Finally, an honest debate about immigration

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By Leith van Onselen

If you get a chance today, make sure that you watch the above debate on immigration aired on Sky News’ Politics HQ.

The debate features former NSW Premier and Australian foreign minister, Bob Carr, who has called for a significant reduction in Australia’s immigration intake, as well as for the federal government to compensate the states for population growth.

The Australian’s Judith Sloan backs Carr’s call, noting that immigration makes incumbent resident workers worse-off.

Below are some key quotes from the debate:

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Bob Carr: “Australia’s got currently the most ambitious rate of population growth in relative terms of any developed country in the world. Our population growth rate is more than Indonesia, it’s really that of a third world country. And I don’t think it would be a remotely bad thing if we were to take five years to add an extra million to our population instead of three-and-a-half or three years that it has been taking over the last decade.

Now that’s my proposition: that we should moderate the rate of population growth. And I’d like some of these hearty advocates for a Big Australia to be honest with us about three subjects:

  1. About infrastructure – I’d the Business Council for example to say that for every 25,000 extra citizens that immigration brings to Sydney or Melbourne, the Commonwealth should fund say an extra kilometer of bus transit ways or underground rail;
  2. I’d like to have honesty on rezoning as well. I’d like some of the advocates for Big Australia to say, yes, our ambitious immigration targets are going to require a pretty radical alteration in the densities of Australia’s three biggest cities; and
  3. I’d just for once like to hear one of these advocates for a Big Australia say we are going to have to work harder at reducing water use per household and at bringing down carbon emissions per head. That we ought to have sustainability targets built into our ambitious vision of an Australia that currently has the most ambitious immigration rate of any developed country.

I don’t think it would hurt one little bit that instead of adding 1 million Australians every 42 months, we took a bit longer about it…

I don’t think you could persuade many Australians that having an immigration program that brings an additional 80,000 to 100,000 into Sydney and Melbourne each year is not ambitious. And I don’t think there are too many people who are looking at the challenge of infrastructure keeping up with that population challenge who wouldn’t think that toning it [immigration] down a bit wouldn’t be a good thing…

We are talking about the denser urbanisation of the coastal strip of Eastern Australia. This is not a debate about filling up an empty continent. It’s a debate about seeing that towards the end of this century, Australia’s population will be concentrated in Hong Kong-style towers in a densely populated fertile coastal strip. And it is this geographical consideration that makes Australia a fundamentally different proposition than North America…

I’d just like to have some honesty in Canberra – these decisions are made in Canberra [which] has the lowest density of any capital city. I just wish some of the advocates of big immigration in Canberra would say ‘yes, but this puts an obligation on us’. Canberra has cut grants to the states by $80 billion an then says to the states ‘your budgets will accommodate the burden, the challenge, of these very high immigration intakes’. And this is an example to me of a lack of honesty in this debate…

There’s a host of work in the UK… and the reports – every report – has said the economic benefit that it [immigration] brings is not to the existing population. Migrants move in and receive all these benefits, but the existing population simply does not”…

Judith Sloan: “The pro-immigration lot will say that there’s not enough investment in infrastructure, public transport, in schools and the like. But the truth of the matter is that 70% of these migrants go to Sydney and Melbourne, and up to a point it’s impossible to keep up with the infrastructure needs of such an ongoing surge in the numbers, so I think it would be very good public policy to reduce the annual intake… and see how we go for a period of time. I think what Bob Carr is suggesting is quite a modest proposal… I think a lot of people would think that is fine…

Nick Reece [Host]: “Countries that don’t have strong immigration programs often get themselves into trouble. And probably the best example of this is Japan, where because of such strong public opinion against immigration, and there’s been a drop in their birth rate, they now have this sort of demographic timebomb which is ticking, which has seen them lose 20-years of good economic growth. So, a properly managed big immigration program surely is a good thing for our economy. Judith?”.

Judith Sloan:“No. No… If you look at the economic analysis of the impact of immigration, you have to determine what impact it has in per capita terms. Of course it [immigration] makes the economy bigger, but it’s actually what happens in per capita terms [that matters]. And the Productivity Commission, for example, found an incredibly modest positive impact of immigration – 40 years down the track. And the reason they can find a positive economic impact is that the wages of the groups that compete with the migrants… they are held back because of the migrants. Now, if you happen to be a local… you might have a really different view on it [immigration]. And that’s where I think the economics actually starts to hit the road in terms of the politics”…

It’s worth pointing out that Judith Sloan was the Commissioner in charge of the Productivity Commission’s 2006 review into the Economic Impacts of Migration and Population Growth, so on this topic she carries significant weight and her views should be taken seriously.

I will add that Nick Reece’s argument that countries that shun immigration and have falling populations are economic basket cases is patently false.

Over the period 2003 and 2015, there were five OECD nations that experienced declining populations. These are charted below against Australia’s mass immigration population ponzi:

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ScreenHunter_15564 Oct. 18 16.58

If it was true that population growth was such an economic boon, then you would expect that GDP per capita would have experienced anaemic growth in these countries. And yet the data shows anything but, with the nations experiencing the biggest population declines – Hungary, Germany and Estonia – experiencing stronger GDP per capita growth than Australia:

ScreenHunter_15566 Oct. 18 16.59
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And what about Japan’s unemployment rate of just 3.0%? How is this a disaster economically?

ScreenHunter_17916 Mar. 14 11.38

In any event, viewers watching the debate overwhelming voted to lower Australia’s immigration intake:

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ScreenHunter_17914 Mar. 14 10.50

It’s high time our politicians listened.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.