Now I don’t use the term conspiracy often. But I have come to the conclusion that there is an immigration conspiracy going on involving Canberra bureaucrats and politicians, among others, who are only too happy to overstate the benefits of immigration while downplaying the costs.
…And don’t be fooled by the idea that immigration is a solution to an ageing population. The Productivity Commission has made the point on multiple occasions that the impact of immigration on the demographic profile of the population is small and doesn’t last without ongoing higher immigration. That’s why many people call immigration a Ponzi scheme.
When it comes to the distribution of the economic benefits of immigration, it is businesses, workers with complementary skills to the migrants and the migrants themselves who hoover up the gains. In fact, it is overwhelmingly the migrants and their families who gain the most. Workers with skills that compete with those of migrants lose out.
We also should note that most economic studies of immigration simply do not take into account the costs of immigration, such as the loss of urban amenity, additional congestion, stress on infrastructure, including schools and hospitals, and environmental pressures.
There is little doubt that were a figure to be put on these other costs that immigration would be imposing a net cost on many parts of Australia, particularly in Melbourne and Sydney.
…And to mention immigration as a means of addressing skill shortages is surely the ultimate cop-out. If there are continuing skill shortages, it is surely incumbent on the federal and state governments to ensure that these jobs can be filled by locals rather than allowing businesses to take the easy way out and bring in skilled migrants.
…But the real clanger in all this — and part of the conspiracy perpetrated by Treasury, which incidentally has never had any real expertise in the economics of immigration — is that a lower immigration intake — 50 per cent fewer permanent immigrants, say — would cost the budget $4bn to $5bn across four years. This is complete hooey and Morrison knows it.
We have always known the fiscal costs of immigration are borne largely by the states and territories. Think: extra schools, extra hospital beds, extra transport, the cost of settlement services, and the list goes on. For Morrison to worry about the supposed loss of $4bn to $5bn in federal government revenue over a four-year period in which total government spending will exceed $1200bn is neither here nor there. But the extra costs to the states and territories are many multiples of this imagined revenue loss.
The bizarre part for me is that the Fake Left are also in on it. Where are the class warriors to defend the unlanded, wages-crushed and generally young? Bootleggers and Baptists all off the cliff together…
You have to be in a state of comprehensive and absolute denial about every Australian’s lived reality, including presumably your own, not to understand, accept and indeed urge that we have — at the very minimum — a “conversation”, and an urgent one at that, about population growth and its major driver immigration.
Apart from anything else, it is a very odd claim to make, as you implicitly do, that the current immigration policy, both as to aggregate numbers and composition, is perfect — fashioned like a bureaucratic Mona Lisa — and cannot even be discussed, far less changed in any way. Everything else is up for discussion and change — even, as we recently discovered, the multi-millennium understanding of marriage. But immigration? Absolutely not. Any discussion is prohibited. For precisely how long: a decade; a century; indeed, a millennium?
In fact, in counter, immigration and population growth are the absolute foundational policy issue for Australia. They it at the heart of every policy issue, right across the board and at every level of government.
You cannot have a sensible discussion about anything in Australia — and I really do mean anything — unless you start with a discussion about immigration, quantitatively and qualitatively, and population.
But Adam Creighton is a card-carrying conspirator:
It is surely a bad look when one of the richest nations, with practically the lowest population density in the world (apart from ice-covered Greenland), ensconced alongside one of the most populous, Indonesia, appears to be toying with a debate about the benefits of slashing immigration.
Cutting immigration has become a popular agenda item for both right and left-wing populists the world over, fuelled by a slowdown in wages, soaring house prices, pockets of social breakdown, and ageing and cramped public infrastructure. Yet lowering immigration won’t solve any of these problems, which are complex and indeed feature among countries with a wide variety of immigration and population growth rates.
…Age-old economic fallacies about immigrants abound. They don’t “take jobs” because, logically, they create demand for goods and services. An influx of low-skilled workers may put downward pressure on the wages of the low skilled relative to those of the high skilled, but our immigration program focuses on the higher skilled, who earn more and pay more tax. In fact our income per person is on track to be $7000 a year higher by 2060 (in today’s dollars), according to the Productivity Commission’s 2015 study on the pros and cons of immigration.
Here’s what a dispassionate economic analysis of the impacts of a rolling supply-side shock does to the labour market, Adam, via UBS:
…and the positive labour supply shock from migration/participation In Australia’s (and NZ’s) case, there has also been a resurgence of migration in recent years which has generated a ‘positive labour supply shock’, likely an additional factor limiting (average) wages growth (Figure 30).
There has also been a large (albeit perhaps inter-related) positive labour supply shock from a surge in the participation rate (particularly for females) to around a record high level (Figure 31). This trend is likely largely cyclical, given it tracked the delta of stronger jobs growth. This increase in participation is more positive than the trend overseas (Figure 27 again).
