RN Breakfast interview with Fran Kelly

FRAN KELLY: Well, with COVID-19 still racing across Europe and the US, Prime Minister Scott Morrison says Australia will take a very cautious approach to reopening travel with the rest of the world. The indefinite closure of the international borders has crashed Australia's immigration program, delivering the biggest hit to forecast population growth in more than a century. Treasury now forecasts that more people will leave the country in the next two years than will arrive, which will have enormous consequences for the economy, already of course, mired in recession.
Alan Tudge is the Minister for Population and Cities, and Acting Immigration Minister. Minister, welcome back to Breakfast.

ALAN TUDGE: G’day, Fran.

FRAN KELLY: There will be one million fewer Australians by the end of 2022 - that's based on forward predictions - one million fewer consumers, many, many fewer taxpayers. This will mean lower living standards for all Australians, won't it?

ALAN TUDGE: Well, it certainly has a very big impact on our economy and on our GDP growth. Population's been a very significant part of our economic growth story for more than a century, and we're now going to have the lowest population growth this financial year since World War One. As you said, it'll be 0.2 per cent this year, whereas normally it tracks at about 1.6 per cent. So, yes, it will have an impact on the economy, and that's why...

FRAN KELLY: Can you put that in dollar terms, or at least GDP terms? What's the hit to GDP from a million fewer people here over two years?

ALAN TUDGE: Well, if you go from 1.6 per cent population growth to 0.2 per cent
population growth, the rule of thumb is that that's about a 1.4 per cent hit to GDP. That means we have to make up for that growth in other ways, and particularly for a boost in the participation rate and boost in productivity. And that's why this Budget is so important, because it does go to those things; it goes to jobs, it goes to business investment. And that's why we're still forecasting that next financial year GDP will still be 4.75 per cent.

FRAN KELLY: Is that realistic, though? I mean, boosting productivity, boosting participation, that's really making up for what the pandemic has done, it's not really going to make up for the added increase of a lack of projection of one million fewer people. Is there any sort of genuine economic reform on the plate? What's coming up?

ALAN TUDGE: Well, of course, and the Prime Minister's been through this, in terms of some of the very substantial economic reform, which is already underway. But the Budget itself of course contains ...

FRAN KELLY: Like what?

ALAN TUDGE: The Budget itself contains significant reform in and of itself, and in particular, in relation to the tax cuts. The tax cuts, which have a flattening of the curve, create further incentives for people to work more. And I know people, some people, will dismiss that, but it's very important. And once you introduce the further stages as well, then it has a further impact. The very significant impact of being able to make investments and write them off all in one year will create a massive boost for investment, and that's why the business community has been so strong in relation to that.
And overall, Treasury does expect - and they're the ones that do the forecast - is that the result of this is that we will see growth next year of 4.75, and then 2.75 and then three the years after that. So, despite the fact that population will be considerably lower, we still are forecasting quite considerable growth in the next few years.

FRAN KELLY: Have you told that to the construction sector? I mean, demand for housing according to the Property Council could be cut by up to 230,000 dwellings. The Property Council wants a roadmap for restarting migration as a top priority for National Cabinet, and it wants an aggressive marketing campaign to sell Australia as a safe and healthy destination for prospective migrants. Is there any work being done at this stage on trying to restore immigration once the pandemic is over, or the borders are open anyway?

ALAN TUDGE: Well, first up, let me just address the property issue, because you're right; the property sector is dependent upon population growth, that almost goes without saying. It's why we've spent so much time doing the HomeBuilder program, which has had a massive stimulatory impact. The first home buyers scheme, which has also had an impact. And also, why we've invested, or one of the further reasons, why we've invested so much in the civil construction area, because it will mop up some of the demand which might not be in the residential construction area. So there are things...

FRAN KELLY: Okay. But meanwhile, is any work being done...

ALAN TUDGE: There are things that we have put in place, Fran, in relation to that. And that's been acknowledged, particularly by the Master Builders Association. In relation to migration, generally, of course, we are thinking very deeply about that. But you've got to understand that a lot of our migration program is actually what's called demand driven, and that means, for example, that once the borders are open you will only be able to sponsor a person in if you're an employer, if you can't find an Australian to do the work. And if there's more Australians available to do the job, then there may well be fewer opportunities for sponsorship to occur. Now, that's why, even if the borders open immediately tomorrow, the numbers might be slightly lower. But having said that, we are still projecting that in four or five years' time, it gets somewhere back to where they were in previous years.

FRAN KELLY: What about, I mean could you, you could still invite migrants in at the moment, bring people into Australia, isolate them for two weeks. Not in the hotel system, they're already overwhelmed with Australians wanting to come home, but maybe Christmas Island or Northern Immigration Detention Centre in Darwin. You could issue the invitation, see who wants to come and manage it that way. Have you thought- are you thinking about that?

