Immigration link to economic growth yet to be proven

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Immigration link to economic growth yet to be proven, says Productivity Commission by: Stephen Lunn

Social affairs writer

From: The Australian

October 29, 2011 12:00AM

The case for higher immigration as a driver for economic growth is far from proven, as is the notion that more immigrants can counter the negative effects of population ageing, the Productivity Commission says.

In an analysis of the "big Australia" debate in its 2011 annual report published yesterday, the commission said the economic impact of immigration "is sometimes clouded by misperception".

"Two benefits that are sometimes attributed to immigration, despite mixed or poor evidence to support them, are that immigration is an important driver of per capita economic growth, (and) immigration could alleviate the problem of population ageing," it says.

The commission also notes immigration doesn't affect household wages overall, though particular sectors could be adversely affected if there were a large influx of skilled immigrants.

And it warns that trying to slow the impact of an ageing population on the economy by bringing in young workers is only a sugar hit.

..."Any effect would be short-lived," the report says. "This is because immigrants themselves age, and progressively higher levels of migration would be needed to sustain the current age structure into the future."

The commission affirms its view that government policy effort might be better spent internally "to improve the participation rates of ... women over 45 and older Australians of both genders."

In May, Population Minister Tony Burke released the Sustainable Population Strategy, which focused on regional development and creating a reliable set of sustainability measures. It deliberately avoided setting a national population target, which had been the focus of much of the policy debate in the lead-up to its release after Treasury's 2010 Intergenerational Report projected a 36 million population by 2050.

The commission indirectly criticised the decision, saying "while focusing on future population targets may be of limited use to policymakers, the rate of population growth is an important consideration."

"How fast Australia's population grows has direct implications for the environmental, urban and social amenity of existing residents. And immigration policy is the most effective mechanism for influencing the rate of growth."

http://www.theaustralian.com.au/national-affairs/immigration/immigration-link-to-economic-growth-yet-to-be-proven-says-productivity-commission/story-fn9hm1gu-1226179973978

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