Cuts to permanent migration would ease rental pressures slightly over 10 years, but it would have a large impact on government revenue.
Coalition leader Peter Dutton’s plans to cut the number of permanent visas and slash net overseas migration would help make renting a little more affordable over the next decade, new analysis shows, but would cost state and federal governments billions in lost tax revenue – up to $211 billion over the next 30 years.
“We believe that by rebalancing the migration program and taking decisive action on the housing crisis, the Coalition would free up more than 100,000 additional homes over the next five years,” he told parliament in May.Under Dutton’s plan, permanent migration would be cut from 185,000 to 140,000 for the next two years, then increase to 150,000 in 2026-27 and be 160,000 each year after that.
He noted that the changes to migration would need to be permanent or long-term to have that effect on the housing market, but that would also come with a long-term cost to the budget bottom line because of the tax they paid over their lifetimes. Grattan’s modelling found every permanent skilled visa holder provided state and federal governments $249,000 over their lifetimes in today’s dollars, so reducing skilled migration by 135,000 over the next four years would cost $34 billion over the next four years and $211 billion over the next 30.“These are the trade-offs. And if that’s a choice that governments or the opposition want to make, they can, but there are consequences: cutting migration is far from costless,” Coates said.
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