In an already difficult economic environment, Australia’s cap on immigration from overseas could put more pressure on struggling businesses. Both major political parties are pushing for a cap on immigration, mounting pressure on businesses.
According to Ivan Colhoun, CreditorWatch chief economist, the next 12 months hold several challenges to a slowing population. Colhoun says,
“…if the population is growing more slowly, then there is less activity around and I think a slower population growth generally means less demand in the economy.”
Labor has set a goal of culling migration by around 65,000 in the coming year. They aim to lower migration from overseas to about 260,000 people. This figure is a slight increase from the 255,000 proposed in December.
Additionally, the net overseas migration number has been cut down to 335,000 from 340,000 for the current financial year. This number is still a jump from the 260,000 number which Labor put out in the 2024 budget.
Impact of the Migration Cap and Trump’s Tariffs
Australia’s cap on immigration also includes international students. Labor has attempted to limit the number of international students to 270,000 this year. The Coalition thwarted that effort in November last year.
Opposition Leader Peter Dutton also made a commitment to reduce permanent migration to Australia by 25 percent, but has recently walked the Coalition’s original goal.
In regards to Trump’s tariff plans, Mr Colhoun responded by saying that they may affect Australia indirectly, because of the extent to which those tariffs affect other countries. With so many unknown components, fewer businesses may be willing to invest, he said. Uncertainty increases pressure. Moreover, high prices hinder Aussie businesses.
“There is also pressure on discretionary spending and consumers and that’s why the cost of living relief that came through in the federal budget is helpful, so it is part of the adjustment that needs to take place,” Colhoun said.
Sources
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