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Migration myths busted

 

23 January 2025

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Once upon a time, actually, not too long ago, migration was rarely the topic of tales, as politicians feared how their readers might react.  All that has changed.  Migration has well and truly emerged from out of the political shadows.  But it is not happy tales that are being told.  They are myths where the villain, migration, is the root cause of many evils, from the housing crisis through to inflation.  These tales are being told with increasing fervency and threaten to dominate media and political discourses in the run up to a Federal election.  Politicians are clamouring to outdo each other and put forward their heroic policies designed to overcome the evil and save the day.

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Even setting to one side for the moment the opposing realities to these mythological tales, the sense of perpetuating them, given the profile of readers, has to be seriously questioned.  Australia is a nation built on the foundation of migration.  Ever since the rallying post-World War II cry from Australia’s first Immigration Minister to “populate or perish”, Australia’s migrant population has grown in both absolute and relative terms.  The most recent 2021 Census counts a migrant population of 7.5 million, meaning that around three out of every 10 people in Australia are migrants.  If you add to that those of us whose parents were migrants, then the population share is more than half (51.5 percent, to be precise).  The likelihood of all readers being swayed by tales of migrant evils and political conquests are slim.  Indeed, towards the end of this piece, we find that the overwhelming  majority of Australian’s view migrants as a source of good.

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But the purpose of this article is not to set opposing realities to one side.  It is to put them front and centre.  Last year, I was welcoming of a platform provided by one client, VETASSESS, to deliver a myth busting keynote to an audience of their stakeholders.  The genesis of this article is that presentation, updated with more recent data where it is available.  While it is shared here with VETASSESS’ blessing, I hasten to add that these are my views.  

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As a teaser to what is to come, these are the seven myths that I will cover juxtaposed against their opposing realities.
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Migration myths vs realities

myths vs realities.png

 

Myth #1  Migration doesn’t matter

 

There are lots of quotes I could select from as evidence of the dim light politicians are casting migration in.  On Budget night, for instance, the Treasurer, our knight in shining armour, highlighted how the Government was heroically “…addressing the pressures caused by population growth, with net overseas migration next year now expected to be half what it was last year”.  While we now know that has not eventuated and that the Treasury has since revised its forecasts, that is not the main point here.  The main point is that migration is, or at least was, being held responsible for pressures supposedly linked to population growth.  The leader of the Opposition's Budget address in reply similarly linked migration to evil – the housing crisis – and shared its heroic plans to “… reduce the permanent migration program by 25 per cent – from 185,000 to 140,000 for the first two years in recognition of the urgency of this crisis”.  As the Opposition launches into campaign mode this policy proposal is taking centre stage.  They are not letting the facts get in the way of a ‘good’ story: it is temporary and not permanent skilled migration that weighs more heavily into the calculation of net overseas migration (refer myth number two) and, as discussed in the context of myth number six, other considerations better explain the housing crisis.

 

To be fair, perhaps I have bent the truth a little here for dramatic effect, as neither party have explicitly said migration doesn’t matter.  To the contrary, preceding the detail of the Liberal Party’s election policies to cut permanent migration is the assertion that they “celebrate the role of migrants in our communities and the incredible contributions they make to our society.”

 

Whichever party wins the election needs to do more than just celebrate.  Migration is key to overcoming Australia’s biggest challenges.  There is a list I could work through, including Australia’s lacklustre productivity growth and looming fiscal deficits.  But I will confine myself to ‘just’ two – its ageing population and persistent job shortages.

 

Australia’s population is ageing.  We have a growing share of people aged 65 and over and a shrinking share of people who are of working age, which is being insufficiently replenished by our young.  Many of you will have read the recent headlines that Australia’s fertility rate has hit rock bottom.  It is now just 1.5 babies per women - a rate not seen since the Depression. 

 

This all makes for a skinny population pyramid (the solid bars in the chart below).  Which is not healthy.  In the absence of migration, Australia’s population would shrink, there would be not enough workers to support the aged, and too few dollars in the fiscal purse to do anything about it.  This one of the few situations where extra fat around the middle is a good thing.  Recent migrants provide that much needed fat (as indicated by the outlined bars).  More than four out of five recent migrants are working aged.

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Population pyramid

Percent

population pyramid.png

Source:  Australian Bureau of Statistics (ABS) Census 2021.  Derived using Tablebuilder.

 

The second challenge is labour shortages.  The latest official assessment for 2024 is that a third of occupations are in shortage Australia-wide.  This is a slight improvement on the year prior.  But it remains a lot.  The chart below puts the current situation in a historical context by counting the number of unemployed persons per job vacancy.

