Melburnians have been told to save water to ensure that the city’s population can double in size:
Greater Western Water, Melbourne Water, South EastWater and Yarra Valley Water have launched a campaign to help Melburnians cut their water use…
Melburnians have been told to save water to ensure that the city’s population can double in size:
Greater Western Water, Melbourne Water, South EastWater and Yarra Valley Water have launched a campaign to help Melburnians cut their water use…
Australian employer groups frequently claim that a strong ‘skilled’ migration program is required to overcome perceived labour shortages – a view that is shared by Australia’s state and federal governments. However, the available data does not support their assertions.
Article first published at by Unconventional Economist in Australian Economy at 12:12 am on June 10, 2019
First, while Australia’s is said to run a ‘skilled’ migration program, the Productivity Commission’s (PC) 2016 Migrant Intake into Australia report explicitly stated that around half of the skilled steam includes the family members of skilled migrants (secondary applicants), with around 70% of Australia’s total permanent migrant intake not actually considered ‘skilled’:
…within the skill stream, about half of the visas granted were for ‘secondary applicants’ — partners (who may or may not be skilled) and dependent children… Therefore, while the skill stream has increased relative to the family stream, family immigrants from the skill and family stream still make up about 70 per cent of the Migration Programme (figure 2.8)…
Primary applicants tend to have a better fiscal outcome than secondary applicants — the current system does not consider the age or skills of secondary applicants as part of the criteria for granting permanent skill visas…
Second, the Department of Jobs & Small Business produces an annual time-series tracking skills shortages across occupations, which shows that skills shortages across managerial and professional occupations were running well below the historical average and close to recessionary levels:
This matters because out of the 111,099 permanent visas handed out under the skilled stream in 2017-18, three-quarters were for professionals and managers, where skills shortages are largely non-existent, as shown above.
To add further insult to injury, the top five occupations granted visas under the skilled stream in 2017-18 were as follows:
According to the Department of Jobs and Small Business’ list, not one of these professions was considered to be in shortage over the four years to 2017, whereas Software Engineer has never been deemed to be in shortage over the entire 31-year history of this series.
The situation is little better for Australia’s Temporary Skill Shortage (TSS) visa system. According to the Department of Home Affairs, there were 34,450 primary visas granted in 2017-18, of which 25,620 (74%) were for professionals and managers; again where skills shortages are largely non-existent.
The failure of Australia’s so-called skilled migration program to alleviate genuine skills shortages is hardly surprising given almost any occupation is eligible, as the below list attests:
The above lists do not require that these occupations are actually experiencing skills shortages, which means that these visas can be used by employers to access cheap foreign labour for an ulterior motive, including to avoid providing training and lowering wage costs.
Accordingly, the 2016 Senate Committee report, entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, found temporary skilled visas were “not sufficiently responsive either to higher levels of unemployment, or to labour market changes in specific skilled occupations”.
Adding to the mess, the salary floor for TSS visas has been frozen at the pathetically low level of $53,900 since 2013-14, which is $32,700 below the average full-time Australian salary of $86,600 (which comprises both skilled and unskilled workers).
Given the above, it is not surprising that actual pay levels of ‘skilled’ migrants in Australia are abysmally low.
According to the ABS’ most recent Personal Income of Migrants survey, the median employee income of migrants under the skilled stream was just $55,443 in 2013-14.
Several surveys have similarly shown that most recently arrived skilled migrants are working in areas well below their reported skill level.
For example, analysis by the Australian Population Research Institute (APRI), based on 2016 Census data, revealed that most recently arrived skilled migrants (i.e. arrived between 2011 and 2016) cannot find professional jobs. That is, only 24% of skilled migrants from Non-English-Speaking-Countries (who comprised 84% of the total skilled migrant intake) were employed as professionals as of 2016, compared with 50% of skilled migrants from Main English-Speaking-Countries and 58% of the same aged Australian-born graduates.
APRI’s results were supported by a 2017 survey from the Bankwest Curtin Economics Centre, which found that 53% of skilled migrants in Western Australia said they are working in lower skilled jobs than before they migrated to Australia.
With this detailed background in mind, it is interesting to read that the Morrison Government has announced reforms to Australia’s permanent residency points system in a bid to ensure it is better targeted towards skilled migrants. From SBS News:
In April this year, the immigration department announced some changes to the point system. These changes will come in effect from 16 November 2019.
According to the new rule, applicants who do not have a spouse or de facto partner will get 10 points.
“Points are awarded for attributes that are linked with the applicant’s ability to make the greatest economic contribution, as the key purpose of the skilled migration program is to maximize the economic benefits of migration to Australia,” the legislation reads…
“The idea is to bring more skilled migrants and discourage unskilled partners who come with married skilled migrants.
“Married invitees with kids fill more places with non-skilled migrants and leave lesser places for skilled migrants,” says [[Immigration Expert Rohan] Mohan.
The reforms are in response to the PC’s findings (above) that half of the skilled stream is taken up by family members of skilled migrants, many of whom are unskilled.
While the changes announced are good in theory, members of the Indian community are already working out ways to game the system and skirt the rules:
[Immigration Expert Rohan] Mohan says many of his clients are waiting for November.
“People have put their marriage on hold to claim these extra points. Earlier people would get married before applying to claim five extra points on behalf of their partners. Now we can see the opposite trend”…
Dilip Kumar, an Australian visa-hopeful says these extra points will help him in a big way.
‘My IELTS score is not very high, so I am counting on the extra points,’ says Dilip who is an auto mechanic in Karnataka and preparing his application for an Australian visa.
Education and Migration agents are also advising clients on Facebook on how to fill in forms to avoid scrutiny by the Department of Home Affairs:
This kind of visa system gaming is common among applicants from India’s Sub-continent, as explained by Melbourne Indian community leader Jasvinder Sidhu, who also acknowledged “widespread… corruption from top to bottom”, with “thousands and thousands of people… being sponsored and they’re all fake”:
JASVINDER SIDHU: These people just get away. Even if they’re caught, media or otherwise through police and thing, they just go on bail and I think the system is very, very easy on these sort of things.
NICK MCKENZIE: It’s easy to rort?
JASVINDER SIDHU: Yes, very easy to rort. You have 10 ways to rort and then if the Government has one rule, you have actually 10 responses how to basically bypass those rules.
NICK MCKENZIE: The Australian Border Force has spent the last 12 months investigating criminal syndicates involved in visa rorting, but insiders say the problem is massive. One of the Immigration Department’s top officials until 2013 has now broken his silence. He says visa rorting was and is endemic and has largely been ignored by politicians focusing on the boat people issue.
Joseph Petyanszki managed investigations for the department for eight years. He wouldn’t be interviewed on camera, but has given 7.30 a statement about what he calls, “The shocking and largely unknown fraud within our working and student visa programs”. He describes a world of “shonky immigration agents” where, “fraudsters …. enter the community with ease”. He points to immigration law “loopholes”, “major integrity problems” and a department which has struggled to cope with such an, “attack on the integrity of our systems”. Petyanszki blames a, “lack of funding and politics”. He says, “It’s been easy to deflect the public’s attention to boat arrivals,” but this fear-mongering has totally ignored, “where the vast bulk of real fraud is most significantly undermining our immigration programs”…
JASVINDER SIDHU: Yes, there’s corruption from top to bottom. Thousands and thousands of people are being sponsored and they’re all fake. The whole system cannot work that smoothly if there’s no corruption in the system.
NICK MCKENZIE: Someone on the inside has to know?
JASVINDER SIDHU: Oh, yes, definitely. Even if you do a bit of overspeeding, you are caught, but this is a huge corruption – huge level of corruption and it is so widespread.
Clearly, Australia’s skilled migration program is a giant fraud that is failing miserably to meet its original intent, lowering wages, crush-loading Sydney and Melbourne, and wrecking overall liveability.
It needs root-and-branch reform, not token changes like those announced above by the Morrison Government.
Amazing isn’t it? The federal government sets immigration policy. And yet the immigration minister can’t even answer the most simple of questions.
In Part Two, Liam Bartlett again takes Alan Tudge to the Woolshed:
Liam Bartlett: “So, when are we going to hit 30 million”?
Alan Tudge: “We outline a 10-year, for example, infrastructure pipeline”.
Liam Bartlett: “Great, so where are we in 10-years?”
