NO.068

Productivity Commission to Examine the Impact of Population

Growth and Migration on Productivity Growth

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.

CANBERRA

25 July 2005

Contact: David Alexander

02 6277 7340

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.

PETER COSTELLO