AT last. Australia is out of recession. “What?” I hear you ask, “I thought Australia had escaped the recession.”
Not so. Those eagerly awaited National Account or GDP figures which came out this week do not tell the fully story. And, incidentally, this is the 50th anniversary of the publication of those figures.
Australia has been in recession since about mid-2008, but the economists will not tell you that.
You see, the GDP figures add up national income and determine whether the economy has expanded or contracted. But they do not account for population growth. In the past year population growth has been greater than the growth in the economy. So income per head has gone down, not up as the Government and economists would mislead you into believing. Now you know why you have been feeling the pinch.
I hasten to add that this is not the Australian Bureau of Statistics’ fault. It just produces the figures. Unfortunately, it cannot do everything at once. The national account figure is seen to be more important than the income-per-head figure so is done first.
But you can do back-of-the-envelope figures. The population is growing at an astonishing 1.9 per cent – at poverty-causing Third World rates. But between mid last year and now, the economy as a whole was growing at less than that rate. So we were going backwards. It is now growing at an annual rate of 2.4 per cent, just ahead of population.
And even then, GDP on its own is not a good measure of human well-being. Yet every quarter the government, the economists, business and financial journalists gather round like supplicants waiting for the statue of the Virgin Mary to shed tears of blood and announce, “We are saved. We are saved. The economy has grown.”
But population growth always takes some, and sometimes takes all, of the growth. Moreover, there are obvious costs to higher population which far outweigh any benefits.
Higher costs of water (witness this week’s Cotter Dam cost); land (witness the unaffordability of housing); longer commuting times; infrastructure costs or infrastructure degradation if the money is not spent; and extra competition for space in cities and wild places.
Despite the costs to the many and the unpopularity of high immigration, governments of both complexion continue it.
Immigration is at record highs. It has more than doubled in the past 10 years to more than 200,000 a year (if you count New Zealanders), plus another 650,000 or so on work, holiday and student visas – many of whom will want to stay permanently.
Why is this policy continuing without much debate, and to the obvious detriment of the existing population?
Beware bipartisanship. The major parties are heavily funded and influenced by interest groups who profit from high immigration to the detriment of the general population.
They are also lobbied by industry groups who may not give donations but who act, quite reasonably, in the interests of their members (some of whom might). And this is very often is not in the interests of the whole population. When, for example, has the Housing Industry Association ever say that high population growth should be curtailed because it is one of the obvious causes of poor housing affordability? Rather it argues for policies that will profit its members. Similarly for any number of industries.
The only way to stop this bipartisan folly is to restrict the big bucks from the big end of town going into political parties’ coffers and also to do what President Obama has done: require that all submissions made by lobbyists and industry groups to be made public.
Political parties don’t do any focus groups on population policy, like they do in so many other areas. They ignore the voters’ views of perhaps the nation’s most important policy. The only time it has been mentioned by a major party was when the Howard Government wanted to exploit a few refugees all the while allowing hundreds of thousands of immigrants in.
It is not racist to seek a sane population policy for Australia. Let’s cut employment immigration deeply and double our refugee intake of about 13,500 and have none with white faces – except, perhaps, those escaping racism in Zimbabwe.
We should have a population policy that aims at improving well-being not impairing it.
You can call this a folly. Historian Barbara Tuchman in her splendid book The March of Folly, laid down the characteristics of political folly (as distinct from misfortune): pursuing a destructive policy, which is known to be destructive at the time, against which many had cautioned, and for which there was a reasonable alternative. History is replete with them.
Australia will bitterly regret this immigration surge. It is adding to or causing nearly every policy woe we have: water shortage; agricultural land being consumed by urban sprawl; congestion; high house prices; climate change; destruction of habitat including the great barrier reef; strains in public education and health; higher food costs and so on and on.
For 50 years now we have foolishly looked to the National Account figures as a measure of our well-being. It is not the ABS’s fault. It does measurements for well-being, but they are practically ignored by government, economists and political journalists.
We need a measure that takes into consideration things like commuting time; costs of water and energy; access to health and education; housing costs and so on.
What is the point of extra income if it takes longer to commute to earn it; causes higher food, water and energy costs and living costs generally?
We are adding one person to Australia’s population every 1 minute 24 seconds. Ten years ago the estimate was we would hit 23 million by 2021. We are almost there 12 years early. Immigration is causing 60 per cent of the increase.
But if you add all those people, total GDP is more likely to increase avoiding a technical recession. And the Treasurer and all the foolish financial commentators cheer. Pity, though, that most of the individuals comprising the ever-growing aggregate will be worse off while a few at the top can escape the degradation.
First published in The Canberra Times. 05 September 2009.