The South Australian Liberal Government is preparing the ground for a cheap labour flood by axing labour hire laws targeting migrant worker exploitation. The question of whether or not South Australian’s actually want this people flood is far more problematic. Back in October last year, the lobby group representing migration agents warned that South Australia’s population growth could fall to zero, and economic problems would worsen, following visa reforms by the federal government. Thankfully, this false alarm was ridiculed by former South Australian Premier, Jay Weatherill, who rejected the Migration Institute’s special pleadings. Article by Leith van Onselen, first published at https://www.macrobusiness.com.au/2018/09/and-now-for-the-crush-loading-of-adelaide/ on September 21, 2018.
As Melbourne and Sydney rage builds, the answer for the living standards destroying growth lobby (property, banks, retail) is South Australia, via Domainfax:
Prime Minister Scott Morrison threatened to “pull levers” to get growth under control on Thursday, including sending international students to regional universities to relieve urban congestion as he puts together a formal population policy.
“Up in the north, they want more population, in Adelaide they want more population,” he said.
“I can tell you, in the outer suburbs of Sydney and Melbourne, they don’t.”
The South Australian Liberal Government is preparing the ground for a cheap labour flood by axing labour hire laws targeting migrant worker exploitation. From The ABC:
Attorney-General Vickie Chapman has announced the State Government will seek to repeal the Labour Hire Licensing Scheme which was put in place by the former state government.
The scheme, which came into effect earlier this year, includes stricter penalties for wrongdoers and a requirement for all labour hire companies to be licensed.
The amendments successfully passed SA Parliament in November 2017 and stemmed from a Four Corners investigation alleging the exploitation and underpayment of migrant workers at various companies.
“The whole regime will go,” Ms Chapman told the ABC.
“The labour hire laws were established on ideology and they’ll be repealed on common sense…
The move has been met with both support and outrage, with Business SA applauding the repeal but the Opposition and SA Unions vowing to fight against it.
Let’s recall what the parliamentary inquiry into establishing a modern slavery act said:
9.146 The Committee recognises that recent Commonwealth, state and territory inquiries have highlighted the role that unscrupulous labour hire companies play in contributing to the exploitation of migrant workers…
9.150 While the Committee acknowledges that a labour licensing scheme is no ‘silver bullet’ to stopping exploitation and modern slavery, it considers that taken together with the Australian Government’s existing measures and the recommendations of this report, it will assist to improve protections for migrant workers…
9.152 The Committee recommends that the Australian Government establish a uniform national labour hire licensing scheme, consistent with recommendations by the Parliamentary Joint Committee on Law Enforcement, the Joint Standing Committee on Migration and the Senate Education and Employment References Committee. This licensing scheme should incorporate random audits and unannounced inspections of labour hire firms to ensure compliance.
We can’t have that! The horribly conflicted Migration Council wants less protections and it must have its way.
The question of whether or not South Australian’s actually want this people flood is far more problematic. Back in October last year, the lobby group representing migration agents warned that South Australia’s population growth could fall to zero, and economic problems would worsen, following visa reforms by the federal government. Thankfully, this false alarm was ridiculed by former South Australian Premier, Jay Weatherill, who rejected the Migration Institute’s special pleadings:
“In South Australia over the last five years, during the Census period 2011 to 2016, (we) grew at five per cent,” he said. “That’s faster than France, it’s faster than the UK, it’s faster than the US. So in international terms population growth has been quite robust.
“In international terms, (we are) growing like a chemistry experiment. We are growing at twice the rate of the growth of the OECD, three times the rate of the growth of many countries around the world.”
When challenged about the state’s decline in population growth relative to other Australian states, he said: “We’re not running a high population growth strategy.”
“Look if you want to spend an hour and a half in traffic or spend over a million dollars for a home and actually deal with the crime and the dysfunction and the disunity that occurs in some of those other fast-growing places you’re welcome to it, but we like it here.”
During a subsequent debate, South Australia’s then opposition leaders warned that the state’s population was growing too slowly, which earned another strong rebuke from former Premier Jay Weatherill. From News.com.au:
South Australian party leaders have butted heads over population growth at a debate hosted by the SA Press Club on Friday.
While SA Best leader Nick Xenophon and opposition leader Steven Marshall highlighted the state’s rate of growth as an area of concern, Premier Jay Weatherill said he was “not a high population growth person” and neither was his government.
“The notion that we’re a slow growing state is nonsense, it’s just that the rest of Australia is growing like a science experiment,” he said.
Here’s the chart of South Australia’s population growth:
Hardly looks like an “area of concern”, does it?
Then again, Jay Weatherill lost the election. So perhaps SA wants a new dose of falling living standards. Here’s the chart of South Australia’s labour underemployment and underutilisation rates (some of the highest in the land):
The irony is that the SA labour market has been hollowed out by manufacturing-destroying exchange rate lifting policies of the growth lobby. Now it will be internally deflated instead.
Get set for the crush-loading of Adelaide. Rising house prices, falling wages and reduced amenity for all.
We had an A grade example of the type of parallel universe Australia’s mainstream media has descended into late last week. A completely false story given prominence in the national media by The Australian, which was then picked up by various other Rupert Murdoch papers, but which sadly even made it beyond that – all without a single shred of fact, and all without anybody thinking to check, or even think about, the main line of the story being reported.
Better still it shows just how easy it may be to get a view into the public domain and have it picked up, with a mobile number, and a basic website splashing about a few logos, to create a Potemkin public ‘movement’. And from there we can get a sighter into the sort of desperado vested interests who’d go there to try and stoke public opinion.
The story began with the following piece which was plastered front-and-centre of The Australian on Thursday night:
Business and unions in rare alliance for Big Australia
Let’s start with the headline and the glossy of Sally McManus underneath. Any half-baked sentient thinker looking at that would assume that there has been some sort of major agreement signed by the Unions and Business on the subject of immigration.
Anybody remotely familiar with Simon Benson and his work can tell you he is a long term lackey for Rupert Murdoch’s Australian operations and has bounced around the Sydney Telegraph as a political codpiece, honing his act, before shifting to mission control last year.
The article is, in fact, highlighted as an ‘exclusive’ by the The Australian. So you would ordinarily think that for something being touted as such they would want to really nail their facts. Presumably Benson had some sort of information basis on which to write the story, and you would have thought that someone somewhere would have checked out something going into the The Australian proclaimed as ‘exclusive’.
Even more, if it is an ‘exclusive’ – did absolutely nobody at the Murdoch press think for a moment, ‘This is a major public announcement, and the idea of public announcements is to ensure the public knows, and if any organisation is making public announcements then it is in their interest to get it out as many media channels as they can. Why are we running this piece as an ‘exclusive’? Why isnt Fairfax, the broadcast channels and the ABC getting this as well? ‘
Alas, it appears we have two strikes from the ‘journalists’, ‘opinion leaders’, and ‘editorial processes’ at The Australian…….. (but it gets a whole heap better):
Big business has joined forces with the ACTU in an unprecedented compact to back a Big Australia, calling on the federal government to maintain current levels of permanent migration amid calls for the rate to be cut.
