Developer’s lobby demands “rapid return” of mass immigration

The Urban Taskforce represents “Australia’s most prominent property developers and equity financiers”. It has provided a submission to the House of Representatives Standing Committee on Tax and Revenue’s inquiry into Housing Affordability and Supply, which simultaneously complains about supply-side constraints while also demanding a “rapid return” to mass immigration.

Below are key extracts encapsulating the Urban Taskforce’s supply arguments:

Housing supply is critically linked to housing affordability. While this might seem like basic economics, that fact that many in the planning community do not accept this maxim is one of the reasons we have such as problem today.

The dogmatic denial from some planners that they have any part to play in causing the problem causes reform paralysis…

Urban Taskforce has been at the forefront of highlighting the failure of the NSW Planning System to ensure its most important task is delivered: to ensure that enough houses are built to meet demand. The Greater Sydney Commission has done the work and the results show that new housing supply has not met demand… the crisis has evolved over the last two decades and this resulted in a cumulative under-supply…

Urban Taskforce has consistently contended that we need greater supply, less red tape, greater flexibility, faster approvals and urgent reform of the NSW planning reform. The States need to address planning constraints on new housing supply or prices will continue to go up…

Next are the Urban Taskforce’s key statements regarding a “rapid return” to mass immigration:

The Commonwealth Budget position is predicated on an assumption that Net Overseas Migration will return, firstly to 160,000 p.a. then rise to 225,000 p.a. over the coming 4 years in the post /COVID recovery period. This is critical to the growth of the Australian economy…

Just under one third of all overseas migrants settle in NSW. The current housing affordability crisis, driven as it is (in part) by a lack of housing supply, poses a real threat to the Commonwealth’s budget position…

Prior to COVID-19, the cap on permanent migrants was reduced from 190,000 to only 160,000. In 2020, this number reduced to almost zero. Further, Australia has not been meeting its cap since 2016. This had a negative impact on economic growth in that period…

If it settles at a permanently lower rate of 100,000 (similar to the level in the late 1990s, before reforms were implemented to attract skilled workers and international students) the impact will be pronounced. The growth rate of GDP would be reduced 0.6%pts, to just 1.3% pa. This is equivalent to output being $460bn less in 2050, when compared to a path consistent with the Centre for Population’s latest projections…

We must change the planning system to build in flexibility to cater for a rapid return of migrants to our economy…

Urban Taskforce welcomes the Commonwealth’s moves to re-introduce both temporary and permanent migration as soon as possible. We further note the Commonwealth’s plans to increase the Net Overseas Migration intake to well above the pre-Covid intake…

Urban Taskforce recommends that the Committee note the need for a rapid return to anticipated levels of immigration as soon as it is safe to do so. Further, in light of the current shortage of housing supply across Australia, Urban Taskforce recommends that the Committee actively progress all available measures to promote housing supply.

The Urban Taskforce is obviously talking its own book. “The crisis has evolved over the last two decades” precisely because the federal government opened the immigration floodgates:

Australia’s net overseas migration (NOM) jumped from an average of 90,500 between 1991 and 2004 to an average of 219,000 between 2005 and 2019 – representing an annual average increase in immigration of 140%.

But what’s the point of running a high immigration policy to juice construction if the new buildings merely house new migrants? That’s tail-wagging-the-dog economics that creates many negative externalities for the incumbent population.

Mass immigration led development is the ultimate Ponzi scheme, with the property industry privatising the gains while the costs are socialised on the existing population via: 1) funding the increasing infrastructure needs (water, power, transport, recreation facilities etc); and 2) suffering the downsides of increasing congestion, being crammed into defective high-rise apartments, paying higher housing costs, and lower wages.

A Ponzi scheme is no way to apply government policy for the good of the people. The housing industry should meet the needs of Australians, not the other way round.

Given the government and housing industry continuously argue that Australia’s housing affordability woes are caused by a ‘lack of supply’, surely then the first best solution is not to return immigration back to its pre-COVID extreme level?

Consider NSW, which the Urban Taskforce has focused upon in its submission.

The NSW Productivity Commission (PC) released a White Paper in June explicitly stating that Sydney’s housing shortage was caused by an unexpected boom in Sydney’s population when the federal government threw open the immigration floodgates in 2005:

Much evidence suggests that our State, and Sydney in particular, has not delivered enough housing over many years.

Of many possible contributing factors, two stand out. First, population growth has exceeded expectations. Forecasts made in 2005 predicted that Sydney’s population would reach 5.2 million by 2031. More recent projections are for a population of around 6.2 million by this time (NSW Department of Planning, Industry and Environment, 2019).

Second, housing supply policy has not achieved the desired results… Since 2006, NSW housing supply has not kept pace with demand or State targets. That has created an accumulated underlying shortage of dwellings.

Shortly afterwards, the NSW Budget revealed that the state’s housing shortage had all but evaporated thanks to the collapse in immigration:

Residential construction is expected to remain strong in the very near term, fuelled by higher house prices, ongoing policy support and low interest rates…

Building approvals are now running well ahead of the change in population, which is depressed due to the lack of inward migration. This suggests a potential oversupply in the near-term relative to the underlying demand for housing (Chart 2.13).

However, rebooting pre-COVID mass immigration would create renewed ‘housing shortages’, according to NSW Intergenerational Report. Specifically, the NSW IGR states that “net overseas migration is expected to return to positive levels in 2023, before returning to pre-COVID-19 levels towards the end of this decade”. Accordingly, “net migration is projected to contribute 2.0 million people to the NSW population” over the projection period to 2061, which “will need 1.7 million additional homes for a growing population, equivalent to one new home for every two existing homes”.

Thus, Sydney’s housing shortage could be permanently solved with the stroke of a pen by the federal government. All it needs to do is reduce immigration back to historical pre-2005 levels. This would also negate the need to bulldoze Sydney’s suburbs into high density.

Sadly, in the property Narco state of Australia, lobbyists like the Urban Taskforce pull the strings. Nothing boosts their profits like flooding the place with millions more migrants.