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Unemployed per job vacancy​​

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Sources:  Derived from ABS 2024 Detailed Labour Force and Job Vacancies data

 

While the labour market has eased – as indicated by the slight uptick in this chart – a ratio of less than two unemployed per vacancy is well down from the peak of 30.  It is still slim pickings for employers.  Addressing skill shortages is a key objective of skilled migration. 

 

 

Myth #2  Australia’s let too many migrants in

 

“Too many” is typically claimed, in sensationalist media and political commentary, with a focus on the right-hand side of this chart.

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Net Overseas Migration

Annualised, thousands​

NOM.png

Source:  ABS (2024) Overseas Migration.

 

This chart measures net overseas migration, or NOM for short.  It is a source of confusion for politicians and commentators.  NOM is the net gain or loss of population through immigration to Australia and emigration from Australia.  At its most basic its arrivals minus departures.

 

In the year to March 2021 there were 94,000 more departures than arrivals.  By September 2023, 556,000 more people had arrived in Australia over the course of the year than had departed.  There is no escaping the fact that that is a massive change over a short period.

 

However, if we pause, stand back, and reflect that there has been a little thing called a pandemic in the interlude, then there is a different way of looking at the data.  The chart below replicates and updates the analysis of Australian National University (ANU) researchers.  The dashed line captures and continues the NOM pre-pandemic trend.  The area below the line is the shortfall relative to the trend before COVID restrictions were put in place.  The area above the line is the more recent catch-up.  The shortfall is clearly much larger than the catch-up.  That is, taken together Australia has welcomed 121,000 fewer people through net migration than would have reasonably been previously anticipated.

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Net Overseas Migration - actual and trend

Annualised, thousands​

NOM actual and trend.png

Sources:  Original analysis by Gamlen, A (2024) “Explaining the 2024 Net Overseas Migration surge,” ANU Policy Brief, May.  Updated using ABS (2024) Overseas Migration.

 

If we repeat the analysis, this time looking at arrivals only, the difference is event more stark.  Arrivals plummeted during the lockdown.  And their resurgence above trend line was delayed and looks to be short lived.  That is, it is a complete myth that Australia is letting too many migrants in.

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Arrivals - actual and trend

Annualised, thousands​

arrivals actual and trend.png

Sources:  Original analysis by Gamlen, A (2024) “Explaining the 2024 Net Overseas Migration surge,” ANU Policy Brief, May.  Updated using ABS (2024) Overseas Migration.

 

What is driving the surge in NOM is that fewer are leaving. 

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Departures - actual and trend

Annualised, thousands​

departures actual and trend.png

Sources:  Original analysis by Gamlen, A (2024) “Explaining the 2024 Net Overseas Migration surge,” ANU Policy Brief, May.  Updated using ABS (2024) Overseas Migration.

 

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Myth #3  Australia’s let too many international students in

 

A popular variant on the myth that Australia has let too many migrants in, is that it has let too many international students in.  The chart on the left breaks the arrivals data, which you have just seen, down into its contributing parts.  The chart on the right calculates the shares in the 2023-24 financial year.  The different shades of blue are international students.  In that year, 207,000 or three out of every 10 arrivals were on a student visa.  While down on the previous year's numbers and shares, they are well above what they were pre-pandemic.

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Arrivals by visa category​

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Source:  ABS (2024) Overseas Migration.

 

While that might sound all pretty scary to some, if you adopt the ANU methodology and apply it to student arrivals, once again we find that the shortfall is much larger than the catch-up.

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Student arrivals

Annualised, thousands​

Sources:  Derived using the methodology in Gamlen, A (2024) “Explaining the 2024 Net Overseas Migration surge,” ANU Policy Brief using data from ABS Data Explorer.

 

It is worthwhile pausing at this point to think about what has been going on.  The up until recently booming international student numbers can be thought about as including Finishers, Deferrers and Workers.  This is not an original categorisation.  It is shamelessly borrowed from international education expert, Jonathan Chew as it is useful for framing our thinking.  The Finishers were those who were stuck offshore and online when border restrictions were in place who subsequently arrived to complete their course on campus once those restrictions were lifted.  The Deferrers were the many international students who chose to defer or delay their studies until Australia’s borders reopened.  The Workers were those who took advantage of the lifting of the cap on the hours international students were permitted to work. 

 

The Finishers are finishing.  The Deferrers will work their way through the numbers.  And, with the reimposition on the cap on the number of hours international students are permitted to work while studying, there is less of an incentive for the Workers to enter under the false guise of being a student.  Which is why the numbers were always likely to come back down and revert to trend.  Indeed, in the above chart they have just dipped below trend. 

 

In the chart below, which switches ABS data on student arrivals for the more up-to-date Department of Home Affair’s data on student visas granted, we can plainly see that the numbers have continued to come down.  In fact, so down that they are now well below trend.  Although you wouldn’t read about it in the papers.

