The NSW economy could grow by $130 billion less over the coming decade if net migration to the state was halved, as has been called for by Premier Gladys Berejiklian.
Such a cut would see immigration numbers to NSW down to about 50,000 a year, with around 54,000 potential migrants being diverted to other states, according to economic modelling commissioned by the Property Council of Australia. This would cut the state’s workforce by about 20,000 people per year, said one of the report’s authors, Ashley Page, chief executive of consultancy organisation AEC.
Mr Page said the research was in line with other national and international studies and he rejected the suggestion that it had been drafted to suit the interests of the Property Council.
“It is a question of fundamentals. If you reduce one of the core factors of production [such as labour] you are going to see a reduction in economic activity,” he said.
However, Ms Berejiklian said yesterday that Property Council members were ‘‘developers who make money building more and more houses and apartments’’.
‘‘You’d hardly expect them to be supportive of a pause in our migration,’’ she said. ‘‘Developers basically ran the last Labor government. Labor allowed development to spiral out of control while failing to build the necessary roads, rail, hospitals and schools.
Premier Gladys Berejiklian said “we need a pause in population growth in Sydney”.CREDIT:JAMES ALCOCK
“I don’t govern for developers. I govern for the interests of all of NSW and that’s why we need a pause in population growth in Sydney.”
The report predicted that the reduction in foreign students at NSW institutions would see the state’s economy lose about $1.3 billion in direct foreign investment in the form of fees and spending.
It predicted that in each year there would be an increasing reduction in gross state product, starting with a decline of $2.4 billion in 2019-20 and reaching a reduction of $24.3 billion by 2028-29.
The reduction of $130 billion is equivalent to approximately 25 per cent of the current NSW economy, and is roughly equivalent to removing the two largest sectors of the economy, financial and insurance services and property.
The change in migration would result in 200,000 fewer jobs and increase real wages in NSW by an average of 0.9 per cent over 10 years.
Mr Page said the modelling suggested most of the lost economic activity would be displaced to other states, primarily Victoria and Queensland.
In October Ms Berejiklian called for a ‘‘breather’’ in immigration to allow the government’s infrastructure program to catch up with demand. ‘‘We are definitely doing the heavy lifting when it comes to infrastructure,’’ she said. ‘‘I don’t want to continue to play catch-up. I want to be ahead of the game.’’
The Council of Australian Governments will meet in Adelaide on Wednesday and is expected to discuss immigration.
Population Minister Alan Tudge said last month that a new scheme could see a “likely” reduction in the immigration cap.
Population Minister Alan Tudge said last month that a new scheme could see a “likely” reduction in the immigration cap.CREDIT:ALEX ELLINGHAUSEN
Jane Fitzgerald, the Property Council’s NSW executive director, said she was concerned that the NSW government might go into the COAG meeting with its views informed by politics rather than evidence.
She said that the last time a state government declared that Sydney was full, under premier Bob Carr, strategic planning ground to a halt, causing a shortfall of 100,000 dwellings that had only recently been overcome. “When you say that you are full, you give yourself permission not to plan or build infrastructure,” she said.
Australian National University demographer Liz Allen said the research appeared to make sense.
“It’s not surprising that a cut to immigration would adversely impact the economy, as the results of this analysis show,’’ she said. “The 190,000 annual permanent migrant cap is based on the available evidence, which suggests the best range of immigration for Australia’s economic wellbeing is between 160,000-210,000 permanent migrants each year.
‘‘Anything above or below this range risks Australia’s economy and future prosperity. We must remember that Australia has avoided economic catastrophe thanks to immigration, and a cut to immigration presents a serious risk of recession.”
Dr Allen said that politicians across the spectrum had allowed populism to colour population policy.
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