A stark statement to open the onslaught. A one sentence paragraph which is simply and utterly false – so false it is almost refreshing to see it as stark as it is for the plain and unadorned rubbish it represents.
There is no evidence anywhere to support it apart from an advertisement placed into The Australian on Friday (which we will get to).
There is not the faintest skerrick of evidence anywhere that the ACTU and its President Sally McManus have joined forces with big business on anything to do with immigration. There is no indication anywhere in their public pronouncements that the ACTU and its President Sally McManus have proclaimed, signed agreement to, funded or done anything to promote, a ‘compact’ promoting permanent immigration at its current levels, or any expansion or reduction of permanent migration levels.
The historic coalition of peak unions, employer groups and the ethnic lobby will release a united policy document today warning of the economic and social consequences of dropping the annual migration rate.
Well Friday came and went, and now the weekend too – and not a sign of any policy document uniting the ethnic lobby, big business and the unions came from anywhere.
The ACTU’s involvement comes as it embarks on a high-profile campaign to rein in employers’ access to temporary foreign workers.
The first migration document of its kind in the nation’s history calls for the current goal of an annual intake of 190,000 to be retained, with long-term levels set proportionally to the population.
Now the bullshit quotient goes up a notch right here. Think about that paragraph for a second. No caveats on why we need an additional 190k per annum, no relating it to how the economy is going, no historical reference – and certainly no mention that the 190k figure itself is a massive historical ramp up on a long term average of about 75k per annum. And then, before you get past that there is a fine sliver of the choicest grade 24 carat bullshit right at the back half of that sentence – ‘with long-term levels set proportionately to the population’.
Think about that for a moment. Our 190k isnt an ideal, it is a starting point and it keeps going up every year “proportionately to the population”. If 0.76% of 25 million brings us to 190k in the first year, in ten years time that same 0.76% will bring us more than 204k.
And no mention of employment outcomes, wages, land usage and degradation therein, consumption, whether or not that makes any form of economic sense, and no mention of who we bring in, or what skills they bring, or what they are expected to provide. Just 190k plus in – every year as far as the eye can see. And we are expected to believe the ACTU has signed up to this with business and the ethnic lobby – without discussing it with Unions under its aegis, with their members, without a debate in the public domain.
The accord will see the ACTU and United Voice, one of the most influential unions in the country, sign a National Compact on Permanent Migration with the peak employer body, the Australian Industry Group.
But on the day of the announcement neither the ACTU or United Voice have any mention of signing a compact with the Australian Industry Group on the subject of immigration numbers. The AIG has a reference to it on Saturday – on the front of its web site.
Federation of Ethnic Communities’ Councils of Australia (FECCA)
United Voice (better known once as the LHMU or the Liquor Hospitality Miscellaneous Union)
Now at this point aspiring journalists would once have been asking themselves ‘What do these organisations have to say about the compact they have signed?’ and maybe even ‘What are they telling their stakeholders about why signing the compact is a good thing or not?’ I say ‘once’ because it often isn’t the case anymore, and the focus these days is being able to copy and paste a media announcement, or parts therein, into a piece being written, and just assuming that because there are logos and because there are links then it is all legit.
As a hat tip to the old timers I thought I would check out these organisations and what they have to say about the ‘compact’.
The Migration Council Australia – has no mention of any ‘compact’ or any tie in with the AIG or the ACTU or ACOSS on the subject of permanent immigration numbers. Their #the-economic-impact-of-migration-2015" target="_blank" rel="noopener">policy area makes no mention of it either.
The ACTU – has no mention of any ‘compact’ or any tie in with the AIG or ACOSS or migrant organisations on the subject of permanent immigration numbers. Their media section makes no mention of it either, apart from the Thursday press release on the subject of temporary visa employees.
ACOSS – has no mention of any ‘compact’ or any tie in with the AIG or ACTU or migrant organisations on the subject of permanent immigration numbers. Their news section makes no mention of any compact on immigration numbers.
Welcome to Australia – has no mention of any ‘compact’ or any tie in with the AIG, ACOSS or ACTU or migrant organisations on the subject of permanent immigration numbers. They have no news or press release or policy section referring to immigration numbers in any way.
The Settlement Council of Australia – has no mention of any ‘compact’ or any tie in with the AIG, ACOSS or ACTU or migrant organisations on the subject of permanent immigration numbers. They have no news or press release or policy section referring to immigration numbers in any way.
United Voice – has no mention of any compact or tie in with ACOSS, AIG, the ACTU or migrant organisations on the need to maintain a permanent immigration volume. Their news and media section makes no reference to any compact, or any consultation with members on immigration numbers.
So that currently leaves us with a website linked to by the Australian Industry Group, and referred to in a presser by FECCA as the substance of the compact which provided the basis for the ‘exclusive’ story being touted by The Australian on Friday. At the bottom of the page is a mobile phone number – 0499 991 098 – which if you ring gets to a voice message saying in a female voice to leave a message and someone will get back to you.
If you type that number into google however, you soon end up with this result – http://fni.org.au/author/fniadmin/ – for whatever the Friendly Nation Initiative involves. The only thing we need concern ourselves with here is that the contact number – 0499 991 098 – is the same one in play for the ‘Compact’ web page and refers to a media contact by the name of Alexander…..*drumroll*…….Willox. And he happens to be a Policy Officer at the Migration Council of Australia according to the Australian Institute of International Affairs.
So this tells us that our compact domain has been registered by some gent by the name of Scott Mills on behalf of the Migration Council of Australia. Scott could easily be a cleric or IT guy of some low level sort, and all he has done is the registering of the domain name, with the costs incurred not necessarily borne by him. As anybody with a domain name can tell you they aren’t hard or expensive to establish, and even that someone could establish a website on behalf of someone, without being connected to it whatsoever. For example I could go to a domain provider and register the domain www.utterbullshit.com on behalf of the Australian Prime Minister, and nobody at the domain provider will check to see if I actually do have anything to do with him.
But before we go there lets take a look at the Migration Council of Australia. In particular lets go to the Board, where amidst a sea of corporate players the very first name to greet the eye is Innes Willox.
Now at this point the lay reader thinking about contemporary Australia, as opposed to the journalist hurriedly trying to cut and paste an ‘exclusive’ together, may think to themselves our Innes is a man about town, for yea verily he is also the main honcho of the AIG, isnt he:
So from all this we can assume that Innes has his hands all over whatever is unfolding with any ‘compact’ and he likes his immigration numbers up, and he doesn’t mind a lot of bullshit, and he will have contacts in just the right places to be able to create a weird population ponzi website, is the father of the boy with the phone number listed – who just happens to be a Policy officer with the Migration Council of Australia, then link to such a website, and be able to get someone to whip up an article giving it just a whiff of public airing.
That stench you can smell, isn’t something on your shoes.
From there, it is worth going back to take a look at the ‘compact’ because you could reasonably assume that if the ‘journalists’ in Murdoch Press overlooked the above, then the actual compact may not have withstood much examination either.
