Dr Judith Sloan was the Commissioner in charge of the Productivity Commission’s 2006 review into the Economic Impacts of Migration and Population Growth. Thus, she speaks with authority on the topic.
Dr Sloan has penned a decisive article in The Australian today arguing that a “return to high migrant intake is a wages killer”:
- Recent surveys suggest that most Australian residents will be pleased by the lower population growth and reduced migrant numbers.
- But “the federal government has given a number of indications that point to support for a resumption of net overseas migration at pre-Covid levels”.
- “In the short term, the federal government is doing everything it can to ease the entry of migrants by allowing the states to run schemes to house international students (on our dime) and to implement a program for farm workers from South-East Asian countries. These initiatives come on top of the ludicrous decision to remove the maximum number of hours international students can work (it was 20 hours a week)”.
- Last week, “Reserve Bank governor Phil Lowe explicitly acknowledged that immigration has contributed to slow wage growth, which in turn has led to inflation being lower than the bank’s target range of 2 to 3 per cent per year”.
- It is “an explanation of the persistence of low wage growth… Rather than lock in higher wages and hence a higher cost base, many businesses are just treading water until high rates of immigration resume and they can source migrant workers at lower rates of pay”.
- The federal government has made it “far too easy for employers to sponsor migrant workers at relatively low pay rates”. The Temporary Skilled Migrant Income Threshold (TSMIT) is just $53,900, “significantly less than median earnings”.
- The 80% increase in international students between 2010 and 2019, “who need to work to pay their fees and cover their living expenses”, has also “impacted dramatically on the relatively unskilled segment of the labour market”.
- “International students compete for jobs with young Australian-born residents – and, in the process, drive down wage growth”.
- The recent “fantastic” labour market results have been partly driven by “the absence of recently arrived migrants and the outflow of migrants”. This has left employers with the only option of hiring local workers. But “a return to NOM at previous levels would reverse this effect, at least in part”.
- It is so much easier for industry to lobby the federal government for migrant workers “than bidding up wages, investing in training local workers and selling to a stable number of consumers”.
- Federal politicians should engage more honestly with the Australian public. “It might even be an election-winning policy to propose much lower levels of immigration”.
Terrific analysis that pretty much matches everything that MB has been arguing for nearly a decade.
The economics does not lie. There is no longer any debate. The RBA governor’s testimony last week dealt the final death blow to any doubters.
Rebooting immigration will increase unemployment and lower wage growth, thereby working at cross purposes to the RBA’s goal of driving up wages and inflation.
Labor should use Phil Lowe’s testimony as ammunition to take a lower immigration platform to the upcoming federal election. It now has the authority of the RBA to back such a policy.
