The Productivity Commission’s Australia’s Migrant Intake report released

The Productivity Commission’s inquiry, ‘Australia’s Migrant Intake’ was released today. See here:

To follow up my Twitter notes after a brief skim read of the summary, here are a couple of additional notes, with a few longer posts to follow later this week on tricky policy questions:

  • The report is comprehensive and doesn’t easily fit an ideological straightjacket. For example, the Commissioners completely reject the notion of a price-based migration program, often associated with libertarian immigration advocates yet also call for higher prices for parent visas.
  • The Commissioners noted and highlighted how in general the current system is operating well. This is important to reiterate, particularly when there are a raft of recommendations calling for policy change.
  • The explicit call to bring migration policy ‘out of the shadows’, so to speak, by the introduction of a formal population policy sitting alongside future IGRs is a major positive in my opinion.
  • The three priorities for immigration policy according to the PC – better integration of migrants after they have arrived; raising the barriers to permanent skilled visas to get better economic outcomes; and, increasing the price of parent visas – each appear to be politically viable, particularly if rolled into a package.

A Government that knew what it was doing could sell their response to this report as a package and could do so without animating the far-right. At the heart of nearly all recommendations is an ‘Australia-first’ approach, meaning the policy change is rooted in advancing the economic interests of existing residents.

There are a number of recommendations which I think are underdeveloped and one or two which are borderline crazy. But more on those later because, in general, I was impressed by the work. As migration in Australia has economic, social, cultural and security ramifications, it is difficult to easily distil everything down into a neat set of proposals. Kudos, Productivity Commission.

Finally, the Commissioners almost plead for Government investment in migration policy. The dearth of evidence and research is hurting the ability to politicians and bureaucrats to make informed decisions. The ‘key point’ reads: “A stronger evidence base is required to inform future immigration policy. This requires further investment in data collection, integration and dissemination, and data analytics capacity.”

From a self-interested standpoint, I couldn’t agree more and I hope the Government implements each of the associated recommendations for promoting evidence as well as a general investment in migration research given the importance migration will continue to play in Australia.

Note: I helped write a submission to the inquiry and gave evidence in person (transcript).

6 thoughts on “The Productivity Commission’s Australia’s Migrant Intake report released

  1. Wow, I skimmed the executive summary and some key parts of the report body and it was outstanding. Thorough and broad conceptualisation of wellbeing. Far exceeded my expectations – thanks for drawing it to my attention.

    It tackled head on some things I’ve been quietly getting grumpy about in listening to immigration debates, like the error of using national per capita GDP as a measure of the welfare effects of immigration, due to the change in composition of the population before and after the migration.

    Some things I would like to have seen more of:

    *Discussion of defence and national security impact. IMHO the strongest ‘hard’ argument for migration from existing citizens perspective isn’t economic (effect on per capita income of existing residents is theoretically ambiguous and empirical studies suggest isn’t very large), but rather increasing total GDP and thereby defence capability.
    *On the flip side, migration could potentially damage social cohesion and this could obviously undermine domestic security and harmony. The report addressed integration but I thought this part was somewhat glib and insufficient given most the Western world is currently seeing large scale destabilising anti-migration movements. At one extreme there is obviously Belgium and France, where somehow something has gone very wrong. There is a hypothetical risk that even if things look pretty good now in Australia, social harm could be non-linear and rapidly increase once some tipping point is reached. I’ve talked to people who have done some (unpublished) data work here and they think there might be a grain of truth to these worries.
    *Distribution – it touched on this but mainly focused on whether immigration lowers wages. I think people are somewhat over fixated on this question given the overwhelming finding that any impact is likely to be negligible at rates of immigration western nations are likely to experience. A more interesting question is whether it transfers resources from renters to land lords, especially in a property market like Sydney and with our property biased tax system.
    *How much does immigration reduce natural resource rents to existing citizens? Australia gets more income from stuff in the ground than most countries – how much does immigration reduce minerals per person? I don’t know how significant this would be but it’s almost never-ending addressed.
    *Political economy – does migration damage trust or other social institutions? Given trust is widely proposed as critical for economic growth (and a welfare state), even a small impact could be very worrying for long-term welfare (and for social democratic politics). The report touched on this but this is an area where I think we need much more analytical work (time to move past wage fixation).
    *Frankly acknowledge that we might have to assume second best policy settings for population policy. It’s fine to say migration would be great if matched with optimal infrastructure provision, tax transfer adjustments etc… but is it actually plausible that this will happen? What if Sydney never increases taxes enough to pay for the infrastructure that is needed?

    My current home, Jakarta, is now a transportation disaster because of mass intranational migration in a context of rigid political obstacles to public investment. Not only does it make urban life notoriously miserable, the impact on productivity is massive – can take 3 hours to get from one inner city office to another. The World Bank recently pointed to this issue as having a major detrimental impact on Indonesia’s growth.

    Finally, how much do we subjectively value migration? I love what Western Sydney has turned into with migration. I know it’s banal to point to food – but on even this somewhat lame criteria it’s amazing. It’s hard to survey and quantitatively value these things but I think we should do more to try.

  2. A couple of corrections on my early am smart phone comment when I should be asleep…..
    *strongest ‘hard’ argument for migration from existing citizens perspective isn’t based on living standards….
    *….I don’t know how significant this would be but it’s almost never addressed.

  3. The recommendations on parents are based on erroneous economic and social assumptions. My parents were born in Australia and paid taxes here all their lives. In their old age they needed health care and social benefits. Contrary to popular economic mythology, these benefits were not paid for from the taxes my parents had paid when they were working. Their taxes paid for the public expenditure of the time, including my education which allowed me to become a relatively high income earner and taxpayer. The benefits they received in old age were paid for by my taxes and the taxes of current migrants to this country. Those migrants are paying the same taxes as me, so why shouldn’t some go to benefit their parents, who after all would have contributed to the cost of the skills the migrants brought into this country? Then of course, their are the other economic and social benefits parents bring. Many of these, including childcare and psychological benefits, have a positive impact on productivity. It’s odd that the “productivity” commission appears blind to these.

    1. Hi Michael, thanks for your comment. I think if migration advocates get stuck into a cost/benefit game with regard to parent visas, we will lose. There can be fiscal costs to an action but it can still be worth doing. The important part is to win an argument about why parents form a part of Australia’s migration program, incorporating any fiscal cost as one of many factors. That said, I can’t see a government or potential government increasing the number of parent visas any time soon. This means we will continue to see temporary tourist visas being used for parents, particularly if the government follow through on their election commitment. Over time, this will mean a large group of elderly, mostly non-English speaking migrants living in Australia but without being part of the community given the barriers to citizenship and any welfare support. Who knows what will happen in the wash up but I’m not very positive it’s the right way to make migration policy. Cheers, Henry

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