Australia faces sharply contrasting views on the impact of migration policy, with debates intensifying over whether reducing net overseas migration (Nom) would harm the economy or improve living standards. The dispute mirrors recent initiatives and discussions in Canada, a country often compared to Australia due to similarities in size, culture, and economic structure.

One Nation, led by Pauline Hanson, advocates for a substantial cut in migration, proposing to reduce temporary migrants by more than 750,000 over three years. The plan includes targeting international students and family members of skilled migrants, aiming to generate a negative net overseas migration figure for three consecutive years before establishing an ongoing cap of 130,000. This contrasts sharply with the Labor government’s longer-term Nom target of 225,000 and the current estimate of 292,000 migrants in the year to March.

Home Affairs Minister Tony Burke warned that One Nation's proposal would severely damage Australian services and the economy. Hanson counters these claims, attributing current economic challenges to recent high population growth and asserting that Australians’ living standards have declined. She cites Canada as an example where reducing migration coincided with improved per capita living standards.

Canada is currently undertaking a significant shift in migration policy that has slowed its population growth. Rather than setting fixed targets for net migration, Canadian policymakers have adopted measures to cut the share of temporary migrants from 7.6% of the population in 2024 to a goal of 5%. This has involved tightening entry and stay conditions for temporary migrants, including international students, alongside granting permanency to some. Annual population growth in Canada has decreased sharply from 3.1% earlier in 2024 to about 0.5% currently.

A May report from the CD Howe Institute, a Canadian think tank, described this as an economic "reset," with employment expected to decline somewhat in the near term and real GDP growth forecast at 0.5% for 2026, settling at around 1% on average over the longer term. The authors emphasize that these trends reflect natural labour market adjustments to demographic changes rather than signs of economic distress. Nathan Janzen, assistant chief economist at the Royal Bank of Canada, concurs, noting that despite lower employment growth, unemployment has fallen and per capita economic performance has improved.

However, economists caution that Canada's experience may not directly translate to Australia. Jonathan Kearns, chief economist at Challenger, highlights that Canada’s post-pandemic migration surge was far larger than Australia’s and that Canadian policies were implemented amid higher unemployment and a recessionary environment caused by aggressive interest rate hikes. In contrast, Australia currently operates within a tight labour market with low unemployment of 4.6% and widespread labour shortages. Luci Ellis, Westpac chief economist, adds that Canada's relative economic resilience benefits from cyclical factors, including recovery from recession, which Australia may not share.

Both countries also face long-term demographic challenges, with aging populations reducing the ratio of workers to retirees. The CD Howe Institute warns that a prolonged period of low population growth could shrink Canada’s economy by about 11.5% by 2060 compared with current projections, raising concerns about fiscal sustainability and increased debt. Janzen suggests that without sustained immigration, labour shortages are likely to become structural.

In Australia, the debate extends to how the migration program is managed. Ellis points to a growing dependence on temporary overseas workers across various sectors, potentially undermining investment in training and hiring local workers. She argues that while Australia has benefited from population growth, it must balance this against long-term workforce development and wage considerations.

As these discussions unfold, policymakers and economists continue to weigh the economic implications of migration settings amid demographic shifts and evolving labour market conditions in both countries.