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VET and Higher Education student visas granted

Primary applicants, annualised, thousands​

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Sources:  Derived by modifying the methodology in Gamlen, A (2024) “Explaining the 2024 Net Overseas Migration surge,” ANU Policy Brief using data from Department of Home Affairs (DHA) Student visas granted.

 

This calls into question the sense of the plethora of measures designed to bring international student numbers down, which have included increased English language proficiency requirements, inflated visa application fees, measures to prevent ‘visa hopping’, lowered age eligibility for post study work rights, less generous post study work rights, and let us not forget the new visa processing rules adopted in the wake of the Government’s failed attempt to introduce hard international student caps. 

 

While the Government may use data like this to illustrate the success of its measures, I suggest that what went up, was always going to come down. 

 

The real question now is what will bring numbers up again when the Government realises the error of its ways.  The latest IDP survey data of globally mobile students shows that they are looking less at traditional markets, such as Australia and Canada who are out-competing each other with draconian measures.  Globally mobile students are exploring their opportunities elsewhere.

 

 

Myth #4  Migrants take our jobs

 

Changing tact, myth number four is that migrants take our jobs.  Historically there has been a strong correlation between changes in the level of unemployment and shifts in attitudes to migration.  When unemployment was high the Australian public were less welcoming of migrants.  This has been repeatedly demonstrated by the Scanlon Foundation’s annual survey results.  For instance, the share of respondents who indicated that the migration intake was ‘too high’ climbed ten percentage points from 37 percent to 47 percent between 2009 and 2010 in the aftermath of the Global Financial Crisis as the unemployment rate increased from 4.2 percent to 5.6 percent over the same period.  COVID-19 restrictions saw the unemployment rate soar to over seven percent in 2020.  Politicians who brought into or played to the myth that migrants take our jobs had an added reason – a virus - to keep migrants out.

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Unemployment and the view that migration is ‘too high’​

unemployment vs view migration too high.jpg

Source:  Markus, A (2021) Mapping Social Cohesion The Scanlon Foundation Surveys 2020.

 

The reality, captured in the chart below, is that as the number of migrants has increased, the rate of unemployment has decreased.  This is a consequence of the broader economic benefits of global talent.  All migrants have helped grow the economy through their consumption.  And, skilled migrants, in particular, have provided the added benefit of boosting the nation’s productive capacity through the 3Ps of Population, Participation and Productivity, and have thereby stimulated job growth.

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Permanent migration and unemployment

perm migration and unemployment.png

Sources:  ABS Labour force status and DHA Historical migration statistics.

 

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Myth #5  Migrants depress wages

 

Myth number five is that migrants depress wages.  This is the sort of labour market shock you may have considered if you did Economics 101.  That is, the typical starting point of the lesson is the assumption that the labour market is in equilibrium: labour demanded equals labour supplied at the prevailing wage rate and the labour market clears.  An exogenous shock in the form of an influx of migrants pushes out the labour supply curve, causing wages to fall in order to bring the market back into equilibrium.

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​The labour market effects of an influx of migrants?​​

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Really?  No.  Not really at all.  CEDA modelling demonstrates that recently arrived migrants have not had a negative impact on either the wages or participation rates of Australian-born workers.  To the contrary, the results indicate that, in some cases, an increase in migrant concentrations in certain levels of qualification and experience is associated with a positive impact on wages and employment. 

 

The charts in the first row of the collection below tracks the permanent migration for the top three occupations in the 2023-24 Migration Program.  The charts immediately underneath tracks the median weekly earnings for the same occupations.  While there is not enough here to suggest causation, it is hard not to see that, for these occupations, as the migration intake has risen, so too has earnings.  In each case, the compound annual average rate of growth is over four percent.  For Design, Engineering, Science and Transport Professionals and Health Professionals its closer to five percent.  This was over a period when wage growth for all occupations was not great.

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​Migration and earnings of top three occupations

Top row – numbers of migrants; bottom row – medium weekly earnings for full time work

mig and med wkly earnings.png

Sources:  DHA (2024) Permanent Migration Program (Skilled & Family) Outcomes Snapshot – Annual Statistics 2014-15 to 2023-24 and

ABS (2024) Employee Earnings.

 

In light of this, it should (now) come as no surprise that when 56 of Australia’s top economists were asked to share their advice on how to deliver wages growth, very few (less than one in 10) backed measures to cut temporary migration.  And fewer still (around one in 20) prescribed cutting permanent migration. 

 

This is because the convenient starting points of Economics 101 lessons of static perfect markets that are in equilibrium, while a handy teaching tool, are rarely true.  I have already shared the reality of persistent labour shortages.  The other reality is that markets are dynamic and conditions, like productivity, can impact markets for better or for worse.

