The paradoxical answer to both questions is higher migration, which will meet demand and keep overall economic growth rising. If fortress Australia reopens as small Australia, then everybody will be worse off. But that’s not a connection that many voters make, and two parties fighting an election on the cost of living have little inclination to make the case for more migrants.
Migrants play a key economic role
Yet skilled working-age migrants are a key part of the population, participation and productivity triangle that Australia’s standard of living rests upon. Australia is still a frontier country, drawing in capital, talent and ideas to drive high returns on its natural wealth.
Eight million Australians in the early 1950s have become 25 million as wool gave way to iron ore and gas. The electrification boom in lithium, copper or hydrogen might be even bigger. Migration no more causes long-term unemployment than the arrival of married women in the workforce in the 1970s did.
Migrants create new demand as well as supply. And the GDP boost from migration in normal times has been enough to offset the rapidly rising costs of a retired population, our other great demographic challenge.
Now this engine is sputtering. But neither party mentions migration in their formal economic election documents. When the NSW Liberal government’s bureaucrats suggested a doubling of migration as a post-pandemic catch-up of 2 million people over the next five years or so, it was quickly buried. Labor conflates the issue with the labour market interests of its union bosses, using the disparaging terminology of “guest workers” for temporary skilled visa holders. It says more of them should be permanent, but not how many.
But in a nation of migrants, the prospect of more migrants is not always an easy sell. Governments must, of course, respond to calls for more local skills training. But that’s not the entire answer. Skills demand in fields like mining and information technology comes in big peaks, and the right workers at the right time and in the right place are immensely valuable. Like the floating currency, it is an economic buffer.
Yet New Zealand is both dropping barriers and warning us off poaching there. Post-Brexit UK has more migrants than ever, many of them now from the same pools Australia fishes in. Australia may have to fight for talent in ways it has not had to do before. But nobody is talking about it in this election.