Australia’s Immigration Ponzi: Importing Numbers, Not Skills, By James Reed and Paul Walker

In August 2025, Australia's immigration system stands at a crossroads, fuelling a population boom that drives economic growth on paper, but masks a deeper malaise. Recent data and analyses, including from Jobs & Skills Australia (JSA) and scholars like Salvatore Babones, reveal a troubling reality: the nation is importing not just too many people, but overwhelmingly low-skilled workers who fill low-productivity roles. This approach, far from addressing critical skill shortages in trades and technical sectors, perpetuates a Ponzi-like scheme where population growth props up GDP, while straining housing, infrastructure, and productivity. Like sacred cows, the dogma of high immigration as an economic panacea is rarely challenged, so it's time to question whether this revered policy is leading Australia toward prosperity or peril. Spoiler: it is peril!

The Mirage of Labour Shortages

Australia's immigration narrative has long hinged on the promise of filling labour shortages, particularly in high-skill sectors. Yet, JSA data published in The Australian on August 21, 2025, paints a different picture. Economy-wide, there are 29.3 applications per job vacancy, with 9.4 qualified and 4 suitable applicants, suggesting an oversupply of labour in many areas. Even in technical and trade roles, where shortages are more pronounced, there are still 22.7 applications per vacancy, with 6.8 qualified and 2.9 suitable candidates. For labourers, the figures are 16.5, 4.5, and 2.4, respectively. These numbers indicate that concerns about labour shortages are overstated, particularly for low-skilled roles, where Australia is awash with applicants.

Despite this, the federal government's ambitious targets, 1.2 million new homes by 2029 and 82% renewable energy by 2030, require skilled tradespeople and technical workers, not low-skilled service workers. The construction sector alone faces a shortage of 130,000 workers, yet the immigration system is failing to deliver. As Alex Joiner, chief economist at IFM Investors, noted, the majority of Australia's net overseas migration is unskilled, with temporary visa holders, primarily international students and working holiday makers, comprising a record 9% of the population.

The Low-Skill Deluge

The composition of Australia's migrant intake tells a stark story. Associate Professor Salvatore Babones, in a recent AFR op-ed, highlighted that most immigrants arrive not through high-skilled permanent migration but via student and working holiday visas. Of the roughly one million international students in Australia, only half attend universities; the rest enrol in vocational programs like cooking or hospitality schools, often as a pathway to temporary graduate work visas. These 200,000 temporary graduates, along with working holiday makers from countries like China, India, and Brazil, make up over 10% of Australia's labour force, largely in low-paid, low-productivity jobs like food delivery, aged care, or restaurant work. It is the Great Replacement.

Analysis from job management platform NextMinute underscores the disconnect: visa holders constitute a tiny fraction of workers in trades, with only 7.47% from the UK, 3.98% from India, and 3.61% from South Africa. Instead, the lion's share of migrants hails from non-English-speaking background (NESB) nations, primarily through student visa pathways, filling roles that do little to address Australia's pressing needs in construction, engineering, or renewable energy infrastructure. This mismatch is not accidental but a feature of a migration system choosing volume over value.

The Ponzi Scheme of Population Growth

Australia's immigration program resembles a Ponzi scheme, where economic growth is artificially propped up by adding more people, not by enhancing productivity. In 2022-23, net overseas migration reached 536,000, 2% of the population, driving GDP growth, but masking stagnation in per capita terms. As Leith van Onselen notes, Australia's population has surged by 8.7 million this century, a 46% increase, yet capital investment in housing, infrastructure, and productive industries has failed to keep pace. The result is "capital shallowing," where resources are spread thinner, leading to declining productivity and living standards.

Housing is a glaring casualty. The National Housing Supply and Affordability Council reported in 2025 that demand for 223,000 dwellings far outstrips the 182,544 annual approvals, with a shortfall of at least 46,000 units. Migrants, concentrated in major cities, exacerbate this pressure, competing for scarce rentals and driving up costs. Infrastructure, from roads to hospitals, also lags, with Treasury's 2024 Population Statement projecting a 13.5 million population increase by 2065, largely driven by sustained high migration. Without matching investment, this growth strains public services and erodes quality of life.

The Sacred Cow of Immigration

The belief that high immigration is inherently good for Australia is a sacred cow, rarely questioned due to its entrenched status in policy and public discourse. As discussed in prior essays at this blog, sacred cows are not slaughtered, but slowly forgotten, often replaced by new dogmas. Yet, Australia's migration policy resists even this gradual erosion, upheld by a bipartisan consensus that equates population growth with economic vitality. This dogma ignores the evidence: low-skilled migration fuels low-productivity sectors, not the high-skill industries needed for housing and renewable energy goals.

On platforms like X, voices echo this critique. One user, @AvidCommentator, argued on August 13, 2025, that focusing on "genuinely skilled high-value workers" could boost productivity, while the current system acts as a "drag." Another, @whyvert, noted on August 18 that the 14% workforce increase since 2019, largely via student visas, has led to stagnant GDP per capita and productivity, likening Australia to a "classic developing country" chasing inputs over efficiency.

Breaking the cycle requires rethinking the sacred cow of high immigration. Australia must shift toward a skills-focused migration system, prioritising tradespeople, engineers, and technical workers who can address shortages in construction and renewable energy. Massively reducing reliance on student and working holiday visas, which flood low-skill sectors, would ease pressure on housing and infrastructure. A multi-year migration planning model, set to begin in 2025-26, could align intakes with economic needs, as outlined by Visa and Immigrations on May 29, 2025.

Moreover, investing in domestic training, such as expanding Free TAFE and apprenticeship programs, can reduce dependence on foreign labour. The government's Advanced Entry Trades Training program aims to recognise the skills of 6,000 workers, but this is a drop in the bucket compared to the 130,000 needed in construction alone. Reason, not globalist woke dogma, must guide policy,

Australia's immigration program, by choosing quantity over quality, is a socially destructive Ponzi scheme that delivers short-term GDP gains at the cost of long-term prosperity. Importing low-skilled workers to fill low-productivity roles exacerbates housing shortages, strains infrastructure, and undermines productivity growth. It's time to slaughter the sacred cow of unchecked migration and replace it with a system that values skills over numbers. Only then can Australia build the homes, infrastructure, and future its people deserve.

https://www.macrobusiness.com.au/2025/08/australia-is-importing-the-wrong-skills/