Is Immigration Good for the Australian Economy?


            We are generally assured that high immigration levels are good for the economy, which should mean that with Australia having, proportionately, one of the highest immigration rates in the world we should also have one of the highest rates of economic growth. Except for a few small countries like Singapore and Luxembourg we also have about the highest percentage of foreign-born of any nation in the world, 28% in fact. (1)

            In the twelve months ending March 2018 Australia’s population grew by 380,700 or 1.6%. Net overseas migration accounted for 236,800 and natural increase for 143,900. (2) Our business leaders assure us that this is good for our economy.

            It’s been claimed there would be a boost to world GDP of $US356 billion by 2025 if immigration increased workforces in high-income countries by 3%. (3)

            Australia should, judging by these comments be doing very well economically. Our economy however is dragging the chain when compared to many others, especially those in Asia. And most Asian nations have small migrant intakes, lower population growth, and in many cases a miniscule proportion of foreign-born residents.

            Australia’s economy, as measured by gross domestic production (GDP), grew by a mere 2.4% in 2016 and the same in 2017. (4) China, whose foreign-born population accounted for 0.07% of their total, enjoyed economic growth of 6.7% in 2016. India and Bangladesh actually performed better and both had lower population growth than Australia. The Philippines and Laos have few immigrants and population growth around 1.5% per annum but their economies also outperformed Australia’s.

            A comparison of the Asian nations with the smallest percentage of foreign-born shows that they tend to have fast growing economies, a few examples: (5)

            Nation             Foreign-born (2017)   GDP Growth (2016)

            China                0.07%                           6.7%

            Vietnam            0.08%                           6.21%

            Indonesia          0.13%                           5.02%

            Myanmar          0.14%                           6.50%

             Sri Lanka         0.19%                           4.38%

            Philippines         0.21%                           6.92%

            Afghanistan      0.38%                           2.23%

            India                 0.39%                           7.11%

            Cambodia         0.48%                           6.88%

            As it can be seen, only war-torn Afghanistan performed worse than Australia. The economy of Singapore, where about a third of the population are foreign-born, actually did worse than us with GDP growth of 2.0%. Japan, despite a shrinking population managed 1.0%.

            High immigration and population growth no doubt provide a stimulus to at least some parts of the economy, most noticeably housing and infrastructure development. These employ a lot of Australians but also employ foreigners. Many real estate developers and construction companies are foreign-owned, hence a lot of their profits will flow overseas. In addition about 40% of the money banks lend for housing mortgages comes from overseas. Then with the excessive cost of housing in our big cities like Sydney and Melbourne a lot of money that could and should be invested elsewhere goes into the over-priced housing. These are no doubt some of the reasons that the promised economic benefits of high immigration have not materialised.

Main sources:

(2) Jessica Irvine, “A Growing Debate for a Growing Nation”, Sydney Morning Herald, 13 October 2018

(3) Debora Mackenzie, “On the Road Again”, Civilisation, New Scientist, The Collection, 2018

                (ANI 86 Spring 2018)

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22.04 | 11:28

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