And so it is. The National Compact on Permanent Migration is an ineptly written a document. From Australia’s immigration taking place as a program in the first half of the first sentence to being a scheme at the end. To a rushed set of exhortations unadorned by any logical or rationale that might easily have been thrown together in a liquid lunch (or thrown up afterward) to a weird collection of principles of which the only remotely measurable one is a need to keep permanent immigration numbers up – presumably where they are at around 190k per annum, though it doesn’t actually say that.
We affirm that Australia’s permanent migration program is essential to Australian society and our economy and do not support any reduction to the scheme.
Our permanent migration program has been central to Australia’s economic and social development and will be critical to Australia’s future as a productive and globally integrated economy and society.
Australia is a country based on multicultural values where migrants enjoy the equality of opportunity to participate and benefit from Australia’s social, economic and political life. As our economic opportunities in the Asia Pacific continue to advance and our population ages, Australia will need migrants to bring skills and youth to complement and develop our domestic workforce and to help to grow the national income needed to support our high standard of living.
We support the current planning levels for the permanent migration program and encourage future programs to maintain a level proportional to the population.
Migrants bring relationships, knowledge, skills and social capital that ensure Australia’s economy is well placed to trade and invest with the countries of our region and beyond. Many Australians in turn live and work in other countries during their lives. In this century, our people to people ties will drive our competitive edge and spread the benefits of our multicultural values.
The successful settlement of millions of people ranks among Australia’s greatest achievements as a nation. As a result, approximately one in four of Australia’s population today was born overseas and half of all Australians have at least one parent born overseas.
Migration is a two-way street that has helped Australia forge ties to every continent, country and culture. It has made our society more cosmopolitan and our thinking more open and dynamic.
Migration nourishes our cultural and linguistic diversity and is one of our greatest strengths in the contemporary globalised world. Our humanitarian program is an important reflection of our values and adds strength to the character of our nation.
We must plan for our success as a nation by supporting settlement services and programs that foster a sense of belonging, encourage social cohesion and enable economic participation.
We must ensure that all those who come are provided with the same rights and opportunities so that our values of equality and a fair go are maintained.
We agree that the following principles should form the foundation of Australia’s migration policy:
We affirm that Australia’s permanent migration program is essential to Australian society and economy and do not support any reduction to the scheme.
The permanent migration program should be set within a national strategy for well managed population growth that provides the community with the education and training, infrastructure, housing and other services needed to support growth and social cohesion.
Australia’s permanent migration program must be evidence-based and calibrated to meet Australia’s national interests taking account of the role migration plays across all our economic levers. Migration, along with education, training, retraining and a strong system of social supports is part of our long-term economic strategy.
Australia’s migration program must be selective but non-discriminatory in terms of ethnicity, national origin, class, religion, gender or sexual orientation.
All migrants have a right to live and pursue economic opportunities in an Australia free of racism, discrimination and exploitation.
Migrants must be given every opportunity to contribute and fully participate in all aspects of Australian life, supported by access to services that assist their capacity to build the skills and knowledge needed to chart their own future.
English language is recognised as critical to participation, both in the workplace and in the broader Australian community, and migrants should have access to free services to develop their English language skills where needed.
The temporary skilled migration program should be limited to instances of genuine skill shortages which are based on evidence–based assessments of the need for specific occupations in the labour market. Where temporary visa workers are necessary we must ensure a robust regime to monitor and enforce compliance with protections incorporated in the program for preventing exploitation of overseas workers and guarding against the undercutting of local wages and conditions as well as holding those who abuse the labour rights of workers accountable.
Encouraging and facilitating permanent settlement has been a key part of Australia’s migration framework and migrants should have a pathway available to seek permanent residency and citizenship.
The confidence of the Australian community in an effective migration program, with appropriate safeguards, is paramount to its success and is contingent on strong and bi-partisan political leadership.
We agree that the following principles should form the foundation of Australia’s migration policy:
Continuing to promote the importance of permanent migration to Australia’s sustainable economic and social development to the wider community.
Supporting efforts to make the migration experience positive for migrants and for the Australian community, free of discrimination and exploitation.
Promoting migration as a stand-alone portfolio function.
Around this utter tripe, Simon Benson crafted his exclusive. Imagine the scene if you will. Innes pops over to Simon’s desk and asks if he could write something on some utter bullshit he is conjuring up and Simon does not miss a beat.
Meanwhile Simon is not a man to question bullshit, Simon is a man to spread it around…….
But the unified stance is designed as a circuit-breaker to the increasingly heated immigration debate, which the signatories believe has become toxic, xenophobic and at risk of ignoring the economic benefits that underpin skilled migration.
The document, spearheaded by the Migration Council, signals the first time unions and employer groups have reached general agreement on temporary skilled migration but based on stricter policing of the program.
We can assume the unified stance has in no way pared the marginal propensity to bullshit, with the document signaling nothing more than the desperate straits the population ponzi lobby is now descending into to get traction in a world where everyone can now see Australian immigration has been run too hard for far too long. Of course, that is before we get to the not insignificant matter of there being no indication at all that any unions have signed up to the compact.
Simon (and Innes?) obviously decided a chart would help things along about here and threw up this one which did at least identify the ramp up in immigration numbers post 2006.
But even there it doesn’t really do justice to the insane level at which Australia has been running immigration numbers over the last last 12 years. Here is an accurate depiction of that:
Simon then works the Union angle some more……
#333333;">ACTU secretary Sally McManus told The Australian the country had a history of permanent migration for “most of the 20th century”.
#333333;">“That system was predicated on civic inclusion as an Australian ideal; the idea that if you lived and worked in Australia, paid taxes and abided by the law, you should also get a say in the content of those laws, as well as the chance at full participation in our social, economic and political life,” she said.
There isn’t anything to doubt about Sally McManus having said anything there. But there’s a lot to ask about how it relates to the ACTU signing up for a ‘compact’ upholding a level of 190k per annum immigration.
#333333;">The issue has divided government ranks, with cabinet ministers publicly at odds with each other over whether the annual intake should be reduced as first proposed by former prime minister Tony Abbott.
Simon is obviously a master craftsman who knows well to weave some factuality into your bullshit narrative so that the reader can feel that something rings true. If we assume that the Prime Minister and Treasurer bullshitted the public about whether Home Minister Peter Dutton took any form of proposal to reduce immigration numbers by even a small volume, then we can assume that there has been some tension on the subject.
#333333;">The business-unions compact follows the release of a report by Treasury and the Department of Home Affairs that backed a Big Australia and revealed that permanent annual migration was forecast to add 1 per cent to GDP growth each year for the next 30 years.
Well, we still haven’t seen any trace of the union side of the compact apart from a photo of Sally McManus so we could easily start that sentence with the ‘business-tooth fairy compact…..’ but our craftsman has some more fact in the narrative. Treasury has recently put out a report backing a big Australia which has been comprehensively debunked, dismantled, chewed, laughed at, snorted on and facesat at Macrobusiness.
#333333;">Signatories to the compact — announced today in an advertisement in The Australian — include the Migration Council of Australia, the Australian Council of Social Service, the Federation of Ethnic Communities Councils of Australia, the Settlement Council of Australia and migration lobby group Welcome to Australia.
