If the Australian public wants low migration why does it get high migration?
The Australian public wants low migration but gets high migration. I used to think that migration levels are a response to challenges like an ageing population, skills shortages and commercial opportunities such as education exports and a construction boom. There are elements of truth to this.
However, the main reasons for Australia’s high migration levels are because big business and the professional managerial class (PMC) want it and because they wield more power than the community if it is divided and disorganised. The ageing population and skills shortages are marketing spin for the real agenda of higher sales and lower wages. Australia’s high migration is the ascendancy of business and the PMC over the public.
Australia wants low migration
Many polls have put the desire for lower migration at 60% or 65%. This occurs despite promotion of migration by the media. Population is closely linked to migration and views on population growth are similar, with recent polls showing 70% of Australians and 80% of NSW residents wanting no more population growth.
Dr Abul Rizvi said, discussing the lack of migration discussion in the lead up to the 2022 Federal election, “If the prime minister were to come out and say, ‘I’m going to increase my migration program to 190,000 per annum as assumed in my budget papers’, he’s gone, 100 per cent. He’ll never say it – and neither will the opposition.”
Australia gets high migration
Australia has had high migration, particularly since 2000. In other developed countries about 14% of the population are migrants but in Australia it is about 30%. This is the second highest share among the countries in the Organisation for Economic co-operation and Development (OECD). In fact, the only country with a higher share is Luxembourg, a tax haven. In the twenty years to COVID, Australia’s population grew by 1.5%, which was triple the 0.5% by which the other OECD member states were growing.
Business support for high migration
Business likes migration, a lot. We know this because they say so. The Business Council of Australia wants the permanent migration intake to grow with population (so more each year) and has argued for the permanent migration intake to be set at 195,000 (and 220,000 in 2023-24). The Australian Chamber of Commerce and Industry wants to encourage free flow of labour. The Housing Industry Association argues against caps on migration. The Master Builders association wants the skilled migration cap to be lifted to 200,000 from the current 137,100. The Australian Industry Group welcomed the 2022 increase in the permanent migration intake as did the Property Council of Australia. The National Farmers Federation wants to permanently increase working holiday visa caps.
Business’ support for high migration is couched in purported concern for the national interest. This is not convincing because the preponderant concern for owners and managers of businesses is the profitability of their business. They will generally choose their business’ interest over the national interest, as most other people do.
The interests of business are served by migration. Migration alters the ratio of capital to labour in business’ favour. For example, there are more consumers for the same three supermarkets and more competition between their employees for jobs. Some business owners and managers are no doubt patriots and may genuinely see the national interest served by higher profits for supermarkets and property developers. Anybody who works long and hard on anything, as CEOs do, inevitably constructs a narrative about the righteousness of their work.
Were business’ principal motivation the suppression of wages and increasing the return on capital, they would have no obligation to disclose this was the case and strong incentives to not do so. Their campaign to lobby government to favour their interests over the public’s will be more effective if secret. It is informative that migration soared in the late Howard government, contemporaneous with the wage crushing WorkChoices legislation.
Fortunately for LMA, they regularly let it slip. Harry Triguboff, CEO of Meriton said when commenting on international students, ‘They create a lot of rental demand and provide us with many workers besides studying… For the wellbeing of the nation and our people we must attempt to keep housing (prices) going up gradually and consistently’. Coles CEO Steven Cain said, “I would certainly like to see more focus on getting more immigration into the country because, eventually, we’ll see rising wages if there isn’t more supply,”.
One of the most candid disclosures comes from the Australian Financial Review which noted, ‘migration is the new growth. It is the quickest and most logical way to overcome the tight jobs market, find skilled labour, grow sales at mature businesses such as Woolworths and Coles, restock accounting and legal functions, and ultimately make more money for shareholders.’
Business really likes migration and politicians like to be liked by business. Political influence can effectively be bought as a result of inadequate regulation of political donations and lobbying. Business has the financial means to buy the political system. Any government that cannot be influenced can be cajoled.
Business has a credible threat of political conflict from the precedent set by the mining industry in 2010 in response to the then government’s desire to change resource royalties. Australia remains a democracy and business does not get everything it wants. The Rudd government could not impose its mining tax in 2010, but the Palaczszuk could increase its coal royalties in 2022, for example. However, when it sets its sights on a specific goal in a complex and dynamic domain of public policy it can prevail.
