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Australia’s relative social and economic success – we hold the record for the longest run of uninterrupted economic growth – is founded in large part on strong immigration from overseas.

Yet the general sentiment about immigration is often ambivalent. On the one hand, we like to congratulate ourselves for being one of if not the most successful multicultural countries on the planet, yet on the other hand we have periodically elected in to parliament politicians who run on anti-immigration platforms.

Irrespective of where the pendulum sways between these opposing sentiments, immigration is likely to remain a key pillar of contemporary Australian society and its economy. Against a backdrop of increasing globalisation in the 21st century – with every incremental advance in technology, our global interconnectedness and interdependence gets tighter – international migration has been growing rapidly. Across the globe in the year 2000, there were 173 million people who packed up and moved away from where they originally had called home. In 2015, that grew to 244 million people.

Australia’s role in this rapid growth in international migration has largely been one of host (or new home) to an increasing number of people originally from overseas. In 2000, just under 115,000 people on net immigrated to Australia. In 2008 that number more than doubled to reach a record 315,687 people. Since then, immigration has ebbed and flowed but tended to oscillate around 198,000 people per annum, a level well above the anything experienced in previous decades.

While strong immigration looks to remain a key pillar of contemporary Australia, continued success and enrichment from such immigration is not automatic. In fact, if not managed and responded to adequately, it can represent a source of social and political instability – Brexit and Trump are key examples.

An adequate and appropriate response to population growth is one that ensures both newcomers and well-established residents can live affordably with adequate and appropriate amenity, proximate to jobs and community. Key tasks for policy makers at every level of government therefore lie in the seemingly mundane but vitally important areas of planning, infrastructure and land release.

Unfortunately, the strain on housing affordability and basic infrastructure in key markets like Sydney and Melbourne – destinations where new-arrivals tend to establish themselves – highlight serious failings in these policy areas.

Planning systems have become increasingly complex, unpredictable and inconsistent between even just different local governments, let alone different states. State governments have drastically reduced housing-related infrastructure investment over the past 20 to 30 years, transferring the financial burden onto the private sector, specifically new housing developers, adding to the cost of new housing. Land re-zoning and subdivision processes are also inconsistent across the country and often subject to significant delays, ultimately leading to significant shortages in shovel-ready land for new housing.

The combined effect of these individual barriers and hold-ups is most clearly demonstrated in the market for vacant residential land, again using Sydney and Melbourne as the pertinent examples. In early 2017, a falling supply of vacant, shovel-ready residential land in the face of strong demand saw the median lot price record double-digit annual increases in both cities.

The overall conclusion is that the industry is significantly constrained in its ability to adequately and affordably respond to the growing housing and related needs of a growing population. These barriers must be addressed as a matter of priority in order for Australia to flourish from and reach the full potential offered by growth in immigration.

co-authored by: By Tim Reardon, HIA Principal Economist
 
  • While it seems reasonable to believe that high immigration has resulted in higher levels of economic growth in aggregate, there is a dearth of evidence it has resulted in any improvement on a per capita basis. Recently we have been under-performing other similar advanced economies who universally have lower levels of immigration.

    There doesn't seem to be any conclusive empirical evidence, or even modelling, to support the thesis that high immigration should lead to better outcomes for the existing population. But it seems increasingly apparent that there are many deleterious effects such as unaffordable housing leading to increasing indebtedness, congestion and overloading of infrastructure and social services.

  • I don't see these as 'opposing sentiments'. We can have both. Open to immigration and acknowledging the wonderful cultural diversity and link (not lineal guarantee) to economic growth. Also to expect moderation to complement the population, numbers periodically reviewed according to stability and the scrutiny of individual character.

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