Immigration is affecting house prices and rents in Australia, and if planning and infrastructure policies don’t improve, the government should consider cutting the migration intake, a report published on March 5 by Australian think tank Grattan Institute said.
The report, titled Housing affordability: re-imagining the Australian dream, said that unless states reform their planning systems to allow more houses to be built, the Commonwealth should consider slowing down Australia’s migrant intake.
“Australia’s migration policy is its de-facto population policy. The population is growing by about 350,000 a year. More than half of this is due to immigration,” the report stated. It added that lower migration would make housing more affordable, but it would probably leave Australians worse off.
According to the report, since 2005, net overseas migration, which includes the increase in temporary migrants, has averaged 200,000 people per year, up from 100,000 in the previous decade. It has been estimated to reach 240,000 per year over the next few years.
“If we want to maintain current migration levels, along with their economic, social and budgetary benefits, we need to do better at planning to allow more housing to be built,” the report added.
The report comes two weeks after former Australian Prime Minister Tony Abbott said that he would make the case for cutting migration to improve stagnant wages, unaffordable housing and clogged infrastructure.
The report suggested that the best policy is perhaps to continue with Australia’s demand-driven, relatively high-skill migration and to build enough homes for the growing population. “If the states are not going to reform planning rules to increase the number of homes built, then the Australian government should consider whether reducing migration is the lesser evil,” it said.
One of the other suggestions made by the report was that any reduction should be modest and targeted at the parts of the migration program that give the smallest benefit to Australian residents and migrants themselves.
It, however, warned that cutting the migrant intake can have its own set of consequences. “It would hit the Commonwealth budget in the short term. Most migrants are of working age and pay full rates of personal income tax. More importantly, cutting back on younger, skilled migrants is likely to hurt the budget and the economy in the long term,” the report added.
The Grattan Institute report said that state governments should set planning rules that allow more homes to be built in inner and middle-ring suburbs of the largest cities in Australia. More small-scale urban infill projects should be allowed without council planning approval, it said.
Meanwhile, the proposed three-year waiting period for new migrants in Australia to claim government benefits will affect around 50,000 families, involving about 110,000 children, between July 2018 and 2021, the Department of Social Services revealed during a Senate hearing last week.
According to the legislation, which is now before the Australian parliament, new residents will have to wait for three years instead of two to avail the family tax benefit, paid parental leave and carers allowance.