Migration cuts – and tourist cuts – could hurt the economy

By Julian Lorkin  Thursday, 21 March 2019  @Business School

"Australia could house around 90,000 more migrants if we no longer let in tourists," says Adjunct Professor Raja Junankar of the UNSW Business School. "Indeed, if Australia is to cut down on immigration, it would also then make sense to introduce policies that limit numbers of international tourists and students."

Permanent migration to Australia is to be capped at 160,000 for the next four years, and a new skilled worker visas, covering 23,000 entrants, requiring three years' residence in the regions as a pre-condition for securing permanent residency, will be introduced under the Morrison government.

However, Professor Junankar suggests that if Australia wants to cut down on immigration, we should also look at international tourists and students. "Economically, if any person living in Australia drains a certain amount of resources, it stands to reason this is also the case with short-term visitors arriving year after year. Not only do they add to crowded public transport, demand for housing, such as Airbnb, they also consume environmental resources, such as the water hotels spend on frequently washing their sheets."

Just as with migration, tourist numbers are on the rise in Australia. The number of international tourists increased from just over 4 million in 1997-98 to over 8.6 million in 2016-2017.

In his discussion paper, called "Is Australia overcrowded? Immigration and International Tourism" he has found that international tourism for Australia is not simply a major earner but also increases aggregate demand in the economy.

"Immigrants not only add to aggregate demand in the economy but also add to aggregate supply and hence GDP increases and, in general, the per capita GDP either increases or certainly does not fall."

He says immigrants, and tourists, should be welcomed. "However, if people believe that Australia is overcrowded and congested, we should also consider cutting back on international tourism, despite the huge positive contribution to the Australian economy they make."


For further comment email raja.junankar@unsw.edu.au

Media contact: Julian Lorkin: 02 9385 9887


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