Despite this deepening crisis, Australia has long suffered from rapid population growth, often portrayed as beneficial, is putting severe pressure on the nation’s fragile economy. Yet the nation’s population has increased by 16% in that same time span. After skyrocketing in 2022 and 2023, the rate of growth has returned to habitual, pre-COVID figures. This historic demographic change raises essential questions, including how migration impacts the labor market. It further shines a spotlight on expected ramifications on housing and infrastructure.
Experts note that in Australia’s case, population has increased significantly. The government’s retreat from the nation’s housing sector has been a significant factor in our present crisis. The absence of affordable, low-income public or government-owned housing has made the crisis worse, as this has increased the demand and driven up costs.
The Australian tax system, including the capital gains tax discount, heavily favours investors. This increase in investor activity has inflated property prices, creating additional barriers for first-time homebuyers entering the market. Knowing how migrants fit into important industries helps paint the larger picture. They account for almost a third of the workforce and are essential to industries such as healthcare, hospitality, and professional services.
Recent information found that in 2021-2022, one in seven migrants were working in the health care and social assistance sectors. Indeed, over 40% of registered nurses and aged care workers in Australia were overseas-born. As the nation continues to face the realities of an increasingly aging demographic, dependence on migrant health personnel will only increase.
Professor Boucher believes approaching our housing crisis needs a more honest recognition of migration’s place.
“So I think we really need to take a good hard look at the evidence when it comes to looking at what is driving those pressures and looking at how the government at all levels needs to be addressing things like the housing crisis without wrongly demonizing migrants in the process… Australia is a country full of migrants and it’s migration that has made us and multiculturalism that has made us such a flourishing, diverse, and successful society and country that we are.” – Professor Boucher
The irony is that the current housing shortage and resultant explosive price activity cannot be blamed on immigration. In the last ten years, the number of dwellings in Australia has grown by 19 per cent – faster than our 16 per cent population growth. Cities like Sydney continue to display an apparently low density for their population size when compared to other established global cities.
The ever-increasing competition for housing, in particular from investors, is pointed out by Matt Grudnoff. To paint migrants as the central issue in the housing melting pot is a misplaced perception, he contends.
“Over the last 10 years, the population has grown by 16%. So in order to just house that extra 16% of people, we’d need to increase the number of homes by 16%. But the number of homes has increased by more than 16%, it’s increased by 19%. So we’re actually building, so actually the number of homes is growing faster than the population.” – Matt Grudnoff
As well as hurting people on fixed incomes, Grudnoff details how other tax policy changes have incentivised speculative investment in real estate. The capital gains tax discount introduced under previous administrations has made investment properties an attractive financial option for many Australians.
“There’s been a big increase in demand for housing and in particular, investors demand for housing. So what’s happened is the capital gains tax discount was introduced under the Howard government that has made making money out of housing very tax effective.” – Matt Grudnoff
Australia’s migration system is primarily skilled-focused, addressing skill shortages in industries where the local workforce is lacking. McAdam emphasizes that this method is critical not just to bolstering economic development but in keeping up with services that residents and businesses depend on.
“So migrants tend to be younger than the average Australian, tend to be well-skilled and so they add a lot to Australia’s economy. Australia’s migration system in particular is very skills focused.” – Professor McAdam
Almost 60% of migrants in Australia have a university education or advanced degree. As a result, Australia’s migrant population is one of the most skilled in any OECD country. This demographic is key because it keeps goods and services that would otherwise become cost prohibitive within reach.
As Australia continues to feel the pressure of their particularly swiftly aging population, experts are united in their assertion that migrant labor will be necessary. To do this, Professor Boucher argues that visa structures will need to be adapted.
“So yeah, it’s clear that we won’t meet the needs of our aging population exclusively through our domestic labor market… we will need to think quite carefully about how we bring in migrant labor.” – Professor Boucher
Tackling these interconnected crises calls for intentional city design and governance that promotes both smart development and opportunity. Matt Grudnoff points out that poor urban planning practices have historically contributed to low-density living conditions in major cities like Sydney.
“It doesn’t mean that there might not be an issue with housing, but that needs to be addressed separately. And I think that’s maybe the answer is more densification.” – Matt Grudnoff