Alan Tudge: “In part we’re going through a process”.
Liam Bartlett: “30 million? 35 million? 40 million? Stop me when I am getting close”
Amazing isn’t it? The federal government sets immigration policy. And yet the immigration minister can’t even answer the most simple of questions.
Well done 60 Minutes.
The Australian Bureau of Statistics (ABS) has released visitor arrivals and departures data for the month of January, which posted record annual permanent and long-term arrivals.
In the year to January 2019, there were 835,310 permanent and long-term arrivals into Australia – up 6% from January 2018 and an all-time high. This was partly offset by 546,310 permanent and long-term departures from Australia:
Put together, there were 289,000 net permanent and long-term arrivals into Australia in the year to January 2019, way above the 42-year average of 154,249:
While the ABS is at pains to state that “permanent and long-term movements… are not an appropriate source of migration statistics”, since they relate to the intention of passengers arriving, not actual outcomes (measured using the 12/16 rule), there is a strong correlation between this series and the ABS’ official quarterly net overseas migration (NOM) estimates:
Given the strong rise in net permanent and long-term arrivals over the second half of 2018, there’s a strong likelihood that ABS’ NOM estimate for September 2018 will jump when it is released on Thursday.
ABC 7.30 Report last night aired part one of its three-part population special, which included me as the economist. While I will reserve judgement until the final two-parts have been aired, my initial gut reaction is disappointment. The main problem I see with it so far is the ABC has inferred that a population of more than 40-million mid-century is inevitable rather than a direct policy choice. Nowhere did The ABC clearly show how the federal government massively increased Australia’s immigration intake from the early-2000
ABC 7.30 Report last night aired part one of its three-part population special, which included me as the economist.
While I will reserve judgement until the final two-parts have been aired, my initial gut reaction is disappointing.
The main problem I see with it so far is the ABC has inferred that a population of more than 40-million mid-century is inevitable rather than a direct policy choice.
Nowhere did The ABC clearly show how the federal government massively increased Australia’s immigration intake from the early-2000s:
Nor how immigration is the defacto driver of Australia’s population increase – both directly as migrants step off the plane, as well as indirectly when they have children (then counted as ‘natural increase’). This was made explicit by the Productivity Commission’s 2016 Migrant Intake Australia report, which showed that Australia’s population would barely increase without immigration:
While the segment at least didn’t include spruiker ‘demographers’ like Liz Allen or Peter McDonald, it instead replaced them with another cookie-cutter demographer from ANU. One wonders why Bob Birrell wasn’t contacted, who has been a strong critique of Australia’s ‘Big Australia’ Program:
Finally, the spokesperson for Infrastructure Australia (IA) claimed that “population growth is an opportunity” – conveniently ignoring that IA has issued several recent stark warnings about infrastructure failing to keep pace with population growth, as well as ignoring IA’s own recent projections showing that living standards in both Sydney and Melbourne will be crushed as their populations surge to 7.4 million and 7.3 million by 2046:
Again, while I will reserve judgement until the final two parts are aired, I am not hopeful that The ABC will analyse this issue correctly and actually inform debate.
Here is the Unconventional Economist, Leith van Onselen's talk at the Sustainable Australia Party venue.
Scott Morrison appeared on ABC Lateline denouncing the government’s plan to tag and release migrants to the bush as a policy brain fart:
TONY JONES: Can you have a debate on population without a debate on immigration numbers?
SCOTT MORRISON: Well of course you can’t… Two thirds of the increase in population is coming through immigration and so if that’s not part of the debate then I don’t know what these guys are going on about. You’ve gotta focus on the things that you can address. Now they can talk about all these other issues, they’re all really important, but those things are not going to solve themselves in the next term of government.
What you can do in the next term of government is ease the pressure on those problems by throttling back, and if this Government’s not prepared to throttle back then they are trying to put one over the Australian people…
We’ve also made it clear that we’re not comfortable with the 36 million [population] projection…
The Government says it is not about immigration and they want to put out this false hope that they can move all these people around the country differently. Well those who are coming into the country, less than 10 per cent of them currently go out and settle in regional areas and rural areas.
So to hold out some false hope that this problem’s going to be solved because a Population Minister is going to fantastically move people around like has never been done before in our history, is I think unfair to the Australian people to suggest that that is realistic option, certainly in the short or medium term. Long term I think there are still real doubts.
The history of settlement over centuries means that people will come and gravitate to areas where there is population…
Scott Morrison also appeared on ABC’s PM program, where he once again rubbished the ‘migrants to the bush’ policy:
It holds out unrealistic promises that all of this can be turned around by everybody moving to regional areas.
We simply know, through centuries of migration experience, that that simply isn’t how it happens.
Are you confused? Well you should be, because these interviews were done in 2010/2011 when the former Gillard Labor Government was also spruiking a ‘migrants to the bush’ policy to relieve population pressures in the major cities.
Fast forward to 2018 and Australia’s permanent migrant program is just as big as then, but even more concentrated than ever into Sydney and Melbourne, which received 86% of migrants last financial year.
History doesn’t repeat but it sure does rhyme. Don’t fall for the Coalition’s latest immigration smokescreen, especially when it has been cutting regional visas while in office:
Department of Home Affairs figures… show non-regional skilled migration visas have risen every year under the Coalition, while those dedicated to the regions dropped from a high of 20,510 in 2012-13 to 10,198 under the Turnbull government in 2016-17.
The five consecutive years of cuts to permanent regional migrant visas coincided with a rise in the total immigration level to record highs of 180,000 a year, meaning proportionally more migrants were arriving on non-regional skilled visas under the Coalition.
[Article first published on Macrobusiness, October 10, 2018 at https://www.macrobusiness.com.au/2018/10/scott-morrison-slams-scott-morrisons-migrants-to-the-bush-policy/?utm_medium=email&utm_campaign=Daily%20MacroBusiness&utm_content=Daily%20MacroBusiness+CID_a2e8fef423e19939f632e11a3fdeb4df&utm_source=Email%20marketing%20software&utm_term=Scott%20Morrison%20slams%20Scott%20Morrisons%20migrants%20to%20the%20bush%20policy]
2.30PM - Sunday 7th of October 2018. Open Public Meeting Stop Over-Development in Melbourne! Speakers: Professor Bob Birrell, Professor Michael Buxton, Mary Drost OAM Planning Backlash, Jack Roach, Boroondara Residents' Action Group, Leith van Onselen- economist. Venue: Zelman Room, Hawthorn Arts Centre, 360 Burwood Road, Hawthorne.
Zelman Room, Hawthorn Arts Centre, 360 Burwood Road:
By train: Hawthorne is a 250m walk from Glenferrie Railway station
By Tram: Stop 75 (corner Glenferrie and Burwood Rds), Tram line 16
Give real power to local communities in planning decisions
Ensure local planning decisions stand
Increased developer charges that benefit from rezoning
Sustainable population policy with slower growth
[Original flyer] Authorised by William Bourke for Sustainable Australia, Sydney
Organised and hosted by Sustainable Australia Party
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.
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.
By Unconventional Economist in Australian Economy at 11:01 pm on February 18, 2018. First published at https://www.macrobusiness.com.au/2018/02/leith-van-onselen-tackles-growth-lobby-monster/.
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:
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 Australia report, 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).
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%]:
Seriously, how big does Ms Wilshire want Australia to become? As noted by The Australia Institute:
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?
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.
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.
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:
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.
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.
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.
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).
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.
The Australian Council of Trade Unions (ACTU) has unleashed on the revised Trans-Pacific Partnership (TPP) trade agreement (dubbed “TPP11”), which will reportedly allow employers unfettered access to ‘skilled’ migrant workers from member nations. From The Guardian:
The revived Trans-Pacific Partnership trade deal will allow at least six countries to access temporary skills shortage work visas without first testing the Australian market, unions have said.
According to the unions’ peak body, the Australian government has confirmed in consultations that employers will be able to hire workers from Canada, Mexico, Chile, Japan, Malaysia and Vietnam in 435 occupations without first advertising jobs to Australians.
The consultation from the Department of Foreign Affairs and Trade appears to confirm for the first time that the text of the new TPP11, negotiated after Donald Trump withdrew the United States from the agreement, will lower Australian barriers to skilled migrants…
The ACTU president, Ged Kearney, said the deal would mean that migrant workers could be brought in as nurses, engineers, electricians, plumbers, carpenters, bricklayers, tilers, mechanics and chefs.