Simon has at least got the names right (he is obviously a senior Murdoch ‘journalist’) but he missed the small fact that there is no sign of anyone signing anything. There arent any signatures on the compact site, and not a scintilla of evidence anybody on the union side of of the compact is even aware of it.
#333333;">It will also involve the Business Council of Australia in what the compact’s signatories claim is a “historic” agreement between business and the trade unions for the economic good of the country.
One wonders if the BCA actually knows of it yet. There is nothing on their website to suggest they do, and they certainly haven’t put out any pressers on the subject.
#333333;">The 10-point policy document sets out critical elements of the migration program including English language skills, evidence-based skill needs, national interest and selectivity at the same time as being non-discriminatory.
#333333;">“This historic national compact brings together civil society, business and our union movement in shared tripartite commitment to migration as part of Australia’s future,” the document says. “We affirm that Australia’s permanent migration program is essential to Australian society and our economy and do not support any reduction to the scheme.”
The compact, as can be seen above, is nothing more than a collection of motherhood statements in abysmal English.
#333333;">The government has argued that the 190,000 intake was a rigid target set by the former Labor government that was based on the “quantity rather than quality” of migrants.
#333333;">The Coalition reset the target to a “goal” that has been allowed to reduce to an expected 160,000 this year.
This is the blame apportionment line, but seemingly takes us towards a reduced number of immigrants arriving this year anyway, despite the compact ostensibly calling for no reduction. Did Simon or Innes read what they were writing, or were they a tad under the weather by this stage?
#333333;">Former Business Council of Australia head and current Migration Council of Australia board member Tony Shepherd said the compact was without precedent.
#333333;">“I welcome this compact and congratulate the signatories,” Mr Shepherd said. “Immigration is the cornerstone of our incredible post-war development. It remains vital to our prosperity and security given our ageing and small population.”
All of a sudden we are back with the BCA and another business gargoyle who is gracing the board luncheons of the Migration Council. He too is talking about signatories despite nobody having seen any sign of anybody signing anything , but he does lay in with two other oft exhorted placebo rationales for higher immigration which have been debunked more times than anyone would care to think about with ageing and small populations.
#333333;">The AiGroup, representing 60,000 businesses, said it was critical that the migration program retained the confidence of the public. “The benefits of migration are felt across every sector of the Australian economy and the skills migrants bring are vital to the development of future industries,” AiGroup chief executive Innes Willox said.
#333333;">“Migration has helped Australia maintain our long record of uninterrupted growth and has assisted us in building our national infrastructure and skills base. It is important that we come to a consensus that migration is a key part of Australia’s future prosperity.”
Innes works himself into the story with a few comments. Innes is probably part of the world which has seen Australia shed economic diversity and sell out Australian employers with Free Trade Agreements. Could he tell us why we need more immigrants if all we do is spread around the wealth from mining operations?
#333333;">Carla Wilshire, the chief executive of the Migration Council who drove the agreement, said migration was one of Australia’s greatest strengths.
#333333;">“Migration has been central to our nation-building story and the national compact creates a platform to build consensus around the importance of migration to Australia’s future,” she said.
All of a sudden we slip a new character in at the end – another Innes flunky from the Migration Council. She is described as ‘driving’ the agreement, rather than a compact, which leads us to wonder if she was taking dictation at lunch with Simon and Innes.
#333333;">The peak union body recognised the need for a temporary skilled migration program on the condition that it was based on a robust compliance regime, restricted to genuine shortages and used “evidence-based” assessment of specific occupations.
#333333;">Yesterday the union issued its own briefing paper demanding more stringent labour market testing for temporary workers claiming there was an over-reliance in some regions.
Surreally the piece concludes with reference to the one thing the ACTU has clearly stated this week – to the effect that temporary employment visas have been abused.
So there it is.
It’s a compact, it’s an agreement, it’s been signed and it involves business, unions, immigration bodies and ethnic councils and social service providers, and it argues for maintaining a high level of permanent immigration – just that it consists of nothing but a web page with some logos, and three quarters of the organisations behind the logos have not even mentioned any agreement or compact.
Maybe The Australian would like to verify whoever paid for the advertisement which appeared in The Australian on Friday and their connection with the Migration Council of Australia? And maybe the Migration Council of Australia may want to clarify with a statement that whoever has paid for that advertisement has been duly authorised to expend monies on its behalf, and that it considers the advertising of the ‘compact’ an efficient use if its resources?
That of course is before we look at Rupert Murdoch’s world and ask ourselves if his minions write ‘exclusive’ pieces based on advertising connected with its own opinion writers, touting websites which are closely connected with that writer.
It has Innes Willox’s fingers all over it. And it stinks.
Tonight, [Feb 18, 2018] I appeared on the ABC’s National Wrap to debate the Migration Council’s CEO, Carla Wilshire, on Australia’s mass immigration program. Below are notes from the debate explaining my position and refuting Ms Wilshire’s key lines of argument.
Economic modelling on immigration is unflattering and does not reflect real life:
During the debate, we got into an exchange over the purported economic benefits of immigration, as noted by the various Productivity Commission (PC) modelling.
Ms Wilshire argued the modelling shows unambiguous benefits to Australians because GDP per capita is increased, whereas I argued that incumbent Australian workers are made worse-off from falling wages (let alone broader impacts like congestion, higher infrastructure costs, smaller and less affordable housing, etc).
At the outset, it is important to note that economic modelling around immigration is inherently limited and often does not reflect real life.
First, it is generally assumed in these models that population ageing will result in fewer people working, which will subtract from per capita GDP. However, it is equally likely that age-specific workforce participation will respond to labour demand, resulting in fewer people being unemployed, as we have witnessed in Japan, where the unemployment rate is below 3%.
Even if this assumption holds true, the benefit to GDP per capita would only be transitory. Once the migrant workers grow old, they too will add to the pool of aged Australians, thus requiring an ever increasing immigration intake to keep the population age profile from rising.
Second, it is generally assumed that migrant workers are more productive than the Australian born population and, therefore, labour productivity is increased through strong immigration. However, the evidence here is highly contestable, with migrants generally being employed below the level of their qualifications, as well as having lower labour force attachment than the Australian born population (more information here).
Third, these economic models typically assume that immigration allows for either steady or increasing economies of scale in infrastructure (i.e. either assumes that population growth does not diminish the infrastructure stock; that bigger is always cheaper; or there is under-utilised capacity). At the same time, they completely ignore the dead weight of having to build more infrastructure each year, as well as the dis-economies of scale from having a bigger population, which necessarily makes new infrastructure investment very expensive (e.g. tunneling, land buy-backs, water desalination, etc).
Finally, and related to the above, these models ignore obvious ‘costs’ of mass immigration on productivity. Growing Australia’s population without commensurately increasing the stock of household, business and public capital to support the bigger population necessarily ‘dilutes’ Australia’s capital base, leaving less capital per person and lowering productivity. We have witnessed this first hand with the costs of congestion soaring across Australia’s big cities.
With these caveats in mind, what does the PC’s modelling on immigration actually say?
Well, the PC’s Migrant Intake Australia report, released in September 2016, compared the impact on real GDP per capita from:
Historical rates of immigration, whereby population hits 40 million by 2060; and
Zero net overseas migration (NOM), whereby the population stabilises at 27 million by 2060.
