Independent modelling commissioned by the Migration Council of Australia warns about the dangers of reducing net migration.
The says Australia needs 250,000 migrants a year to boost the economy by $1.6 trillion by 2050.
The migration report comes as the government releases the five-yearly (IGR) which shows that migrants are expected to make up a smaller percentage of the population in coming decades.
The IGR provides a snapshot of Australia in 2055, when the population is tipped to almost double from 24 million today, to 40 million. The modelling shows Gross Domestic Product will fall and wage growth will slow.
The government assumes net overseas migration will remain stable at 215,000 people per year, down from a peak of 300,000 in 2008-9.
Currently, net overseas migration (new migrants arriving, minus Australians leaving per year) makes up 1 per cent of the national population, but that is expected to decrease to 0.5 per cent by 2055 under the IGR modelling.
But Treasurer Joe Hockey said multiculturalism would not diminish.
“It won't change the face of Australia because we are a diverse population," he told SBS.
The Intergenerational Report proposes skilled migration that is well targeted and appropriately adjusted to economic circumstances.
But the alternate modelling from the Migration Council of Australia shows if annual migration was increased to 250,000 people, the economy would be boosted by $1.6 billion – a rise of $1,125 per person in Gross National Income.
The treasurer said there were pros and cons to be considered.
“If you did that then you'd need to build more infrastructure to cope and that means government spending more money so that's a good debate to have and we welcome the debate," he said.
The five-yearly IGR assesses how changes to Australia's population size and age profile may impact economic growth, workforce and public finances over the next 40 years.
It finds economic growth will slow as Australians live and work longer.
By 2055 almost one in five people aged 65 will still be in the workforce, and around 40,000 people will make their 100th birthday.
Gross Domestic Product is tipped to fall to 2.8 per cent over the next 40 years, compared with 3.1per cent over the previous 40 years.
By 2055 almost one in five people aged 65 will still be in the workforce, and around 40,000 people will make their 100th birthday.
Wages growth is also expected to slow to 1.4 per cent, down from 1.9 per cent over previous years. By 2055 the average Australian can expect to earn $117,300.
However, Australians are expected to be working much longer. By 2055 almost one in five people aged 65 will still be in the workforce, and around 40,000 people will make their 100th birthday.
The report also makes a case for further cuts to government spending, particularly in health and social services.
It warns if proposed budget measures do not pass the parliament, net government debt would reach 60 per cent of GDP.
In contrast, if proposed policy was implemented, the net debt would be wiped by 2031-32.
By 2055 the average Australian can expect to earn $117,300.
Key findings of the Intergenerational report:
- In 2054/55 there will be about 40,000 people aged over 100 (compared with just 122 now)
- The number of people aged over 65 is expected to double
- The number of people of traditional working age (15-64 years) is expected to fall from 4.5 for every person over 65 to 2.7 people
- The population will be 39.7 million (versus 23.9 million now)
- Average economic growth is expected to slow over the next 40 years (2.8 per cent vs 3.1 per cent now)
- Under current legislation the budget deficit would be 6 per cent of GDP in 2054/55 (vs 3.1 per cent, OR $48.5 billion, in 2013/14)
- Under a "proposed policy scenario" the Abbott government expects to improve the budget bottom line to a sustained surplus from 2019/20
- Government debt under current legislation would be 60 per cent of GDP, but under "proposed" policies it would be zero by 2031/32
- With AAP