That’s it. Mass immigration sits on wages. In the test tube it’s neither good nor bad. It just is. The Productivity Commission, the ABS and the Australian Population Research Institute also show that migrants have worse employment outcomes than the Australian born population (see here).
Creighton’s emotive drivel is the key input of the conspirator. Another dead giveaway is inconsistency, given Creighton has forgotten what he wrote in March 2017 about the population “squeeze” afflicting Melbourne and Sydney.
Moreover, his use of land mass as the key determinant in population is just the coward’s way of yelling “racism” into the heavens. Australia has roughly the land mass of Brazil. Should we have 200m people, its huge spread of slums and environmental disaster too? Why not shoot for a population density matching Singapore and we could have 60bn people! We can import Marsians and Betelgeuseans to goose GDP!
Economic, urban and natural sustainability are the key inputs that matter, all of which are obviously being stretched to the detriment of living standards for everyone but an elite few living on the east coast.
As Phil Coorey notes, kind of sitting on the fence:
…”Already, both cities stand out in global assessments of housing affordability and traffic congestion. And even if we do manage to stuff an additional 7 million people into those cities what are we going to do with the other 9 million who will be added to the Australian population in that same period of time?
…Such a backdrop is fertile ground for calls such as those made by Abbott. When Rudd first landed in trouble over big Australia, it wasn’t just infrastructure that was a concern but natural resources such as water. Back then, the Murray-Darling, in terms of its capacity to irrigate crops and maintain its vital environmental functions, was in poor shape.
Then opposition leader and former water minister Malcolm Turnbull said investment in water infrastructure would determine whether Australia could sustain 35 million people. Today, the basin is in worse shape. And thanks to the bungled handling of the water portfolio by Joyce, trust levels between the basin states are at a poisonous low.
The immigration debate is here at last, in no small measure thanks to the LVO one man wrecking-ball, and the longer it goes on the more hollow the conspirators sound.
Immigration – because there are many desperate to hate – must be treated with extreme care by politicians and journalists, and certainly with more care than Abbott seems capable. The inherently racist parties will seek to use any discussion and any seeming evidence of the negative impact of migrants as fuel to burn their fires of hate.
But the economy is not as straightforward as Abbott would have us believe – migrants increase economic activity and generally improve overall productivity. What they don’t do is lower wage growth.
Research by the Australian National University has found that “immigration had no impact on the wages of incumbent workers”. Yes there were some workers who were negatively affected by migrant workers, but “positive effects outnumbered negative effects three-to-one, and the overwhelming impression is that immigration has no effect”.
As the Productivity Commission found when it looked at Australia’s migrant intake, one of the biggest issues for migrant workers is not that they increase unemployment or drive down wages, but that they are more susceptible to exploitation by their employers.
Wages growth over the past four years has been steadily falling until it has reached a state where 2% annual growth is viewed as an improvement. There are many factors at play that have led to this – and a large one is the run of policies by governments of which Tony Abbott was a member that sought to undermine the ability for workers to bargain for higher wages and which also made it easier for employers to pay workers less.
But talking immigration is a simple solution – it blames others and frees Abbott and his kind from admitting their own ideology has always had as its aim lower wage growth.
The same can be said of housing.
…For Abbott, as so many of his ilk have found, it’s easier to attack migration than admit their own policies are much more to blame.
Ahem…mass immigration is one of the Coalition’s policies. It’s not some God-given truth. Any sensible economic policy addresses both supply and demand.
As Leith has previously explained, the ANU modelling cited by Jericho transpired exclusively through the mining boom (2001-11) which is hardly a fair sample. We supported higher immigration too when the nation faced genuine supply constraints, to keep wage rises from running away. The question today is: is it good policy to flood the labour market with foreign inputs during a period of huge oversupply? Obviously not. And Greg Jericho’s ignominious flip-flopping strongly suggests that he knows it, marking him out as card-carrying member of the conspiracy.
Jess Irvine does a better job with similar arguments, largely agreeing with Tony Abbott:
In the main, Abbott is correct to say that increasing the supply of something tends to decrease its price.
But he has missed a key caveat – a crucial phrase adored by economists the world over: “ceteris paribus”, or, “all other things being equal”.
In truth, all other things are rarely equal when it comes to analysing the economy.
Immigration is just one variable in an incredibly complex economy, in which demand and supply factors play equally important roles.
Abbott is right that more rapid population growth boosts demand for housing. But the story is far from over at that point. Governments can and do release more land for housing and local governments rezone land to boost supply.
Come on, Jess, we all know that’s balderdash. Population growth is nearly all immigration driven. As well, it’s pointless arguing for the supply side fix when it clearly is not coming. Our planning system is broken. And that means the downsides of further mass immigration are much higher. We need a moderated pace so we can look after the interests of Australian workers and youth, as well as making a still generous contribution to those wishing to come.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
