CEDA warns migration cuts will have economic spillover

The Committee for Economic Development of Australia (CEDA) has warned while a dramatic cut in headline migration figures might be seductive, changes at scale will have a spillover in the economy including the labour market.

The government's immigration policy recently came under the spotlight regarding whether refugee intake will be reduced. This comes on the backdrop of One Nation's immigration policies gaining traction, which aims to cap visas at 130,000 per year to ease pressure on housing, wages and infrastructure.

Latest Australian Bureau of Statistics data highlighted that in the 2022-23 financial year 6.9 million jobs were held by migrants.

CEDA highlighted around one in five construction workers are migrants; over one in three workers in healthcare and social assistance come from abroad. In the transport and logistics sector nearly 40% of workers are migrants.

"Sweeping changes to our migration intake therefore involve real economic trade-offs, with impacts likely to be acute in certain industries," CEDA chief executive Melinda Cilento said.

"Promised benefits from reduced immigration may come with a sting in the tail for the cost of living if poorly designed policy means businesses are unable to access much-needed workers and increase prices accordingly."

Cilento noted the balance between the costs and benefits that come from any level of immigration is a challenging task.

"As the debate on immigration policy continues, transparency around what these trade-offs look like and how they will be managed needs to be the starting point for policymakers," Cilento said.

Oxford Economics has hypothesised an extreme scenario of "zero migration" globally and found while destination economies, mostly advanced, would see significant declines in output per capita, origin economies would have modest gains as retained labour is diluted across larger domestic populations.