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Migration and Australia’s post-COVID-19 economic crunch

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Police officers patrol near the Sydney Opera House following the implementation of stricter social-distancing and self-isolation rules to limit the spread of the coronavirus disease (COVID-19) in Sydney, Australia, 6 April 2020 (Photo: Reuters/Loren Elliott).

In Brief

Like most developed economies, Australia entered the coronavirus crisis in an economically weakened state.


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Prior to the crisis, Australia’s stock market was roaring and corporate profits as a portion of GDP were strong. But economic and productivity growth were anaemic, real wages and labour utilisation were flat, and private consumption and business investment were weak. That’s an ideal combination for driving up wealth and income inequality.

Slow economic growth has been a feature of developed economies for the past decade. This coincided with the first decade in which almost every developed nation, plus China, simultaneously experienced a demographic burden phase with their working age to population ratios in decline Some nations, such as Japan, started ageing decades earlier.

The developed world’s second decade of demographic burden — the 2020s — has kicked off with a substantial recession if not a depression. Until there is a vaccine for COVID-19, economic activity will remain heavily subdued, even as some restrictions begin to ease.

But once we do have a vaccine, will we see an economic ‘snapback’ as predicted by Australia’s Prime Minister Scott Morrison? Or will it be more like a dead cat bounce, with economic growth remaining sluggish as it did for years after the Great Depression?

Net migration to Australia in 2020 and 2021 is likely to be substantially negative. Most of the over one million temporary entrants in Australia, not including New Zealand citizens, have been told to go home. Those who cannot afford to get home and cannot keep their job will flood Australia’s charities, eventually forcing the government to either help them leave or help them survive.

Australia has not experienced successive years of negative net migration since the early 1930s. Negative net migration of over 150,000 per annum would result in overall population decline — something Australia has not experienced since 1916 when troops were sent to Europe.

Recessions in Europe and North America will also reduce net migration to those continents —especially with the rise of far-right, anti-immigration parties urging their governments to adopt Australian-style border protection measures.

Austere economic times tend to accelerate a decline in fertility rates. That was the case after the Great Depression and the recession of the early 1990s.

The combination of very low net migration and declining fertility will accelerate population ageing in the 2020s, with severe consequences for economic growth and government budgets. Government balance sheets will already be severely impaired by the coronavirus recession, with very little revenue coming in and massive stimulus and support expenditure. If a vaccine is not available until well into 2021, further social, employment and business support, health, aged and childcare expenditures will also be required.

While much needed, governments may not be enthusiastic about further stimulus measures to kick-start their economies once a vaccine is available.  Indeed, they will be eager to wind back many of the support measures put in place for the crisis. They will be highly conscious of the additional pressure on government budgets from populations that will be ageing more rapidly than projected by the United Nations in its 2019 revision.

So what should Australia do?

In the very short-term, the Australian government needs a more nuanced approach to temporary entrants than its ‘go home’ message. That rhetoric trashes Australia’s reputation for the future, deepens the recession and makes recovery more difficult. Helping temporary entrants abide by self-isolation requirements, attend the doctor as needed, avoid destitution and contribute services to Australia’s health and aged care needs should  be a short-term priority.

Once a vaccine is found, the key challenge will be to get the maximum number of people back to work as quickly as possible. In the current low interest rate environment, the best way to do this would be by dealing with Australia’s infrastructure backlog — both large projects as well as smaller, local-level investments that would benefit small businesses. That would give the economy the boost it will need as well as develop a capital base to improve longer-term productivity.

The coronavirus crisis has also raised questions of the relative role of the private and public sectors in the delivery of essential services — such as health, aged care and key utilities — as well as the maintenance of a minimum manufacturing capability and the safeguarding of government stockpiles of key supplies. How these industries and arrangements are shaped in future will be a major challenge.

Despite the costs, maintaining the current crisis policy of free childcare and public investment in early childhood education may be the best way to slow a decline in the fertility rate and improve long-term educational performance. With a constantly ageing population though, the challenges of weak aggregate demand, sluggish household consumption expenditure and very cautious business investment will remain.

Slowing the rate of population ageing through targeted immigration, as it has done since the early 2000s, can help Australia better manage the transition to a more aged society. That will require a re-think of current immigration policy settings to assist with recovery, including the recovery of Australia’s international education and international tourism industries.

But that will not be enough.

As John Maynard Keynes said some seven years after the Great Depression, with an ageing and declining population we shall ‘be absolutely dependent for the maintenance of prosperity and civil peace on policies of increasing consumption by a more equal distribution of incomes’.

Will governments around the world be up for such a challenge, having seen the critical role that essential service but poorly-paid workers play during a crisis?

Abul Rizvi is a PhD candidate on Immigration Policy at the University of Melbourne. He was a senior official in the Department of Immigration from the early 1990s to 2007 when he left as deputy secretary. He was awarded the Public Service Medal and the Centenary Medal for services to development and implementation of immigration policy, including in particular the reshaping of Australia’s intake to focus on skilled migration.   

This article is part of an EAF special feature series on the novel coronavirus crisis and its impact.

