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Shaping a nation – population growth, immigration and urban planning

Two important reports have recently been released that deal with the thorny issues of population growth, immigration and urban planning.

The Federal Treasury’s ‘Shaping a Nation’ Report sets out to inform debate about immigration and its contribution to Australia’s future prosperity. It sets out important facts about Australia’s population growth and the role of immigration in the wider Australian economy.

Most people already understand that migration has made up a substantial part of Australia’s population growth over the last decade –Almost 60 percent of Australia’s population increase over the past decade has come from migration.

Temporary Migration – the story less told.

Perhaps less well understood are the different features of Australia’s permanent and temporary migration programs:

  • Australia’s permanent migration has increasingly focussed in skilled migration. The refugee and humanitarian program makes up less than 10 percent of the total permanent migration intake.

  • Australia’s annual temporary migration intake (ie student and work visas) is substantially higher than the permanent migration intake. Permanent migration intakes have been set at 190,000 migrants per year for the past six years whereas the temporary visa program is uncapped - between 300,000 and 400,000 people have entered Australia each year under this program over the past decade. This is a massive figure, and it double what the temporary visa program levels were over the previous decade (1996-2006).

The students and workers that move to Australia under the temporary migration program make a substantial contribution to the Australian economy and society. The majority locate in Australia’s capital cities and the impacts of natural population growth, permanent and temporary migration needs to be factored into our city plans.

Victoria – the fastest growing state.

Victoria is experiencing these impacts more than other states. It has had the largest overall change in population of any state over the past five years, and it is the only state where all three population components (natural increases, overseas and interstate migration) are positive - and growing at an increasing rate.

National population growth by State (Treasury - Shaping a Nation)

Victoria's population growth by type (Treasury - Shaping a Nation)

Victoria is attractive to people from interstate and overseas because it has a strong job market and its a great place to live. So the more the government does to improve jobs, housing supply, transport and liveability, the more attractive it will be for people to relocate.

That is quite a conundrum – the community demands that government does a better job with managing our city, but the gains are hard to see when the growth keeps on outpacing official forecasts.

Why immigration matters to the Australian economy.

The Treasury report makes it clear why migration is so important to Australia’s future economic outlook.

National taxable income and expenditure by age cohort (Treasury - Shaping a Nation)

A substantial part of government spending is tied to providing aged care, pensions and health care to Australians aged over 65 years. The taxable income to fund this comes from people aged between 20 and 65 years old. Migrants are predominantly of working age when they arrive to Australia. Unemployment amongst skilled migrants is low and they arrive at a time in their lives when their taxable income is highest and their usage of government services is lowest.

The Treasury report makes that case that migration has had (and will continue to have) a positive economic, social and fiscal impact. But it also acknowledges that population growth creates significant pressure on infrastructure, transport networks and housing.

Less politics and more joined up governance is needed.

Whilst State Governments carry much responsibility for these things, the Federal government has a major role to play – not only in setting immigration policy and funding infrastructure projects, but also in setting policies that affect cities and housing markets.

The Grattan Report recently released a seminal report on Australia’s housing affordability challenges. Amongst many other things, this report considers the inter-relationship between urban planning, immigration and other forms of government policy. It succinctly sets out its view on what each level of government should do:

“The Commonwealth Government can improve housing affordability somewhat – and immediately – by reducing demand. It should reduce the capital gains tax discount to 25 per cent; abolish negative gearing; and include owner-occupied housing in the Age Pension assets test.

And unless the states are prepared to reform their planning systems, the Commonwealth should consider tapping the brakes on Australia’s migrant intake.”

That is controversial. It is not in our nation’s longer-term interest to substantially wind back migration.

But State and Federal governments need to have a ‘joined up’ view of the combined impacts of immigration policy, taxation, housing supply, infrastructure spending and city planning on our national wellbeing. If Australia’s population growth is to continue at the current high levels then we all need to collectively step up to the plate to address the housing, infrastructure and planning challenges that such growth demands.

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