Immigration secret to Australia avoiding recession
Australia is standing firm amid growing calls for immigration curbs, even as the US and Europe succumb to rising populism. It has little choice if it’s to continue a period of record economic expansion.
A flood of arrivals that’s swelled the population by 50 percent over the past three decades has underpinned economic growth and allowed a succession of governments to boast of avoiding recession since 1991. Populists are blaming immigrants for over-burdened infrastructure, soaring housing prices and low wage growth.
Australia’s former Prime Minister Tony Abbott, now on the government’s backbench, is among those saying “enough.” He wants to slash the annual allowance to 110,000 migrants from 190,000, a move the government says could shrink its coffers by as much as A$5 billion ($3.9 billion) over four years. Anti-multiculturalism senator Pauline Hanson is calling for zero net migration. Introducing such curbs in Australia, which has one of the fastest-growing populations in the developed world, could derail economic growth that’s lingering below its 10-year average.
“Australia’s immigration policy has given it an advantage over other developed nations in creating demand, consumption and employment,” said Su-Lin Ong, Royal Bank of Canada’s head of Australian economic and fixed-income strategy. “It’s the challenge for politicians to rationally explain why it’s beneficial and important for voters not to be swayed by populist thinking. That’s clearly easier said than done.”
Governments from the US to the UK to Europe have clamped down on immigration as voters are increasingly drawn to populist parties blaming foreigners for widening social and economic inequality. Australia has taken the opposite route: it welcomed 184,000 new arrivals in fiscal 2017.