Labor has rejected One Nation’s claim that Australia’s migrant intake is directly linked to the nation’s productivity slump.
The response comes after conservative-leaning One Nation Senator Tyron Whitten warned on Sept. 14 that Australia’s labour productivity hadn’t improved since 2016.
“The Reserve Bank’s head of economic analysis, Michael Plumb, said the lack of ‘capital deepening’—meaning less capital investment per worker—has held back labour productivity,” he told the Senate, hours after his party released their detailed migration policy, which pledged to cut 750,000 temporary visa holders over three years.
“More people, less capital,” Whitten said.
A rapid growth in the number of workers can contribute to “capital shallowing” if investment in machinery, technology, and other productive capital fails to keep pace.
Put simply, a taxi company with 10 vehicles and 10 drivers would have one vehicle available for each worker to produce an income.
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However, if it employed 20 drivers without increasing its fleet, the amount of “capital” available per worker would halve, which also impacts productivity. Labour productivity is the amount of goods and services produced for each hour worked.
Whitten drew a direct link between high migration numbers and the slump.
Australia recorded net overseas migration of 301,000 people in the year to December 2025, down from the record post-pandemic highs but still well above pre-pandemic levels.
“Given that net overseas migration more than doubled from the mid-2000s, and then hit record levels under this [Labor] government, does the government accept that high immigration has produced capital shallowing as a material cause of Australia’s productivity slump?” he asked Finance Minister Katy Gallagher during Question Time.
But Gallagher said she disagreed with One Nation’s assertion, saying the party blamed a large number of issues on migration and that most advanced economies were struggling with an economic downturn.
“It’s an issue that all advanced economies are dealing with,” she said.
“Our lowest productivity decade was, I think, the one the [centre-right] Coalition oversaw when they were in government.
“We revised down our productivity assumptions when we came to government in recognition of that, but we’ve also, in this budget, got a very strong focus on driving productivity… across a whole range of areas across government.”
Gallagher said she didn’t blame lower productivity on migration.
“Australia has for many, many, many decades now relied on support from overseas workers to support our economy,” she said.
Whitten replied, “I’m not blaming migrants, I’m blaming you.”
He also pointed to Canada and New Zealand, which he claimed had suffered some of the world’s worst labour productivity under a high migration model.
“When Canada drastically cut its immigration numbers, the world didn’t stop spinning,” he said.
“Instead, in early 2026, Canadian output per person was rising.”
Gallagher argued Labor had cut migration by 45 percent from the post-COVID peak, would adhere to a migration scheme based on need, and that productivity issues needed a “whole of government” approach.
She also said organisations like the Business Council, Australian Chamber of Commerce, and National Farmers Federation expressed opposition to a crackdown on migration.
Are Australian Workers ‘Underutilised?’
One Nation Senator Malcolm Roberts then put forward a question on behalf of United Australia Party Senator Ralph Babet, who claimed the number of underemployed—as opposed to unemployed—Australians in the workforce had grown from 1.35 million when Labor came to power, to 1.68 million in July, 2026.
“Taking out the COVID period, underutilisation has been falling since the measure began in 2014, until Labor took over, now it’s going up,” Roberts said.
“The only interpretation of this data is that there are not enough hours, not enough work to go around.
“As a result, 1.68 million Australians are working less than they want to and need to.”
But Gallagher argued her government had achieved a historic low unemployment rate of 4.5 percent and had created 1.3 million jobs since coming to power.
The minister said Labor had also increased annual wage growth.
“It is being pretty resilient against the backdrop of global uncertainty and the risks that come with that,” she said.