ALAN TUDGE: Well, the quarantine system is the speed limit, if you like. And obviously there's only a certain number of slots available there, and -

FRAN KELLY: Well we haven't got the Northern Immigration Detention Centre open or Christmas Island open for this purpose - the Government could do that. Are you considering it?

ALAN TUDGE: Well, the states are responsible for the quarantining arrangements and we've put some pressure on them...

FRAN KELLY: No. But the federal government can move on Christmas Island, for instance, and it could work with Northern Territory on the Northern Immigration Detention Centre.

ALAN TUDGE: Well, the states with the National Cabinet has agreed for the states to be responsible for the quarantine arrangements, and we put some pressure on them to increase the number of beds they have available. But you've still got a state like Victoria where there's zero quarantine beds which are open right now.

FRAN KELLY: Sure.

ALAN TUDGE: At the moment, and typically you'd have say about a third of all migrants go to Victoria - so that becomes an issue. Clearly, the Victorian government still doesn't have confidence in its quarantine arrangements. So that becomes, in some respects, the speed limit on it. And that's why we're forecasting that the numbers will still be quite considerably lower over the next few years, but then they do come back in about year four and year five.
 
FRAN KELLY: What about the number of refugees? Australia is facing a deficit of one million people – projection - as we've just been discussing, but at the same time the Federal Government in the Budget announced it'd slashed the refugee intake by 5000 places. How does that make any humanitarian or practical economic sense?

ALAN TUDGE: Well, the number this year will be 13,750, which is actually an increase on what it was last year. Last year's figure came in at 13,170, and...

FRAN KELLY: But when we're talking last year, are we talking financial year? Does that take into account the number down because of the pandemic?

ALAN TUDGE: It does, and that was the outcome...

FRAN KELLY: So, that's not a real - that's not a real litmus test then, is it?

ALAN TUDGE: Well, it still is because the pandemic is still ongoing, Fran. I'm simply pointing out that last year was 13,170 was the actual numbers that came in. And this year we're forecasting will be 13,750 - so a slight increase on what it was last year.

FRAN KELLY: But why? I'm asking you why? I mean, there's no shortage of displaced people and refugees in desperate need of a permanent safe haven. Australia could do with more people living here and spending here. Why not bring in 5000 more and bring it up to the cap that was in place - over 18000. Why cap it at 13,750?

ALAN TUDGE: Well, we'll still be the third most generous country in the world with an absolute...

FRAN KELLY: Yeah, but that's not my question. Why have you decided to cap it and make that cap 5000 lower?

ALAN TUDGE: Well, I mean, I've addressed this. First up, that it's actually an increase in what it was last year. Second up...

FRAN KELLY: But it's a decrease on our cap.

ALAN TUDGE: ...that all migration is down considerably, Fran. We're going to have, for the first time ever, more people leaving the country than coming into the country - we'll have the first time ever that situation in 75 years, sorry first time in 75 years that will be the case. So, migration is down across the board, and yet at the same time the humanitarian intake will be slightly up on what we actually had last financial year and will still be...

FRAN KELLY: Yeah. But, Minister, that's disingenuous. Migration is down because that's a free choice. Humanitarian intake is different - as I say, there are tens of thousands of people in UNHCR camps waiting for people to take them. Why doesn't Australia honour the commitment it had made beforehand? Why not?

ALAN TUDGE: Migration is down because we've closed the borders, Fran. And as I said...

FRAN KELLY: Yeah, I know. But if we're bringing in 13,750 people anyway, why not bring in 18,000?

ALAN TUDGE: And as I said, the speed limit becomes the quarantine arrangements. And so consequently, overall migration is a fraction of what it has been in previous years and all migration is being impacted by that.

FRAN KELLY: So the decision to decrease the humanitarian intake is the speed limit of the quarantine, is it?

ALAN TUDGE: Well as I said, we'll still be the third most generous country in the world on an absolute basis, in terms of our humanitarian intake, and it will still be a slight increase on what it was last year, Fran.

FRAN KELLY: Okay.

ALAN TUDGE: And it's also in keeping with the fact that overall migration is down across the board and the pandemic continues. We reserve the right, as we do each and every year, to reset what the Humanitarian Program might look like for the following 12 months - we do that in the budget each year. For this year it will be...

FRAN KELLY: But we've banked, but the Budget has banked a billion dollar saving over four years.

ALAN TUDGE: And for this year it will be 13,750. And if next year a different decision is made, then it will they made in the Budget context.

FRAN KELLY: Minister, thank you very much for joining us. 

ALAN TUDGE: Thanks very much, Fran.

FRAN KELLY: Alan Tudge is the Minister for Population, Cities and Urban Infrastructure, and the Acting Minister for Immigration.