Impact Of Immigration On Australian In Socioeconomic Context Economics Essay

1995 words (8 pages) Essay in Economics

5/12/16 Economics Reference this

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This essay will explain the economic, environmental and social impact of immigration on Australia and its role in the future prospects of the country. Studying the country for the group report and presentation we came across how important are the skilled immigrants as an addition to the labour force of Australia. Immigration is an interesting issue as it touches many areas of public life: economics, demographics and even religion. According to OECD around 3% of the people in the globe are migrants.

Each country and even regions in a specific country experience migration differently. Therefore this essay with the use of PESTLE analysis to scan the political-legal, economic and environmental impact and Hofstede Cultural dimensions to explain social attributes, will be a focused research on immigration and its effect on the people and the country. The first part gives an inside of the history of migration and the early policies adopted by the country. Part 2 goes on to illustrate the trends over time concerning the migration policies and laws. Part 3 and 4 deal with the environmental and economic impact of immigration respectively. Finally, the social attitude and how are immigrants treated in today’s society will be considered.


Australia being a British colony and closely connected with the Empire, concentrated its early migration policies before World War II in keeping the country ‘white’ accepting into the country only British and Europeans. However, after World War II migration was high in the agenda of politicians with policies being set in accordance with the needs of the country: allow more non-European skilled immigrants to cover the shortage of labour and expand the manufacturing industry.

Their slogan was ‘populate or perish’ and a large wave of immigrants was accepted in the country. The ‘White Australia’ Policy was abolished in 1973 and regardless of origin; anyone could become a citizen of Australia being a permanent resident for three years or more. The years to follow will see the policies and laws towards migrants becoming more structured and focused. Significant changes took place aided by globalisation and the easier movement of people. Indeed globalisation and the fact that national events have international effects is one of the drivers of migration.

Immigration policies

We will analyse the Political and Legal parts (political support and initiative, legislation changes) of PESTLE to evaluate the immigration policies adopted by the governments. The permanent entry and conditions are established by the Australian Government whereas the Department of Immigration and Citizenship is responsible to issue visas under various programs.

The size of permanent migration program increased substantially and this is mainly the aftermath of the growing focus on skilled workers. The Skill Stream accounts for 64% of the total Migration Program followed by the Family Stream which accounts for 35.7% and finally the Special Eligibility with 0.3%.

In 2008 it was announced by the government that the skilled migration will be more demand driven and therefore more responsive to changes in the demand for labour and the needs of the economy. This was to assist industries facing skill shortages mostly in health and engineering sector.

As with demand-driven operating models and especially ‘pull’ models that support the use of resources as soon as the need arises, the Migration Program adapts policies to respond to the country’s needs. Australia had a ‘brain drain’ problem for many years with highly skilled workers and professional leaving the country. It can be argued that that is one of the reasons why the Migration Program is so keen in accepting in the country skilled labour.

Actually, legislation changes are made to accommodate the new immigrants, for example the removal of fees for English courses. However, concentrating more on the skilled immigrants might be seen as unfair by other categories of migrants as the recent riots have showed at Villawood a detention camp in Sydney.

Detainees complained of lengthy waits to have their asylum claims heard. It is argued that those of a genuine need of government protection are not treated as it should. As a matter of fact, Immigration Minister Chris Bowen proposed a new law where any asylum seeker found guilty of an offence would fail to receive a permanent visa.

In terms of return to the country, though, and especially the economy, skilled labour contributes more. The number of refugees arriving by boat increased substantially and even though the government tries to accommodate them all this is impossible.

Impact of immigration on the environment

Moving on to the Environment from PESTLE we will consider the level of pollution and attitudes from the government. Most of Australia’s geographical area is uninhabited with people concentrated in a small number of specific parts of the country and cities. Australia has one of the lowest population densities of all countries with only 2.92 people per square kilometre.

Even though it may seem that Australia land area of 7.7 million square kilometres could support a larger population, this is impossible due to the fact that deserts occupy almost 38% of the country mainly in the centre and western part. The situation worsened with the recent severe floods in the many states. In Queensland alone 200,000 were affected and a mass evacuation took place.

Therefore it is obvious that population increases are important to Australia since 75% of the population lives in urban areas with cities like the Australian Capital Territory having the highest population density at 152.5 people per square kilometre. A research of the Australian Bureau of Statistics (2010) showed that 54% of the population increase is due to immigrants.

