and before we are back to anything like pre-pandemic norms,” Ms Ong said. In particular, this would include international students who are critical for work in the hospitality, leisure and tourism sectors and skilled professional migrants in areas of shortages.

“Labour constraints will, at some point, if they persist, start to constrain output and growth,” she said.

Another expert who raised the issue of temporary visas keeping local low-skilled workers’ wages suppressed was the University of Western Australia’s Jakob Madsen. He also thinks the inflow of skilled workers and entrepreneurs from overseas had the opposite effect.

“When borders open up and Australia resumes to the same policy as previously, the impact of the immigration on wages is likely to be small,” he said, however, he added it depends on the type of immigrants granted visas. He also flagged concerns high levels of immigration would add more pressure to the housing market.

AMP Capital chief economist Shane Oliver said closed borders were leading to labour shortages in hospitality, accommodation and agriculture. But he said this did not appear to be pushing up wages more generally.

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From the mid-2000s net immigration levels have been around 240,000 a year, compared to previous levels closer to 110,000. He said this was “a major contributor to poor housing affordability and strains on infrastructure”.

Macroeconomics’ Stephen Anthony favoured skilled migration levels of 100,000 to 120,000 a year nationally but warned doubling this, and importing lots of low-skilled migrants, would create a “property sector and education sector Ponzi scheme”.

Australian Council of Trade Unions economist Margaret McKenzie said the pandemic had revealed many firms had used foreign labour to keep wages low regardless of skills shortages.

“There needs to be a proper reassessment of those areas where there is a genuine need for international contribution to skilled occupations,” she said.

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