Australia has found an unusually effective way to avoid fixing its economy.
Whenever growth weakens, productivity stalls, the population ages or businesses complain about labour shortages, we add more people.
Migration has obvious advantages. It expands the workforce, increases consumption, broadens the tax base and brings skills into the country. Properly designed, it can make Australia richer.
But that is not the same as saying Australia’s current dependence on mass migration is healthy.
The deeper problem is that population growth has become a substitute for economic reform.
Australia’s population grew by 412,500 people in the year to December 2025. Net overseas migration accounted for 301,000 of them — about 73 per cent of total population growth.
That immediately adds workers, consumers, renters and taxpayers to the economy. Aggregate GDP rises. Businesses acquire customers. Universities acquire students. Governments acquire revenue.
What it does not necessarily do is make the country better at producing things.
And on that measure, Australia is doing remarkably badly.
The Productivity Commission reported last week that labour productivity was flat in the June quarter and fell 0.2 per cent over the year. Australia is now barely 1 per cent above its average productivity level of 2015–19.
The underlying numbers are more revealing. Output increased 2.1 per cent over the year. Hours worked increased 2.3 per cent.
Australia produced more largely because more labour was used, not because each hour became more productive.
That distinction matters.
An economy can expand by putting more people and capital to work, or by becoming better at turning those inputs into output.
Australia has become very good at the first.
The second is harder.
It requires governments to confront restrictive planning laws, inefficient regulation, infrastructure bottlenecks, weak competition, tax distortions and an economy in which creating new productive capacity is often considerably more difficult than bidding up the value of existing assets.
Those reforms create losers. Population growth is politically easier.
Housing shows the problem in its clearest form.
Australia has spent decades restricting how much housing can be built where people actually want to live.
Grattan Institute estimates that about 80 per cent of residential land within 30 kilometres of the centre of Sydney and 87 per cent in Melbourne is restricted to buildings of three storeys or fewer.
In Brisbane, Perth and Adelaide, at least three-quarters is zoned for two storeys or fewer.
Then we rapidly increase the number of people requiring housing.
The resulting shortage is subsequently described as a housing crisis.
Migration did not create the planning system. But adding demand faster than a constrained system can accommodate makes the consequences worse.
This is the point at which the migration debate usually collapses into stupidity.
One side argues that migrants are causing Australia’s problems. The other responds that migration increases GDP, fills skills shortages and produces substantial economic benefits.
Both can be partly right while missing the central question.
The issue is not whether immigration is good or bad.
The issue is why Australia has become so dependent on population growth to maintain economic momentum.
The historical record is instructive.
Treasury has observed that over the two decades to 2022, Australia’s productivity growth was substantially weaker than earlier projections while the population ended up about three million larger than projected, largely because net overseas migration was much higher than expected.
Yet aggregate real GDP ended up remarkably close to the original projection.
Australia undershot productivity and overshot population, while arriving at roughly the expected size of the economy.
That does not prove migration caused weak productivity. It shows that population growth can sustain aggregate growth even when productivity disappoints.
A highly skilled migrant who starts a company, develops technology or fills a genuinely scarce medical position can plainly increase national productive capacity. There is a strong economic case for that migration.
But that does not justify treating migration itself as an economic strategy.
Every additional person also increases demand for housing, electricity, roads, hospitals, schools, water and transport.
If productive capacity and infrastructure expand accordingly, the country can become both larger and richer.
If they do not, Australia divides congested infrastructure and scarce assets among more people while congratulating itself on economic growth.
The political economy also favours the status quo.
Population growth creates immediate and identifiable beneficiaries while many of its costs are diffuse.
Employers gain access to labour. Universities gain international students. Businesses acquire more customers. Property owners benefit when additional housing demand feeds into rents and prices. Banks finance a larger economy. Governments collect more revenue.
The benefits are concentrated and visible.
The costs appear as higher rents, longer commutes, more expensive housing, overloaded infrastructure and younger Australians discovering that entry into the property market has moved further away.
None of this requires hostility towards migrants. Migrants enter the same dysfunctional system as everyone else.
The criticism belongs elsewhere.
Australia has repeatedly chosen the politically easy method of enlarging its economy instead of the difficult task of improving it.
Mass migration has therefore become something like an economic drug.
It produces an immediate effect. It suppresses certain symptoms. It allows the underlying condition to remain untreated.
Eventually, however, the dosage itself becomes part of the problem.
A serious economic reform program would reverse the order of operations.
Build the houses. Reform planning. Increase infrastructure capacity. Remove barriers to investment and enterprise. Improve competition. Raise productivity. Then design a migration system around the productive capacity Australia wants to build.
Migration that expands productive capacity is an economic asset. Migration used to compensate for the failure to expand productive capacity is not an economic strategy.
A country can become larger without becoming better at producing anything.
Australia has spent too long pretending those are the same achievement.