Ideas@TheCentre
Pollies' porkies over small Australia skill shortages
It seems Treasury has reached the same conclusion as the CIS. Despite what populist politicians tell us, our population is increasing. Our strong birth rate means that even if we cut migration, we still have to cope with a growing population for the next few decades at least.
‘Small Australia’ was always a bit of a beat up. Now it appears it is economic folly, too.
Of course, we could slow the rate of population growth by dramatically slashing migration.
But, while the rest of the developed world is worrying about stubbornly persistent dole queues, our biggest worry will soon be finding enough workers. The mid-year budget outlook released last week predicts that unemployment will fall to 4.5% by the middle of next year.
Around two-thirds of our migration intake is now skilled. And with the mining boom kicking our economy into overdrive, skills are suddenly exactly what we need.
Even the OECD weighed in on the topic this week, saying that Australia’s medium term growth prospects are healthy – because of the mining boom and strong population growth.
If a ‘senior Labor source,’ quoted in the Fairfax press last weekend, is right, the Gillard government has woken up to this reality, too.
Unfortunately, the spectre of ‘Small Australia,’ which dominated both major parties’ rhetoric throughout the election campaign, might yet come back to haunt us. In the Australian Financial Review this week, Chris Richardson from Access Economics argued that the pressures on labour supply caused by our political leaders’ ‘abandonment of Big Australia’ could help push up interest rates.
Not only were our politicians telling porkies when they said they could stop population growth, they neglected to mention what adverse impacts such a move could have. As Richardson reminds us, ‘capping population growth is not costless.’ Our politicians better keep this in mind.
Jessica Brown is a Policy Analyst at CIS. Download her recent report, Populate and Perish? Modelling Australia’s Demographic Future, co-authored with Dr Oliver Marc Hartwich.
