What is the connection between Peter Dutton, the Liberal federal opposition leader, and Steven Miles, the Labor premier of Queensland?
Both of them are adamant about slowing migration in order to lower housing costs.
Migrants are "a huge part of why [home] prices and rents haven grown so rapidly," according to Steven Miles' argument on Tuesday. Cameron Dick, his treasurer, supported him, calling for a halving of migration to Queensland.
Peter Dutton pledged in his Budget reply address on Thursday to reduce the permanent migration program by 25%, from 185,000 to 140,000 for the next two years before increasing it to 150,000 and then 160,000.
These remarks follow Australia's record-breaking influx of migrants last year. The story is straightforward. How stupid were we to accept record numbers of migrants when there was a housing scarcity across the country?
There is no background information on the record intake from the previous year. International students were the only ones responsible for the growth. The pre-pandemic averages were lower for all other visa categories.
Because they were unable to attend in the previous years due to our country's lockdowns and the protracted Chinese lockdowns, we admitted a large number of international students in a single year.
This was a pent-up demand that will never happen again. International student spaces have now been filled, and we will gradually and automatically return to pre-pandemic levels.
It is blatantly alarmist to think that we will ever again see such a high number of migrants.
All of our politicians were sure to emphasize in their criticisms that while they recognize the value of immigrants, their sole goal is to reduce immigration in order to lower housing costs. The main goal is to lower housing costs for Australians. You understand?
That makes sense in some ways, but it is also a very practical story.
While it is true that every new person needs a place to live, there is now a housing crisis, and we lack the manpower to construct a large enough supply of new homes at this time. Reducing migration will alleviate the current housing issue.
But which migrants are we removing from the system? Students from other countries make up the largest group. Simple: housing costs will drop if we accept fewer international students. However, a very distinct niche of tiny, specially designed apartments close to the institutions is occupied by international students.
Family-sized homes are in the greatest demand for housing. Reducing the number of international students frees up some of our restricted number of tradies to work on other residential projects, but it does not free up the kind of housing stock that is now needed. That is a victory, but it has a price.
Reducing the number of overseas students means that you and I will cover the difference in international enrollment fees. Many of the eight largest universities in the Group of Eight receive more than one-third of their total financing from international student fees as a result of our defunding of our universities thus far.
Australia has over 975,000 international students registered in 2023. Nearly half attended a university. The total number of these 437,000 overseas university students has doubled in the last ten years. It seems reasonable to have only 337,000 overseas students.
We would therefore need to replace about $30,000 in annual fees per head if we were successful in capping the number of overseas students and reducing the number of university students by 100,000 (after all, we want to genuinely reduce the strain on the housing market, not just eliminate a few thousand).
That would represent a $3 billion gap in student fees alone in our fictitious scenario. Oh no, we would undoubtedly pay the appropriate taxes.
We cannot reduce the number of international students we accept without also reforming our university system.
There are justifications for this, but we should hold our leaders accountable for having an open discussion about the drawbacks. Would each of us be prepared to pay an additional few hundred dollars in taxes in exchange for this shift in immigration policy? The electorate must answer that question, but it is reckless of politicians to avoid publicly discussing this trade-off.
Is it possible for us to accept fewer skilled migrants?
Yes, that is simple enough. We have the option to cap the annual number of skilled temporary and permanent visas we issue.
Reducing this intake is easy. Despite this, we have exceptionally low unemployment and a skills need across all industries. Employer and industrial interest organizations are furious if you reduce the number of skilled migrants. Reducing skilled migrants also hinders your home-building endeavors. You know, it is also difficult to cut skilled immigration.
We must be able to cut other visa groups instead. Since they live with friends, family, or at a hotel rather than occupying housing stock, visitor visas will not be revoked. Regional Australia benefits greatly from working holiday visas, which are also not to be overlooked. We committed to issuing a minimal number of humanitarian visas (asylum seekers) when we signed international agreements.
We would not jeopardize our reputation abroad for the meager savings available in this tiny visa category. What about visas for family members? Can not people with visas bring their spouses or children with them? We also do not know how much leeway we have here.
Any administration that wishes to reduce immigration must make difficult decisions. There are costs associated with reducing migration. Will either of the likely future administrations be prepared to shell out that much money? No, I would say.
Migrants are an easy scapegoat, and talk is cheap. It just so happens that the primary cause of the high cost of housing is these non-voters. Politicians who advocate for decreased migration rates appear to be addressing the issue of home affordability.
In this manner, they may steer clear of making daring housing policy decisions that will annoy voters.
Therefore, there is no need to admit that the states are complicit in the housing affordability crisis through their stamp duty addiction; there is no need to introduce unpopular but effective land taxes; there is no need to discuss inheritance taxes; there is no need to discuss rent control measures; there is no need to acknowledge the absurdity of first-home buyer grants (they only serve to drive up house prices, and I challenge you to find a single economist arguing the opposite); and there is no mention of franking credits.
Without addressing any of the politically difficult housing concerns, a politician can make the case for reducing immigration and check the box for "tackling the housing affordability issue."
By effectively informing voters that his policies will result in a decrease in the value of their homes, Bill Shorten lost the election that could not be won. Pollies will not soon make the same error twice.
Therefore, it might be said that the current strong attitude on curbing migration is merely a pre-election narrative. The Liberals made big limits to immigration before their most recent election victory, but in the end, Australia saw record-high immigration intakes.
I would not take a politician's pledge to reduce migration seriously unless they provided a thorough explanation of how the drawbacks would be handled.
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