“Clearly the only allegiance the Turnbull government values is to employers,” she said, accusing it of putting big business ahead of “the rights of workers and the national interest of Australia”.
“There has been no analysis of how this will affect local employment, nor have there been any safeguards proposed to protect these vulnerable workers.
“This agreement would be a disaster for Australia and we call on the Turnbull government to immediately cease negotiations until they have proved that the deal will not come at the cost of massively increased exploitation and unemployment”…
This is pathetic by the Turnbull Government. The recent Senate Report, entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, explicitly recommended stringent labour market testing of all temporary ‘skilled’ workers to ensure that employers employ locals first wherever possible:
Recommendation 7: The committee recommends that the replacement of local workers by 457 visa workers be specifically prohibited.
Recommendation 8: The committee recommends that the current exemptions on labour market testing for ANZSCO skill levels 1 and 2 be removed.
Recommendation 9: The committee recommends that the Migration Regulations be amended to specify that labour market testing applies to all positions nominated by approved sponsors under labour agreements and Designated Area Migration Agreements.
Immigration should never be included in trade agreements. Immigration is covered in Australia’s ‘Migration Programme’, and there is little sense in negotiating away control of our sovereign borders other nations – and in the process diluting Australian wages and working conditions – for slightly improved market access.
Trade agreements should be for trade and nothing else.
[email protected] Article first published at https://www.macrobusiness.com.au/2017/12/tpp-2-0-open-immigration-floodgates/
Leading real estate rent-seeker, the Property Council of Australia (PCA), is pushing for another idiotic policy “solution” to fix Australia’s housing affordability woes: offering a government-backed low deposit home loan scheme.
From The Australian:
"A government-backed low-deposit home loan scheme could help address housing affordability by getting more buyers into the market and adding to the housing stock, according to the Property Council of Australia…
The PCA highlighted the Keystart program in Western Australia, where buyers can purchase a home with a 2 per cent deposit in Perth and up to 7 per cent in regional areas without paying lender’s mortgage insurance…
PCA chief of policy Glenn Byres said the program had been “useful in helping to drive supply” and had helped buyers who would otherwise be locked out.
“The big challenge right now is the deposit gap and people having to save sufficiently to meet the deposit requirements of lenders,” Mr Byres told The Australian…
BIS Oxford Economics senior manager for residential property Angie Zigomanis said any rollout of such a scheme might encourage some borrowers to buy better properties than they could otherwise afford, which could drive up prices for more affordable homes…
Digital Finance Analytics principal Martin North… echoed concerns about pressure on pricing, saying that when similar programs had been introduced around the world “it tends to lift property prices higher”.
Earth to PCA: you don’t “fix” housing affordability by sucking sub-prime buyers into the market and raising demand. You fix it by implementing policies that lower demand and boost supply. You know, things like:
As usual, the PCA is using the fig leaf of “housing affordability” to lobby for government subsidies to the housing sector. This shameless self-interest should be resisted on all fronts.
Article first published by Unconventional Economist in Australian Property at 8:33 am on January 12, 2018 by Leith van Onselen at https://www.macrobusiness.com.au/2018/01/another-idiotic-housing-affordability-solution-emerges/
"For more than a decade, the Productivity Commission has debunked the common myth that immigration can overcome population ageing. [...] If Australia was truly a ‘clever’ country like Japan, it would manage population ageing by: 1) better utilising existing workers, given there is significant spare capacity in the labour market; and 2) where required resort to technological solutions. The last thing that Australia should be doing is running a mass immigration program which, as noted many times by the PC, cannot provide a long-term solution to ageing, lowers wages, and places increasing strains on infrastructure, housing and the natural environment." This article first published at #comments">https://www.macrobusiness.com.au/2017/06/poor-old-japan-low-unemployment-less-crowded-cheaper-housing/#comments
For more than a decade, the Productivity Commission has debunked the common myth that immigration can overcome population ageing. For example:
In a nutshell, trying to overcome an ageing population through higher immigration is a Ponzi scheme. It requires ever more immigration, with the associated negative impacts on economic and social infrastructure, congestion, housing affordability, and the environment.
The obvious question that follows is, if immigration is not the solution to the ‘problem’ of population ageing, then what is? Enter Japan, whose population is both shrinking and ageing quickly:
And whose labour market is tight, with Japan’s unemployment rate recently hitting a 22-year low of just 2.8% (if only Australia was so lucky!):
Rather than open the immigration spigots for a short-term fix, and in the process crush-load infrastructure and housing, Japan has instead taken the high tech route of engaging in automation.
Population boosters in Australia often label Japan an ‘economic basket case’ due to its ageing population. But the facts do not back this assertion up. In addition to having an unemployment rate that Australian workers could only dream of, as well as a relatively affordable housing market, Japan’s GDP growth in per capita terms has been highly respectable, as it has been for most other nation’s with declining populations:
These facts have not been lost on the Center for Economic and Policy Research (CEPR), which has penned the following rebuke to the clam that Japan is facing a ‘dismal’ future due to population ageing:
The NYT featured yet another piece on a country, in this case Japan, facing a future with a lower population. The piece warns that it will be difficult to maintain economic growth with a declining population and that Japan’s labor shortage would get more severe.
This doesn’t sound like too bad of a story to people familiar with economics. Thus far the labor shortage has not been serious enough to cause wages to rise in Japan. If it eventually does get more severe and wages do rise then it just would mean that some of the least productive jobs would go unfilled. For example, perhaps Tokyo would no longer pay workers to shove people into overcrowded subway cars.
As far as GDP growth, economists usually care about GDP per capita as a measure of living standards, not total GDP. This is why Denmark is a richer country than India, even though India has a much larger GDP…
It is worth reminding readers that growth in productivity swamps the impact of demographics. If Japan can sustain a 1.5 percent pace of productivity growth, then output per worker hour would be 80 percent higher in forty years. Even in a very extreme demographic change, say going from three workers per retiree to 1.8 workers per retiree, this would still allow for a 17 percent rise in average living standards over this period… And this does not account for the benefits from less strain on the infrastructure and the natural environment. Nor does it take account of the lower ratio of dependent children to workers…
Presumably the folks who are concerned about the job-killing robots expect that productivity growth will be considerably more rapid.
We also shouldn’t forget that economists at MIT recently found that there is absolutely no relationship between population ageing and economic decline. To the contrary, population aging seems to have been associated with improvements in GDP per capita, thanks to increased automation:
If anything, countries experiencing more rapid aging have grown more in recent decades… we show that since the early 1990s or 2000s, the periods commonly viewed as the beginning of the adverse effects of aging in much of the advanced world, there is no negative association between aging and lower GDP per capita… on the contrary, the relationship is significantly positive in many specifications.
If Australia was truly a ‘clever’ country like Japan, it would manage population ageing by: 1) better utilising existing workers, given there is significant spare capacity in the labour market; and 2) where required resort to technological solutions.
The last thing that Australia should be doing is running a mass immigration program which, as noted many times by the PC, cannot provide a long-term solution to ageing, lowers wages, and places increasing strains on infrastructure, housing and the natural environment.
In late 2015, in a great twist of irony, one of the people responsible for the proliferation of high rise dog boxes across Melbourne – former planning Minister (now Opposition Leader) Matthew Guy – had a Damascus moment and questioned the merits of high immigration into Melbourne: Article first published at Macrobusiness.
“I think there has got to be a genuine community, business and governance discussion about how we really focus on building the population of our regions, because I am very, very sure that the four-and-a-half million people of Melbourne think … our city is bursting,” Mr Guy said. “Can you imagine it with another million people on top of this, as it will be within 15 years time?”
Then in May 2016, Guy went even further claiming that “managing population growth is Victoria’s biggest challenge”:
Every year Victoria’s population grows by the size of a packed MCG… and 92 per cent of them are headed towards Melbourne.
So it is no wonder that strained and congested infrastructure is something Victorians experience every day…
Our roads are clogged, our trains are full and we can’t get inside trams let alone find a seat on one.