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The advice of the majority (four out of five) of Australia’s top economists is that in order to boost wages you have to first boost productivity.  Indeed, a number commented that bringing in the right migrants can be a driver of productivity growth.

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Top economists advice on how to deliver higher wage growth

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Note: Responses of 56 of Australia’s top economists to the question: "Higher wages growth is now a top priority of the RBA in its efforts to sustain stronger economic growth. Please identify the three of these government policies you think would best help deliver higher wages growth"
Source: Martin, P (2021) “Top economists say cutting immigration is no way to boost wages,” The Conversation.

 

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Myth #6  Migrants are the cause of the housing crisis

 

Rounding back to the myth I foreshadowed in the opening paragraphs - the one that is too frequently coming out of the mouths of politicians’ - migrants are the cause of the housing crisis.  In the Leader of the Opposition’s recent pre-election pitch he revealed that “rebalancing” Australia’s migration program and “fixing the housing crisis” are priorities for a Coalition government.  He also vowed to cap international students.  But I digress.

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To be fair, it is not just politicians.  The Institute of Public Affairs has laid the blame for the housing crisis squarely in the laps of new arrivals.  So too has Alan Kohler, who has also called for a slowing of the population growth the match the construction industry’s capacity to build.  Surely it is the construction industry’s capacity to build that is the bigger problem.  But I digress.  Again.And commentators are at one with politicians in justifying justifying caps on international student numbers for the purpose of easing the housing crisis.

 

I could go on.  These are respected commentators.  And they are by no means alone.  Their arguments hold the allure of common sense, as surely more people means more people to house.  However, as realities that have busted myths numbers one and two demonstrate, NOM and student arrivals are less than what would have reasonably been anticipated pre-pandemic.  Further, international students typically live in purpose-built student accommodation or crowded share houses.  That is, they are not as often as portrayed competing for housing with the general populous.

 

Don’t get me wrong.  I am not playing down the housing crisis.  It is very real.  But there are other factors in play.  A report by the Business Council of Australia (BCA) sheds some useful light on the situation.  It supports the point I am making here: international students and migrants are not to blame.  Contributing supply-side factors identified are zoning and other planning restrictions that limit density, high construction costs, tight construction labour market conditions, and disincentives to downsize even if homeowners wanted to, such as stamp duties.  Impacting demand is the appetite for more space – particularly as many of us now work from home. 

 

So when Australia’s top economists were once more asked for their advice, this time on what to do about the housing crisis, very few thought that restraining migration would have much of an impact.  There was some support for the opposite – that is, increased migration of construction workers.  And many prescribed remedies that address the supply-side barriers just discussed.

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Top economists advice on how to increase housing affordability

top economics on housing.png

Note: Responses of 49 of Australia’s top economists to the question: "Here is a list of measures governments could take to increase housing affordability (to reduce the cost of purchasing or renting relative to wages).  Which would you most support?"
Source: Martin, P (2024) “Doing nothing is not an option’ – top economists back planning reform and public housing as fixes for Australia’s housing crisis,” The Conversation.

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Myth #7  Migrants are fuelling inflation

 

The last myth that I wish to cover here is that migrants are fuelling inflation.  This myth has been making headlines for some time now.  For example, an article which ran in the Australian Financial Review (AFR) back in October 2023, when NOM was rising steeply and inflation was running hot, was headlined “Migration surge adds to inflation pressure for RBA”. 

 

This argument has its roots in another Economics 101 lesson: inflation is the outcome of too much money chasing too few goods.  That is, more migrants means more money doing the chasing and, therefore, more inflation. 

 

But that is only half the story.  Migrants also help produce the goods and provide those services that are being chased, which helps drive prices down.  This is a big reason why we have skilled migration.

 

In separate AFR article, titled “Immigration a ‘good thing’, says Bullock”, the Reserve Bank Governor is on the record that, the net effect is unclear but, whatever it is, it is likely to be small.

 

 

Migration is a good thing

 

When the latest Mapping Social Cohesion Report was released in November last year, the media made much of the 49 percent of respondents who think migration is too high.  Granted this is higher than in previous years.  But this is somewhat unsurprising given the relentless commentary demonising migration by linking it to the myths we have just discussed and more.

 

Missing in the media's reaction was the flipside: 49 percent think migration is about right or even too low (I suspect the missing one percent is due to rounding).  Scarce mention was made of the 85 percent of respondents who agreed that multiculturalism has been good for Australia.  And little was made of the large shares of respondents who are of the view that migrants are good for the economy (82 percent), improve society (82 percent), make good citizens (92 percent) and fill job vacancies (72 percent).

 

So, as your parents always told you, don’t believe everything you read in the papers.  They may be tales perpetuating myths and false heroes.

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Mary Clarke

Principal

DXP Consulting

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M: +61 401 088 571

E:  mary.clarke@dxpconsulting.com.au​

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