The PC’s modelling did find that GDP per capita would be 7% ($7,000) higher by 2060 under current mass immigration settings. However, all the gains are transitory and come from a temporary lift in the employment-to-population ratio, which will eventually reverse once the migrants age (i.e. after the forecast period):
The continuation of an immigration system oriented towards younger working-age people can boost the proportion of the population in the workforce and, thereby, provide a ‘demographic dividend’ to the Australian economy. However, this demographic dividend comes with a larger population and over time permanent immigrants will themselves age and add to the proportion of the population aged over 65 years.
The PC also explicitly acknowledges that per capita GDP is a “weak” measure of economic welfare:
While the economywide modelling suggests that the Australian economy will benefit from immigration in terms of higher output per person, GDP per person is a weak measure of the overall wellbeing of the Australian community and does not capture how gains would be distributed among the community. Whether a particular rate of immigration will deliver an overall benefit to the existing Australian community will crucially depend on the distribution of the gains and the interrelated social and environmental impacts.
It is worth pointing out that the PC’s modelling unrealistically assumed that Australia’s infrastructure stock would keep pace with the extra population, which is vital if economy-wide productivity is not to dimish:
Specifically, the expansion in labour supply through migration is projected to lead roughly to the same proportional growth in capital and output in most industries including infrastructure industries. That is, the modelling broadly assumes that there are constant returns to scale in production…
As the modelling broadly assumes that there are constant returns to scale in production, the economy-wide modelling results are broadly linear. Hence, while the modelling provides insight into the economic impact of NOM, in practice limits on Australia’s absorptive capacity (including environmental factors) mean that constant returns to scale are unlikely to hold for very high rates of immigration.
Clearly, this assumption is at at odds with the Australian economy’s ‘lived experience’, whereby massive infrastructure deficits have accumulated over the last 15-years of hyper immigration, particularly in the major cities.
Most importantly for incumbent Australian workers, the PC’s modelling finds that labour productivity and real wages are projected to decrease under current mass immigration settings versus zero net overseas migration (NOM):
Compared to the business-as-usual case, labour productivity is projected to be higher under the hypothetical zero NOM case — by around 2 per cent by 2060 (figure 10.5, panel b). The higher labour productivity is reflected in higher real wage receipts by the workforce in the zero NOM case…
With zero NOM, real wages are projected to increase over time, and at a rate greater than in the business-as-usual scenario. That is, in the zero NOM scenario labour is relatively scarce which puts upwards pressure on real wages and causes a substitution towards capital, contributing to the marginally higher labour productivity relative to the business-as-usual scenario (figure 10.5, panel b). Higher rates of labour force participation through immigration in the business-as-usual case is projected to moderate such wage pressures.
Therefore, according to the PC’s most recent modelling, high immigration improves per capita GDP by 2060 by boosting the proportion of workers in the economy, but this comes at the expense of lower labour productivity and lower real wages.
Moreover, beyond the forecast period (2060), the migrants will age and retire, thus dragging down future growth – classic ‘ponzi demography’.
As noted by the PC above, its latest modelling also did not take account of the distribution of gains to per capita GDP, which is vitally important. Thankfully, it’s 2006 major study on the Economic Impacts of Migration and Population Growth did, and the results were unflattering.
Here, the PC modeled the impact of a 50% increase in the level of skilled migration over the 20 years to 2024-25 and found that “the incomes of existing resident workers grow more slowly than would otherwise be the case”. Below is the money quote:
The increase in labour supply causes the labour / capita ratio to rise and the terms of trade to fall. This generates a negative deviation in the average real wage. By 2025 the deviation in the real wage is –1.7 per cent…
Broadly, incumbent workers lose from the policy, while incumbent capital owners gain. At a 5 per cent discount rate, the net present value of per capita incumbent wage income losses over the period 2005 – 2025 is $1,775. The net present value of per capita incumbent capital income gains is $1,953 per capita…
Owners of capital in the sectors experiencing the largest output gains will, in general, experience the largest gains in capital income. Also, the distribution of capital income is quite concentrated: the capital owned by the wealthiest 10 per cent of the Australian population represents approximately 45 per cent of all household net wealth…
To it’s credit, the PC’s Migrant Intake Australia report does go to great lengths to stress that there are many costs associated with running a high immigration program that are not captured in the modelling but are borne by incumbent residents and unambiguously lowers their welfare:
High rates of immigration put upward pressure on land and housing prices in Australia’s largest cities. Upward pressures are exacerbated by the persistent failure of successive state, territory and local governments to implement sound urban planning and zoning policies…
Urban population growth puts pressure on many environment-related resources and services, such as clean water, air and waste disposal. Managing these pressures requires additional investment, which increases the unit cost of relevant services, such as water supply and waste management. These higher costs are shared by all utility users…
Immigration, as a major source of population growth in Australia, contributes to congestion in the major cities, raising the importance of sound planning and infrastructure investment …governments have not demonstrated a high degree of competence in infrastructure planning and investment. Funding will inevitably be borne by the Australian community either through user-pays fees or general taxation.
…there will be additional costs for the community where environmental services that are currently ‘free’ have to be replaced with technological solutions…
Accordingly, the PC explicitly asks that these costs be considered as part of any cost-benefit analysis on the immigration intake, rather than blindly following the results of its modelling.
A prime example of these costs is infrastructure. In its Migrant Intake Australiareport, the PC pulls no punches about the higher cost of living imposed on incumbent residents from mass immigration, particularly in the big cities:
…where assets are close to capacity, congestion imposes costs on all users. A larger population inevitably requires more investment in infrastructure, and who pays for this will depend on how this investment is funded (by users or by taxpayers). Physical constraints in major cities make the costs of expanding infrastructure more expensive, so even if a user-pays model is adopted, a higher population is very likely to impose a higher cost of living for people already residing in these major cities.
This follows the PC’s warnings in 2013 that total private and public investment requirements over the next 50 years are estimated to be more than 5 times the cumulative investment made over the last half century:
The likely population growth will place pressure on Australian cities. All of Australia’s major cities are projected to grow substantially… In response to the significant increase in the size of Australian cities, significant investment in transport and other infrastructure is likely to be required… Total private and public investment requirements over this 50 year period are estimated to be more than 5 times the cumulative investment made over the last half century…
Similarly, in its latest Shifting the Dial: 5 year productivity review, the PC explicitly noted that infrastructure costs will inevitably balloon due to our cities’ rapidly growing populations:
Growing populations will place pressure on already strained transport systems… Yet available choices for new investments are constrained by the increasingly limited availability of unutilised land. Costs of new transport structures have risen accordingly, with new developments (for example WestConnex) requiring land reclamation, costly compensation arrangements, or otherwise more expensive alternatives (such as tunnels).
In short, there is little hope of achieving the level of investment required to sustain current levels of mass population growth, let alone an increase in the immigration intake to 250,000 (from 210,000 currently), as demanded by the Migration Council.
Overall, the PC’s economic modelling on immigration shows little (if any) material economic benefit to incumbent Australian residents. And once you add the various external costs not captured in the modelling (e.g. more expensive housing, more expensive infrastructure, congestion, and environmental degradation), the overall costs of mass immigration to ordinary Australians almost certainly outweighs the benefits.