Managing the growth of our population is the biggest challenge Victoria faces today…
Then in November 2016, Guy returned claiming that almost doubling Melbourne’s population to 8 million is unsustainable and calling for population growth to be shifted to the regions:
All of Melbourne’s problems are intrinsically linked to this [population] growth, and it requires a government of vision and purpose to adequately respond to these challenges for the sake of us all… Our vision for Victoria is a state of cities, not a city state…
For too long, governments have ignored decentralisation… An effective decentralisation agenda is crucial to underpinning our desire to improve Melbourne’s liveability and economic growth of the regions…
Then in February, Victoria’s Shadow Parliamentary Secretary to the Leader (Population Policy and Housing Affordability), Tim Smith, again warned that Melbourne’s population growth is unsustainable and called for growth to be diverted to the regions:
The vastness of Melbourne is something to behold and the centralising of Victoria’s population continues as 92 per cent of new arrivals to Victoria stay in the capital.
Victoria is growing by one person every five minutes, more than 100,000 a year… We have seldom seen population growth like it… Victoria’s present growth dwarfs the population booms of the 1850s and 1960s, and is contributing towards an infrastructure crisis characterised by severe road congestion, overcrowded public transport, schools bursting at the seams and a scarcity in the residential house market that is taking home ownership out of reach of many young Melburnians…
Melbourne is nowhere near as liveable as it was… Opposition Leader Matthew Guy’s vision is to decentralise Victoria and develop its regional cities, to take the pressure off Melbourne and grow country Victoria… The state desperately needs a government that is committed to decreasing the percentage of newcomers who make their home in Melbourne… We want to see more people commuting to Melbourne from regional Victoria — we can’t have a Melbourne that expands forever… An effective decentralisation agenda is key to improving capital city liveability and the economic wellbeing of the regions.
This month, the Liberal candidate for Brighton, James Newbury, penned an article in The Age warning that the Labor Government’s planning reforms will wreck the suburbs and reiterated the call for Victoria’s population growth to be shifted to the regions:
Your home, as they say, is your castle. That’s why for most of us, our suburb is a bit like our local village… Our villages are getting more cramped, they are getting taller, and finding parking has become a daily chore…
In recent weeks – with little fanfare – the Andrews government slipped through a so-called “refresh” of planning laws, which encourages increased densification. Under the changes there will be less new housing built in Melbourne’s outer growth areas, and more built within 20 minutes of the city.
The densification strategy is Andrews’ solution to Victoria’s population doubling over the next 30 years. To cope with the strain of that intense population growth, the government intends to allow more development on each piece of land, by scrapping the two residences on a neighbourhood block rule…
The only way to keep the character of our suburbs, preserve our neighbourhoods, and cater for intense population growth, is to expand Melbourne, develop satellite hubs, and attract people towards regional centres.
As a lifelong Melbournian, I too have watched in disbelief as Melbourne’s population has expanded at a frantic rate, growing by a whopping one million people (27%) in the 12 years to June 2016:
Anyone that has lived in Greater Melbourne over this period will agree that living standards are being eroded. Roads and public transport have been crush-loaded and housing has become hideously expensive.
The situation is set to deteriorate further if Melbourne’s population grows as projected by the State Government. According to these projections, Melbourne will add on average 97,000 people per year (1,870 people per week) for the next 35 years – adding the equivalent of around 9 Canberras or 2.5 Adelaides to the city’s population:
While the State Liberal Party’s concerns are justified, how realistic is their solution to decentralise? The key driver of Melbourne’s projected population growth is the federal government’s mass immigration program:
And to date, migrants have always chosen to settle in the big cities of Melbourne and Sydney, rather than the regions:
Decentralisation has been on Australia’s political agenda for around 100 years without success (other than the creation of Canberra). So what makes the Victorian Liberals believe they can magically turn the situation around?
Short of locating government departments to the regions, what can the State Government realistically do?
And what good is decentralisation if all it means is that ‘urban sprawl’ is replaced by ‘regional sprawl’ as the regions simply become commuter towns for Melbourne? Or, to put it another way, regional dormitory suburbs are created instead of fringe suburbs?
Rather than accepting mass immigration as a fait accompli, the State Liberal Party should instead lobby their federal counterparts to establish a national population policy that reduces immigration and does away with a ‘Big Australia’ on the grounds that is is placing undue strain on infrastructure and housing, and is reducing living standards of incumbent residents.
Victoria’s politicians should also lobby for a greater share of tax revenues on the grounds that they are incurring the lion’s share of the costs from immigration, in the form of providing expensive infrastructure and social services.
To the Liberal Party’s credit, they have at least recognised that Melbourne’s population growth is both unsustainable and unwanted. But they need to look at the root cause – excessive levels of immigration – and seek to bring it back down to sensible and sustainable levels.
For its part, the Labor Government needs to open its eyes. Few Melbournians want a city of 8 million people. The one we have already is barely functioning properly at 4.6 million.
Anyone that lives in Sydney or Melbourne will have experienced the crippling rise in congestion on our transport networks first hand. Morning and evening peaks now run for hours, traffic is forever thick on the weekends, and the time taken to travel from point A to point B now takes longer than ever. Article originally published at https://www.macrobusiness.com.au/2017/05/mass-immigration-grinds-big-cities-to-halt/
Over the weekend, The Australian confirmed what we living in the big cities already know: commuting is fast becoming a nightmare:
The number of vehicles travelling in Australian cities
has grown almost tenfold in the past 70 years and, with exponential
population growth not being met with adequate road infrastructure
upgrades, traffic speeds are crawling to a standstill…
Last year, a report from the Committee for Economic Development of
Australia said congestion could cost the nation more than $50 billion in
lost productivity by 2031 unless addressed.
The latest congestion bill was $16.5bn in 2015.
Congestion levels on major arterial roads are at a high, with most
cities suffering much slower travel times and lower average speeds than
Sydney, which last year was named the nation’s most congested city by
peak transport body Austroads, has seen significant reductions in
average speeds even since 2011. The population of Greater Sydney has
risen by almost 300,000 people during that time, reaching almost five
Melbourne is growing by 2000 new drivers each week, with more than
200,000 vehicles travelling across the West Gate Bridge between the CBD
and western suburbs each day…
Between 2006 and 2013, speeds on Melbourne’s major arterial roads
have slowed by an average of 13km/h, with speeds on the West Gate
Freeway entry ramp from Williamstown Road slowing to half the speed
limit of 100km/h during morning peak hours…
The primary culprit is pretty obvious for those that care to look:
the explosion in population growth, which has seen Melbourne add one
million people over the past 12 years (a 27% increase) and Sydney add
821,000 people (a 20% increase):
In October last year, Infrastructure Partnerships Australia (IPA) released a report that used Uber driver information to measure “road network performance” in Sydney, Melbourne, Brisbane and Perth to drill down into average travel times at different hours of the day.
The results were based on the following number of drivers in each city:
And found that “efficiency” pretty much followed the level of population growth:
In Melbourne, which is the population ponzi king, travel times have
worsened materially, followed by Sydney, which has also experienced
strong population growth. Brisbane only experienced a minor worsening in
travel times. Whereas in Perth, where population growth has cratered,
travel times have actually improved.
The Bureau of Infrastructure and Regional Economics has also forecast soaring costs of congestion, particularly in Sydney and Melbourne, over the next 15 years:
The underlying driver of this population growth and rising congestion
is the ‘Big Australia’ mass immigration program being run by the
federal government and supported by the three major political parties –
the Coalition, Labor and The Greens.
While net overseas migration (NOM) has fluctuated as long-stay
temporary migrants have come and gone, the fact remains that Australia’s
immigration settings are set at turbo-charged levels and are projected
to remain so for decades to come, thus maintaining Australia’s
population growth at around 400,000 people a year – equivalent to adding
a Canberra to Australia’s population:
Underpinning this high NOM is Australia’s permanent migration program, which is currently 200,000 a year, comprising:
This permanent migration program was ramped-up massively from the early-2000s, as shown in the next chart:
Accordingly, in the 16 years to 2016, Australia’s net overseas
migration (NOM) rocketed to an annual average of 200,000 people a year –
almost triple the historical average of around 70,000 people a year.