Business is not monolithic. The business sectors that appear to be the most belligerent in their lobbying for migration are the protected industries like supermarkets and property developers who have unfettered access to Australian consumers. For more globally exposed companies such as in IT, they have to compete globally so it does not matter much where its customers live. As one example, compare the enthusiasm for high migration expressed above among property and supermarket CEOs with the plainer speaking thoughts of tech CEO Matt Barrie.
Politicians’ support for high migration
Politicians support high migration because they are members of the professional managerial class (PMC), the attraction of migration as a toggle on GDP, because of the difficulty of reform in general and their fear of big business.
The standard left-right rubric for understanding politics can often be informative and useful (for example on climate change or industrial relations). However, it is not relevant in migration policy where all politicians (ALP, LNP, Teals and Greens) support high migration. There are several reasons for this.
PMC membership
Generally the PMC are much more supportive of high migration than the workers. As well as politicians, the PMC includes managers, lawyers, unionists, academics, journalist, think tank workers and party officials. Success in these industries is very hard without traits like native English speaking ability, deep local cultural competency and social connections. This skill set protects the PMC from most global competition in the labour market.
As such the PMC face effectively no labour market competition from migrants who lack the above traits, which is most of them. The only ‘exception’ is the small number of PMC migrants from other Anglophone democracies (the threat from which is offset by the ability for the Australian PMC to work in those countries).
Conversely, blue collar workers face intense competition from all categories of migrants who, being locked out of the PMC, will always be over-represented in industries like rideshare driving, farm work and hospitality.
Members of the PMC are also insulated from the impact of migration on housing as they will have disproportionate access to the bank of mum and dad whereas few members of the working class will.
The PMC experience of high migration is therefore materially different from that of the working class. Their disagreement about migration is not really a disagreement because they might as well be discussing different concepts under the word migration. It is as if a guy in a sleeping bag at a freezing camp site thinks the guy sleeping in his undies is too sensitive to the cold.
The common ground between the PMC and working class can be seen in those situations where globalisation touches something that matters to them. For example, one of the biggest challenges for young, female members of the PMC is the shortage of marriage minded men. On this topic it is quite common to see globalisation treated with as much disdain by the PMC as the working class. The concerns raised, of essentially being undercut in the marriage stakes by foreign women with low expectations of husbands, are analogous to the concerns of the blue-collar workers concerns about being undercut by submissive migrants with low expectations of employers.
This is magnified by the different ethnic makeup of the white PMC and the more diverse working class. Humans tend to have the most empathy for others who look or act like them. The less you have in common with your uber driver, the less his low wage bothers you. The result is a further lack of connection and concern between the PMC and working class.
Finally, I will note in passing my own hunch, unsupported by any peer reviewed data at all, just from my experience as a long term ex pat in Asia. When the Australian PMC travel abroad they are daunted and overwhelmed by the cultural weight of the United States in international fora. The Americans we meet overseas are disproportionately from New York and California. These Americans speak scathingly of their compatriots in the ‘flyover’ (states other than NY and Ca). The Australian PMC endorse intensely the cosmopolitan mores of the Americans from NY and California in an effort to cultivate affinity with the Americans, essentially by saying, we might not be Americans but we are certainly not flyover people either. As I say, just a hunch, no data.
Migration as a toggle of GDP
Those politicians who oppose or may be indifferent to high migration on first principles can be won over by political pragmatism. For a politician to achieve anything they need political capital (popularity with the public that allows them to do unpopular things). The government earns political capital with popular actions and spends it on unpopular actions. Most politicians will have a pet cause and want to get political capital for it.
The management of the economy is one avenue for getting political capital. Formulating economic policies to improve the wellbeing of the community is difficult. Creating the mere appearance of it is easier. Migration grows the population which leads to greater sales of most products. The headlines fill with reports of businesses making higher profits, politicians opening new roads and new businesses opening.
As well as apparent success, population growth does result in substantive success, provided the economy is only measured in terms of aggregate Gross Domestic Product (GDP). This is a fictive success however because GDP is the wrong tool for measuring what matters. Business benefits greatly from an economic discourse that centres GDP (effectively more sales) as a measure of success. This is because business’ own measure of success, profit, is aided by more sales.
Business, and the media on which it has profound influence, therefore centre GDP in their commentary on the economy, further boosting the appearance of economic success. The result is greater popularity of the government in the eyes of both the community and business.
Difficulty of reform in general
Political reform in general is hard. Reforming migration is hard because it is one of the most consequential domains pf public policy, it touches everything. Consider for example, the relationship between housing affordability and migration and what reform would look like.