Further information on why mass immigration is not in Australia’s interest is explained in MB’s submission to the federal government’s Migration Program review, which is reproduced below. (You can also download a PDF copy here – please share it around).
The Migration Council must believe in exponential population growth:
In responding to my claim that Australia’s NOM is running at triple the historical average, Carla Wilshire argued that when measured in percentage terms (i.e. the rate of growth), it isn’t actually that high and could be increased further. (Again, the Migration Council has lobbied for the immigration intake to be increased to 250,000 from 210,000 currently.)
In taking this line of argument, Ms Wilshire is being very loose with the facts.
First, as noted by the PC’s Migrant Intake Australia report, Australia’s immigration intake as a percentage of population (currently 1%) is very high by historical standards:
Second, and more importantly, it is not the immigration rate that matters for infrastructure, traffic congestion, or the environment, but rather the sheer numbers. Does Ms Wilshire honestly believe in exponential population growth? Because that’s what a stable immigration growth rate implies, which is clearly unsustainable [note: Australia’s current population growth rate in 1.6%]:
Figure 10 shows that under the ABS central forecast, in 2061 Victoria would have the same population as all of Australia had in 1960. In 2061 Queensland would have a larger population than all of Australia had in 1950. It is important to note that these are not the projections of the high growth scenario (Series A), but of the one that most closely matches current trends (Series B).
How much population is enough?
Migration Council is just another mass immigration lobby group:
During the interview, I claimed that the Migration Council’s economic modelling on immigration could not be trusted as it is a vested interest lobby group backed by big business.
Ms Wilshire responded angrily claiming that it was non-partisan and not-for-profit.
Since its inception, the organisation has lobbied strongly for a ‘Big Australia’ and for the immigration intake to be increased to 250,000 (from 210,000 currently).
It has also been chaired by pro-Big Australia business people and has stacked its board accordingly.
Andrew Jakubowicz, Professor of Sociology, described the formation of the Council in 2010 as follows:
The announcement of the formation of a Migration Council of Australia and its launch by the Governor General on August 1, confirmed by Department of Immigration and Citizenship official Gary Fleming at the Settlement Council of Australia conference in Adelaide in late June, marks a critical juncture in population and immigration policy…
The MCA wants to find a new space to assert the importance of migration and effective settlement, and has brought together some heavy hitters to make this happen. Headed by Peter Scanlon (ex Patricks Chair) – and bringing together Business Council of Australia chair Tony Shepherd, Australia Post head Ahmed Fahour, Ethnic Communities Federation chair Pino Migliorino, Adult Migrant Education Victoria head Catherine Scarth and a number of others – the organisation seeks to build a bridge between those with an economic interest in a big Australia, and those with a social interest in a fair Australia.
Scanlon has been a key figure in building an information base about immigration and settlement through his Foundation… He is also a major real estate developer and will come under scrutiny for how this new lobby group might create benefits for his commercial interests…
Peter Scanlon is a key leader of Australia’s ‘growth lobby’, and has a clear vested interest in mass immigration, as explained by John Masanauskas:
MAJOR investor and former Elders executive Peter Scanlon hardly blinks when asked if his conspicuous support for a bigger population is also good for business.
Mr Scanlon, whose family wealth is estimated to be more than $600 million, has set up a foundation with the aim to create a larger and socially cohesive Australia.
It also happens that Mr Scanlon has extensive property development interests, which clearly benefit from immigration-fuelled high population growth.
“My primary driver in (setting up the foundation) is if we don’t have growth we are going to lose all our youth because the world is looking to train people around the world,” he explains. “Instead of having stagnant growth, we’re going to have a serious decline.”
Mr Scanlon believes that governments aren’t doing enough to sell the benefits of a bigger population so he has put his money where his mouth is…
Peter Scanlon vacated the chair of the Migration Council in 2015 and was replaced by long-time mass immigration booster and Australian Industry Group CEO, Innes Willox, who was affectionately described last year by The AFR“as one of Australia’s top business lobbyists”.
Let’s not pretend that the Migration Council of Australia is impartial in the immigration debate. It is a stealth ‘Big Australia” lobbyist for the business sector.
On a side note, a quick look at the Migration Council’s modelling of immigration’s economic impacts reveals the following howler of an assumption: it “allows for economies of scale in infrastructure”.
You read that right. Their model ridiculously assumes that bigger is always cheaper and/or there is always under-utilised capacity. This flies in the face of the ‘lived experience’ of growing infrastructure bottlenecks and rising congestion costs, as well as increasingly complex and expensive infrastructure projects (i.e. classic dis-economies of scale).
I’ve already discussed these infrastructure issues above with respect to the PC’s modelling, so I won’t do it again. But clearly the Migration Council has chosen favourable assumptions to get a positive modelling result in support of its Big Australia agenda. Garbage in, garbage out.
Carla Wilshire admits a ‘Big Australia’ will lower residents’ living standards:
Finally, after spending the whole segment arguing that mass immigration will raise Australia’s living standards, Ms Wilshire tacitly admitted that, actually, living standards will fall for those of us living in Sydney and Melbourne:
“…congestion in Sydney and Melbourne is undoubtedly getting to a point where a significant investment in infrastructure is going to have to happen. In fact, one could argue that point was some years back…
One of the ways that we are going to have to solve that problem is decreasing the per capita cost of investment in infrastructure. And migration is part of that solution…
And in some senses it is also about an acceptance that the way in which these two cities function, and the way in which we live in these two cities, is going to change over time. It’s going to be much more about apartment living. It’s going to be much more about public transport. And it’s going to be much more about sustainable cities”…
Only in the Bizarro World of the Migration Council do you solve an infrastructure deficit by adding millions more people. And only in the Migration Council’s world does having to live in shoebox apartments, suffering from greater congestion, as well as making everyone consume less of everything, just so we can make room for mass immigration, equate to higher living standards.
Submission to the Department of Home Affairs’ Managing Australia’s Migrant Intake Review
At MacroBusiness we support immigration, but at sustainable levels.
Australia’s immigration levels are too high – higher than our cities can absorb. The infrastructure costs of high immigration are excessive and Australia’s infrastructure supply is not keeping up with demand, despite our best efforts.
The economic arguments frequently used to justify high immigration fail the evidence test. Empirical data does not support mass immigration. Excessive immigration also damages Australia’s employment market and the environment.
It is time for an honest debate.
Currently, Australia’s immigration program is overloading the major cities with tens of thousands of extra people each year to stoke overall economic growth (but not growth per person) and to support business (e.g. the property industry and retailers), despite growth per person stagnating.
Meanwhile, individual living standards are being eroded through rising congestion costs, declining housing affordability, paying more for infrastructure (e.g. toll roads and water), environmental degradation, and overall reduced amenity.
The economic evidence for the above is contained in this submission.
The Australian Government needs to stop ignoring these issues. Australia’s living standards are at stake.
MacroBusiness urges the Australian Government to reduce Australia’s immigration intake back towards the historical average of around 70,000 people per annum.
