If NSW cut 54,500 migrants within the next ten years, the state economy would be $130 billion worse off.
It would also mean 200,000 less jobs, and an increase in wages of only 0.9 per cent, according to economic modelling commissioned by the Property Council of Australia.
The modelling comes off the back of NSW Premier Gladys Berejiklian’s calls in October for a “breather” in migration levels to be halved to 50,000 per year.
NSW welcomed about 105,000 migrants in the 2017-18 financial year.
The research has also been unveiled ahead of the Council of Australian Governments’ meeting, to be held this Wednesday, where migration will be on the agenda.
But the modelling shows that going ahead with the proposals would mean wiping approximately 25 per cent of the current NSW economy, or removing the two largest sectors – financial and insurance services and property owners.
The industries that would be worse off from the migration cuts would be professional services occupation, which would be a reflection of the direct reduction in permanent or temporary skilled worker visas.
Lessened migration could also mean further declines in house prices, according to the report, as lower demand for dwellings would reduce overall investment in new properties and construction activity.
The lost investment value could reach $177 billion by 2028-29.
“This research strikes a cautionary note for those suggesting migration to NSW should be cut, especially drastically,” said Property Council NSW executive director Jane Fitzgerald.
As the state relies on migration for jobs, prosperity and growth, a preferable plan would be to “better manage and plan for growth” such as fast-tracking infrastructure projects designed to ease congestion, she said.
“NSW tried the ‘Sydney’s full’ experiment once before and all it delivered was lower productivity, lower economic growth and sowed the seeds of the housing affordability crisis we have experienced over the past few years.”
Policymakers are forgetting the benefits of migration, says business lobby group
Australian Chamber of Commerce CEO James Pearson argued that Australia’s approach to migration had delivered the nation “a comparative advantage”.
“The emphasis on younger, skilled migrants and the mixture of temporary migrants including skilled, working holidaymakers and students, and a cap on permanent migrants of 190,000 a year, has all added up to a stronger-than-average outcome from migration,” he said.
“Policymakers are overlooking the benefits, and have become caught up in constricting temporary skilled migration and feeding perceptions that migration is a cause of congestion in Sydney and Melbourne.”
Politicians would not stop business from growing or employing people because of infrastructure, and they shouldn’t do so for migration, he added.
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.