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Edition 61

Contents
Essay

The great transformation

Hooked on migration

IMMIGRATION HAS BECOME one of the great defining, dividing issues of our time. In Europe, it is helping to overturn governments, dissolve old political certainties, spawn large populist movements and, in Poland and Hungary at least, perhaps destroy democracy itself. Anxiety about immigration drove Britain’s vote to leave the European Union and the return of the far right to the German parliament for the first time since the Nazi years. A poll last year found that a majority of respondents in all European countries bar Finland were either ‘worried’ or ‘very worried’ about immigration.

Not just in Europe. In the United States, the oldest and largest immigration nation, Donald Trump’s promise to substantially cut migrant numbers, above all by building a wall to stop people entering from Mexico, helped to elect him president. Around the world, the mass movement of people divides those who feel more at home with globalisation from those who fear being left with no comfortable home at all. In a recent report, Balanced Migration: A Progressive Approach, Harvey Redgrave of the Tony Blair Institute for Global Change finds ‘barely a liberal democracy in existence today that has been untouched by political debate over immigration’.

Yet that’s not quite true. In Australia it has been twenty years since immigration was at the heart of public debate. In 1998 Pauline Hanson’s One Nation party threatened to produce a nativist backlash to fifty years of broad bipartisan consensus on migration policy. Its vote shot up briefly in Queensland and a few other places, then the party splintered and sank, and has only recently returned as a relatively small force. In 2010, the country had a brief population debate as people, or at least those who ring in to talkback radio, reacted unhappily to Prime Minister Kevin Rudd’s call for a ‘Big Australia’ of thirty-five million people by 2050. But that debate also flared and vanished. Over these two decades, soaring rates of immigration seemed to produce no corresponding anti-immigration feeling, which stayed constant in most authoritative opinion polls, and well below its levels in the 1980s and 1990s.

Every year since 2007, the Scanlon Foundation has measured public attitudes to immigration. In 2007, the proportion of Australians saying it was ‘too high’ was just over a third, while just over half said it was ‘about right’ or ‘too low’. Ten years later, the figures had hardly moved. Nor did voters rank immigration high on lists of priority issues. Along with Canada, Australia seemed to have become one of the most pro-migration societies in the developed world.

This was remarkable, given how much the ground was moving under­foot. More than 3.6 million migrants – one person in seven in the country – have arrived in the past twenty years. Nearly one in four Melbourne residents arrived in the past decade. Today, one in ten Australians is born in Asia and, for the first time in the nation’s history, a greater proportion of people born overseas are from Asia rather than Europe. More than one in three residents of Melbourne’s CBD speaks Mandarin or Cantonese at home, while Sydney has sixty-seven suburbs in which at least half the population does not speak English at home. In the two years to March 2018, about eight thousand refugees, many of them from Syria and Iraq, moved into Fairfield in Sydney’s west.

Migration, writes journalist George Megalogenis in Australian Foreign Affairs (Black Inc., 2017), ‘is unleashing the most profound changes to Australian society since the gold rushes of the 1850s’.

 

FINALLY, INEVITABLY, IMMIGRATION returned this year to the centre of public debate. How many immigrants should Australia take? Who should they be? The answers are not simple. Whatever path the country takes will bring benefits and challenges; governments have the daunting task of not only making these trade-offs but of folding migration, high or low, into a larger and longer-term story about the nation. They haven’t done that for a long time.

 

IT WAS AN oblique start to such a big debate. On 15 February 2018, Home Affairs Minister Peter Dutton, also Minister for Immigration and Border Protection, told Sydney radio host Ray Hadley that it was time to look at cutting the permanent migration program. Pointing to overcrowding in Australia’s biggest cities, Dutton said ‘we have to reduce the numbers where we believe it’s in the national interest’.

In a speech five days later, former Prime Minister Tony Abbott welcomed the comments of his fellow conservative inside the Liberal Party. Such was the unreality of current politics, Abbott said, that before Dutton spoke no one on the frontbench of government or the Opposition had been game to raise the issue that was exacerbating unaffordable housing, city congestion and problems of integration in the suburbs – Australia’s high immigration intake.

Responding at once, Treasurer Scott Morrison said that while Abbott’s proposal to cut the permanent migrant intake from 190,000 to 110,000 a year might be superficially attractive, the change would damage the economy and reduce budget revenue by $4 billion to $5 billion over the next four years. Morrison added that the problems Abbott raised, such as crime, were not caused by immigration.