Many people in housing stress work in low skill industries like transport, hospitality and retail and seek cheap, basic accommodation near public transport. Prospectively ending work rights for international student visas would end the flow of people using the education system as a back door to the labour market. This would see vastly less competition for both the exact types of housing sought and the exact work done by many people in housing stress. It is a no brainer for housing affordability.
However, drops in revenue for landlords, employers and universities would be fiercely resisted from the moment they are even announced. It could be over a year before wages and rents change enough to be felt by the people it benefits. The current university funding model is based on its ability to sell back door entry to the Australian labour market. That would require an Australian government to restructure university funding, possibly requiring tax increases or fee increases. That would be a big reform imposing costs on some of the richest and most articulate people in the country. It would be hard work politically and all the while the opposition would soak up vast donations from property developers, banks and supermarkets.
How does it work?
Politicians are caught between the business lobby that wants high migration and the public that wants low migration. The ALP, LNP, Greens and Teals are all staffed by the PMC and/or unable to defy business. The Commonwealth government’s approach in the 21st century has been to tailor the rhetoric to the public’s desire for low migration but give business the migration levels it wants. Words for the public, business gets the number. To facilitate discussion of this we need to first define some terms.
Migration types
There are different types of migration and so different measures. We will focus on Net Overseas Migration (NOM) and permanent migration. The most recent forecast for NOM is 315,000 in 2023/24 and then 260,000 a year thereafter. The actual migration figures have blown these forecasts away with NOM hitting 454,000 as at March 2023.
NOM includes the net movement (long term arrivals minus departures) of both migrants and returning Australian citizens. Despite the inclusion of citizens (who are likely not seen as migrants by some) NOM remains the most relevant way of assessing migration levels for issues such as wages, rents, house prices, the environment and wealth.
Permanent migration caps offer one useful way to gauge the government’s enthusiasm for high migration because it is a number chosen exactly by the government. The government refers to a ‘permanent migration’ program that aggregates skilled and family reunion visas but does not include humanitarian visas.
However, as the visas issued under the humanitarian program afford permanent residency and are issued pursuant to a cap they also reflect the government’s migration level preferences. As such, this paper uses what we call the ‘combined permanent migration’ cap which sums skilled, family reunion and humanitarian migration streams into a single figure that can best be used to gauge the government’s enthusiasm for permanent migration. We limit the analysis to just NOM and permanent migration just for brevity.
Big Australia
The use of migration to drive high population growth to benefit big business is sometimes called ‘Big Australia’. The term Big Australia was coined by Prime Minister Kevin Rudd in 2010 and the policy is attributed to him. However, this is a fundamental misunderstanding. The policy settings underpinning Big Australia were implemented by the Howard government, left in place by his successors and renewed as soon as possible after the pandemic. While there are significant differences between political parties in Australia, migration quantum is not one of them.
There was very little comment about migration during the most recent election campaign in 2022. What little there was indicated that at least migration would be lower under the Albanese government than under the Coalition. Following the election, the government increased it. It increased the permanent migration cap from 160,000 to 195,000 (without offsets to the humanitarian program of 17,875) meaning the combined permanent migration cap went from 177,875 to 212,875. It also hired 400 more staff to clear visas. NOM has risen to between 315,000 and 400,000 in the first years of the Albanese government but some of this was a readjustment after the closure of the borders during the pandemic. The LNP, now in opposition, expressed concern about Big Australia. This was in contrast to its enthusiasm for it for all sixteen years in government in the 21st century.
The rhetoric was different before the 2019 election campaign when then Prime Minister Scott Morrison said he would cut Australia’s permanent migration intake from 190,000 to 160,000 and linked migration population growth and urban congestion. On closer examination however, this was not a cut as the government was only issuing around 160,000 under the old cap so there was no substantive change. As the Guardian noted, ‘[Morrison’s] shift actually delivers close to status quo.’
The combined permanent migration cap was 208,750 when Scott Morrison became Prime Minister and was reduced to 178,750 for 2019-20. However, this was driven only by the faux cut detailed above. The NOM figures do not provide a useful comparator because they are skewed by the unprecedented border closures in March 2020. Migration was little discussed in the 2013 and 2016 elections but featured prominently in the 2010 election.