As shown in the next chart, which comes from the Productivity Commission’s (PC) recent Migrant Intake into Australia
report, 86% of immigrants lived in the major cities of Australia in
2011, whereas only 65% of the Australian-born population did:
And because of this mass immigration, Sydney’s population is
projected to grow by 87,000 people per year (1,650 people each week) to
6.4 million over the next 20-years – effectively adding another Perth to
the city’s population:
It’s even worse in Melbourne, whose population is projected to
balloon by 97,000 people per year (1,870 people each week) over the next
35 years to more than 8 million people – effectively adding 2.5
Adelaide’s to the city’s population over this time period:
It’s common sense that ramming 80,000 to 100,000 extra people into
Sydney and Melbourne each year will create immense pressures on housing,
infrastructure, congestion, and overall livability.
Even former Treasury secretary Ken Henry gets it, last year sounding the alarm that rapid population growth has overrun infrastructure and housing in the big cities:
“My observation in Sydney, in Melbourne, today is that
people already think – with very good reason – that the ratio of
population to infrastructure is too high,” he said.
Australia will need to construct a new city every year as big as
Canberra or Newcastle to accommodate the expanding number of people, he
said. Or, every 5 years,
Australia would need to build an entire new city from scratch for 2
million people; or an entire new city as big as Melbourne every decade.
Without such action, there will be more congestion, longer commute
times to work and increasing problems with housing affordability…
Where is the national plan to cope with this mass immigration? How
will Australia’s governments and businesses ensure that incumbent
Australians’ living standards will not be eroded by the associated
pressures on infrastructure, housing, the environment, and the dilution
of Australia’s fixed mineral endowment, which is a key driver of our
wealth and living standards?
Residents of Sydney and Melbourne, in particular, know that their
living standards will be smashed if mass immigration is allowed to
continue. Therefore, reducing immigration back to the long-run average
of 70,000 people annually, as advocated by the Sustainable Australia party,
is becoming critical. This would see Australia’s population stablise at
around 32 million mid-century, rather than the current projection of
around 40 million.
Because as it stands, Australia cannot possibly hope to build enough
infrastructure to supply a Canberra-worth of new residents each and
every year for decades to come, which is what we are facing under
Australia’s current mad immigration settings.
Unbelievably, the party that is supposed to safeguard the Australian environment – The Australian Greens – is trying to scuttle the Turnbull Government’s modest changes to so-called ‘skilled’ 457 visas. From The Canberra Times:
The Turnbull government’s plan to scrap the 457 skilled migration visa faces new hurdles in the Senate with the Greens set to refer it to a committee to examine if it could harm the economy, hobble individual businesses or put at risk Australia’s multicultural fabric.
Trade spokeswoman Sarah Hanson-Young will move on Monday to secure crossbench and opposition support for an inquiry into the replacement of the 457 class with a pared down system with fewer eligible occupations and shorter visa periods, and which is separated from subsequent citizenship eligibility…
“If Australia is going to attract the type of expertise, intelligence and experience that we need, we have to engage with our region and the wider international community,” Senator Hanson-Young said.
“This inquiry will help to untangle some of the mess that was made when Malcolm Turnbull decided to use the cheap politics of racism and crass anti-migrant sentiment to appease the conservative rump of his own party…
“To stride confidently into the global future, we will need to attract and retain the best and brightest minds to our innovation, IT and education sectors. That can only be achieved through careful consideration of policy, not sloganeering and jingoistic hyperbole”…
Until now, 457 visas lasted four years and holders were able to apply for permanent residency at their conclusion and then serve as little as a 12-month waiting period before applying for full Australian citizenship.
However, the new arrangements will limit most visas – particularly in the lower paid occupations – to two years with a single renewal and no access to permanent residency at the conclusion.
Seriously, what hope is there of having a rational debate about immigration settings when The Greens play the ‘racist’ and ‘xenophobia’ card whenever the issue arises?
If Hanson-Young had bothered to examine the facts pertaining to 457 visas, she would have identified four major problems with the system that need fundamental reform, namely:
These shortcomings have been expertly identified by Dr Joanna Howe, a senior lecturer in law at the University of Adelaide (see here and here), the recent Senate report entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, and by the Australian Population Research Institute’s (APRI) recent report entitled “Immigration overflow: why it matters”, which examined the widespread rorting of Australia’s 457 visa system, especially within the IT sector.
The Department of Immigration has also for several years shown that skills shortages are near ‘historical lows’, with major labour surpluses present in IT, accounting and engineering – where 457 visa use along with the granting of permanent residency visas are especially high:
To its credit, the Turnbull Government’s replacement of the 457 visa system overcomes some of these problems by:
But rather than safeguarding the environment, and calling for more sustainable levels of immigration, The Greens have instead shown themselves to be the party most in favour of open borders, mass immigration, and a ‘Big Australia’.
Recently, The Greens’ lobbied for Australia to increase its immigration intake by another 50,000 people a year, from already turbo-charged levels, without any corresponding offsets!
This comes despite the latest federal government State of the Environment report, released last month, revealing that Australia’s natural environment is being placed under acute strain as Australia’s population grows out of control. It also comes on top of growing concerns about the deleterious impacts mass immigration is having on living standards in the big cities, such as packed trains, worsening traffic congestion and deteriorating housing affordability.
The fact of the matter is that there are few better policy solutions to protect Australia’s environment and living standards than limiting population growth and abandoning plans for a ‘Big Australia’, which necessarily means significantly cutting immigration.
However, instead of living up to their name, and advocating for a smaller population trajectory on behalf of Australia’s environment and living standards, The Greens have chosen to howl ‘racism’ and ‘xenophobia’ in response to sensible changes to Australia’s immigration program.
The bottom line is that The Greens are a fake environmental party hellbent on destroying the Australian environment and incumbent residents’ living standards via never-ending mass immigration and strong population growth.
This article first published at https://www.macrobusiness.com.au/2017/04/fake-greens-try-scuttle-457-visa-changes/
Unconventional Economist, Leith van Onselen again takes the ABC to task over its shocking bias in reporting and discussing the impacts of Australia's population growth. In this case he exposes the failure of political guests and the moderator on Q&A to respond to the core of an importance audience question about Australia's population ponzi and housing unaffordability. Article first published on Macrobusiness on April 13, 2017 at https://www.macrobusiness.com.au/2017/04/yet-abc-refuses-discuss-population-ponzi/.
I noted on Tuesday how the ABC has recently displayed shocking bias in the immigration debate.
In late March, ABC’s The Link aired a shockingly biased segment whereby presenter Stan Grant tried to bully Dick Smith on immigration, aggressively dismissing Smith’s arguments and replacing them with a whole bunch of myths and faulty logic in support of a ‘Big Australia’.
ABC Lateline then aired a half-hour segment on housing affordability, which failed to even mention mass immigration’s key role in driving up housing demand and prices in Sydney and Melbourne, despite me cutting a monologue on this exact issue for Lateline, which the ABC left on the cutting room flaw.
Earlier this month, ABC The Drum aired a shockingly biased segment spruiking benefits from immigration without acknowledging the various costs for the incumbent population, including for housing.
And over the weekend, the ABC badly misrepresented comments from former CBA CEO, Ralph Norris, who claimed that Australia’s housing woes were being caused by excessive demand from rapid population growth (immigration).
On Monday night, we got another dose of the ABC’s bias when Q&A refused to acknowledge or discuss the population ponzi following a reader’s question. Below is the transcript (video at 14.29):
A reversal of the two-speed economy now sees residential construction in the eastern states driving the nation’s prosperity. But some have likened the current housing boom in Sydney and Melbourne to a population Ponzi scheme, and housing affordability is a major problem. How long does the panel think that housing and population growth can continue to make up for mining and manufacturing? And is it time for a rethink of the generous tax concessions offered by negative gearing?
I’ll start with Penny Wong, because that is a specific policy of the Labor Party.
Well, I mean, we have a view, and I think, you know, a fair few people have backed it in, frankly, that you don’t have a serious housing affordability policy unless you tackle negative gearing and capital gains tax. We have some of the most generous tax incentives in the world for investors. We have a very small proportion of new owners…of housing being bought by first-home buyers. We’ve got very large numbers of proportion of investors in the market. Something’s got to give, and if we don’t tackle the tax incentives, which really don’t level… which skew the playing field towards investors, then you really don’t have a housing affordability policy. And the extraordinary thing is that we saw the Treasurer today giving a speech on housing affordability where the single biggest area which he needs to address was off the table for political reasons, not for policy reasons.
