Unit 1
Unit 4 
Policy Approach
Immigration – Economic Impact
Immigration plays an important role in expanding the Australian economy. However, there are also some economic costs that should be considered.
Advantages
An increase in the Australian population adds to our productive capacity. Just a few years ago the former treasurer announced that the key ingredients to ensuring the long term growth of the Australian economy were population, participation and productivity. Through immigration the Australian population has been able to increase. The process of targeting specific skills has also helped to ensure that the people who are moving here are likely to be employed, and their work is very likely to be adding to the overall capacity of the economy.
There are also many who would argue that our immigration policy has helped to slow the ageing of the population. More than 50% of all immigrants who come to Australia are aged between 15 and 34. In comparison, only 28% of the existing population falls into this bracket. If immigration is maintained, then the number of people of working age will increase. This will help to remove pressure on the budget as people get older, and the demand for age-appropriate services (such as health care) increase.
Perhaps the greatest controversy in regards to immigration is the perception that they will “steal jobs”. However, long term analysis suggests that the opposite is true. When more people arrive they will add to the supply of labour. In a deregulated labour market this can put downward pressure on wages. On the other hand, people who come to this country also add to aggregate demand. With the increase in demand we have seen more jobs. The net impact is that, after controlling for other factors, immigration can actually result in a lower unemployment rate.
Finally, the cultural benefits of a diverse population should never be underestimated. The ability to learn new languages, eat different food and participate in a range of global festivals all add to our non-material standard of living.
Disadvantages
There are many people who would find the assertions made above difficult to believe. They would argue that while more jobs might be created in a macroeconomic sense, the skilled migration program can act to push people out of certain industries. For example, people with strong information technology skills have been targeted for some time, and as a result many people in this country feel that they can no longer compete.
Others have argued that immigration can lead to a reduction in our social wage. This argument stems from the fact that if existing infrastructure must be divided amongst an even larger population, then each person will have access to a slightly smaller share. While the government can act to increase welfare to ensure that the distribution of disposable income is equitable, there is very little that they can do to ensure that we each maintain the same level of access to roads, parks and libraries. For example, if the population increases and we experience more frequent traffic jams as a result, that would be a decline in our social wage.
There is also the environmental impact to consider. Many people who move to this country are able to enjoy a higher standard of living, but this comes at the cost of higher carbon emissions. Research has shown that, on average, people who move to this country travel from a country that emits only 42% of the carbon per capita that is emitted here. When the move is made to Australia, the overall impact on global warming is increased, and more resources are consumed in this country.
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