< lang="EN-US">Covid 19 is the proverbial straw that broke the camel’s back. The Australian economy had been trudging along for almost a decade. Growth was below the long-term trend rate but the ‘lucky country’ tag endured. It was still the only OECD economy that had not seen a recession since 1990. It had survived the Asian financial crisis of 1997 and the widespread recession of 2000-01. It had even dodged the Global Financial Crisis of 2009 on the back of China’s voracious appetite for Australian iron ore, coal and copper.< lang="EN-US">
< lang="EN-US">That era is coming to an abrupt halt. While the lockdowns imposed in Australia are less severe than those in some European countries, they have already had a pronounced effect on the economy. Bloomberg estimates that Australia is not merely entering its first recession in three decades; it is likely to see the largest economic contraction since the Great Depression ended in 1931. GDP is expected to shrink by as much as 10 percent during the first three quarters of 2020 and it could take up to three years for the economy to return to 2019 levels. Prime Minister Scott Morrison and his team have announced a series of ambitious monetary and fiscal measures to save businesses from becoming bankrupt, and to keep unemployment levels in check. Taken together, the stimulus package announced so far amounts to AUD$ 320 bn (US$ 165 bn) or a staggering 16.4 percent of GDP. But as major sectors of the economy from tourism and retail to education and entertainment reel under the attack of Covid 19, it is likely that an entire generation of Aussies will experience prolonged economic hardship for the first time in their lives. This will pose an important challenge to both government and society in a nation that is always conscious of the ‘tyranny of distance’.< lang="EN-US">
< lang="EN-US">A 2015 book by eminent journalist George Megalogenis, titled ‘Australia’s Second Chance: What our History tells us about the Future’, could have some interesting pointers. Megalogenis looks at 150 years of immigration and economic data and concludes that each time Australia went through a recession, its leadership chose one of two options: to batten down the hatches, close the country to foreign migrants and raise high tariff walls with the notion of protecting jobs and wages; or to keep tariffs low to preserve competitiveness and to open up the country to foreign migrants with the notion that the demand generated by them will grow the economy out of the recession. His data shows that each time the leadership closed the economy, Australia endured a longer and deeper recession than its peers; each time the country chose to open up, the recession was shorter and shallower than the peers. Colonized Australia was most open to migration from the middle of the 19th century till the 1890s. By 1890, some 32 percent of residents were born overseas and the country saw an extended spell of wealth-generation, weathering periodic recessions with ease and becoming the most prosperous country on the planet by the end of the 19th century.< lang="EN-US">
< lang="EN-US">That didn’t prevent a rise of xenophobia against the Chinese who had come in large numbers during the gold rush and others (including Indians) who could enter the country as British subjects. The White Australia policy introduced in 1901 effectively shut the country to non-European migration and stayed in place well into the 1940s. Alfred Deakin, the country’s second prime minister and an enthusiastic architect of the policy had this grudging acknowledgement about the Chinese, Japanese and Indian immigrants: “It is not the bad qualities but the good qualities of these alien races that make them dangerous to us. It is their inexhaustible energy, their power of applying themselves to new tasks, their endurance and low standard of living that make them such competitors.” Protection was preferred over growth and the period, which also saw heavy Australian casualties during the two world wars, coincided with a prolonged decline in the country’s fortunes.
< lang="EN-US">It took the next 30 years to progressively dismantle that policy, ending with Prime Minister Gough Whitlam’s Racial Discrimination Act of 1975, which again opened up the country to migration without discrimination. During the next four decades, Chinese and Indian migrants became the country’s second and third largest ethnic groups respectively. Australia won respect for putting together a tough but fair points-based system that reflected the country’s priority sectors for immigration and by 2018, foreign-born residents had again soared to 28 percent of the country’s population. The average age of the foreign-born Chinese and Indian communities is just 34 years and as Megalogenis points out, the migration of young and aspirational communities has contributed to the country’s strong economic growth during this period.< lang="EN-US">
< lang="EN-US">But there is data, and then there is the politics. Australia’s immigration policy has stayed among the more evocative themes for its politicians and the ruling Coalition has made a particular virtue of its tough posture against any form of illegal immigration. The most recent bout may have started with Prime Minister John Howard’s famous 2001 re-election campaign line, “We will decide who comes into this country and the circumstances in which they come,” but his successors have also stayed true to this mantra. The net migration into Australia over the last decade has come down from a peak of 300,000 in 2009 to 228,000 in 2018. In fact, the figures for 2018 show a decline of 10% over the previous year.< lang="EN-US">
< lang="EN-US">So Australia once again stands at the crossroads. As a country with land almost two and a half times the size of India (7.6 million sq km), with a population of 26 million that is about the same as Delhi, the economic argument for greater migration is persuasive and, in the words of Megalogenis, history could be a guide to the future. An inflow of young migrants will provide just the stimulus that the country needs to come out of this Covid 19-inspired recession. But will the politics allow it?