A bunch of ministers lined up to back Morrison – and one of them was Dutton. Speaking as if he had never made his comments days before, he extolled the benefits of bringing in skilled migrants, who worked, paid taxes and contributed to society. ‘My judgment is we have got the settings right,’ he said. But that is almost certainly not what Dutton believes.

In 2016–17 the actual permanent intake fell 6,400 below the planned target of 190,000. The reduction, which was never publicised, is not large, but it is unprecedented and could only have occurred with Dutton’s intervention. For at least twenty-five years the Immigration Department has almost always brought the intake to within a handful of visas of the target.

This year, even more than previously, Dutton’s department has again quietly restricted the number of permanent visas issued to migrants. He has also changed the terminology, no longer referring to the size of the annual permanent migration intake as a ‘target’ but as a ceiling – not a goal to be met but an upper limit that can be avoided. Over the next year, Dutton’s actions will almost certainly reduce the annual figure by twenty to thirty thousand.

While the cut seems relatively small at this stage, its long-term consequences could be profound. It was enough to spur Morrison’s Treasury Department – backed by Dutton’s own Department of Home Affairs – to publish a document, Shaping a Nation, setting out what the two departments saw as the economic benefits of immigration. It also drove the business peak body, the Australian Industry Group, to announce a rare compact with the Australian Council of Trade Unions, whose member unions have often been wary of high migration, calling on the government to maintain the permanent intake at the same level it is today.

Within the government, these confusing events had as much to do with its divide between liberals and conservatives as about its divisions over immigration. The debate that accompanied them was pretty threadbare. Haggling over the number provided little explanation, and less evidence, about why one number or another would represent the best long-term outcome for Australia. In Morrison’s response to Abbott, an issue that will define Australia’s identity and future for many decades was boiled down to its immediate impact on the budget bottom line. Ministers – even Dutton, a supposed straight shooter – seemed unable to talk candidly and consistently about it. At the same time, the ALP has been cowed into avoiding discussion of immigration lest the Coalition remind Australians that decisions made by Kevin Rudd’s government helped to restart the flow of asylum-seeker boats after its election in 2007.

To be fair, the people politicians govern are also uncertain. The 2017 Scanlon poll shows that while 15 to 20 per cent are strongly for migration and 10 to 13 per cent strongly against, about two-thirds are ‘in the middle ground, open to persuasion’. On the upside, the Australian debate, compared to those in Europe and the US, has so far been calm and largely stayed away from issues of race, apart from Dutton’s attacks on ‘African gang violence’ last summer and his recent call for Australia to bring beleaguered white South African farmers to ‘a civilised country’. Some right-wing politicians and media commentators have urged Australia to limit Muslim migration, but the debate remains mostly on the margins.

Yet the relatively low temperature of the larger immigration debate should not mask its high importance. In deciding whether numbers should continue at current levels, or rise or fall, and by how much, Australians are deciding what sort of country and people we want to become. To try to answer these questions we must first try to understand why government has retreated from shaping immigration policy and why that matters; how economy rather than society came to dominate the debate; and how an immigrant nation lost the ability to talk about itself.

 

IT’S EASY TO forget the passions migration policy once evoked. In 1976, three years after the formal annulment of the White Australia policy, a small boat carrying five young Vietnamese men sailed into Darwin Harbour. In the ensuing years, Malcolm Fraser faced down parts of public opinion to insist that Australia take fifty-six thousand Indochinese refugees during his prime ministership.

In 1988, after Opposition leader John Howard raised concern about the pace of Asian immigration, Prime Minister Bob Hawke moved a resolution in parliament reaffirming the non-discriminatory nature of the migration program. Four Liberal MPs, including Philip Ruddock, later the longest-serving Immigration Minister, crossed the floor to vote against Howard, whose dismissal as leader the following year was attributed in part to the drama of this day. In 1989, Hawke tearfully and unilaterally announced that twenty thousand Chinese students could stay in Australia after the Tiananmen Square massacre. In 1996, Pauline Hanson stood alone and unloved on the floor of parliament, insisting that a silent majority backed her claim that Australia risked being ‘swamped’ by Asians.

These arguments were fierce, at times toxic. Some politicians put themselves on the line to have them. The principle at stake was fundamental: would this be a mostly European and white nation, or one that was wholly open to the world – and in particular, to its own part of the world?

In 1996, John Howard’s coalition government came to power and immediately cut migration, one of only two governments to do so outside a recession since the program began after World War II (the Whitlam government was the other). It also accelerated the reweighting of the program to favour skills. Five years later, as a once-in-a-century mining boom took hold and business demanded more labour to address skills shortages, and Australia’s fertility rate fell substantially below 1.8 children per woman, the government changed its mind and opened the door to many more migrants and overseas students.