You mean negative gearing?
Negative gearing, yes. Because they want to be able to belt us about it rather than actually have a sensible discussion about the policy.
Just a very brief one. The Australian ran up the flag pole the idea that Morrison, the Treasurer, would talk in that speech about the idea of super funds for first-home buyers being able to be raided to pay for housing, or at least to give a deposit.
Well, this is the idea that Malcolm Turnbull himself has described as a thoroughly bad idea, and I agree with him, because if you’re saying to people, “Raid your retirement savings,” which is what it is, to purchase a house, it seems to me pretty bad economic policy.
OK. Mitch Fifield?
Thanks, Tony. Thanks, David. Negative gearing, ultimately, is a way of getting a tax deduction for an expense incurred in earning income. That’s what negative gearing is.
If you already own a house, to be precise.
Yeah, but that is…that’s part of our system of taxation. What we have great difficulty with is Labor presenting negative gearing as though it somehow magically solves the housing shortage and housing affordability. It wouldn’t. It’s something that people have made investment decisions based upon, so you don’t want to go changing these things lightly. Overwhelmingly, the single greatest contributor to the housing affordability issue is land supply, is a lack of land in the right places, is zoning restrictions that make it difficult to develop, is red tape that makes it difficult for housing estates. And also, importantly, having infrastructure, like transport in the right places. That’s… Those things together probably make the greatest contribution.
Mitch, I’ll come back to you. I will come back to you.
I will come back to you, but make your quick point.
Just a quick point. Ultimately, this is a shared endeavour between federal, state and local governments, which is why the Treasurer has indicated that, in the Budget, we will have measures where the Commonwealth can make a contribution to doing something about this issue.
Two very quick points. One, Mitch talks about retrospectivity. Our policy was no retrospectivity, so existing assets would be continued to be treated the same. What we wanted to do was restrict negative gearing to new housing to try and pull on supply. But the second point, the Government never answers – why should somebody buying their seventh house have a better…have more tax incentives than someone buying their first?
I’ll let you respond to this question, you obviously want to, and then I’ll go to…
I just feel like this is one of the great political tragedies, housing affordability, of this generation. As a mother of four kids, I just despair that my children will ever be able to live in the same city as me. But then what I’m also noticing around me, in terms of my peers in their 40s, 50s, 60s, there a lot of people around me who are still renting, who have never been able to make that leap into the great Australian dream of owning their own plot or block, whatever it is. And I just think that’s so sad. We’re facing worlds of retrenchment, of jobs that aren’t secure anymore, of situations where pension funds… You know, we don’t have the super to pay into our pension funds. I just feel like this is a huge ticking time bomb and we don’t only need to talk about the younger generation, it’s the older generation as well, heading into their pension years and still renting.
I’ll come to you, I will, I just want to… The Great Britain has had a similar experience.
The Great Britain.
Yeah. We do, we do have.
The Great Britain, or Great Britain. I mean, the massive price inflation of housing in London has forced a huge number of people out of the city.
It’s right across the country, really. I think the average house price now is over eight times more than the median disposable income for the average family, average median income. And this has had a considerable knock-on effect. One of the reasons why is because people who no longer can make any money on savings, or rely on a pension, are buying houses to rent to people. I don’t know if they’re the second homes you’re talking about. Are they being bought to rent out or are they being bought to live in?
Mostly by investors to rent.
Yeah. We call it buy-to-rent. It’s the same sort of thing. And obviously, as a renter, you do get certain tax breaks and the people that you’re…renting the houses out don’t have a great deal of protection. This has become a very big issue. And as you said, we also have the situation where many of our key workers – our teachers, our firefighters, our nurses – are having to live outside of the cities where they’re working. It’s a considerable problem. 50% of the land that gets permission to be built on isn’t built on. The amount of affordable housing that’s built on there is dwindling all the time because of the huge profits to be made in selling up-market houses. It’s a real situation. We should be building more houses. And at the moment, the local councils are not allowed to build houses. Now the Government wants housing associations – and they’re the people that replaced the councils for building affordable housing – they’re going to compel housing associations to sell their houses on the free market. It’s ridiculous.
OK, Mitch Fifield, should this not be treated as a national emergency, and would you not get credit if you did that? A government often said to have little vision, a government going down in the polls, could actually make a huge…well, impact, by doing something like that, but it never happens.
Well, to the contrary, the Treasurer and the Prime Minister have indicated that housing affordability is high priority for the Government. That’s why we’re going to have a plan in the Budget. And we’ve got to look at all elements because housing availability isn’t just about home ownership, it’s about rental affordability, it’s about social housing, it’s about homelessness. You need to have a comprehensive package that addresses all of those elements, but you also need the cooperation of the state governments and local governments. As I said before, it’s a shared endeavour of all levels of government, and it’s something that we’re going to have a lot more to say about in the Budget.
OK, it’s time to move along.
As you can see, not one panelist even mentioned the central part of the question pertaining to Melbourne and Sydney housing being a “population Ponzi scheme”, nor whether it is sustainable. Nor did Tony Jones do his usual thing and bring guests back onto the key point of the question.
Hopelessly biased ABC.
Article by Leith van Onselen. Dick Smith is a national treasure. Yesterday he used his own money to fund an ad in Australia’s major newspapers challenging Lucy Turnbull – the chief commissioner of the Greater Sydney Commission (GSC) – on mass immigration, and asking her what her eventual plans are for the population of Sydney – querying whether it could be 16 or even 100 million.
Below is the ad:
The response from Lucy Turnbull’s office was pathetic. From The Australian:
The Australian sought comment from Ms Turnbull, through the Greater Sydney Commission. Commission chief executive Sarah Hill responded that Sydney’s rate of population growth was the “hallmark of all successful cities around the world”, and the group based its planning on a middle range of growth forecast, prepared by the state’s demographers.
“More than half of this growth is through natural increase,” Ms Hill said. “Our responsibility is to plan for this to make our city more liveable, sustainable and productive, rather than to debate the facts.”
So, “more than half of this growth is from natural increase”, according to the GSC? Not according to the Australian Bureau of Statistics (ABS). As shown in the below charts, net overseas migration (NOM) into NSW (read Sydney) accounted for 67% of population growth in financial year 2016, and has done so on average over the past 30-plus years:
However, the above charts significantly understate the true impacts of immigration on Sydney’s population growth because “natural increase” captures the children of migrants. That is, NOM brings with it an immediate direct boost to population as well as a subsequent boost as new migrant arrivals have children (subsequently classified as “natural increase”).
For this reason, the Productivity Commission this year estimated that Australia’s population would peak at 27 million by 2060 under zero NOM, versus 41 million under NOM of 200,000 – a difference in population of 14 million! This comes despite only 9 million of this population increase coming directly from NOM. The other 5 million comes from migrants and the decedents of migrants having children (see next chart).
These are “the facts”, which the GSC seems only too willing to ignore: it is primarily mass immigration that is causing Sydney’s infrastructure woes, as well as pressuring housing.
Clearly, the best way for Lucy Turnbull to make Sydney “more livable” is to tap her husband on the shoulder and convince him to rein-in Australia’s mass immigration program.
Because as far as high immigration goes, the buck stops with the federal government. If you are in local or state government then you don’t have much choice but to cope with continuing mass immigration putting an ever-increasing strain on already stretched infrastructure, housing and public services.
Lucy Turnbull is in a unique position to influence federal policy and effect change for the betterment of both Sydney and Australia. But like her husband she is a mouthpiece for the ‘growth lobby’ that gains from never-ending population expansion at the expense of the rest of us.
This article, by Leith van Onselen, was first published at http://www.macrobusiness.com.au/2016/12/the-turnbulls-population-credibility-collapses-under-dick-smith-barrage/. Republished with author's permission.
Free Public Event. Guest Panel, Q&A... 'An Economically Sustainable Australia' - Economist Leith van Onselen and the Hon Kelvin Thomson. WHEN Saturday 19th November, 2016. 2:45 for 3pm - 4:30pm, WHERE Upstairs at The Sporting Globe hotel, 288 Bridge Rd, Richmond VIC. Opposite the Richmond Town Hall. Hosted by Sustainable Australia.
Free Public Event. Guest Panel, Q&A...
