Economic blinkers warp immigration assessment

by on April 20, 2018

THE Treasury-Home Affairs report on immigration seems to have based its evidence and reasoning upon its conclusion that high immigration is a “good thing”. On the report’s own figures, present high immigration will produce an extra 1.1 per cent of total GDP. Given that 190,000 immigrants year is just a tad under 1 per cent, that does not make for very much increase in GDP per person. And that is on Treasury’s optimistic and economics-only view.

The economic gain per person is so little that more people are questioning whether it is worth the risk.

The underlying economic equation, though, remains inescapable. If you increase population by 2 per cent a year, which is what is happening in Australia, you have to double (yes, double) your infrastructure effort – not just increase it by 2 per cent.

This is because infrastructure (roads, football stadiums, hospitals, bridges etc) on average last about 50 years. Some longer (the Sydney Harbour Bridge). Some shorter (Olympic Stadium). If the stuff lasts 50 years you have to replace 2 per cent of it every year, just to mark time. If you add 2 per cent population growth you have to add another 2 per cent, in effect doubling the infrastructure requirement, just to mark time.

This is why people are screaming.

There are few economies of scale here. When a school is full you have to build a whole new one. Indeed, there are diseconomies of scale. If you use a road to capacity, it gets clogged and people waste time in traffic.

Treasury concentrates on income and tax and virtually ignores stresses on capital (infrastructure). It also ignores the environment. It ignores the replacement of agricultural land with housing and whether we have enough water. It ignores the social cost of forcing people into apartments. It ignores the morality of reducing Australia’s capacity to export food as more will be consumed here.

A lot of the increase in GDP from higher population comes from the higher price of goods and services that become scarcer, not from higher standards of living. A round of golf now charged at $1000 because land values have sky-rocketed adds $1000 to GDP. Yet it is the same round of gold which only added $100 to GDP when that was the going rate when we had lower population and lower land values.

GDP is a warped measurement. It does not measure well-being. If higher GDP (and not even much higher GDP per person) is the best argument for continuing the recently hugely increased immigration intake, it is a very poor one, even if you believed the economic modelling that produced it.

The fact that Tony Abbott and others on the conservative side of the Liberal Party have called for lower immigration as part of leadership destabilisation does not mean the argument is wrong. They are just making the right call for the wrong reason.

The fact that immigration is virtually the only Abbott policy call that Malcolm Turnbull has not buckled to or the News Ltd press has not supported shows the strength of the lobby groups that profit from it.

Australia would be a better place if Turnbull agreed with Abbott on immigration and stood up to him on energy policy. But no, the big Ponzi schemers among miners, developers, retailers and transport operators who benefit from more immigrants at the expense of the existing population have the Liberal Party in their hands. Abbott never mentioned immigration when he had the power to do something about it.

Further, high immigration punctures Turnbull’s boast of record jobs growth. In the words of the Reserve Bank jobs growth has been “strong enough to absorb growth in the working-age population, although not high enough to reduce the unemployment rate further”.

Unemployment is stuck at 5.6 per cent. In other OECD countries with lower population growth, on the other hand, it is falling as the world recovers from the Great Recession.

Maybe, that is part of the Ponzi scheme. Keep a nice pool of unemployed around to dampen labour demand and keep wages low.

High immigration is not doing the vast majority of Australians any good and the rising tide of resentment has absolutely nothing to do with race, religion, refugees, multi-culturalism or human rights. It is about raw numbers. It is about house prices, congestion and health and education pressures.

Unless mainstream parties listen, they will be handing an exploitable ripe issue to minor parties and dog whistlers on the right of the Liberal Party with all its concomitant dangers.

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The past week or so must have been fairly galling for researching medical scientists in Victoria. They are desperate for just a million or so to control a serious outbreak of a flesh-eating ulcer. Meanwhile the Victorian Government has committed nearly $500 million to stadiums and other sporting facilities in the state to guarantee that the AFL grand final stays in Victoria until 2057.

Victorian Premier Daniel Andrews defended it because other states are doing it. Western Australia, for example, is spending $1.5 billion on a stadium. NSW initially proposed a $2 billion madcap scheme to replace the Sydney Football Stadium and the Olympic Stadium which when built for the 2000 Olympics was supposed to last for generations.

The states and Federal Government should bow out of funding for elite sports, especially the big money spinners: football and cricket.

At least Andrews appreciates that elite sport is business, referring to “markets”. He said, “We know how competitive these markets are … and we were not prepared to take that risk.”

The risk, of course, is not to the well-being of Victorians but to voter antagonism towards his government if, heaven forbid, the ALF final was played in Perth or Adelaide.

Would it matter two hoots it if was? More than 90 per cent of the audience is via television anyway.

These businesses would run anyway, without any government help. Players would still aspire to play at higher levels as they have done for a hundred years. A few players and administrators would be paid less. So what?

And the payment for TV rights to elite sports verges on the obscene. Worse, it starves the production of Australian television drama.

The fact the sports organisations can attract so much private money indicates there is no need for government help.

There are no public-interest grounds in doing so. To the contrary. Elite sport provides poor roles models: alcohol and drug abuse, violence, cheating and other serial misbehaviour.

Further elite sport is not good for your health: witness the collapsing marathon runner; the brain-damaged football players (including soccer players who “head” the ball); and weekly injury tallies in every elite sport played.

Let government bow out and let the market decide what happens in the sport business. If we are to have any anti-siphoning rules, they should apply to prevent the leaching of resources from “free-to-air” public health and education to the “pay-as-you-use” private health and education sectors.
This article first appeared in The Canberra Times and other Fairfax Media on 21 April 2018.

{ 1 comment… read it below or add one }

Graham Clews 04.27.18 at 2:48 pm

Congratulations, Crispin for another fine article! I wonder when – and if – the Australian public will grasp that perpetual growth is not the way forward. By coincidence, I penned the letter below to the Canberra Times several days earlier. The Treasury-Home Affairs report had prompted commentary from Peter Hartcher (well short of Gold Walkley standard, I must say!) and from the Canberra Times itself and I thought these needed a response. Alas, although several very intelligent and thoughtful letters snuck through to publication, mine did not. So, here it is for your consideration:
The Canberra Times editorial (18 April: Debate more subtle than critics think) takes almost precisely the line of Hartcher’s article (14 April: The fine line over immigrants). The essence of each article is that concerns over our extraordinarily high and unsustainable mainstream immigration program are unjustified and those expressing these concerns are populists.
To be sure, several of the current commentators on the subject (Abbott’s foremost among them) are mere opportunists, but the motives of the messengers, at least in this instance, bear not at all on the message itself. The problems are real, the concerns justified, and the solution self-evident: a severe reduction in the annual migrant intake to a figure that will see our population plateau at something below 30 million.
What is extraordinary in the opinions expressed on our current immigration program by the CT editor, by Hartcher and by other ‘growth-ists’ whose views have graced the Canberra Times (Pascoe, Irvine, Martin spring to mind) is that none has ever mentioned the environmental impact of their ‘perpetual growth’ vision; similarly, each has ignored or underplayed the rather self-evident livability issues created by more and more people FOREVER. All our concerns, we are told, are merely a matter of planning and infrastructure. The fairly obvious link between more of us and the constant diminution of the natural landscape has never got a look in!
And why do we grow? For nothing more than a dubious 30 year projection that millions more of us will secure a miniscule economic advantage. Given the harm done by fewer than 25 million of us to date, I shudder to think what 40 million, 60 million, 100 million of us might do. Who do these guys think they are kidding!

Graham Clews

Kambah, ACT.

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