Migration News

Why migrants may be our greatest economic asset


Posted 21 Apr 2015, 2:49pm

British arrivals at Sydney hostel

Forget the myths. Migrants lift the three “Ps” of high economic growth – population, participation and productivity. So maybe we need to increase our intake, writes Patrick Carvalho.

Ahead of the upcoming federal budget, the recent Intergenerational Report has rekindled debate about the benefits and costs of our immigration program, which is one of Australia’s greatest economic assets: young, hard-working migrants with a diverse and rich cultural background that economically, politically and socially contribute to grow Australia’s strength and affluence.

Unfortunately, some debaters are propagating misconceptions and myths about immigration. Even respected columnists are lured to the easy scapegoating, stating that “immigration carries a huge threat to our productivity” as a bigger Australia requires additional housing and public infrastructure.

Indeed. Australia needs greater investment to stop reducing – and preferably start increasing – our levels of physical capital per person. Yet it would be more productive to see coming infrastructure requirements as an opportunity to grow our economy, instead of blaming immigrants for our lack of political pusillanimity to tackle urban bottlenecks.

To paraphrase Jim Barksdale: if all we have are opinions, let’s go with mine. But if we have data, let’s look at data. Fortunately, we indeed have data on immigration.

According to the Australian Bureau of statistics (ABS), the proportion of Australians who were born overseas, currently at 6.6 million people, has hit its highest point in 120 years. This corresponds to nearly a third of Australia’s population. Pushing a bit further, almost half of all Australians were either born overseas or have at least one parent who was. In fact, virtually no Australians alive today can dispute having at least one foreign ancestor. We are a nation of migrants.

Still the present debate on immigration rests on newcomers. More specifically, whether or not new migrants net contribute to overall living standards. Fortunately, we also have data on that.

According to the 2015 IGR, about 88 per cent of migrants are aged under 40 years, as opposed to only 54 per cent of resident Australians; almost half of newcomers are aged 20-34 years versus only one in five resident Australians. Migrants are mainly young and at their prime working age.

In November 2013, the ABS released a survey on the characteristics of recent migrants. Of those who obtained Australian citizenship since arrival, the labour participation rate was 77 per cent, which is above the national average rate of about 65 per cent. Claims that migrants are a net pressure on welfare payments do not stack up. Migrants are likely to be working.

The Department of Immigration also has some interesting statistics on the current migration programme. Of the last 190,000 places available in Australia’s Migration Programme, more than two thirds corresponded to skilled migration, where deeply-valued human capital needs to be demonstrated beforereceiving residency. That is Australia’s biggest free-ride in the most sought-out form of capital investment. Migrants generally have high levels of human capital.