Immigration and the resources boom mark 2

Two contending pressures have shaped the Australian Government's population policy. One reflects employers' desire to sustain a rapidly growing workforce and a high rate of population growth so as to maximise aggregate economic growth. They want to maintain net overseas migration (NOM) at 180,000 per year or above. The other is urban sustainability. This reflects voters' concern about the implications for their quality of life if NOM should continue at 180,000 or above. They fear ever-growing congestion, loss of urban amenity and dwindling housing affordability. The Australian Government's decisions on the immigration program were detailed at the time of the 2011–12 Budget announcements. These show that the employers' concerns have prevailed. As a result, NOM is likely to track at 180,000 or higher into the medium term and the population will grow to 36 million or more by 2051. If this happens, the 'Big Australia' that politicians promised to avert at the 2010 election will be unavoidable. Why do the government and employer groups want continued high migration? The case for higher migration partly rests on estimates of the number of skilled workers that employers require. The most widely quoted source on the scale of this need has been prepared by the government's workforce advisory body, Skills Australia. It concludes that, Australia will need an extra 2.4 million skilled workers by 2015 and an extra 5.2 million by 2025. Such enormous numbers cannot be achieved without very high net migration. However, these forecasts were determined by the assumptions that the econometric modellers (Access Economics) were required to work with. These included that NOM would grow from 220,000 in 2010 to 250,000 by 2025 and that Australia's aggregate GDP would grow at nearly four per cent per annum over the period to 2025. These extreme assumptions meant that there would have to be rapid workforce growth. Moreover, Access Economics assumed that productivity growth would be very high, and that this would result in a more skills-intensive economy. This meant that new entrants to the workforce were assumed to be more skilled than in the past. In other words, the Skills Australia projections are based on a circular argument, grounded on the assumptions fed into the model used by Access Economics.