4 responses to “Migration and Australia’s post-COVID-19 economic crunch”

  1. Well written Mr Rizvi.But i have few questions for you
    1 Do you think the goverment policy now asking temporary residents to go back to their home countries reflect on an underlying Aussie sentiment against mass migration although they make it look like skilled migration(infact vast majority of them end up doing jobs which has nothing to do with their skills)
    2 Is the Australian economy now strong enough to snap back to the normal pace lets not forget the already inflated property market
    3 How about the record low consumer sentiments?
    4 Will an average Australian feel safe again (most of them think that migrants are responsible for it although it has nothing to do with the real scenerio)

    • Dear Jose,

      A curious selection of questions for Mr Rivzi. I, would be keen, if I might impose, to know your thoughts on the notion of perpetual immigration-fed population growth and your perception of the harm this will do to the Australian environment. Australia, by the way, already has one of the worst records of extinction on the planet. Meanwhile, we have a considerable number of species at risk and endangered. We have lost most of our rain-forest and vast tracts of forest, our river systems and soils are much degraded and much over-used. I could go on. Yet, Mr Rivzi never addresses such issues in his writing and one must conclude from this that they are unimportant to him.

      There is no doubt, Australia and, indeed, any country on the face of the earth could have a healthy economy with little or no population growth. It is towards this future we must strive. It is the only one that is sustainable. No doubt immigration will continue but ought never be more than is needed to keep the Australian population stable and to provide for the usual niceties of international discourse (for example, Australians do, occasionally, find love overseas and this love ought to be able to come home. Of course, this circumstance would likely occur as often in reverse … so a zero some game!) Of course, we should also accept our humanitarian responsibilities (refugees) but this will never equate to our existing immigration programme which, for decades has been of unsustainable dimensions.

  2. It is unsurprising Rizvi’s view have secured an airing in a forum such as this, focused as it is on conventional economic thinking in the absence of environmental concerns and general matters of livability.

    The essence of Rizvi’s answer to everything is ‘growth’, not merely economic growth but population-fed (in the Australian context via extremely high immigration) economic growth; ie, more and more people consuming more and more forever! But Rizvi never comes to terms with how this model can ever work to any long term advantage. It is the truncated nature of his vision that makes it such a farce. He looks no further than the end of his nose.

    A reader will never find in Rizvi’s analysis any mention of the ‘environment’ or the rather obvious — and inescapable negative consequences — of his growth model. For these reasons, while his views might secure support from Australia’s Asian neighbours — more content, apparently, to live cheek-by-jowl, and who are still closely focused on ‘material’ advancement, they are becoming increasingly unappealing to Australians, including new Australians, who are looking beyond the endless accumulation of wealth to a sustainable future.

    In all respects, Rizvi’s cure is very much worse than the ailments he proposes to fix. He hopes, though, to make the medicine more palatable by ignoring its numerous side-effects. The truth is that, even if one accepts the ailments exist — and I do not — he is prescribing the wrong medicine.

    If Rizvi intends to continue flogging his immigration-fed growth model — and wishes to be taken seriously, and that is very hard to do — he must include in his narrative how he anticipates his answer to our problems fits in with a diverse, robust and fecund natural Australian environment. He must also explain how he would address the numerous ‘livability’ issues that come with his vision. While he is about it, he might also nominate/identify a population figure for Australia that he deems ‘sufficient’. Or does he seriously imagine that Australia can — and must– grow its population forever?

    Let us be clear, Rizvi’s reference to ‘targeted’ immigration — which implies the bare minimum to keep things going — has never been part of his agenda. Australia has had, for the past several decades, ludicrously high levels of immigration; I have never read Rizvi counselling against that.

    As for his pre-occupation with an ageing population, Rizvi is, as always, a monument to over-statement. There is much analysis about to demonstrate that high immigration does very little to alter the dynamics of a population pyramid — and it is certainly not worth all the attendant harm. Moreover, it requires a constant and ever-larger immigration top-up to have any hope of working! Rizvi’s tendentious assessment also ignores the pressures brought to bear on the Australian Government by migrants to bring in their parents, oftentimes quite aged. In short, many of our new migrants will bring the ‘ageing’ problem with them!

    Here is the future Australia must pursue — and this ought to be adopted by the rest of the world (much harder to do, of course, when population growth is internal and not fed by immigration). Australian must put its environment first. No further decline in an already much diminished natural landscape. That requires a stable and not an ever-growing population. Rather than the easy — but utterly unsustainable — solutions proposed by Rizvi, Australia must pursue economic well-being from a platform of low/no population growth.

    For a developed nation, there is no environmental future in growth, especially that fed by eternal population growth. Our Asians neighbours, more than most, ought to have an awareness of the challenges of human fecundity … and the consequences that have come with a failure to address it. Australia is blessed for having the ways and means readily available to it to address population issues. We would like to keep it that way while always being open to helping our less fortunate neighbours do the same.

    Rizvi’s vision is no vision at all. It is a dud and ought to be treated as such.

  3. Abul Rizvi is an immigration advocate par excellence. Any reason is good enough to try and get more people into Australia, in this case presenting the worn out argument of an ageing population.
    I actually see an ageing population as a boon to a country. Most are independently living people, many have wealth, certainly more wealth than younger people. Many provide vital services, unpaid, to the community. Their wisdom and experience cannot be lauded enough.
    Yes, some fall through the cracks, but with a well established program, these can be helped to become a benefit rather than a cost to the community.
    Australia as a country cannot carry a large population, it is environmentally damaging. We see the cracks appearing everywhere, on the land, in the rivers, in the reefs, in the fishing industry, in the species loss. Australia was never meant to carry a large population and did not do it during pre-European times, the First Australians knowing very well what the land could afford.
    In fact, it would be environmentally desirable for the population to decline over time to levels less than half of what they are.
    Nor is a large population needed: look at all the all-round successful countries in the world today: many of them have very small populations

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