MIGRATION will play a key role in Australia’s economic development over the coming decades, adding up to $1.6 trillion to the national gross domestic product by 2050, according to a new economic analysis.

Commissioned to Independent Economics by the Migration Council of Australia, the Economic Impact of Migration report reveals that Australia’s migration program will aid in propelling the national population to 38 million in the next 35 years.

In contrast, the report indicates that Australia’s population growth would stagnate at 24 million without support for foreign nationals.

Similarly, migration is anticipated to improve labour force participation by 15 per cent, with the number of employees holding a university education set to rise by 60.4 per cent by 2050.

“Because of the emphasis on students and skilled migrants in Australia’s migration program, many migrants bring higher education and skill levels and higher labour force participation rates than existing Australian residents, leading to economic benefits directly for migrants and indirectly for the existing population,” the report reads.

Migration is also expected to have a positive effect on the long-term real net wages for Australia’s workforce, with the average expected to rise by 9.7 per cent.

“These gains have a distributional affect, proportionately benefiting low-skilled and medium-skilled workers,” the report notes.

“The effect of migration on wages to 2050 is a 3.5 per cent decrease for high skilled workers, an 11.0 per cent increase for mid skilled workers and a 21.9 per cent increase for low skilled workers,” the report states.

On labour productivity impacts, the report indicates migration has a ‘mixed effect’.

“On the one hand, productivity receives a boost, as high levels of education are associated both with high personal productivity and a contribution to general productivity through research and development,” it reads.

“On the other hand, there is a loss in productivity from applying a larger labour force to a fixed stock of natural resources, including mineral resources and land.

“However, the gain in employment easily outweighs the loss in productivity, so by 2050, migration leads to a 5.9 per cent gain in GDP per capita. This gain in GDP per capita flows through to an even larger gain in living standards.”

Migration Council Australia chief Carla Wilshire, who has addressed resource employers at previous AREEA conferences, described the economic benefits of migration demonstrated in the report as ‘unambiguous’.

“Migration is a significant factor in terms of the three P’s – participation, productivity and population – and for too long, the economic impact of migration has been undervalued,” she said.

“Migration will play an increasingly important role over the next 35 years, helping to mitigate the worst effects of an ageing population and ensuring Australia remains a highly skilled nation.

“On average, migrants are younger, more highly educated and have higher labour force participation rates. They contribute more in government revenue and draw down less per capita in services.

“If we are serious about addressing our fiscal deficit and our aging population, then a healthy migration program is critical.”

AREEA chief executive Steve Knott said the resource industry has already experienced the benefits of skilled migration, which he said ‘plays a small but critical role’ in supporting growth in the mining, oil and gas sectors.

“In 2014, the Australian resource industry accounted for just 4.1% of applications for 457 visas under the temporary skilled migration program,” he said.

“The resource industry’s use of skilled migration has declined in recent years, but where we do employ international specialists, their expertise and skills are often critical to safety, performance and supporting a large number of aligned Australian jobs.

“Migration has a very real impact on job opportunities for Australians – skilled overseas workers have never been used to replace Australian jobs, rather they complement the skills available here with new global expertise and support projects delivering great value to Australia’s economy.”

To view the report in full, click here.