Hanson's 750,000 plan against Labor's 225,000 target

Australia's argument over cutting migration comes down to one question: would slashing net overseas migration trash the economy, or deliver a population reset that lifts living standards? Governing Labor and ascendant One Nation have set out starkly different visions of a migration program in the national interest. Last month, One Nation leader Pauline Hanson announced a plan to cut the number of temporary migrants in Australia by more than 750,000 over three years. The plan targets international students and the family members of skilled migrants.

• •One Nation says reaching that reduction would require net overseas migration to turn negative for three years, before an ongoing annual cap of 130,000.
• •Labor's longer-term net overseas migration target is 225,000, set against the last official estimate of 292,000 for the year to March.

Home Affairs Minister Tony Burke said One Nation's plan, if enacted, would trash Australian services and trash the Australian economy. Hanson rejects that view, and lays the economy's woes on the high population growth of recent years instead. In a social media post, she said vested interests were warning that a technical recession could follow if migration is cut. In the same post she asserted that Australians have endured a per-capita recession for years, with lives made worse by migration.

Canada's migration squeeze, half done

Hanson's exhibit is Canada, which she says has shown living standards improve when migration is cut. The comparison is a common one for Australia: Canada has long been something like a sister country, similar in size, culture and economy. The country is now partway through a dramatic migration adjustment, one that has flattened its population growth.

• •Unlike Hanson, Canadian policymakers have set no net migration target. Their goal is to bring temporary migrants down from a peak of 7.6% of the population in 2024 to 5%.
• •Canada is about halfway to that goal.
• •The tools have been fewer temporary arrivals, international students above all, harder-to-get stay extensions, and permanency for some temporary migrants.
• •The government made exceptions for migrants working in areas of particular labour shortages, such as agriculture and the care economy.

The effects show up in the headline numbers: annual population growth slowed from 3.1% in early 2024 to 0.5%. Where the squeeze has landed is uneven, too. Canada's university sector has been hit particularly hard by the tighter migration rules.

What the Canadian forecasters found

In May, the CD Howe Institute, a leading Canadian thinktank, took up the question of the country's economy in a lower immigration era. The title was Resetting Expectations. Its authors, Don Drummond and Parisa Mahboubi, used modelling to estimate what the shift means for employment and growth.

They estimated Canadian employment could fall this year and the next. Real GDP growth in 2026 may be no more than 0.5%, they forecast, and little more than 1% on average in the long term. The authors argue the expected employment fall is what a normally operating labour market delivers given the demographic shifts underway, not signs of a struggling economy. Their conclusion: the economy is adjusting rather than broken, and grasping that adjustment is a precondition for sound policy.

• •Nathan Janzen, the Royal Bank of Canada's assistant chief economist, endorses the CD Howe assessment.
• •The population shifts, he said, have changed how economic data must be interpreted.
• •If the population estimates are right, Canada could post negative employment growth and still see unemployment fall.
• •His overall verdict: the Canadian economy has been relatively resilient, and the per capita economy looks to be getting better.

Why economists say Australia is a different case

Economists warn against assuming Canada's experience would be replicated in Australia. Jonathan Kearns, chief economist at Challenger, points first to the size of the two surges: Canada's post-pandemic migration wave was far larger than Australia's. The excitement about Australia's post-Covid immigration, he said, missed how small it was next to Canada's. How far each population sits from its pre-Covid path makes the same point: Canada's population still sits 5% above its pre-Covid trend, while Australia's is tracking just 0.2% above its pre-pandemic trend line.

The slowdown in Canada's population growth, Kearns argued, only makes sense against the massive run-up that came before it. Canada's crackdown began at a moment of high unemployment, the aftermath of an aggressive series of interest rate hikes by the Bank of Canada. Any Australian crackdown, by contrast, would start from a tight labour market where unemployment sits at 4.6% and shortages are widespread.

Westpac chief economist Luci Ellis sees no simple comfort in Canada's record:

Canada, for now, sits about halfway to its 5% goal for temporary migrants as a share of population. In Australia, the argument between One Nation's three negative years of net overseas migration and an ongoing cap of 130,000, and Labor's longer-term target of 225,000, is the one still running.