agency for australiaAUSTRALIA will need more than 250,000 new migrants a year to raise living standards and add $1.6 trillion to the economy, according to new analysis backed by one of the government’s top business advisers.

The head of the government’s commission of audit, Tony Shepherd, has warned that the migration intake should be maintained at current levels and then rise in the years ahead to confront the challenges of an ageing population.

The new study by the ¬Migration Council of Australia says a steady climb in the migration intake will be crucial to tackling the long-term pressures on the nation as the nation heads towards a population of about 40 million by 2055.

The study highlights the risk of lower growth and deeper budget deficits if policy decisions are made to scale back the migrant intake at a time when the union movement is campaigning against the use of skilled foreign workers. Reprising the “big Australia” debate of five years ago, the analysis offers a crucial check on the government’s Intergenerational Report, which will be released today to back Joe Hockey’s argument for budget reform.

The council’s findings make it clear that a lower migration intake would reduce growth, undermine attempts to increase workforce participation and make it harder to cut welfare dependency.

Yet the government has chosen a lower migration intake of 215,000 a year as the base ¬assumption for the IGR, sparking a debate over whether the figure is too small and could produce lower growth than otherwise.

The IGR forecast is below the net overseas migration of 224,300 over the past year in the government’s latest tally. The Australian can reveal that other key forecasts in the IGR include annual GDP growth of about 2.8 per cent on average, a troubling fall in the workforce participation rate as people age but a gradual rise in life expectancy to an average of almost 90.

In a sign that Australians will live healthier and longer lives, by mid-century there will be about 35,000 people over the age of 100. The continued arrival of young migrants will be essential to dealing with the ageing of the population.

Mr Shepherd, who was previously president of the Business Council of Australia and chairman of the Migration Council, said the country had to maintain the current intake. “As the population rises we should consider raising the rate, having regard to our capacity for absorption,” he said.

A central conclusion in the Migration Council analysis is that keeping net overseas migration at current levels will add $1.6 trillion to the Australian economy every year by mid-century, driving almost half the country’s economic growth over the coming decades.
Drawing on government data showing net overseas migration will be 257,000 in 2018, the council forecasts the steady inflow of new and younger workers will ease the pressures of an ageing population as the country has to support more older Australians who cannot work.

The population is expected to climb to 40.2 million by 2055, but a halt to the migrant intake would see the population stagnate at 24 million, the Migration Council report says.

“Critically, the report shows migrants contribute more than existing residents,” said Migration Council chief executive Carla Wilshire.
Migrants rely less on government benefits and contribute more to the workforce because they are generally younger than other Australian residents and pay for their education before they arrive in Australia or when they get here. “This research refutes the commonly held view that migration reduces the capacity of Australians to find work, showing little impact on the unemployed,” Ms Wilshire said. “Our report shows Australia’s skilled migration framework plays an important role in helping mitigate the worst effects of income inequality without punishing Australian job seekers.”

Disputes over population growth have been sparked with each release of the official Treasury forecasts in the Intergenerational Report, including a backlash against Kevin Rudd when he voiced support for a “big Australia” in early 2010.

The 2010 report forecast a population of 35.9 million by 2050 but this was based on net overseas migration of only 180,000 — a figure that was obsolete within a few years.

Net overseas migration was 224,300 in the year to June 2014 and will climb to 257,000 in 2018 according to the Department of Immigration and Border Protection’s latest figures.

David Crowe, Political Correspondent, Canberra, The Australian, 05 March 2015

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