An Economically Sustainable Australia
Economist Leith van Onselen and the Hon Kelvin Thomson
WHEN Saturday 19th November, 2016. 2:45 for 3pm - 4:30pm
WHERE Upstairs at The Sporting Globe hotel, 288 Bridge Rd, Richmond VIC. Opposite the Richmond Town Hall. Hosted by Sustainable Australia.
One of the most profound changes affecting the Australian economy and society over the past 12 years has been the massive lift in Australia’s net immigration, which surged from the mid-2000s and is running at roughly twice the pace of long-run norms (see next chart).
Article first published on Macrobusiness at http://www.macrobusiness.com.au/2016/08/the-great-immigration-subterfuge/
One of the most profound changes affecting the Australian economy and society over the past 12 years has been the massive lift in Australia’s net immigration, which surged from the mid-2000s and is running at roughly twice the pace of long-run norms (see next chart).
With much of this immigration flowing into the two major cities – Sydney and Melbourne – whose populations have ballooned:
It is this massive increase in population that is the key reason why many of us living in the major cities are stuck in traffic, cannot get a seat on the train, are experiencing crowded hospitals and schools, and cannot afford a home.
The population influx has simply overwhelmed our cities’ infrastructure and services. And the plan from all sides of politics – the Coalition, Labor and the Greens – is to continue the policy of high immigration without commensurate investment to cope with the influx.
For a major commodity exporter like Australia, which pays its way in the world by selling-off its fixed endowment of resources, ongoing high immigration is self-defeating from an economic standpoint. That is, continually adding more people to the population year after year means less resources per capita. It also means that Australia must sell-off its fixed assets quicker just to maintain a constant standard of living (other things equal).
The net result of this “Big Australia” policy is that living standards are being eroded as the capacity of the economy and infrastructure to absorb all of the extra people is overwhelmed, and the country’s natural resources base is diluted among more people.
Despite these inconvenient truths, there are still many commentators that champion Australia’s word-beating immigration program.
We got a taste of this view this week by The ABC’s Tom Switzer, who penned a piece in Fairfax claiming that John Howard deserves praise for cracking down on refugees as it allowed him to significantly ramp-up economic migration into Australia:
The facts reveal the Pacific Solution has done more for immigrants and refugees than open door advocates ever imagined…
Simply put, tough border protection not only discourages people from making perilous journeys on the high seas. It also, crucially, boosts public confidence in a large-scale, non-discriminatory migration program…
Implicit in Howard’s advocacy of border controls was a truly sound belief that mass migration is conditional on government control over “who comes to this country and the circumstances in which they come”, as he put it in 2001…
Just look at the record. With Howard’s policy of offshore processing, unauthorised boat arrivals largely stopped. At the same time, the rate of legal, non-discriminatory immigration doubled…
Let’s get a few things straight.
First, it was the sleight of hand by John Howard that originally mislead the Australian people on immigration. Howard effectively performed a ‘bait-and-switch’ on the Australian people whereby he slammed the door shut on the relatively small number of refugees arriving into Australia by boat all the while stealthily shoving open the door to economic migrants arriving here by plane.
Howard never explicitly mentioned that he was in favour of high immigration because he knew the electorate would be against it. Instead, he scapegoated refugees to give the impression that he was stemming the migrant inflow while proceeding in secret with his ‘Big Australia’ plan.
Unfortunately, rather than being honest with the electorate, the Rudd/Gillard Governments and the Abbott/Turnbull Governments continued the subterfuge. There has never been any community consultation, any national discussion, nor any mandate to proceed with turbo-charged levels of immigration.
This comes despite an Essential Research opinion poll released in May revealing that the overwhelming majority of Australians (59%) believed “the level of immigration into Australia over the last ten years has been too high”, more than double the 28% of Australians that disagreed with that statement.
Second, the claim that the Australian Government has control over “who comes to this country and the circumstances in which they come” is questionable.
Skills shortages “remain low by historical standards”, according to the Department of Employment, whereas there is a huge surplus of underutilised labour, thus undermining the rationale behind the large-scale importation of foreign workers.
The system surrounding so-called skilled and student visas has been corrupted, with widespread rorting and fraud revealed by the recent joint ABC-Fairfax investigation (see Australia’s hidden people smuggling scandal), leading to claims the system has been overtaken by “crooks and criminals”.
When combined with the Turnbull Government’s policy allowing 6 year-olds and their guardians visa entry into Australia’s primary schools (and conveniently allowing them to purchase established property), along with the proposal to allow migrants to bring into Australia their elderly parents (thus further ageing the population and straining Australia’s healthcare system and infrastructure), it is clear that Australia’s purported “skills-based” immigration system is a farce.
Worse, because of this dysfunctional policy, Australia is on track to nearly double its population by 2050 to more than 40 million people, despite virtually no discussion nor mandate for this dramatic change, nor any plan on how to cope with this growth.
It would be nice if politicians examined the facts, and gauged the community’s views, before pursuing the current high population (immigration) growth strategy. This way, Australia might not have been left with an “infrastructure emergency”, housing affordability problems on a grand scale, and falling livability.
Australia desperately needs a frank and honest national conversation about population policy, which focuses on whether or not large-scale immigration is benefiting the living standards of the existing population. Not the current ‘smoke and mirrors’ approach that conflates immigration with refugees, or the divisive “Hansonites vs progressives”.
A new front has opened in the student-migration scam, whereby the Turnbull Government has opened the door to international primary school students and their guardians to access Australian schools and purchase Australian property ahead of achieving permanent residency. From SBS News:
[Republished here with permission. Originally published at http://www.macrobusiness.com.au/category/featured-article/. Published by the Unconventional Economist at #comment-2636816">http://www.macrobusiness.com.au/2016/06/turnbull-opens-new-student-migration-scam-floodgate/#comment-2636816]
From July 1, students aged six and above would be able to apply for student visas regardless of their country of citizenship – and their guardians can also apply for Guardian visas (subclass 580)…
These visa-rule changes, which were announced during Prime Minister Malcolm Turnbull’s visit to China in April, also mean non-residents can buy several new properties or one existing property…
Dave Platter, from the leading Chinese international-property portal Juwai.com said there has been a nearly 20 per cent jump in inquiries for properties in Australia since Mr Turnbull’s announcement…
Estate agents Vera and Geoffrey Wong have hosted an open home in Sydney’s Eastwood.
Most of their clients are either Chinese or South Korean investors, and Mr Wong says when they were choosing a property, there is no doubt their children’s education is considered most important.
He said buyers are planning purchases that cater for their children’s entire education.
“Schooling … that is – I can’t emphasise it enough – is one of the main factors,” he said.
“Our clients, I would say over 70 per cent, (are looking,) at schooling and the university afterwards.”
Unbelievable. Primary schools in “good” catchment areas are already bursting at the seams. Meanwhile, Australia’s biggest cities, which is where most migrants arrive, are already struggling to digest a decade of rampant population growth (immigration), which has clogged their roads, trains, and reduced residents’ overall amenity.
And yet the government wants to add more immigrant fuel to the fire, just so that it keeps a floor under Australia’s already ridiculously expensive house values.
Where is the additional federal investment in schools and infrastructure to keep up with the migrant influx? And where is the consideration of impacts on Australia’s existing residents – especially young families struggling to buy a home and put their children through schooling?
Is this what Australia has been reduced to: flogging land, houses and visas to wealthy Chinese? Is this what Turnbull really means by his “innovation agenda”? Surely we can do better.
unconventionaleconomist AT hotmail.com
The Senate Education and Employment References Committee has released a scathing report entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, which documents the abuses of Australia’s temporary visa system for
at 7:11 am on March 30, 2016 | #comments" title=" View Australia’s disgrace: the exploitation of foreign workers Comments" target="_blank">93
The Senate Education and Employment References Committee has
released a scathing report entitled A
National Disgrace: The Exploitation of Temporary Work Visa Holders,
which documents the abuses of Australia’s temporary visa system for
According to the report, there are over 1.8 million temporary visa
holders in Australia (see Table 2.5 below), with approximately 1.4
million of them having work rights. This means that temporary visa
holders comprise around 10% of Australia’s labour force.
Below is a summary of the Committee’s view of the 457 visa system
for so-called “skilled” foreign workers:
The committee received evidence that a key indicator of the
effectiveness of the 457 visa program in addressing genuine skills
shortages is the responsiveness of the demand for 457 visa workers to
changes in the general rate of unemployment, and to changes in the
supply of skilled labour in particular occupations.
