Migration, productivity and the cost of living
Australia’s migration debate has reached a critical point. Housing affordability is deteriorating, household budgets remain under pressure, and many Australians feel that economic growth has not translated into better living standards. Against this backdrop, calls to reduce immigration have gained political traction. Yet the central question is not simply how many people Australia should admit. It is whether the country’s economic policies, infrastructure and institutions can turn population growth into broadly shared prosperity.
In October 2026, Mathias Cormann, Secretary-General of the Organisation for Economic Co-operation and Development (OECD) and a former Australian finance minister, warned that politicians risk answering public frustration with populist measures instead of fixing the economy’s structural weaknesses. His argument, reported by The Guardian and The Nightly, deserves serious consideration. It also opens a wider debate about how governments should manage migration, provide housing and lift productivity (Wong 2026; Spagnolo 2026).
Population growth is not the same as economic mismanagement
The scale of population growth helps explain public concern. The Australian Bureau of Statistics (ABS) reported that Australia’s population reached about 27.9 million at 31 March 2026, an annual increase of 392,700 people, or 1.4 per cent. Net overseas migration accounted for 292,100 of that increase (ABS 2026). Migration therefore remains a large part of national population growth.
Rapid growth creates real planning challenges. Where construction and infrastructure investment fail to keep pace, renters, first-home buyers and lower-income households tend to carry a disproportionate share of the adjustment. Migration policy sets the scale of growth, while planning and economic policy determine how well it is accommodated, so blaming migrants for a shortage of homes confuses the source of demand with the failure of supply.
Cormann acknowledges this. He said population grew at twice the pace of homebuilding for three years, and argued that the answer is to fix housing supply, infrastructure and services rather than cut migration (Spagnolo 2026). His position is not that migration has no consequences, but that arbitrary restrictions do not repair the failures underneath.
The productivity problem behind the cost-of-living squeeze
Cormann’s wider argument is that living standards cannot improve sustainably without higher productivity, meaning more output for each unit of labour and capital. The recent record is weak. The Productivity Commission reported that multifactor productivity fell by 0.5 per cent in 2024–25, compared with average annual growth of about 0.4 per cent over the preceding 20 years (Productivity Commission 2026).
A bigger workforce does not automatically make each worker more productive, and population growth alone does not guarantee rising real wages.
The OECD’s economic survey of Australia similarly points to slow productivity growth, housing affordability and weak competitive pressure as key challenges, and recommends reform to competition, housing supply and the tax system (OECD 2026).
Cormann also argues that cash handouts and energy rebates are short-term fixes. They put money into an economy that is not producing more, so prices rise and the cost falls on the budget and taxpayers (Spagnolo 2026).
Does immigration benefit Australian workers?
One of the strongest claims in Cormann’s argument concerns jobs. He cites OECD research finding that Australian regions receiving more migrants saw faster employment growth among Australian-born workers, with no measurable effect on their wages (Spagnolo 2026). That challenges the assumption that migrants simply take jobs from existing residents. Migrants are also consumers, taxpayers and entrepreneurs, and they help fill shortages in health care, construction and aged care.
Aggregate findings do not mean every worker benefits equally. Outcomes vary by occupation, location, skill level and bargaining power. Some existing workers may face more competition in particular segments of the labour market, and migrant workers themselves can face underpayment, exploitation or difficulty finding work that matches their qualifications. The OECD also identifies skill mismatches in the migration system, with shortages emerging in some sectors even during the post-pandemic surge (OECD 2026).
The debate should therefore move beyond a choice between unrestricted immigration and blanket caps. Overseas labour should not substitute for training, better conditions or competitive wages.
Australia needs a system that responds to demonstrated skill needs, supports workforce development and evaluates outcomes over time.
Housing and infrastructure: the missing side of the equation
Housing is where the debate becomes most politically consequential. People experience population growth through rents, commutes, crowded services and the difficulty of buying a home, not through national statistics.
The OECD identifies restrictive land-use rules and housing affordability as significant structural problems (OECD 2026). Lifting supply takes more than construction targets. It requires planning reform, serviced land, skilled builders, infrastructure investment and coordination across federal, state and local governments.
This creates a paradox. Restricting migration might ease some demand, but it would not remove planning bottlenecks, land constraints or the financial barriers to building. Maintaining high migration without matching investment, on the other hand, intensifies pressures that governments have already failed to address.
The sensible response is to coordinate migration settings with housing and infrastructure capacity.
Governments should publish transparent assessments of expected population growth, dwelling completions, rental availability and service demand, and respond to measurable constraints in particular cities and regions rather than relying on national targets alone.
Beyond populism: a more credible economic policy
Cormann warns that mainstream parties risk losing public confidence if they imitate anti-immigration movements instead of addressing what is driving voter dissatisfaction (Wong 2026). Dismissing public concern as populism would be equally mistaken. Australians are entitled to expect governments to manage population growth responsibly and to protect living standards and essential services. Confidence depends on evidence, accountability and visible results.
A credible programme would rest on four priorities.
- Lift productivity through investment in technology, research, skills, infrastructure and competition, so that higher output per hour becomes sustainable real-wage growth.
- Make housing more affordable by accelerating construction, reforming planning systems and coordinating infrastructure with population growth.
- Improve the quality and accountability of migration through transparent skills-based selection, labour-market protections, better recognition of overseas qualifications and regular assessment of outcomes.
- Pursue responsible fiscal policy while protecting vulnerable households, treating temporary relief as a bridge to structural reform rather than a replacement for it.
These reforms should be judged against measurable results: real disposable incomes, housing affordability, productivity growth, job quality and access to public services. The number of migrants admitted, or the headline rate of growth, is not the test.
Conclusion: a plan, not a scapegoat
Cormann is right that arbitrary caps cannot substitute for productivity-enhancing reform, and the evidence he cites suggests migration does not inevitably undermine Australian jobs or wages. But governments must do more than defend aggregate benefits. They must show that growth is being managed to protect living standards and social cohesion.
Australia does not have to choose between welcoming migrants and looking after Australians.
It has to build an economy capable of doing both, with more homes, better infrastructure, stronger productivity, effective public services and a migration program matched to genuine needs. The real test of policy is not whether Australia becomes larger, but whether Australians become better off.
References
- Australian Bureau of Statistics (ABS) 2026, National, state and territory population, March 2026, Australian Government, released 17 September 2026, https://www.abs.gov.au/media-centre/media-releases/australias-population-grows-14-march-2026.
- OECD 2026, OECD Economic Surveys: Australia 2026, OECD Publishing, Paris, 21 January, https://doi.org/10.1787/d22a1efd-en.
- Productivity Commission 2026, Annual productivity bulletin 2026, Australian Government, 19 February, https://www.pc.gov.au/ongoing/productivity-insights/bulletins/bulletin-2026.
- Spagnolo, J 2026, ‘Former WA Liberal senator Mathias Cormann warns Australia is drifting in wrong direction’, The Nightly https://thenightly.com.au/politics/former-wa-liberal-senator-mathias-cormann-warns-australia-is-drifting-in-wrong-direction-c-23032617.
- Wong, K 2026, ‘Mimicking populists will not ease cost of living or boost productivity, Mathias Cormann warns’, The Guardian, https://www.theguardian.com/australia-news/2026/oct/17/mimicking-populists-will-not-ease-cost-of-living-or-raise-productivity-mathias-cormann-warns-ntwnfb.
