The Stats Guy: Dutton’s migration dog-whistle doesn’t stack up

The current strong stance on slowing migration can be viewed as being nothing but a pre-election narrative, writes Simon Kuestenmacher.

The current strong stance on slowing migration can be viewed as being nothing but a pre-election narrative, writes Simon Kuestenmacher. Photo: TND/Getty

What do Steven Miles, the Labor Premier of Queensland, and Peter Dutton, the Liberal federal Opposition Leader, have in common?

They both very much want to slow down migration to make housing more affordable.

Steven Miles argued on Tuesday that migrants are “a big part of why [house] prices and rents haven risen so rapidly”. He was backed by his Treasurer, Cameron Dick, who wants migration to Queensland to be halved.

In his Budget reply speech on Thursday, Peter Dutton promised to slash the permanent migration program by 25 per cent (from 185,000 to 140,000 for the next two years before lifting it up to first 150,000 then 160,000).

These comments come after Australia had record high migration intakes last year. The narrative is simple. How foolish were we to take in record numbers of migrants during a nationwide housing shortage?

No context is provided regarding last year’s record intake. The growth was exclusively driven by international students. All other visa categories were below pre-pandemic averages.

We let in so many international students in a single year because they weren’t able to come in the years prior due to our national lockdowns and the prolonged Chinese lockdowns.

This was pent-up demand and won’t be repeated. The spots for international students are now filled and we will bit by bit, and automatically, reach pre-pandemic levels.

Any suggestion that we will see these type of migrant numbers again is pure fear-mongering.

In their critiques our politicians were all very careful to emphasise that they appreciate the importance of migrants but only wish to cut migration to drive down house prices. It’s all about making housing more affordable for Australians. Got it?

There is a certain logic to that, but it’s also an incredibly convenient narrative.

Granted, each new resident must be housed, there is a current shortage of housing, and we don’t have the workforce in place to build sufficient new housing stock right now. If we slow migration down, we soften the immediate housing crisis.

What migrants are we taking out of the system though? The biggest cohort are international students. Easy, let’s just take in fewer international students and housing becomes cheaper. However, international students occupy a very specific niche of very small, purpose-built apartments near the universities.

The demand for housing is biggest in family-sized homes. Reducing the number of international students doesn’t free up the type of housing stock that’s currently needed, but it does free up some of our limited number of tradies to work on other residential projects. That’s a win, but it comes at a cost.

Cutting international student numbers means you and I will pay for the shortfall of international enrolment fees. We defunded our universities so far that many of our eight biggest universities (the Group of Eight) get over a third of their total funding from international student fees.

In 2023, around 975,000 international students were enrolled in Australia. Almost half of them went to a university. These 437,000 international uni students as a cohort are twice as big now than a decade ago. Only having 337,000 international students sounds acceptable.

So, let’s assume we manage to cap international student numbers and decrease the uni student pool by 100,000 people (after all we want to actually minimise pressure on the housing market and not just cut out a few thousand people) we would need to replace around $30,000 of fees per head per year.

In our hypothetical scenario that would be a shortfall of $3 billion in student fees alone. Ouch, we surely would be taxed accordingly.

It’s impossible to cut our international student intake without simultaneously overhauling our university system.

There are arguments in favour of this, but our politicians owe us the honest conversation about the downsides. Are we willing to each pay a few hundred dollars more in tax for such a change in migration policy? That’s something the electorate has to answer, but it’s irresponsible if politicians do not discuss this trade-off openly.

Can we take in fewer skilled migrants?

Sure, that’s easy enough. We can set a limit to the number of temporary and permanent skilled visas that we give out each year.

It’s not hard to lower this intake. We do however have a skills shortage in all industries and very low unemployment. Minimise the number of skilled migrants and you have all industry and employer lobby groups up in arms. Cutting skilled migrants also hurts your efforts to build houses. You see, cutting skilled migrants isn’t so easy either.

There must be other visa groups we can cut instead, right? Visitor visas will not be cut since they don’t occupy housing stock but live with friends and relatives or in a hotel. Working Holiday visas are a godsend for regional Australia and won’t be cut either. We signed international accords promising to hand out a certain minimum of humanitarian visas (asylum seekers).

We wouldn’t risk our international standing for the minimal savings to be had in this small visa category. What about family visas? Can we not allow visa holders to bring their spouses or kids along? Not sure how much wiggle room we have here either.

Any government that wants to cut the migration intake needs to make hard choices. Cutting migration does not come without a price. Is either of the plausible future governments willing to pay that price? I would argue no.

Talk is cheap and migrants are a very convenient scapegoat. It just happens to be that these non-voters are the main driver of high house prices. Politicians calling for slower migration figures look like they are tackling housing affordability.

This way they can avoid making bold housing policy choices that would inconvenience voters.

So there is no need to own up to nonsensical first-home buyer grants (they only drive-up house prices and I challenge you to find a single economist arguing the opposite); no need to acknowledge that the states are complicit in the housing affordability crisis through their stamp duty addiction; no need to introduce unpopular but effective land taxes; no need to discuss inheritance taxes; no need to discuss rent control measures, and no word about franking credits.

A politician can argue in favour of cutting migration and tick the box of “tackling the housing affordability issue” without the need to discuss any of the politically challenging housing issues.

Bill Shorten lost the unlosable election by essentially telling voters their homes would go down in value as a consequence of his reforms. Pollies won’t make this mistake again anytime soon.

The current strong stance on slowing migration can therefore be viewed as being nothing but a pre-election narrative. Before their last election win the Liberals announced bold cuts to migration and Australia ended up seeing record high migration intakes instead.

As long as a politician promising to cut migration doesn’t explain in great detail how the downsides will be managed, I wouldn’t take the message seriously.

Demographer Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His latest book aims to awaken the love of maps and data in young readers. Follow Simon on Twitter (X), Facebook, LinkedIn for daily data insights in short format.

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