The changes since then have been seismic. In 2008–09, net overseas migration – the most important measure, defined as the number of people who spend twelve of the past sixteen months in the country minus the people who leave – reached three hundred thousand, the highest absolute number for net migration in Australian history. A large proportion came from Australia’s biggest sources of skilled migrants and overseas students: China and India. One of Howard’s biggest legacies, whether he intended it or not, was the final acceptance of a big migration program that was not only entirely non-racial, but tilted towards Asia.

Growth in overseas students has comprised the biggest change. International education has become Australia’s third biggest export industry, worth $27 billion a year and directly employing 130,000 people. The industry thrives in large part because it is a route to migration: when, in 2005, the government offered international students new pathways to permanent residency via skilled migrant visas, their numbers rose by almost 86 per cent over the next three years. Today, overseas students make up more than 40 per cent of net overseas migration.

The most reliable single measure of public opinion towards immigration is the state of the economy, and especially of employment. In the deep recession of the early 1990s, opposition to high migration rose to 70 per cent. The long boom, by contrast, took the heat out of the issue and no doubt helped to produce Australia’s relative calmness on issues of race. And the new migrants clearly added to the economy’s strength. After six months of settlement, almost nine in ten skill-stream migrants have jobs and six in ten have highly skilled jobs, according to Department of Home Affairs figures. They have higher rates of employment, education and earnings than the general population. They are also young: more than half of the two largest groups in 2016-17, Chinese and Indians, are under the age of thirty-five.

As a result, far from draining the government purse, they enrich it. In 2009–10 (the latest figures available), skilled migrants paid a median income tax of $8,100 a year, compared to $4,500 for Australians in general, according to the Productivity Commission’s 2016 report, Migrant Intake Into Australia.

Over a lifetime, these migrants pay much more in taxes than they take out in welfare benefits. Since most arrive as young adults, they either already have a tertiary education or they get one here by paying full fees. Two-thirds of them spend a number of years on a temporary visa, with no access to most government services and benefits, while paying full rates of income tax and GST. Even after they gain permanent residence, most migrants must wait four years – extended from two in the May budget – before they can access all social security benefits. For the government, they are a goldmine.

This Australian approach to migration has been noticed overseas. In 2016, British ministers Boris Johnson and Michael Gove pledged to introduce a ‘genuine Australian-style points-based immigration system’. Stephen Miller, a senior adviser to Donald Trump, said last year that Australia’s system was ‘compelling’ in its ‘efforts to make sure that immigrants are self-sufficient’.

 

BUT THESE COMMENTS take a narrow, economic view of the Australian model. It is deeper and more complex than that. In his speech in 1945 to parliament launching the postwar migration program, the first Immigration Minister, Arthur Calwell, portrayed it as a kind of grand bargain between the government, the people and migrants themselves. Each had to play their role to ensure the nation’s security, economic strength and confident place in the world.

For sixty years afterwards, governments of both main parties invested huge amounts of effort, resources and political capital in order to ensure continuing public support for the program. They knew they were profoundly changing Australia in ways that not all Australians would like, and they had a duty to constantly explain why. Australians were explicitly encouraged to welcome migrants, and migrants were urged to become citizens as quickly as possible. Rigid government control of migration has included very harsh treatment of asylum seekers and anyone who comes uninvited. At the same time, Australia has settled more than eight hundred thousand refugees since 1945, introducing a formal humanitarian program, backed by generous support services, after Indochinese refugees arrived in large numbers from 1976.

Brutal in some respects, and impossible to implement if Australia were not an island at some distance from its neighbours, the model has enabled this country to not only avoid most of the immigration problems bedevilling Europe, but to use immigration as an instrument of economic and budget policy. In the past two decades, however, that model has been quietly but substantially eroded.

After terrorist bombings in Madrid in 2004 and London in 2005, the Howard government changed Australia’s approach to citizenship, twice lengthening the period before which migrants could become citizens. Ministers said they wanted to be able to vet migrants for potential threats to national security before conferring citizenship, even though migrants to Australia already go through extensive character and security checks before they are granted permanent residence. The government also introduced a written test for aspiring citizens on their knowledge of the nation’s history, life and values, and on their responsibilities as Australians.