The Optimum Population Trust argues that to sustain the current standard of leaving the optimum population of Australia is 10 million people and 21 million at the lowest possible living standard. The current figure of population 22.5 million people and the projected figure of 36 million in 2050 are high above the optimum set by the organisation.

However, it can be argued that natural resources like oil could sustain population pressures if the people, the government and major companies invest in substitutes and new technologies. As far as global warming and greenhouse gas emission are concern Australia is one of the largest polluter of the world with the CO2 emission reaching the outstanding figure of per capita.

This and other environmental externalities like congestion may have a deteriorating effect on the living standards of Australians. Environmental deterioration due to increased migration must be weighed against economic impacts when considering the future of the country.

Impact of immigration on the economy

The Economy from PESTLE analysis seems to be the strongest card of the country. The economic performance of Australia has been remarkable since the economic crisis. This part will concentrate particularly on the impact the skilled immigrants have on the economy of Australia.

Overall, larger population means more labour translating in higher gross domestic product and income. However, how this increase is spread across the population and the impact on living standards are not clear given the aggregate measures of GDP and GNI. If we consider GDP and GNI per capita then these are affected by the productivity of the workers and the participation rate.

Skilled immigrants affect the supply composition of labour. It is projected in the Commission paper of 2006 that by 2024-2025 and with a modelled 50% increase in the skilled migrants working age share will fall by 0.17% and participation rates will increase by 0.73% due to the cumulative effect of migration.

The unemployment rate will increase with the years of residency with the cumulative effect of decreasing unemployment rates of new arrivals early in the period begins to outweigh the higher unemployment rates of new arrivals late in the period, and overall the unemployment rate decreases by 0.03% and hours per worker will rise by 0.05 per week. As expected real gross domestic product was projected to be around 4 per cent higher than otherwise.

The annual average income per capita was projected to be $383 higher but not equally distributed. Migrants are expected to benefit more from the increase in average income since the incumbent population’s average real wages declined by $334, but income from other sources raised, especially from government transfers due to higher indirect tax revenue, $103 per annum respectively.

A higher income per capita means that people will spend more leading to increased tax revenue for the government. The impact of increased skilled labour must by also be considered in the context of different industries and regions. For example in the Western Australia the most important sectors are mining and agriculture which are capital intensive affected mostly by changes in capital stocks rather than labour composition.

The immigration increases can address the costs and time associated with the training of domestic labour. However, it may substitute domestic income and discourage the human capital investment of the country. The answer is to make the skilled migrants a compliment to domestic labour rather than a substitute.

People’s attitude towards immigration

In order to analyse the social attributes towards immigration the Hofstede Cultural Dimensions will be used in this section. Overall, globalisation made people of Australia today more acceptable of foreigners settling in their country and they are open to the idea of a multicultural society.

However, it is evident from the early migration policies discussed on previous section that the government had a discriminating approach towards non-British migrants especially those settlers coming from Asia, in an attempt to perceive the national identity. Many have argued that this attitude was a product of fear that as the British had colonised and decimated the aborigines so will a stronger nation do to them.

With globalisation, people began to realise that foreigners settling in their country will be a reality for their everyday life. Ethnic communities were formed and foreigners took part in elections as government officials and academics. In the year 2010 the foreign-born population in Australia was 26.4% of the total population compared to the 3.1% of the world average.

In a recent survey carried out by the University of Western Sidney 86.6% of the people asked agreed that ‘It is a good thing for a society to be made up of people from different cultures’. Nevertheless 80.1% answer for themselves that they are no prejudiced against other cultures but in the question ‘Is there a racial prejudice in Australia’ 84.4% agreed.

According to Hofstede’s Cultural Dimensions Australia has the second highest level of individuality of 90 coming behind the United States’ ranking of 91. Individualism describes the relationships of people and the way the live together. People therefore are expected to take care of only themselves and immediate family maybe that is why Australians may still be suspicious of foreigners. In addition earnings are very important therefore they might feel a threat from the skilled migrants.

Critical reflection

This essay tried to tackle a very complex and significant issue of Australia. Maybe the analysis would have been more concise if it was concentrated in fewer areas that are affected by immigration. Most of the sources used are from the government’s websites but in some parts critics were also evaluated.

In addition the presence of International Business Models is not sufficient and more examples of models could have been used. Difficulties were faced in the research when trying to find the most recent statistical data. More independent sources could have been use and more coherent arguments.

The results are inconclusive and a more detailed research must be carried out to better assess the question of what is the impact of immigration on Australia. The issue of migration must be set in a wider context taking under consideration a greater number of factors and drivers for example consider also the role of emigration.

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