“The increase in demand in from immigration is broadly offset by the increase in Labor supply, but in the short term there can be some adjustment costs, and we’re seeing that in the housing and rental market.”
Wrong.
Demand isn’t going to be offset by increased supply if half of the immigration intake is going to university.
Like school leavers we need to get more people into the workforce and out of the classroom.
“Adjustment costs” is a very mild way of describing a very serious issue. I.e. Homelessness.
Treasury are so far removed from the real world it’s not funny.
Economics Legislation Committee
14/02/2024
Estimates
TREASURY PORTFOLIO
Department of the Treasury
Senator RENNICK: I guess that’s my point. Half the immigration rate is driven by students who aren’t necessarily builders. They’re at university studying, rather than actually out there building the houses. It’s not like the Snowy Mountains hydro scheme, where a lot of immigrants came in and started building straightaway. And that’s my point. We’ve got a shift in the labour workforce from being on the tools to not being on the tools. I think we really need to look at getting the country back on the tools, if you know what I mean.
Mr Yeaman: There are other ways the labour market adjusts. Our view is that, over time, the effect of increased demand from those migrants is broadly offset by the increase in labour supply that they bring to the economy. But, in the short term, there can certainly be adjustment costs, and we’re seeing some of that in the housing and rental market, as you say, and housing takes time to adjust. But there are other ways the workforce adjusts. If a student comes in, they will draw resources away from other areas of the economy, as you say, and wages and other aspects of the economy will adjust. But there’s no doubt that there’s been some additional pressure in the housing market in the short term, which is well documented, which reflects both some of the capacity constraints in the construction sector that we’re seeing now and migration.
Senator RENNICK: Would you look at a levy on universities and the income they earn from foreign students, to help pay for housing and social housing?
Senator Gallagher: I think that’s probably a matter for the Minister for Education and the Department of Education.
Senator RENNICK: Well, Treasury will obviously model this.
Senator Gallagher: All I’d say on that front is that there is a lot of work being done through the Universities Accord.
Senator RENNICK: So you are looking at introducing a levy on universities?
Senator Gallagher: No, but we are looking at—
Senator RENNICK: I’d support it if you did. I think they should pay more tax.
Senator Gallagher: It would be more appropriately dealt with in Education.
Senator RENNICK: Thanks.