These changes, neither of which were supported by any external or internal review, were revisited last year by Dutton when he sought to further extend the qualifying period for citizenship, largely on the same national security grounds. He also wants to introduce a much higher English-language hurdle and powers to decide whether applicants have satisfactorily integrated into the community (the Senate has blocked those proposals but the government plans to reintroduce them). The government has provided no evidence of how the shift reduces the risk of terrorism, or why it justifies undermining Australia’s long-standing inclusive approach to citizenship.

An even bigger change, the rise of temporary migration, has also been poorly explained. Temporary migrants, including overseas students, skilled workers, New Zealand citizens and working holiday-makers, have brought significant benefits. Employers get a chance to assess potential migrants before sponsoring them for a permanent visa, while they, in turn, get a chance to decide whether they want to stay before committing to permanent residence. But as uncapped temporary migration has expanded dramatically while permanent migration has been held steady, the total number of temporary residents has expanded significantly. Today, about 1.7 million temporary migrants live in Australia. Many have been here for several years and aspire to stay, but recent changes introduced by Dutton mean that most face very limited pathways to permanent residency and citizenship. As journalist and migration specialist Peter Mares, co-editor of this edition of Griffith Review, has put it, they are ‘not quite Australian’. Is Australia at risk of creating a cohort of people who contribute to the economy but cannot belong to the society, who pay tax but are denied social support? Above all, since temporary migration may well grow as the economy grows and employers demand more labour, can Australia find ways to address the high risk of exploitation these migrants face, while maintaining pathways for those who fit Australia’s needs to become permanent residents?

Imperceptibly, without public debate, the model is being transformed. Australia remains a high immigration country, but governments no longer celebrate it, nor do they urge migrants to take out citizenship or make it easy to do so. Nevertheless, they are happy to take the money migrants contribute to the budget bottom line. Allowing employers to decide how many skilled temporary migrants they need to fill shortages in various job categories, and outsourcing decisions about the student intake to the higher education sector, has enabled overall migrant numbers to rise and fall with the health of the economy – a clear benefit. But it has also shrunk the national story, since the most vocal pro-migration sector, business, talks about it only in terms of self-interest.

That shrinking story has other dimensions. In the past twenty years, universities have become transfixed by the asylum-seeker issue, generously funding refugee research while neglecting immigration. The mainstream media, under financial pressure, lost much of its capacity to report how migrants were integrating, as the Fairfax newspapers and The Australian did energetically thirty years ago. Ethnic community groups, which had been vocal in the 1980s, lost their profile. Gradually, the immigration and integration landscape disappeared from view. In December last year, as the permanent migration intake ran at close to its highest in Australian history, the Turnbull government abolished the Immigration Department, absorbing it into Home Affairs and spreading its old roles among a range of departments. It has never publicly explained why.

The final cause of the change to the migration model is one of the biggest: divisions over asylum seekers have overshadowed the immigration debate. Australia’s rigid border control has undoubtedly made it easier for governments to run a large migration program. It also led to a popular view that a government that was so hard on unauthorised arrivals must be restricting migration. On the contrary, as sixty-three thousand asylum seekers reached these shores in the past two decades, 3.6 million migrants arrived. Distracted by those anxious faces on flimsy boats, we missed the queues at the airports. And while we were half looking, the nation was transformed.

 

THE DEBATE THAT emerged this year is not simply between left and right, or between Labor and the Coalition. Luke Foley, leader of the NSW Labor Party, joined former NSW premier Bob Carr in calling for cuts to the program because, they say, Sydney cannot cope with more migration at current levels. Commentators such as Gay Alcorn, Ross Gittins and Mike Seccombe, all writing for publications identified with the centre-left, have argued that the urban pressures of housing prices, traffic, public transport congestion and overloaded infrastructure make it time to slow immigration, at least for a while.

Australia’s population growth is faster than that of any other major OECD country. Nevertheless, while the current immigration rate of 1.1 per cent of total population since 2006 is double that of the previous three decades, it is no higher than the rate between 1949 and 1972. In 1969–70, 175,000 people came – a much higher figure, per capita, then today’s intake.

The problem is that growth is very unevenly spread. In 2016, 87 per cent of immigrants lived in major cities compared to 67 per cent of the Australian-born. That figure does not capture the outsized role of Sydney and Melbourne in attracting migrants. In the year to September, 2017, the number of overseas migrants to NSW and Victoria, predominantly to their capital cities, reached a historical peak of ninety-nine thousand and eighty-eight thousand respectively, according to the Grattan Institute. The next most desirable destination, Queensland, took just thirty-one thousand migrants.

