Key facts
- One Nation proposes cutting Australia's temporary migrant numbers by over 750,000 in three years.
- One Nation's plan would require net overseas migration to turn negative for three years.
- Canada has reduced its annual net international migration from 3.1% to 0.5% of the population.
- Canadian think tank CD Howe Institute forecasts lower employment and GDP growth due to reduced immigration.
- Australia's population is tracking 0.2% above its pre-pandemic trend, while Canada's is 5% above its trend.
Australia is grappling with the potential economic consequences of significantly reducing net overseas migration, a policy championed by the populist One Nation party and debated against the government's more moderate targets. One Nation leader Pauline Hanson advocates for cutting temporary migrant numbers by over 750,000 in three years, arguing it would improve living standards and address economic woes, even suggesting Australia could face a technical recession if migration is cut. She points to Canada's recent migration adjustment as evidence that living standards can improve when migration is reduced.
Home Affairs Minister Tony Burke, however, has warned that such drastic cuts would "trash Australian services and trash the Australian economy." Labor's longer-term target for net overseas migration is 225,000, a figure significantly lower than the last official estimate of 292,000 in the year to March.
Canada has implemented policies to reduce temporary migrants, aiming to lower their share of the population from a peak of 7.6% in 2024 to 5%. This has slowed annual population growth from 3.1% to 0.5%. A report by the Canadian think tank CD Howe Institute, authored by Don Drummond and Parisa Mahboubi, suggests that while Canada's economy is adjusting rather than broken, employment could fall in the short term, with long-term average GDP growth projected at just over 1%. Nathan Janzen, assistant chief economist at the Royal Bank of Canada, agrees that the economy is resilient and that population shifts necessitate a reinterpretation of economic data.
However, economists like Jonathan Kearns, chief economist at Challenger, caution against directly applying Canada's experience to Australia. Kearns notes that Canada's post-pandemic migration surge was far larger than Australia's, and its population is still 5% above its pre-Covid trend, compared to Australia's 0.2% above trend. Furthermore, Canada initiated its migration crackdown amid high unemployment and aggressive interest rate hikes, whereas Australia faces a tight labor market with widespread shortages. Luci Ellis, chief economist at Westpac, also highlights that cyclical factors, including Canada recovering from a recession, contribute to its apparent resilience.