Immigration levels are more than a third higher than the government promised.
In the year to June, 457,560 permanent and long-term migrants arrived in Australia on a net basis, factoring in departures.
This was 36.5 per cent higher than the 335,000 level Treasury forecast in the March Budget before the election, with new Australian Bureau of Statistics data highlighting the government’s reliance on importing labour.
The latest figures show immigration levels in 2024-25 were in fact higher than the 435,000 level of 2023-24, with Labor last year failing to cap international student enrolments.
MacroBusiness economist David Llewellyn-Smith said Treasury wanted more foreign workers to pay taxes to fund the government’s high spending.
With personal income tax providing more than half of Commonwealth revenue, he said the government sees importing migrants as vital, particularly with the number of retirees expected to double over the next 40 years.
The huge migrant inflows has put upward pressure on house prices which are now among the world’s most expensive, and led to congestion on roads and public transport, while putting pressure on hospitals and schools.
‘The easiest way to do that is to run high immigration because you get more warm bodies to tax,’ he told Daily Mail Australia.
Anthony Albanese ‘s government has relied on high immigration to cope with an ageing population – at the urging of Treasury bureaucrats (pictured is the Prime Minister in Sydney)
‘That’s not efficient and it doesn’t raise living standards, but it does meet Treasury’s KPI.’
While Canberra reaps the tax revenue, state governments – especially NSW and Victoria – are left to pay for the required infrastucture, schools and hospitals to keep pace with the surging population.
‘The federal Treasury benefits a great deal from immigration but the state budgets get smashed by it because they’re the ones that have to do all the investment,’ Mr Llewellyn-Smith said.
‘That’s all worn by the states, but they don’t get the tax benefits from the federal government of the extra warm bodies.’
Treasury isn’t expected to change course, with briefs prepared for next week’s Economic Reform Roundtable focusing on the ageing population, while ignoring Australia’s growing reliance on income taxes from migrant workers.
‘Over the next 40 years, the number of people aged 65 and over will double, and the number aged over 85 will triple,’ the brief on economic resilience said.
Mr Llewellyn-Smith said the government’s Economic Reform Roundtable had already been taken over by Treasury bureaucrats and big business, both lobbying for high immigration to expand the labour supply.
‘It’s a terribly unproductive waste of time,’ he said.
The Treasury briefs on economic resilience, productivity and Budget sustainability all mentioned ageing, but they said nothing about rapid population growth ahead of this month’s Economic Reform Roundtable (pictured are Sydney commuters)
MacroBusiness economist David Llewellyn-Smith said Treasury wanted more foreign workers for the tax revenue
‘Basically, the whole agenda has been consumed by vested interests before we’ve even got there and terrified the government.
‘In theory it was a great idea but unfortunately, the federal government has a kind of fatwa on the word ‘immigration’ and nobody’s mentioned it. They see immigration as the only viable solution to an ageing population – it’s incredibly lazy.’
Llewellyn-Smith argued Australia’s ‘immigration-led’ growth was eroding productivity because population growth was outstripping investment in capital.
‘When you have an immigration-led economy like Australia’s, you are unproductive – that is, your population rises faster than your capital and so you get capital shallowing,’ he said.
‘So the quality of service declines and the efficiency of service declines in everything because immigration runs at a pace that we can’t sustain investment for.
‘Because you’re importing cheap foreign labour, most of it low-skilled, businesses actually tend to disinvest; they have no need to invest in automating processes when they’re just getting cheaper labour.’
Treasury is expecting personal income tax revenue of $349.7billion to make up 51.7 per cent of its $676.1billion in tax receipts during this financial year