These changes are creating two, or many, Australias. George Megalogenis sketched them in his Australian Foreign Affairs article8 per cent of Sydney residents, and only slightly fewer in Melbourne, are born in China or India. That is twice the proportion in Adelaide and Perth, more than twice that in Brisbane, and four times that in Hobart. So the genuinely Eurasian nature of our two biggest cities will not be quickly reproduced anywhere else – except perhaps in Canberra, where the Chinese and Indian-born form 6 per cent of the population; and Darwin, where Filipinos number 4 per cent and all Asian-born 9 per cent. In Brisbane, the two largest overseas-born groups are New Zealanders (5 per cent) and English (4.2 per cent), while one in every eleven Perth residents, and one in every fifteen Adelaide residents, is born in England. Perth’s English-born, however, are much more likely to be young, skilled migrants than those in the rest of the country.

Australia’s whitest (and amongst the oldest) population centres are in regional areas such as the Sunshine Coast, where the top four migrant ancestries apart from Australian are: English, Irish, Scottish and German. Across regional Australia, the percentage of migrants from Asia is less than 5 per cent; from the Middle East and Africa it is less than 1 per cent.

The paradox, common to most OECD countries, is that these areas with very few migrants and more aged populations have the strongest anti-immigration views. And – in another paradox – often the highest demand for migrant labour. Without backpackers, Australia’s fruit and vegetables would not get picked, and without overseas doctors and nurses, regional health services would struggle to find staff. Nevertheless, regional voters are almost twice as likely to be anti-migrant as people in cities, according to the 2018 Grattan Institute report, A crisis of trust. One Nation is strongest in its Queensland rural heartland and gets very few votes within fifty kilometres of the Brisbane city centre.

The pull of Sydney and Melbourne for migrants reflects these cities’ strong service sectors, particularly the power of their universities to attract overseas students. Grattan Institute figures show that between 2006 and 2011, half of all jobs growth was not only in Melbourne and Sydney but in their CBDs and inner suburbs, where service industries predominate.

This reshaping of Australia’s economic geography helps to explain a 50 per cent rise in housing prices in Melbourne and 70 per cent in Sydney over the past five years alone. It helps to explain growing class and intergenerational inequality, as home ownership rates fall steadily among Australians younger than fifty-four years of age, and sharply among very young adults and the poor. Immigration is far from the only factor driving up house prices and rents: restrictive planning rules, rising incomes, falling interest rates and tax changes that led to a surge in the number of property investors have all contributed. But immigration has played a part, because the sort of migrants Australia attracts tend to be young adults who move quickly into well-paid jobs and start looking for a home close to work.

Fierce opposition to housing development in affluent areas, especially the middle-ring suburbs of Melbourne, has forced migrants and other home buyers to the fringe, and exacerbated urban sprawl and the financial and environmental costs that go with it. Current record levels of housing construction are the bare minimum needed to meet expected population growth on the eastern seaboard, according to Housing affordability: re-imagining the Australian dream, a Grattan Institute report published earlier this year. Coming to a seemingly reluctant conclusion, the report’s authors write that while best policy would be continuing high immigration, if states cannot reform their planning codes or find other ways to build more housing, the Commonwealth should consider ‘tapping the brakes’ on the migrant intake.

 

IN THESE BIG cities, new migrants are increasingly bunched together. One in four people in Sydney, and nearly one in five in Melbourne, lives in a suburb in which at least half the population was born overseas. In Auburn in Western Sydney and Dandenong in Melbourne’s south-east, people from a non-English speaking background make up 83 and 75 per cent of the population respectively. These historically high concentrations drove the Scanlon Foundation to ask in its 2017 Mapping Social Cohesion report ‘whether past patterns of integration are continuing or whether new norms are being established’.

The more migrants from one background gather in one area, the less likely they are to blend with the larger community. They will find it both harder and less necessary to learn English, the most important method and measure of integration. Skilled migrants who speak English very well are significantly more likely to be employed than migrants whose English is poor, according to research by demographer Peter McDonald.

The latter is a growing group, according to McDonald’s 2016 English Proficiency Report, written for the Scanlon Foundation with fellow demographers Helen Moyle and Jeromey Temple. Whereas the number of citizens not speaking English well or at all remained stable at about half a million between 1991 and 2006, by the 2016 census it had surged to 820,000. Among them were a quarter of a million Chinese speakers, who made up nearly two-thirds of the increase between the 2011 and 2016 censuses in people who cannot speak English well. These Chinese-born are not recent students: some came in the Tiananmen Square group after 1989, others are parents and dependent relatives, most of them middle-aged and female. In contrast to them, most Arabic speakers who did not speak English well in 2011 considerably improved their English in the next five years.

