Will cutting migration ruin Australia's economy or restore living standards?

The Clash Over Migration Targets

Public debate centers on a critical question. Would drastic cuts to net overseas migration collapse the economy? Or would it trigger a necessary demographic reset? This reset aims to revitalize stagnant living standards. Labor and One Nation present radically different visions. They disagree on what serves national interests.

Pauline Hanson, One Nation’s leader, unveiled an ambitious plan last month. It targets a reduction of over 750,000 temporary migrants in three years. The strategy focuses on two specific groups. These are international students and family members of skilled visa holders. One Nation claims the net overseas migration index must turn negative for three consecutive years. Afterward, a permanent annual cap of 130,000 net migrants should apply.

This figure contrasts sharply with Labor’s long-term target of 225,000. The latest official estimate recorded 292,000 for the year ending in March. Tony Burke, the minister for internal affairs, reacted critically. He stated that One Nation’s plan would „trash Australian services and ruin the Australian economy.”

Hanson’s Counter-Argument

Hanson rejects this argument. She attributes current economic struggles to excessive population growth in recent years. In a social media post, she accused established interests of warning about a technical recession. She claims this warning is false.

Hanson emphasized that Australians have endured a per-capita recession for years. Living quality has deteriorated steadily due to current migration policies. She cited Canada as a demonstrative example. Living standards improved there after migration reductions.

Canada’s Dramatic Adjustment

Canada has long been considered Australia’s sister country. It shares similar size, culture, and economic structures. The North American nation is undergoing a dramatic migration policy adjustment. This has flattened population growth.

Unlike Hanson, Canadian decision-makers did not target a specific net migration number. Instead, the government launched a complex package of measures. These aim to reduce the share of temporary migrants. The goal is to drop from a 2024 peak of 7.6% to 5%. Canada has currently reached about half of this objective.

This reduction occurred through decreased temporary arrivals. The focus was on foreign students. The government also complicated residence extension processes. Additionally, it granted permanent resident status to some temporary migrants.

Economic Impacts and Forecasts

Annual population growth has slowed significantly. It dropped from 3.1% in early 2024 to just 0.5% now. It remains to be seen how well the Canadian economy has adapted. What lessons does this offer Australia?

A May report from the CD Howe Institute analyzed the economy in a „low immigration era.” The document was titled „Resetting Expectations.” Authors Don Drummond and Parisa Mahboubi developed mathematical models. They estimate employment in Canada may fall this year and next.

Real GDP growth in 2026 could be at most 0.5%, they predict. Long-term averages would be „just over” 1%. Falling employment is usually alarming. However, Drummond and Mahboubi argue it is a natural result. It reflects a labor market functioning normally given demographic shifts.

Expert Analysis and Resilience

They assert these indicators do not signal a suffering economy. Understanding this adjustment is a prerequisite for healthy policy. Nathan Janzen, deputy chief economist at the Royal Bank of Canada, supports this view. He notes demographic changes have altered how we interpret economic data.

The university sector was hit hardest by stricter migration rules. The government provided exceptions for migrants in major labor shortage areas. These include agriculture and the care economy. Janzen concludes the Canadian economy has remained relatively resilient.

Contextual Differences

He adds that if demographic estimates are correct, negative job growth is possible. This could happen simultaneously with falling unemployment. The per-capita economy appears to be improving.

Economists warn against assuming Canada’s experience will replicate in Australia. Jonathan Kearns, chief economist at Challenger, points to a key difference. Canada’s post-pandemic immigration wave was much larger than Australia’s.

While locals are enthusiastic about post-Covid immigration in Australia, it was tiny compared to Canada’s. Even now, Canada’s population is 5% above its pre-Covid trend line. In contrast, Australia’s population is only 0.2% above its pre-pandemic trend line. Thus, Canada’s decline must be contextualized against its massive growth.