Below is another excellent guest post from MB reader Erin Rolandsen, CEO of Angelassist:
The Guardian ran yet another piece of propaganda pleading for Big Australia, this time leaning on KPMG modelling to claim that cutting migration would actually lift house prices: “Slashing migration would actually lead to higher house prices in Australia – here’s why.”
In typical polemic style dressed up under the respectable guise of “research”, the model takes extreme scenarios (zero migration for a decade), locks in existing tax settings and industry structures, and spits out a number: house prices would be 2.3% higher by 2035.
Their primary argument rests on assuming that fewer migrants means fewer construction workers, reducing housing supply more than it reduces demand. This assumption, however, is fatally flawed.
In reality, the very structure of the construction industry makes it extremely difficult to source tradies through immigration. The bulk of the industry relies on individual subcontractors, for whom it makes no sense to go to the effort and expense of sponsoring immigrant workers.
Rising material and other costs have significantly impacted margins in recent years, causing even large construction firms to fall over.
It is notoriously difficult for overseas tradies to get their skills recognised here without completing an expensive bridging qualification. Low wages combined with high cost of living pressures and limited accommodation options mean any workers who do come are often vulnerable to exploitation.
These factors are reflected in the fact that only 2.5% of skilled temporary immigrants in 2024 were in home building occupations. In total, there were 667,000 migrant arrivals last year of which only 4,229 were tradies.
If we are being generous and assume the newcomers all settle into 4 bedroom homes, we are being asked to believe that every single migrant tradie is able to build in excess of 39.4 houses per year. Or put another way, each of these migrant tradies would have to be single-handedly building a new home every 9 days just to keep up with our migrant intake.
The rest of the analysis is similarly based on ludicrous assumptions. Rents (a truer indicator of housing because it gauges shelter rather than speculation) did actually decrease during Covid when immigration was paused. As even KPMG acknowledges, easing rents boosts the fertility rate.
Scarcer labour would force firms to invest more in research, innovation and capital deepening, driving efficiency, not inflation.
With lower tax intakes from population growth, the government would be motivated to adjust its taxation models, perhaps forcing it to start properly taxing our natural resources.
These are clear examples where the economic creed of “Ceteris Paribus” (all things being equal) are not always appropriate when modelling.
My 3 I’s Hierarchy once again helps us make sense of the spin:
- Identity—Critics of high migration are painted as xenophobes, so the debate can be shut down before it begins. Note how in The Guardian article, caution about migration numbers was conflated with hatred of immigrants.
- Interests—Corporates, universities, developers and consultancies profit handsomely from a flood of fee-paying arrivals. Their interests are what this modelling really serves.
- Ideas—What never gets discussed is whether the economic model itself – propping up population growth while productivity flatlines – is sustainable or democratic.
The article itself admits that 68% of Australians believe immigration numbers need to be carefully considered. In essence, they are arguing that Australians are racists and that our will should be ignored.
Australia doesn’t need more consultant-driven alibis for failed policy. It needs honesty.
If The Guardian and its consultants want to defend Big Australia, they should at least admit whose interests they are serving.
Until then, ordinary Australians are right to be sceptical of their models and to demand a genuine contest of ideas.
