The Treasurer today announced that the Productivity Commission will undertake a research study into the impact of population growth, including through migration, on Australia’s productivity growth.

The Commission will report on the nature of international migration flows over the last decade, in particular, flows of skilled migrants and the impacts this has had on skill levels in the Australian population generally, as well as within different industries and occupations.

This study will assess likely future developments, identify the mechanisms through which population growth transmits to productivity growth and report on whether there are any legislative or other impediments preventing Australia from realising potential productivity gains from population growth.

The Treasurer noted that understanding the link between population growth and productivity is especially important in the context of an ageing population. Given the importance of productivity growth as a major driver of improved living standards there is value in identifying the ways in which population growth and the human capital aspects of migration can affect productivity.

The terms of reference for the study are attached.

Further information on the study can be obtained from the Productivity Commission’s website at: www.pc.gov.au or by contacting the Commission directly on (02) 6240 3239.

Terms of reference

THE IMPACT OF MIGRATION AND POPULATION GROWTH ON PRODUCTIVITY GROWTH IN THE AUSTRALIAN ECONOMY

Productivity Commission Act 1998

The Productivity Commission is requested to undertake a research study examining the impact of population growth, including migration, on Australia’s productivity growth. Productivity growth is a major driver of improvements in real per capita living standards, so there is value in identifying the ways in which population growth and the human capital aspects of migration can affect productivity.
In undertaking the study the Commission is to:

1. report on the nature of international migration flows over the last decade and the extent to which Australia has participated in them, in particular, flows of skilled migrants
2. examine the impacts on skill levels in the Australian population generally, as well as within different industries and occupations, of skilled and unskilled migration
3. assess the relationship between migration, its different permanent and temporary categories, population growth, population and workforce diversity and productivity in Australia, its States and Territories and regions (where possible) and assess likely future developments, quantifying impacts where possible and drawing on the experience of other OECD countries
4. identify the mechanisms through which the impacts of migration and population growth on productivity are transmitted
5. report on any legislative or other impediments which prevent Australia realising the potential productivity gains from migration and from effective use of Australia’s population and workforce diversity, and
6. consider the impact of migration and population growth on labour force participation and economic growth more broadly.

The Commission is required to provide a report within nine months of receipt of this reference.

The report is to be published.