Perth and the Gold Coast now considered regional in government bid to boost population
The definition of regional Australia has been redrawn after a new visa scheme came into effect over the weekend, with Perth and the Gold Coast no longer classified as major cities in a bid to steer population growth to their faltering economies.
The federal government increased the number of regional visas from 23,000 to 25,000 after strong uptake in the program earlier this year but also reduced the permanent migration cap from 190,000 to 160,000 places.
But regional areas for migration purposes are now broadly considered to be areas outside Sydney, Melbourne and Brisbane, as the government aims to ease population pressure in the largest cities. Prime Minister Scott Morrison earlier said the program would create an “even stronger economy”.
Perth and the Gold Coast are now open to migrants hoping to work or study on the regional visa program. Other capital cities – including Adelaide, Canberra and Hobart, along with a long list of smaller cities like Newcastle, Wollongong and Geelong – are also eligible.
Demographics Group director Simon Kuestenmacher said nothing has changed for these cities except that the government wants to channel more population growth into these areas.
“From any geographical or statistical point of view, calling Perth a regional city is, of course, nonsensical,” Mr Kuestenmacher said. “That’s where this regional visa comes in … really it’s about channelling population growth away from Melbourne and Sydney.”
He said smaller regional towns – which would have otherwise attracted these skilled visa holders – will lose out to the bigger cities around the country.
“Australia has seen strong population growth because it’s an attractive place for jobs … that led to big jobs growth and high house prices. And people say we had so much population growth and infrastructure didn’t grow at scale,” Mr Kuestenmacher said.
“But if you go to any other city [outside the largest capitals], everybody else wants population growth quite desperately.
“I don’t think the capped migration will go on for very long, this strong-man gesture just to prove that you are a strong government escaping the horrors of population growth. But then the main goal is you want to maintain population growth to maintain GDP.”
Bankwest chief economist Alan Langford said the reclassification of Perth as a regional area is a clear policy measure, attempting to boost the city’s economy, which has been in the doldrums.
“It looks a bit odd, but it’s the fact that we’ve got lots of spare capacity here whereas Sydney and Melbourne are bursting from the seams,” Mr Langford said. “It’s directing or targeting policy where there is a need for more people.”
He said while it won’t have an immediate effect, in the medium to long term it will see more people settle in Perth and help the weak housing market too.
“No wonder the housing market here is soft. We all have the same interest rate, exchange rate. The difference is population growth, and this will help a little bit.”
But Per Capita senior economist Warwick Smith said the policy was lazy, avoiding a more systematic approach of reviving regional towns and cities.
“It’s a positive step, but a more systematic approach is needed that makes regional living appealing rather than being coercive by simply forcing some migrants to live in the regions,” Mr Smith said. “The notion that the way we reinvigorate the regions is to funnel immigrants into them is a bit of a cop-out.”
He said the government is acknowledging there are problems but not addressing the causes because it would cost more to fix.
“[It’s] mostly a lack of opportunities in regional Australia … forcing immigrants to move to the regions costs the government very little,” he said. “We also have pretty high unemployment in many regional centres and could focus on training those people instead of importing skills.”
He said pushing more migration into towns and cities at a time when there was rising unemployment because of a struggling economy would help push up house prices.
“One impact will definitely be to prop up house prices, just through raw population pressure. Just asking who they are really doing this for, is it the local population or is it the very powerful real estate lobby?”
It comes as house price forecasts continue to be revised higher with HSBC the latest to tip the uptick in sentiment to continue into 2020.
It expects national housing prices to rise by 5 to 9 per cent in 2020, up from the previous forecast of 0 to 4 per cent.
Sydney prices are expected to rise 8 per cent to 12 per cent in 2020, HSBC said, with Melbourne set to lift 10 to 14 per cent.
Meanwhile, new Commonwealth Bank research showed home buying intentions had risen sharply, approaching record highs of 2017, according to the bank’s Household Spending Intentions survey for October.