All the top twenty local areas containing poor English speakers are in the two big cities, predominantly in Sydney’s west and Melbourne’s outer south-east. Interestingly, unlike other language groups, concentrations of Chinese speakers who do not speak English well are found in many areas of expensive real estate, such as along Sydney’s North Shore railway line, and in Box Hill, Doncaster and Glen Waverley in Melbourne. If these groups are not integrating well – and more research is needed to confirm that – it would be a first for Australia to find poor integration in affluent suburbs. A 2018 Scanlon Foundation report on Chinese and Indian settlement experiences finds that Chinese migrants’ relatively low English proficiency plus higher unemployment levels than both the Australian-born and Indian migrants make them ‘a group that may be particularly at risk of social isolation from the broader Australian community’.

Thanks in part to English-language programs and other long-term integration policies, along with intergenerational mobility and the relative ease in the past of moving house, Australia has had almost no migrant enclaves. Will that continue, especially when the economy has so dramatically changed? Until the 1980s, migrants took jobs in factories that were often close to their homes, did not require much English, and received union wages. Today, manufacturing is a shadow of its former self, while service-sector jobs are much more likely to require language skill. A recession, which must come one day, would gravely exacerbate all these trends, as well as leaving Australia’s 1.7 million temporary migrants and most recently arrived permanent residents without welfare support.

Finally, migration inevitably puts more strain on the natural environment of what is already a dry and significantly deforested continent. A larger population also makes the challenge of addressing climate change more daunting. Australians already produce among the highest carbon emissions per head of any people.

 

WHAT OF THE arguments for maintaining high migration? They, too, are strong. For a start, how would immigration be cut to 110,000 a year, as Abbott proposes? The family stream – about sixty thousand migrants a year – is now mainly comprised of partners of citizens and permanent residents. By law, the minister cannot deny, or even delay, the granting of visas for spouses and dependent children. The government could cut the humanitarian program, but it is small, and for forty years the government has used it to parade its generosity and global citizenship. The Turnbull government even recently increased the annual intake, from 13,750 to 18,750, before a 2016 United Nations conference to address the global refugee crisis.

That leaves skilled migrants, who make up two-thirds of the annual intake of 190,000. This group – which according to the government’s own research provides the biggest benefit to the budget, is most supported by business and is best placed to integrate – is precisely the group Dutton is now cutting, a bizarre decision for a Coalition minister. The abolition of the 457 visa and other new restrictions, which took full effect in March, are reducing the number of temporary skilled migrants who can convert to permanent residence. This will reduce the number coming to Australia.

Growth in overseas student numbers may also slow, since the government has narrowed their path to permanent residence by way of a skilled visa. At present their numbers are soaring to more than half a million, perhaps because universities are chasing new funds to compensate for recent government cuts to their budgets. How the sector will respond to such a threat to its livelihood is not hard to predict.

The building industry also relies on migrant demand, while aged care relies on migrant employment. Farmers are demanding a new agriculture-worker visa after a near halving of the number of working holiday-makers since 2011–12, in part because of rising concerns about exploitation. The economy has become hooked on immigration, and demographic realities suggest it might be for years to come.

Because the country’s rapid population growth is built to a large degree on migrants whose median age is much younger than that of other Australians, it has one of the developed world’s slowest rates of population ageing. Yet over time the population growth rate will almost certainly decline, in part because Australian women are having fewer children than at just about any other time in our history.

Since 2011–12 alone, the fertility rate has fallen from 1.92 to a preliminary estimate of 1.73 children per woman, the lowest level since 2000–01, when the then Treasurer, Peter Costello, began to warn of the dramatic and damaging effect of low fertility and an ageing population on the economy and government budgets. Abbott and others who deride Treasury’s support for migration as a rigid ideology are missing the point. For twenty years population ageing has genuinely spooked Treasury, and is pivotal to explaining why the Howard government, which came to power determined to dramatically cut migration, reversed course. To understand the importance of population ageing, let’s compare Australia’s demography with that of Japan.

Developed economies have generally depended on a reasonably high proportion of people of working age in the general population. Workers pay the taxes that enable government to fund hospitals, schools, roads and pensions for retirees. In 1990, when Japan was still seen as the world’s miracle economy, seven out of every ten people were of working age. The ratio in Australia was similar. Today, only six in ten Japanese are of working age, whereas in Australia higher birth rates and more immigration have held the ratio steady. In Japan, 30 per cent of the population are over 65; in Australia the share is 16 per cent. The consequences of this divergence are plain to see.

