Treasury Department Finds Migration a Net Boost to Economy

A landmark report released by the Treasury and the Department of Home Affairs has found that migrants provide an overall net boost to the Australian economy.

The study—which found that migration is making Australian’s wealthier—demonstrates that the annual permanent intake has added up to one percentage point to GDP growth each year, for thirty years. The report also found that migrants make up a combined lifetime tax contribution of almost $7 billion.

The study’s publication follows an intense spike in media scrutiny concerning Australia’s immigration program after an investigation published in The Australian earlier this month showed that the annual permanent intake for this year is forecast to drop by more than 20,000.

The decline is largely being attributed to the knock-on effect of tighter vetting rules that have been gradually introduced by the Department of Immigration over the last three years.

The study was commissioned last year as part of an internal study by the secretary for Home Affairs, Mike Pezzullo, and Treasury secretary, John Fraser, and shows that the wages, hours, and employment rate of local Australian’s are not significantly affected by immigration.

The report—which traces the history of migration and population growth over the last 50 years—found that migrants provide an economic dividend, along with lifting living standards by 0.1 of GDP per capita and increasing overall productivity by 10 per cent. The current migration program is also expected to add between 0.5 and 1 percentage point to the annual average GDP growth rate between 2020 and 2050, by limiting the effect of Australia’s ageing population

The study attributes migrant contributions as a being one of the key factors that helped to protect Australia from the full effects of a recession following the onset of the global financial crisis.

“Migrants deliver an economic dividend for Australia due to current policy settings which favour migrants of working age who have skills to contribute to the economy,” the report said.

“This leads to higher rates of workforce participation and likely productivity benefits. This, in turn, increases Australia’s GDP and GDP per person, with positive flow-on effects for living standards … migration improves the commonwealth’s fiscal position, since migrants are likely to contribute more to tax revenue than they claim in social services or other government support.

“Together, the 2014-15 cohorts of the Permanent Migration ­Program, the Humanitarian Program and the 457 temporary skilled visa program are projected to contribute a net fiscal benefit of $9.7bn over 50 years.”

Skilled migrants who were granted permanent visas in 2014-2015 are estimated to represent a lifetime net contribution of $6.9 billion to the budget, while family migrants who were granted permanent visas during that same period are expected to constitute up $1.6 billion in taxes.

The only immigration program that was found to produce a lifetime net cost to the budget was the refugee and humanitarian visa, which will end up costing taxpayers $2.7 billion. The report also found that the permanent program was not a significant factor in driving population growth, instead pointing to temporary migration—either for education or tourism—as real the culprit behind recent demographic changes.

A senior registered migration agent for Absolute Immigration, Majlinda Lulo, lauded the report’s publication as another piece of clear evidence that Australia’s migrant community is an indispensable part of the local economy.

“There is clear evidence that migration contributes to our nation on a number of levels,” Lulo said.

“We believe that government policy should focus on harnessing these benefits—especially in view of our aging population and significant brain drain—while at the same time ensuring the integrity of the migration programme.”

The Treasurer, Scott Morrison, has also issued a statement addressing the publication of the report, saying that, “the analysis conducted by Treasury and the Department of Home Affairs provides a clear evidence base for the government’s migration policy settings supporting our national interest.”

“The Turnbull government’s migration program retains the flexibility of a maximum cap on permanent migration, focused on skills, and is underpinned by our strong and successful border controls and strict enforcement of our visa rules to maintain integrity.”

“The key difference between the Turnbull government and its Labor predecessors is that the Labor government ran a tick-and-flick program on permanent migration.”

“Under previous governments, the 190,000 intake under the permanent program for skills and family visas was a target that had to be met. In the 2016-17 budget, the Turnbull government officially changed this requirement to be a maximum cap under the program, creating the necessary flexibility,” Morrison said.

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