Australia is set become the "beneficiary of large scale in-migration over the coming decades".

This isn't an excerpt from Home Affairs Minister Clare O’Neil, who on Thursday released the findings of a major review into Australia’s immigration system, paving the way for the most significant reforms in decades.

Rather, these comments were made hours earlier by former US Treasury secretary and leading economist Larry Summers – in front of a packed theatre at the 2023 Morningstar Investment Conference in Chicago. 

Former US treasury secretary Larry Summers

Larry Summers says Australia's economy will benefit substantially from immigration. Picture: Morningstar

During a fireside chat with Daniel Needham, president of Morningstar Wealth (and an Australian), Summers said immigration is the reason he’s ‘long’ on the Australian economy.

“Societies that can accept immigrants on a substantial scale are societies with great potential for success,” he said.

Immigration, he says, is a big part of America’s success story. Today, the collective value of US companies relative to the rest of the world is at 60%, the highest it’s ever been.

“People who are prepared to migrate across oceans are special people who get things done and are very effective, that's part of understanding what's happened in the United States over hundreds of years,” he said. 

“If you ask who's going to be the beneficiary of large scale in-migration over the next decades, I think that's going to be Australia on a substantial scale.”

Australia's immigration overhaul


It comes as the government embarks on a radical overhaul of what it says is a ‘broken’ immigration system that favours “temporary migration” in “lower paid jobs”. 

“What has emerged is a system where it is increasingly easy for migrants to come to Australia in search of a low paid job, but increasingly harder for migrants to come here with the skills we desperately need,” Minister O’Neil said in a speech on Thursday. 

The government released a draft outline of its new migration strategy, signalling several key reforms, including: 

  • An increase to the minimum wage for temporary skilled migrant workers from $53,900 (where it has been frozen for a decade) to $70,000 – which is the level it would have reached if indexed over that period.
  • Clearer pathways to permanent residency for skilled migrants and international student graduates.
  • Tightening the requirements for international students studying in Australia, including a crack-down on students who aren’t genuinely here to study.
  • Reforming the ‘points test’ used to select permanent skilled migrants.
  • A new three-tiered migration pathway, segmented by factors such as skillset and income, with a “fast, simple route for specialised, highly skilled workers”. 

O’Neil says it’s not about more people, rather attracting the right people to lift Australia out of a growing “productivity rut” through innovation and human capital.

Technology is one of the key focus areas for the government, which has set a target of 1.2 million tech-related jobs by 2030.

And with almost 170,000 layoffs in the sector globally so far this year – more than the entirety of last year (164,511) according to headcounts live tracker Layoffs.fyi – that could open up a new pool of global talent. 

Even as Australian tech firms move to reduce costs by lowering their head count, Professor Barney Tan from the School of Information Systems and Technology Management at UNSW Business School says many companies are still crying out for tech workers. 

“If anything, this global development may see a greater availability of tech talent for Australia as the laid off employees displaced from the US, Europe and the UK may now be forced to move,” he says. 

"Funnily enough, it is not so much the technical staff who are being laid off. A report by 365 Data Science found that many of the workers affected are actually HR personnel, accounting for 28% of total layoffs." 

Atlassian

Atlassian laid off 5% of its workforce in March to reinvest in business-critical roles. Picture: AP

Australian tech giant Atlassian (TEAM) in March announced it was shedding 5% of its workforce, or around 500 employees. Yet founders Mike Cannon-Brookes and Scott Farquhar noted these job losses would be concentrated in its talent acquisition, program management, and research teams.

"To be clear, this decision is not a reflection of Atlassian’s own financial performance, as we will be reinvesting in roles that better support our priorities," they said in a staff memo.

“As a company, we have massive growth opportunities in front of us, particularly across cloud migrations, ITSM, and serving our enterprise customers in the cloud. Although hard, this rebalancing will help us put more wood behind these arrows."

But with other countries also fighting for the same pool of talent, Morningstar technology analyst Roy van Keulen says Australia will struggle to compete.

“Those people simply have too many other options. We only attract those looking for an overseas adventure so a priority-lane for visa processing would help, but the numbers would be limited and they'd be unlikely to settle in Australia permanently,” he said. 

“In the long-run we will have to develop the talent here through our universities, with domestic students and with students from overseas.”

He says retaining the brightest international students after they graduate is by “far the best lever to pull.”

The government will finalise its immigration strategy later in 2023 following a consultation process.

But perhaps the biggest issue of all is where to house these workers and students.

Australia is in the grips of a worsening housing crisis, particularly in inner-city rental markets, where migrants and students typically live when they first move to Australia. 

And new population forecasts released Friday evening estimate Australia's net migration will reach a record high of 400,000 this financial year - well above the previous forecasts of 235,000.