Canada and New Zealand cut migration sharply and saw modest rent falls – but only alongside weaker labour markets and stronger housing supply. The lesson for Australia is not imitation, but stability.

There has been much discussion in the media (and amongst some politicians) that we should copy Canada and NZ on immigration policy after those two nations brought down net migration very significantly and experienced some falls in house rents. The Editor of the Australian Financial Review has explicitly recommended that Australia follow Canada’s lead. It’s therefore worth examining what has happened in those two nations.

Canada After running a very high immigration policy for a number of years (both before and immediately after covid), Canada made major cuts to overseas student numbers (much more than the reductions Australia has made) as well as to temporary worker numbers that led to net migration falling close to zero (see Chart 1).

Permanent migration was also reduced but remains at around 380,000 in the current year. Australia’s permanent intake is around 210,000.

But it wasn’t just the cuts to students and temporary workers that drove down net migration to Canada. It was assisted by a massive increase in the outflow of students and temporary workers (as well as Canadian citizens and permanent residents) due to a very weak labour market. The rapid increase in the outflow has been much larger than the increased outflow of students and temporary workers from Australia. A key difference is the very different labour market conditions in the two nations.

Six months after the end of Covid, the Canadian unemployment rate had fallen to 4.8........

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