In 1990, per capita GDP and real wages were similar in the two countries. Since then, Australia’s per capita GDP has risen by more than 57 per cent and Japan’s by less than 22 per cent. Average wages in Australia have increased by more than a third; in Japan they have risen barely at all. (This contradicts the common view that immigration pushes down wages.) Of course, not all these changes can be attributed to immigration. Above all, Australia enjoyed a sustained mining boom. But population ageing has also played a big role.

Some argue that the effects of ageing on the economy will be counteracted by older people staying on in the workforce. But even if they are working, the elderly tend to save more and spend less. It is younger consumers who drive economic activity, buying cars and fridges, furnishing homes and clothing children.

As populations age, the costs of funding health care, aged care and pensions rise steeply. If, at the same time, the share of the population who are working and paying taxes falls, then governments have to borrow more. Japan’s government debt is now two and a half times greater than GDP; in Australia, it is about two-thirds of GDP.

Japan’s story over the past thirty years confirms what economists have long maintained: ageing drags down aggregate demand, economic growth and labour productivity. It hits government budgets and increases public debt. Even worse for Japan, between 2010 and 2015 its population shrunk by nearly a million people, creating what Prime Minister Shinzo Abe called the nation’s ‘biggest economic challenge’.

As a result, a nation that has long been committed to ethnic and cultural homogeneity has quietly begun to invite immigrants, lifting the proportion of the overseas-born from nine hundred thousand to 2.3 million over the past thirty years. That is still less than 2 per cent of the population but it is likely to grow. In 2015, Japan’s net immigration, mainly from South Korea, China and the Philippines, was 170,000, almost certainly a record to that date.

Japan is hardly alone. China, also ageing rapidly, has introduced a new visa to try to attract its diaspora of young workers and students home. Russia, where birth rates are falling precipitously, is paying women to have children. In Germany deaths already exceed births – this is the natural outcome of an older population. Most other countries in Europe are not far behind.

Australia’s younger population gives it a significant comparative economic advantage over many other nations. It is true that immigration cannot stop ageing. Australia, along with all other developed nations, is going to continue to age. But well targeted immigration can materially slow the rate. Maintaining net migration at around current levels would ensure that Australia remains one of the developed world’s youngest nations for the foreseeable future, or at least until other countries begin to use immigration in the way Australia has. It would ensure the higher demand that comes from a younger population, as well as a supply of workers to fill the jobs that an older population will require (assuming robots won’t be doing most of them). It would enable the consequences of lower economic growth and government revenues to be felt gently rather than drastically. It would buy vital time in which to determine how this new society dominated by older people is going to work.

Australia faces a stark choice. Either it maintains migration at around current levels with a strong focus on young and highly skilled people, or it significantly reduces the numbers. At least for the next few years, Peter Dutton has made this choice. His decisions to cut the permanent intake and to make it harder for skilled temporary migrants and overseas students to attain permanent residence mean that net overseas migration in 2018–19 is likely to be around two hundred thousand, below what the government assumed in this year’s budget and well below the middle assumption of 240,000 a year used by the ABS in its most recent population projections. Combined with a falling fertility rate, the effect will be a slower growing, more quickly ageing population. Future government decisions to hold, raise or further cut immigration levels will determine how large the effect will be.

 

YET THESE PRO-IMMIGRATION arguments, however strong, cannot be based solely on economics – on ‘take your immigration medicine, it’s good for you’, as Peter Lewis of pollsters Essential painted them in a recent Guardian column. Populism is thriving because people have grown tired of being told by those in power that some economic reform is benefiting them when they can’t see it. Supporters of continuing high migration need to find stories as vivid as those told by their opponents: packed roads, disconsolate young people walking away from homes they cannot afford, suburbs in which people feel that their neighbours are strangers.

These pro-migration stories certainly exist: the dynamism and fresh thinking that migrants bring; the buzz and pride of having global streets and cities, and opportunities for young people to work in them; the bridges to China and India and other countries that migrants can build; the prospect of developing a new and distinct Eurasian society in the most dynamic economic region on Earth. Yet these stories are harder to tell, and need leaders with a fair degree of nerve.

Instead, government has largely given up making a case for migration as part of building a nation and opted for a small-target strategy, as it has done in so many policy areas. The choice or drift is partly understandable given the complexity and sensitivity of the issues, but it leaves the field for others to fill. In its 2016 report, Migrant Intake into Australia, the Productivity Commission made a plea for ‘a clear articulation of immigration policy and its implications for population growth… Without such a factual understanding, there is a risk that public support for immigration could fracture and false perceptions could magnify as various interest groups seek to exploit the misunderstanding for their own purposes.’

