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The next regular federal election must be held by May 24, 2025, so we are – at most – 18 months away from a campaign. And if you were to predict today where the Coalition is going to pick a fight with Labor, you would have to put immigration near the top of the list.

Peter Dutton, a hardline former immigration minister, made the country’s record migration surge a key plank of his budget reply in May, noting it was occurring “at exactly the same time as a housing and rental crisis”. He claimed it was the return of Big Australia by stealth. This week, the opposition called for immediate abolition of the so-called COVID visa and cuts to the international student intake. It won’t be the last we hear from them on the topic.

Illustration: Jim PavlidisCredit:

There will always be a puddle of anti-immigrant sentiment for politicians to exploit, but the severe shortage of housing, and the resulting expense, is stirring genuine concern about migration levels. And the inevitable consequence of governments, economists and commentators talking so much about housing supply is that at some point, people will start thinking about the other side of the equation: demand.

It may, as chief political correspondent David Crowe wrote recently, turn toxic. You can see doubts about migration showing up more often in the comment sections of newspapers, for example; and while some of it is grounded in old-school racism or newfound eco-fascism, some of it is coming from reasonable people wondering whether the numbers add up.

Immigration can be a political minefield. As Dutton well knows, you ought to choose your words carefully when discussing migrants and their families. NSW Opposition Leader Mark Speakman, taking the more orthodox view of the business community that high migration levels should be maintained, proved the point this week with a clanger about Australia being unable to “securely maintain occupation” of the continent without a steady flow of migrants. Populate or perish. He later walked back his “colourful” comments.

What this does show, however, is that the Coalition is divided on how to approach the subject. And it suggests the parties’ more moderate figures may not be comfortable with some of the rhetoric that is appearing, and will amplify, as the election nears.

You don’t need to look far through the journals where conservative ideas percolate to get a feel for the arguments. The right-wing Spectator Australia magazine carried an article this week by Jordan Knight, “the founder of Migration Watch Australia”, who indulged the dog whistle of “white flight” while saying conservatives were failing miserably on migration.

The article also contended that Labor was running a large migration program because migrants vote Labor. Never mind the fact they don’t at all until they eventually become citizens, this claim has become a talking point. “This is about Labor ensuring they’re in the majority,” Liberal National Party MP and former cabinet minister Keith Pitt told Sky News this week during a discussion about immigration. “It’s more Labor voters – that’s what they’re looking for.”

However ugly and divorced from reality the debate may get, Anthony Albanese will have a problem because his solutions to the housing crisis, and those of his state Labor premier friends, are at best going to take years to bear fruit. At worst, they are pipedream promises that will never come to fruition. The squeeze on rents is only predicted to tighten, an inevitable function of higher demand and lagging supply.

Former Victorian premier Daniel Andrews announced an ambitious target to build 800,000 new homes in 10 years, then promptly vacated the post. That is now a problem for Jacinta Allan, who duly billed it as the biggest, most important issue for the state in her debut press conference as premier on Thursday.

There is actually a fair amount of substance to Victoria’s plan, such as ditching permits for single dwellings or cutting the approval time to 10 days, putting the minister in charge of approving medium-density projects, an Airbnb levy, and residential conversions of CBD office buildings.

In NSW, where the affordability crisis is significantly worse, Premier Chris Minns spent the week dialling up his rhetoric against NIMBYs, mayors and opponents of high density across the political spectrum. Minns’ target is at least 75,000 homes a year for the next five years, and we will know by Christmas where he intends to distribute those throughout Sydney and the regions.

But both states are singing from the same song sheet: we’re going to build up, not out (or up and out), and councils need to help or get out of the way.

To do that, though, we need builders. Lots of them. This is where the case gets trickier for leaders to prosecute; we need more migrants to build the houses for all the people who need a place to live – including the migrants we’re bringing in to build the houses. It seems self-defeating, which was exactly the point 2GB’s Ben Fordham put to Minns on Friday morning.

“That’s true,” Minns replied. “But we’ve got to deal with the reality that’s presented to us. There’s not enough tradies in the construction sector to build the completions that we need in NSW.”

The Grattan Institute has examined how the migration system contributes to our construction workforce. Its work, previously unpublished, found recent migrants are less likely to work in the construction sector than most other fields. That was especially the case for the migrant cohorts growing the fastest, such as international students and temporary graduate visa holders. New Zealanders were the biggest contingent of migrant construction workers, making up almost 5 per cent of that workforce in 2016.

“The kinds of migrant populations that are booming right now are not those that tend to work in construction,” says the Grattan Institute’s economic program director, Brendan Coates. “Students, they make up less than 1 per cent of the construction workforce.”

The bottom line? “For every 100,000 additional migrants that come to Australia – many of whom offer big benefits to Australia in other ways – comparatively few are the kinds of workers we need to build the homes to house them.”

The federal government will soon release its response to a review of the migration system led by former public service chief Martin Parkinson. The government will reportedly move to fast-track visa processes for skilled workers attracting salaries over about $120,000 a year, but it may exclude tradies amid pressure from unions.

That’s concerning, says Coates. “That pathway should be offered to all workers in any occupation, provided they earn at least $120,000 a year, and should not be subject to labour market testing, which has proven to be a complete failure.”

In a recent submission to the Senate’s inquiry into rental affordability, the Grattan Institute said lowering migration would make housing somewhat more affordable in the long term, but would probably leave Australians worse off overall. Skilled migrants, for example, pay more in tax than they draw in government services, and thus bring with them a large fiscal dividend – about $300,000 in their lifetime, the institute estimates. “That’s enormous,” says Coates.

Cutting family migration would just mean spouses wait in Australia on bridging visas, so they would still be here, competing for housing. The humanitarian program – refugees – is small and hardly contributes to housing pressures. Where Coates believes cuts can and should be made without too much cost is temporary migration, and that is where the government appears to be heading in its imminent response to a review of Australia’s migration system.

The best things you could do, Coates says, is raise the bar for international students, pull back on the rights given to graduates to stay and work in Australia, and limit the working holidaymaker visa to one year – without the ability to extend it for working 90 days in the regions. That was also one of Parkinson’s recommendations.

Home Affairs Minister Clare O’Neil has stressed the review is not really about “how many” people come to Australia but what kind. She says the changes the government will soon announce do not increase the migration intake; if anything, they will “reduce the size of the system a bit”.

That will not deter an opposition that believes it’s on a winner with a campaign on immigration. Especially as the pains of higher rents and longer queues are immediate and tangible, while the fiscal dividends are distant and nebulous.

Michael Koziol is Sydney editor.

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