On 18 July 2010, then Prime Minister Julia Gillard said ‘Australia cannot and should not hurtle down the track towards a big population.’ This indicated there would be less migration but the combined permanent migration planning cap rose from 182,450 in 2010-11 to 210,000 in 2012-13. NOM increased from 172,000 in 2010 to 237,000 in 2012. While Prime Minister Gillard’s comment was about population, immigration is the main driver of population growth and unlike natural increase is effectively chosen by government.
The Howard government had perhaps the greatest gap between the rhetoric about migration and the substance of its policies, though it occurred differently. Initially, it did make substantive cuts to the migration program. Between 1995-96 and 1996-97, the first full year of the Howard government, the humanitarian intake dropped 27% (from 16,252 to 11,902); the family reunion intake dropped 21% (from 56,700 to 44,580); the skilled migration intake increased 14% from 24,100 to 27,550 and net overseas migration dropped 26% (from 97,444 to 72,402).
However, this trend was drastically reversed in the second to fourth terms of the Howard government. From the first full year of the second Howard government in 1999-00 to the last in 2007-08, the combined permanent and humanitarian migration intakes doubled from 86,060 to 171,644 while net overseas migration more than doubled, rising 134%, from 104,210 to 244,000.
One of the most prominent features of migration policy in the 21st century under John Howard was the prominence of the processing methods for asylum seekers in the migration discourse. There were significant changes to the treatment of asylum seekers during this time. However, the quantum of the humanitarian intake was in fact the least dynamic element. It stayed within a band from a low of 11,356 to a high of 15,860. Moreover, this excited and occupied the media’s attention while Big Australia was quietly built. A great example of the disconnect between rhetoric and numbers in Australia’s orthodox migration discourse. The change of direction from the Howard Government also reflects secretive campaigning by business in the 1990s and likely still to this day.
Economic journalist Alan Kohler said ‘The Coalition doubled Australia’s immigration in 2006 from roughly 100,000 a year to 200,000 a year at the time and it was in my view largely an industrial strategy designed to suppress wages and to protect the project they had to crush unions. And it worked. Wages growth has been extremely sluggish ever since then and the unions have got virtually no power… the coalition’s always been very strong on borders and refugees and stop the boats that sort of thing and I think that was partly designed to disguise the high level of immigration.’
There are important differences between Labor and the LNP but on the issue of migration quantum, they are identical. The real political fault line is between the proponents of high migration (business and both parties of government) on the one hand and the community that wants low migration. There are no substantive differences between Labor and the LNP on migration quantum.
Migration is a difficult question for the Greens and Teals. They receive fewer donations from big business. However, their environmental and blue-collar supporters will generally want lower migration while their PMC voters and officials want high migration. As cross benchers they are analogous to opposition legislators and need not resolve this tension. They do not state an explicit position on migration quantum. Their muted migration policy formulation is quite different from the ALP and LNP but the outcome is the same, business gets the migration levels it wants.
The Greens and Teals will often oppose certain property developments and in so doing will face the wrath of a certain property developer. The dilemma however, is that the best way of structurally reducing demand for new developments, lower migration, would incur the wrath of the property industry in its entirety. A fearsome proposition that dwarfs a conflict that might occur with a single property developer.
Even the faintest scrutiny reveals the flimsiness of the various scare campaigns around low migration such as an ageing population or the skill shortage. However, there is some truth to them and migration does legitimately attend to them to various extents.
Low migration is not a silver bullet, it would deliver a different set of costs and benefits. Weighing up these costs and benefits is a complex and dynamic value judgment, about which people can reasonably disagree. However, this also provides cover for government to choose the set of costs and benefits that just so happen to favour business every single time. In this way they would likely see their conduct as not being sinister at all. Rather, in weighing up the costs and benefits they are subconsciously steered to the set that pleases business.
One response to a tight labour market would be better wages to increase participation and higher training and investment to increase productivity. Business loses from both these. Another response would be to increase migration which costs business nothing. The choice between migration or training, investment and wages is a complex analysis for some and people can reasonably disagree. However, one answer will enrage business and business is either the worst enemy or the best friend any politician can have.
Australia is a democracy and big business is not in complete control. However, when it sets its sights on a clear, discrete goal in a complex policy domain in a competitive political system, it can prevail against strong opposition from the public.
Evidence
If government has yielded to business influence, neither the government nor business would have any obligation to disclose that and would have strong incentives to conceal it. They ran a secretive campaign to influence migration policy in the 1990s and got the Howard government to give them big Australia by the 21st century. The notion that they have ended this is implausible.
Conclusion
The Australian public wants low migration but gets high migration because of the ascendancy of big business and the professional management class over the public.