Back to rotten politics as usual

Several events in the past week neatly illustrate what is rotten in the state of Australian politics and policy-making.

Treasurer Josh Frydenberg has told an Australian Chamber of Commerce and Industry event that he was considering increasing immigration. And the chamber itself called for a nearly doubling of the skilled migrant intake to 200,000. 

Notice how business gets the Treasurer’s ear and they speak to each other. Business wants high immigration because it provides a pool of cheap labour and generally weakens labour’s bargaining power. 

Reserve Bank Governor Philip Lowe acknowledged as much earlier this year when he said, “In my view, this is one of the factors that has contributed to wages being less sensitive to shifts in demand than was once the case.”

We do not have a skills shortage in Australia. We have a training shortage.

As Lowe said, “skilled” migrants dilute the “incentive for businesses to train workers to do the required job”.

Most of the jobs on the so-called skilled shortage list are jobs that people in Australia can be trained to do. They are jobs like “chef” not jobs like “rocket scientist”.

Frydenberg citied the furphy of countering the aging population. First, it would take a crushing onslaught of migrants under 40 to have any significant impact on the age profile of the population. Second, those immigrants would eventually age, too. Third, it is an appalling insult to people over 65 in Australia to suggest they are a drain. A great many of them continue to work; earn incomes from capital more than enough to support themselves and help their families; and do volunteer and caring work.

The really costly people who do not work are those under the age of 20. Ask any parent. And there will be more of them to educate if migration goes up.

The big accounting and ratings firms have chimed in with a lot of alarmist drivel about the pandemic resulting in a lower population and therefore lower GDP.

Fitch Ratings said the economy would be 2 per cent – or more than $40 billion – smaller by 2026 than it otherwise would have been because of the drop in migrant numbers.

But we should not fall for this scare tactic. Far from it. Some estimates put the population in 2026 at one million (or 4 per cent) fewer in 2026 than it would have been without that drop.

So yes, GDP will be lower, but it will be shared among fewer people, who on average will be better off. A 2 per cent GDP reduction is more than offset by a 4 per cent population reduction. In short, the pandemic-induced reduction in population makes us as individuals better off, even if the amorphous “economy” is smaller.

Better to be richer in a smaller economy than poorer in a larger one. But try telling that to business interests.

NSW Premier Dominic Perrottet also joined the chorus. He wants a doubling of pre-pandemic immigration levels to “catch up”.

What happened to the voice of earlier Premiers who correctly said Sydney is full? Does Perrottet want to catch up to that congested past?

Indeed, remember Prime Minister Scott Morrison in 2018 cutting the permanent migrant intake to 160,000 from 190,000, arguing the residents (voters) of the nation’s major cities were worried about their ever-increasing populations.

“They are saying: enough, enough, enough. The roads are clogged, the buses and trains are full. The schools are taking no more enrolments. I hear what you are saying. I hear you loud and clear,” Morrison said.

As usual with this Prime Minister it was short-term salesmanship to be seen doing something. Now that the congestion concern is temporarily off the agenda he and other political leaders have stopped listening to ordinary residents and turned their ears to the usual crowd of self-serving property and retail businesses.

So why do they turn their ears away from what the voters want to what business wants? Because the major parties need the money to fund ever-more-expensive campaigns in competition with each other, and corporations have the vast majority of that money.

The corporations give, and the major parties deliver policies the corporations want.

This has been made easier because the Public Service has been emasculated and replaced with policy advice from big consulting firms.

In 2020, the four big consulting firms – Deloitte, EY, KPMG and PwC – got $750 million worth of contracts from the Federal Government.

And by the way, between them they gave $1 million to the main political parties in a perfectly legal way in Australia’s rotten donations system. These firms are the experts in cost-benefit analysis and getting value for money. They certainly would not waste $1 million without a return.

Alas, even the Greens appear to have joined the growth mania with a promise to build a million “affordable” homes.

We only have a housing crisis in Australia because we have a tax-policy crisis which favours “investment” in residential property, squeezing out residents.

The proposed Greens houses would have to be built somewhere, presumably on agriculturally rich land on the urban fringe or in the ever-dwindling amount of koala habitat. There is an environmental cost to high immigration (about which the Greens are virtually mute). 

And then we had this week another superb illustration of the misdirection of public money to favour those in power.

The truly appalling part of the ICAC evidence in the Berejiklian case came from then Premier Mike Baird’s strategy director, Nigel Blunden. He seemed far less concerned that $5.5 million was being handed to a shooting range without going through all the proper funding guidelines than the fact that it was going to a safe seat, Wagga Wagga – in effect politically wasted because it could have been better directed politically to a marginal seat.

Grants (at both the federal and state level) are now playthings of the party in power, not impartially administered programs based on community need.

Only when quality independents have the balance of power in the House of Representatives will we end corporate donations and get an anti-corruption body with teeth.

Crispin Hull

This article first appeared in The Canberra Times and other Australian media on 23 October 2021.