The problem is bigger, though, than a confused and narrow narrative. The broader retreat of government puts huge strain on migration policy. ‘A high proportion of the promoters of high immigration are also promoters of smaller government, never acknowledging the two are incompatible,’ wrote economist Ross Gittins in a March 2018 column for Fairfax. ‘When you persist with high population growth but put the clamps on government, you end up with overcrowding, congestion and the rest.’

To be fair, economic change has wrenched some levers out of government’s hands. Many people, from Dutton down, have asked whether Australia could maintain its migration levels while taking the heat off Sydney and Melbourne. Can more migrants be encouraged – or even directed, as Citizenship and Multicultural Affairs Minister Alan Tudge speculated in May – to not only move to other capitals and towns but to stay there? In its recently published paper, Shaping a Nation, Treasury called for research into what levers government has to ‘alter the spatial distribution of the Australian population’ and how they might be used.

In theory, the match could be perfect. South Australia, for example, has told the Commonwealth for years that it wants more migrants. No doubt many migrants would love South Australia. Sadly, it’s not so simple.

Today nearly a third of skill-stream visas are designed to encourage or require skilled temporary migrants to live for some time, usually a maximum of two years, in a smaller capital or a region. But the problem is less about attracting people to these places than it is their finding jobs that enable them to stay once they are there. In the postwar years of Keynesian big government, the Commonwealth could build the Snowy Mountains Scheme, or support the development of a car industry in Adelaide and Geelong, and direct migrants to go to them, providing not only jobs but houses and schools for their families. That kind of state intervention has long gone. For nearly half a century, governments have thrown huge amounts of money at regional economic development, with very little to show for it. Now and then a government decentralises a department, or funds a submarine factory in Adelaide. Small migrant communities move to a country town, sometimes with heart-warming results. Yet these are marginal changes.

Instead, all the evidence from around the world shows that today’s big service industries – IT, finance, design, media, management, higher education, hospitality and entertainment – want to cluster not only in big cities but even more closely, in their CBDs and inner suburbs, where they can exchange ideas, trends and people. Migrants move there for jobs and to join pre-existing communities, and the snowball gets larger.

In the absence of some unlikely counter trend, Australia’s four largest cities will dominate even more than they do today. By 2050, Melbourne and Sydney are each projected to be home to around eight million people. By then they will be first-world megacities, with their own myths and mindsets – separate from the rest of the country. They will be freewheeling, global spaces, Eurasian, economically powerful, abrasive and accepting, with crowds in the street and cranes in the sky. They will be alienating for some people from smaller places, perhaps harder, lonelier and more unequal than they are now, but also fields of magnetic attraction, especially for the young.

Even today, residents of inner Melbourne already have more in common with their counterparts in Manhattan, even Milan, than they do with people in Dimboola or Nhill, who hold to an older sense of the national psyche. Thirty years from now, can these different Australians still be called one people? And since the nation is likely to remain for some time not only the primary unit of political and economic life but the main source of most people’s sense of community and meaning, can leaders tell a story to bind together this increasingly centrifugal place?

These are questions for tomorrow. Today the country has to make a call about immigration. Here’s what it might be.

Migration is likely to fall for a while, above all to address the anxieties caused by rapid growth in Sydney and Melbourne. In future years, it will also slow when the economy slows. At the same time, history suggests that growing numbers of people want and need to move: for work, money, safety, pleasure, freedom, learning, love and sometimes a new life. Yet governments won’t make decisions on that basis, or support migration for its own sake. Countries can always put up walls. What is likely to influence Australian governments is a continuing decline in fertility rates that exposes the economic and social challenges produced by an ageing population. Unless the Australian public does not accept this argument, it probably means maintaining migration at the levels of recent years. Immigration must be managed, and well explained, but it is unlikely to be dramatically cut.

Since Arthur Calwell stood in parliament to announce the start of the program in 1945, immigration to Australia has been a remarkable success. In a mere seventy-three years, without major upheaval, it has transformed an insular, institutionally racist society of seven million people into one of the most diverse and tolerant nations, twenty-five million strong, of whom almost exactly half are migrants or the children of one. If any society can confidently steer towards a future based on migration, Australia can. Can our leaders talk about this? Can we all?

 

Note: The online version of this piece has been amended following its publication in the print version of Griffith Review 61 to include a second reference to an article by George Megalogenis in Australian Foreign Affairs (Black Inc., 2017).


From Griffith Review Edition 61: Who We Are © Copyright Griffith University & the author.

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