1. Australia’s immigration program is unprecedented:
One of the most profound changes affecting the Australian economy and society this century has been the massive lift in Australia’s net immigration, which surged from the early-2000s and is running at roughly triple the pace of historical norms (Chart 1).
In the 116 years following Australia’s Federation in 1901, Australia’s net overseas migration (NOM) averaged around 73,000 people a year and Australia’s population grew on average by around 180,000 people.
Over the past 12 years, however, Australia’s annual NOM has averaged nearly 220,000 people a year and Australia’s population has grown on average by 370,000 people.
The principal driver of Australia’s population increase has been the Australian Government’s permanent migrant intake, which has increased from 79,000 in 1999 to nearly 210,000 currently, including the humanitarian intake (Chart 2).
Due to this mass immigration ‘Big Australia’ policy, Australia’s population has expanded at a rate that is more than 2.5 times the OECD average, easily the fastest of advanced English-speaking nations (Chart 3).
This rapid population growth is expected to continue for decades to come, with the Australian Government’s Intergenerational Report projecting population growth of nearly 400,000 people a year – equivalent to one Canberra – until Australia’s population reaches 40 million mid-century (see Chart 1 above).
However, the problem with Australia’s mass immigration policy is not just the extreme volume, but also the concentration of migrants flowing to Australia’s largest and already most overcrowded cities.
As shown in Chart 4, around three quarters of Australia’s NOM has flowed to New South Wales and Victoria, principally Sydney and Melbourne:
In the 12 years to 2016, Melbourne’s population expanded by nearly 1.1 million (30%), while Sydney’s population expanded by 845,000 (20%). There was also strong growth in Brisbane (537,000) and Perth (502,000) (Charts 5 and 6).
The migrant influx helps to explain why dwelling price growth has been strongest in Sydney and Melbourne, and why housing is most unaffordable in these two cities (Charts 7 and 8). While the Australian Government and property lobby likes to blame a ‘lack of supply’, the problem rests primarily with excessive demand from mass immigration.
The chronic problems around housing and infrastructure will only get worse under the current mass immigration policy.
State Government projections have Melbourne’s population expanding by 97,000 people each year (1,870 people a week) and Sydney’s by 87,000 people each year (1,670 people each week) for the next several decades until both cities’ populations hit around 8 million people mid-century.
To put this population growth into perspective, consider the following facts:
It took Sydney around 210 years to reach a population of 3.9 million in 2001. And yet the official projections have Sydney adding roughly the same number of people again in just 50 years.
It took Melbourne nearly 170 years to reach a population of 3.3 million in 2001. In just 15 years, Melbourne expanded by 34% to 4.5 million people. And the official projections have Melbourne’s population ballooning by another 3.4 million people in just 35 years.
No matter which way you cut it, residents of our two largest cities will continue to feel the impact of this rapid population growth via: traffic gridlock; overloaded public transport, schools, and hospitals; pressures on energy and water supplies; as well as more expensive (and smaller) housing.
It is a clear recipe for lower living standards.
2. No economic bonanza:
Politicians and economists frequently claim that maintaining a ‘strong’ immigration program is essential as it keeps the population young and productive, and without constant immigration, the population would grow old and the economy would stagnate.
For example, Prime Minister Malcolm Turnbull has stated previously that “anyone who thinks it’s smart to cut immigration is sentencing Australia to poverty”. In a similar vein, former KPMG partner and “unabashed supporter of a bigger Australia”, Bernard Salt, has produced reams of articles warning that Australia faces economic and fiscal catastrophe without ongoing strong immigration.
Economic models are often cited as proof that a strong immigration program is ‘good’ for the economy because they show that real GDP per capita is moderately increased via immigration, based on several dubious assumptions.
First, it is generally assumed in these models that population ageing will result in fewer people working, which will subtract from per capita GDP. However, it is just as likely that age-specific workforce participation will respond to labour demand, resulting in fewer people being unemployed, as we have witnessed in Japan, where the unemployment rate is below 3%.
Even if this assumption was true, the benefit to GDP per capita would only be transitory. Once the migrant workers grow old, they too will add to the pool of aged Australians, thus requiring an ever increasing immigration intake to keep the population age profile from rising.
Indeed, the Productivity Commission (PC) has for more than a decade debunked the myth that immigration can overcome population ageing. For example, in its 2010 submission to the Minister for Population, the PC explicitly noted that “substantial increases in the level of net overseas migration would have only modest effects on population ageing and the impacts would be temporary, since immigrants themselves age”.
Academic demographer, Peter McDonald, has also previously stated that it is “demographic nonsense to believe that immigration can help to keep our population young” .
Second, it is generally assumed that migrant workers are more productive than the Australian born population and, therefore, labour productivity is increased through strong immigration. However, the evidence here is highly contestable, with migrants generally being employed below the level of their qualifications, as well as having lower labour force attachment than the Australian born population (more information here).
Third, economists and their models generally ignore obvious ‘costs’ of mass immigration on productivity. Growing Australia’s population without commensurately increasing the stock of household, business and public capital to support the bigger population necessarily ‘dilutes’ Australia’s capital base, leaving less capital per person and lowering productivity. We have witnessed this first hand with the costs of congestion soaring across Australia’s big cities.
Moreover, the cost of retro-fitting our big cities with infrastructure to cope with larger populations is necessarily very expensive – think tunnelling and land acquisitions – with costs borne largely by the incumbent population. This fact was explicitly acknowledged by the PC’s recent Shifting the Dial: 5 year productivity review:
“Growing populations will place pressure on already strained transport systems… Yet available choices for new investments are constrained by the increasingly limited availability of unutilised land. Costs of new transport structures have risen accordingly, with new developments (for example WestConnex) requiring land reclamation, costly compensation arrangements, or otherwise more expensive alternatives (such as tunnels)” .
Finally, while economic models tend to show a modest improvement in real GDP per capita, the gains are more likely to flow to the wealthy, whereas ordinary workers are made worse-off.
In 2006, the PC completed a major study on the Economic Impacts of Migration and Population Growth, which modelled the impact of a 50% increase in the level of skilled migration over the 20 years to 2024-25. The modelling found that even skilled migration does not increase the incomes of existing residents. According to the Commission: “the distribution of these benefits [from skilled migration] varies across the population, with gains mostly accrued to the skilled migrants and capital owners. The incomes of existing resident workers grow more slowly than would otherwise be the case” .
Of course, there are other costs borne by incumbent residents from immigration that are not captured in the economic modelling, such as worsening congestion, increased infrastructure costs, reduced housing affordability, and environmental degradation – none of which are given appropriate consideration by politicians nor economists.
Adding a Canberra-worth of population to Australia each and every year – with 80,000 to 100,000-plus people going to Sydney and Melbourne – requires an incredible amount of investment just to keep up. Accordingly, Australia’s infrastructure deficit has fallen badly behind over the past decade, and will continue to do so under Australia’s mass immigration program, thus eroding residents’ living standards.
3. Empirical data does not support mass immigration:
While the economic models might show small per capita gains from immigration-fuelled population growth, based on faulty assumptions, the actual empirical evidence shows no link between population growth and prosperity.