Evidence to the committee indicated that the responsiveness of
the 457 visa program to the upturn in the unemployment rate lagged by
two to three years. Furthermore, the committee received evidence that
the 457 visa program was having a detrimental impact on the employment
opportunities for Australian graduates in specific occupations such as
engineering and nursing.
The committee acknowledges that it received conflicting evidence
regarding the balance between permanent and temporary migration. In
theory, the value of temporary migration is that it allows business to
meet short-term skills shortages. In this respect, there is an
advantage in having some element of temporary migration because
addressing skills shortages solely through the permanent migration
scheme could result in a skills surplus, particularly if a sector that
was booming experienced a sudden down-turn (the resources sector for
example). Addressing short-term skill shortages with the 457 visa
scheme should be a way of moderating these types of rapid
transformations in discrete segments of the skilled job market.
However, the committee is concerned that the broader temporary
visa program, and specifically the 457 visa program, is not
sufficiently responsive either to higher levels of unemployment, or to
labour market changes in specific skilled occupations…
Given the concerns raised in this inquiry, it is therefore
appropriate to review the policy settings of the 457 visa program and
labour agreements at this juncture to ensure they are set correctly…
The Committee recommends that the minimum income threshold for 457
visa holders be indexed to ordinary weekly earnings, so that it is not
eroded over time, along with the implementation of more rigorous,
independent, evidence-based, and transparent processes for determining
the Consolidated Sponsored Occupations List (CSOL), which it sees as ad
hoc and ineffective:
Recommendation 5: The committee recommends that
the Temporary Skilled Migration Income Threshold (TSMIT) be indexed to
average fulltime weekly ordinary time earnings (AWOTE) as at 1 July
2015 and that indexation occur each financial year.
Recommendation 6: The committee recommends that
the Ministerial Advisory Council on Skilled Migration (MACSM) be
re-constituted as a genuinely tripartite, independent, and transparent
body with responsibility and commensurate funding to provide objective
evidence-based advice to government on matters pertaining to skills
shortages, training needs, workforce capacity and planning, and labour
migration (including Designated Area Migration Agreements and the full
range of temporary visa programs with associated work rights). The
committee further recommends that the reports produced by MACSM be made
The Committee also wants stringent labour market testing of all
457 visa nominations to ensure that employers employ locals first
The committee notes that the vast majority of all occupations
available for sponsorship under the 457 visa program are exempt from
labour market testing… although the extent to which it is occurring is
difficult to quantify, the committee is deeply disturbed by evidence of
workers losing their jobs only to be replaced by 457 visa workers. In
this regard, the committee is of the view that there should be a
prohibition against replacing local workers with 457 visa workers…
Given the current high levels of unemployment and
under-employment amongst Australian professionals, however, the
committee is of the view that the labour market testing should be
further strengthened. In particular, the current exemptions on labour
market testing for ANZSCO skill levels 1 and 2 should be removed, and
labour market testing should be required prior to all 457 visa
Further, the committee is of the view that labour market testing
should apply to all positions for which a 457 visa holder is nominated
under labour agreements and Designated Area Migration Agreements.
Recommendation 7: The committee recommends that
the replacement of local workers by 457 visa workers be specifically
Recommendation 8: The committee recommends that
the current exemptions on labour market testing for ANZSCO skill levels
1 and 2 be removed.
Recommendation 9: The committee recommends
that the Migration Regulations be amended to specify that labour market
testing applies to all positions nominated by approved sponsors under
labour agreements and Designated Area Migration Agreements.
Importantly, the Committee also recommends that employers using
457 visas make explicit efforts to employ and train locals:
Recommendation 13: The committee recommends
that employer sponsors of a 457 visa worker (professional) be required
to also employ an Australian tertiary graduate in the same enterprise
on a one-for-one basis.
Recommendation 14: The committee recommends
that employer sponsors of a 457 visa worker (trade) be required to
demonstrate that apprentices represent 25 per cent of the sponsor’s
total trade workforce (with the threshold for this requirement being
the employment of four or more tradespersons).
Recommendation 15: The committee recommends
that the current training benchmarks be replaced with a training levy
paid per 457 visa holder employed in the business. The committee
recommends that the levy be set at up to $4000 per 457 visa worker and
that the levy be paid into existing government programs that
specifically support sectors experiencing labour shortages as well as
apprenticeships and training programs…
The most damning assessments from the Committee were regarding
Australia’s Working Holiday Maker (WHM) and student visa holders, who
were “consistently reported to suffer widespread exploitation in
the Australian workforce”.
The Committee also noted that undocumented foreign workers were
eroding labour standards for Australian employees:
The committee received evidence that undocumented work by
migrant labour has resulted not only in the severe exploitation of
highly vulnerable workers, but also impacted Australia’s labour
markets, including placing downward pressure on the wages and
conditions of Australian workers and undercutting the majority of
legitimate employers that abide by Australian workplace laws.
Looking at the WHM (417 and 462) visa program first, the Committee
noted the following:
A substantial body of evidence to this inquiry demonstrated
blatant and pervasive abuse of the WHM visa program by a network of
labour hire companies supplying 417 visa workers to businesses in the
horticulture sector and the meat processing industry.
It was clear from the evidence that these labour hire companies
have a particular business model. There are a number of labour hire
companies in Australia with close links to labour hire agencies in
certain south-east Asian countries… The scale of the abuse is
extraordinary, both in terms of the numbers of young temporary visa
workers involved, and also in terms of the exploitative conditions that
On completion of their ‘training’, the 417 visa workers were
given a job where they were required to work regular 12 to 18 hour
shifts 6 days a week. They were frequently denied proper breaks and
often had to keep working or return to work early after suffering
workplace injuries. The pay rates were appalling. Most received around
a flat $11 or $12 an hour irrespective of whether this was the night
shift, the weekend, or overtime hours. These wage rates are illegal and
clearly breach award minimums…
Poor or non-existent record-keeping was endemic across the
labour hire companies mentioned in this inquiry. This has serious
implications for ensuring compliance with legal minimum conditions of
employment. The 417 visa workers never met the head labour hire
contractor and only had a mobile number to receive texts about the
start time for their next shift. The committee received many documents
including fake timesheets and envelopes with a figure scrawled on it
instead of a proper timesheet. The workers were paid in cash with no
deductions for tax.
When the shift was over, these workers returned to squalid and
overcrowded accommodation with no proper facilities, for which they
were charged exorbitant levels of rent by the labour hire contractor.
The rent payments were deducted straight from the workers’ pay packets,
most of the time in clear contravention of the law…
And regarding the student visa system, the Committee noted:
The hearings into 7-Eleven revealed that undocumented work
performed in breach of a visa condition (as opposed to visa overstayers
and persons in Australia without a visa) is a huge problem in
Australia. International students who were legally allowed to work in
Australia were required to work hours in excess of their visa
conditions precisely so their employers could then exploit the
technical breach of their visa conditions in order to underpay them and
rob them of their wages and other workplace entitlements…
Working (or being required to work) in breach of a visa
condition renders an international student liable to visa cancellation
and deportation and effectively excludes such workers from the
protections of employment law under the FW Act. This further reinforces
the power of unscrupulous employers over their workers and provides a
perverse incentive for employers to breach the law by coercing their
employees to breach the law…
The committee is particularly concerned about the pressure that
certain employers have exerted on temporary visa workers to breach a
condition of their visa in order to gain additional leverage over the
employee. The committee recognises the reality that unscrupulous
employers have exercised their power in the employment relationship and
the employee has been rendered vulnerable to exploitation…
The committee particularly thanks the former employees of
7-Eleven who appeared at the public hearing in Melbourne. Their
accounts of appalling exploitation and intimidation by their franchisee
employers painted a bleak picture of working life in Australia for
substantial numbers of temporary visa workers. Their stories were not
isolated occurrences to be brushed off as one-off incidents caused by a
few rogue employers. Rather, the overwhelming body of evidence
indicated that the problem of underpayment at 7-Eleven was, and may
remain, widespread and systemic.
The Committee makes a bunch of other recommendations around the
rights of temporary visa holders, compliance and enforcement issues,
franchising issues, etc. There are 33 Recommendations in total.