Since Australia’s immigration intake was expanded in the early-2000s, trend GDP per capita growth has plummeted to recessionary levels, suggesting falling living standards (Chart 9).
Chart 10 plots the growth in GDP per capita versus population change between 2000 and 2016 across OECD nations and shows no correlation (Australia denoted in red):
Meanwhile, there is a slight negative relationship between labour productivity and population growth (Chart 11):
Whereas there is zero correlation between population growth and multifactor productivity across OECD nations:
A recent study by economists at the Massachusetts Institute of Technology (MIT) also found “that even when we control for initial GDP per capita, initial demographic composition and diﬀerential trends by region, there is no evidence of a negative relationship between aging and GDP per capita; on the contrary, the relationship is signiﬁcantly positive in many speciﬁcations” (Chart 13).
There is also evidence to suggest that mass immigration is partly behind Australia’s trade and current account deficits, as well as the nation’s ballooning foreign debt.
The lion’s share of Australia’s export revenue comes from commodities and from Western Australia and Queensland in particular (Chart 14):
However, the majority of Australia’s imports and indeed private debt flows to our biggest states (and cities), New South Wales (Sydney) and Victoria (Melbourne). Sydney and Melbourne also happen to be the key magnets for migrants (see Charts 4,5 and 6 above).
Increasing the number of people via mass immigration does not materially boost Australia’s exports but does significantly increase imports (think flat screen TVs, imported cars, etc.). Accordingly, both New South Wales and Victoria have driven huge trade deficits as the extra imports have far outweighed exports (Chart 15):
All of these extra imports must be paid for – either by accumulating foreign debt, or by selling-off the nation’s assets. Australia has been doing both.
Australia would improve its trade balance and current account deficit, as well as reduce the need to sell-off assets and binge on debt, if it simply cut immigration.
Australia will ship the same amount of hard commodities and agriculture regardless of how many people are coming in as all the productive capacity has been set up and it doesn’t require more labour.
4. Lowering immigration would raise wages:
Hand wringing over Australia’s anaemic wages growth (Chart 16) hit fever pitch recently, with politicians, economists and media all searching for answers.
One cause that has received scant attention is the role caused by mass immigration in driving-up labour supply and reducing the bargaining power of workers.
Employer groups often argue that a strong ‘skilled’ migration program is required to overcome perceived labour shortages – a view that is supported by the Australian Government. However, the available data shows this argument to be weak.
The Department of Employment’s 2016-17 Skills Shortages report revealed that Australian skills shortages “continue to be limited in 2016-17”, and that there are a high number of applicants per job (Chart 17):
The Department of Employment also revealed a record number of Australians studying at university (Chart 18):
Of whom many graduates cannot gain meaningful employment (Chart 19):
The Australian Bureau of Statistics’ labour force data also shows that Australia’s underutilisation rate remains high, especially for Australia’s youth, despite the recent improvement in the labour market (Chart 20).
Curiously, Australia’s permanent skilled migrant intake is significantly higher today (128,550) than it was at the peak of the mining boom in 2011 (113,850). Why? Unlike then, labour shortages are “limited”, wages growth is running near the lowest level on record, and labour underutilisation is high. What is the economic rationale for running the highest permanent migrant intake on record when economic conditions do not warrant it?
Standard economic theory claims that net inward migration has minimal long-term impact on wages. That is, when the quantity of labour increases, its price (wages) falls. This will supposedly increase profits, eventually leading to more investment, increased demand for labour, and a reversal of the initial fall in wages. Immigration, so the theory goes, will enable the larger domestic population to enjoy the same incomes as the smaller population did before.
However, a recent study by Cambridge University economist, Robert Rowthorn, debunked this argument. The so-called ‘temporary’ effects of displacing incumbent workers and lower wages can last for up to ten years. And if there is a continuing influx of migrants – as is the case in Australia – rather than a one-off increase in the size of the labour force, demand for labour will constantly lag behind growth in supply .
In other words, if the Australian Government was to stem the inflow of foreign workers, then workers’ bargaining power would increase, as will wages growth. It is basic economics.
As noted in April last year by The Australia Institute’s chief economist, Richard Denniss, the very purpose of foreign worker visas is to “suppress wage growth by allowing employers to recruit from a global pool of labour to compete with Australian workers”. In a normal functioning labour market, “when demand for workers rises, employers would need to bid against each other for the available scarce talent”. But this mechanism has been bypassed by enabling employers to recruit labour globally. “It is only in recent years that the wage rises that accompany the normal functioning of the labour market have been rebranded as a ‘skills shortage'” .
Australia’s youth is effectively caught in a pincer by the Australian Government’s mass immigration program. Not only does it hold down their wages, but it also inflates their cost-of-living via more expensive housing (both prices and rents).
5. It’s time for a national debate and population policy:
The Australian Government under both the Coalition and Labor has long supported mass immigration and a ‘Big Australia’ on flawed economic grounds.
Behind the scenes, the ‘growth lobby’ of retailers, the banking sector, the property industry and erroneously named ‘think tanks’ all push the growth-ist agenda, while completely ignoring the cost burden on ordinary residents.
At the same time, many on the left pursue the globalist agenda of ‘open borders’ citing spurious social justice concerns.
Currently, there is no coherent plan other than to inundate the major cities with extra people each and every year to stoke overall economic growth (but not growth per person), to support big business (e.g. the property industry and retailers), and to prevent Australia from going into recession (despite growth per person stagnating).
Meanwhile, individual living standards are being eroded through rising congestion costs, declining housing affordability, paying more for infrastructure (e.g. toll roads, water and energy), environmental degradation, and overall reduced amenity.
Never have Australians been asked whether they want a population of 40 million-plus mid-century. Nor whether they want Sydney’s and Melbourne’s populations to swell to eight million mid-century.
Yet immigration and population growth affects every facet of Australian life, including: how long one spends stuck in traffic; whether one can get a seat on a train or a spot in hospital or school; and/or whether one can afford a good sized home within a decent commute to where one works. It is a key determinant of living standards above all else, yet is rarely questioned by the media nor politicians.
Without mainstream political representation on this issue, divisive elements like Pauline Hanson’s One Nation party have emerged to wrongly use the ills of overpopulation to attack the small number of refugees arriving in Australia, as well as Muslim and Asian immigration.
As this submission has shown, there is strong justification to reduce Australia’s permanent migrant intake back to historical levels primarily by slashing skilled migration, which has been the driver of the influx. This would take the strain off the major cities, put a floor under wages growth, and safeguard Australia’s environment.
Australia could achieve such immigration cuts without affecting its global obligations via the humanitarian migrant intake. Indeed, much of Australia’s 130,000 strong permanent skilled migrant intake comes from countries where skills are more desperately needed than in Australia. Australia’s immigration program is depriving these countries of skills, and we have a moral obligation to limit the brain drain.
More broadly, Australia desperately needs a national debate and a population strategy, led by the Australian Government. The Government needs to conduct a population plebiscite asking Australians how big they want the nation to become, and then set immigration policy accordingly. The Australian Government also needs to provide a comprehensive plan detailing how and where it will accommodate all the extra people, while safeguarding incumbent residents’ living standards.