More flawed arguments for a “Big Australia”

By Leith van Onselen

The Australian’s David Uren wrote an extraordinarily one-eyed article yesterday in support of rapid population growth, which espouses all of the so-called economic positives without due regard for the negative consequences:

…rapid population growth has been a vital support to the Australian economy since the global financial crisis…

Apart from Luxembourg, there is only one other advanced country with a population growth rate above 1 per cent and that is Canada at 1.1 per cent… Australia’s population is rising more rapidly than those of India, Mexico or Indonesia and is only just behind Pakistan and The Philippines.

Faster population growth means stronger markets for retailers, home builders, health providers, banks and the countless array of consumer-facing businesses. It has also added to the demand for infrastructure… Population growth is the reason house prices are strong, and is driving the mini housing construction boom that has been under way for the past 18 months.

Since 2008, Australia’s GDP per person has only been rising at an average of 0.7 per cent, or barely a third of the long-term average before the crisis of 2.2 per cent. Elevated population growth has lifted total economic growth to an average of 2.5 per cent over the last six years…[Migrants’] addition to demand during periods of soft growth generates more jobs than they take up. Were it not for population growth, businesses selling to consumers would be cutting staff numbers and unemployment would be much higher.

Let’s dissect Uren’s arguments one-by-one.

First, the claim that rapid population growth means “stronger markets for retailers, home builders, health providers, banks and the countless array of consumer-facing businesses” as well as housing.

It is true that growing the population is an easy way for businesses to sell more goods and services. Immigration also gives businesses access to lower cost workers. And there’s less need to become more efficient when your customer base is growing inexorably. Rather, just sit back and watch the profits flow.

Take, for example, Australia’s banks, which get the double bonus of not just having more consumers to sell debt to, but also extra demand for housing, which helps to support house prices and their loan collateral, especially given the urban consolidation policies operated by Australia’s states.

But what is missing from Uren’s analysis is that while the big end of town is a clear winner from rapid population growth, it doesn’t wear many of the costs. That is borne by everyone else.

It is you and I that will be forced to spend more time in traffic jams as Australia’s infrastructure – already straining after a decade of rampant immigration – fails to keep up with population growth.

It is you and I that will be called upon to pay for expensive new infrastructure (e.g. roads, rail and desalination plants) in a futile bid support the rapidly growing population.

It is our children that will be required to live in smaller and more expensive housing, often further away from the CBD, as more people flood into our major capital cities.

And it is our children that will be called upon to once again ramp-up the immigration intake once the current batch of migrants grows old and needs support – the very definition of a ponzi scheme.

Where is the acknowledgement of these costs, or the admission that rapid immigration can actually lower productivity by diverting investment away from productive areas (see yesterday’s post)?

Uren’s claims about economic benefits are also spurious.

Economic growth through population is an illusion – it expands the economic pie (more inputs equals more outputs) but leaves everyone’s share of that pie unchanged.

One only needs to view the below chart to see what I am talking about. Despite enjoying the biggest mining investment boom in history, per capita real GDP has risen by a paltry 4.8% since September 2008, versus 15.9% growth in overall real GDP (see next chart).

ScreenHunter_6381 Mar. 05 08.07

So more than two-thirds of Australia’s economic growth has come entirely from population growth, with growth in per capita terms anaemic at best, despite the huge mining investment boom over that period.

Nor does Uren’s claim that migrants’ “addition to demand during periods of soft growth generates more jobs than they take up” stand up to scrutiny. Sure, employment has been growing, but it has not grown at anywhere near the level required to soak-up the extra workers from immigration (see next chart).

ScreenHunter_6722 Mar. 26 09.54

Hence the rising unemployment:

ScreenHunter_6723 Mar. 26 09.55

And underemployment:

ScreenHunter_6724 Mar. 26 09.57

Uren has also failed to acknowledge that Australia earns its way in the world mainly by selling its fixed mineral resources (e.g. iron ore, coal, natural gas, and gold). More people means less resources per capita. A growing population also means that we must deplete our mineral resources faster, just to maintain a constant standard of living.

No, the key criteria that needs to be met in deciding whether to expand the immigration intake is: “will it improve the living standards of the pre-existing population”? The answer to this question seems to be a resounding “no”.

As I noted yesterday, if all Australia is doing is growing for growth’s sake, pushing against infrastructure bottlenecks, diluting our fixed endowment of minerals resources, and failing to raise the living standards of the existing population, what’s the point?

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Comments

  1. Agreed UE. Policy disproportionately rewards the 1% for massive short terms gains.

    Simultaneously using cheaper labour to push wages down while elevating the price of an abode is the definition of unsustainable. It is a policy that’s only logical conclusion is to make the gap between household incomes and house prices widen further.

    Metropolitan infrastructure has no chance to keep up with unprecedented new arrivals causing State governments/councils to hurtle towards debt induced oblivion as they attempt the futile goal of trying to keep up with it.

    Meanwhile as UE points out the population is in a vice grip towards lower living standards as wages fall, traffic and public transports chokes, and the health and utility systems creak under the burden.

    Really is outrageous and there is no political voice that will oppose it.

    • There would be next week if everyone in NSW who’s not satisfied left LNP, Labor and Greens last below the line.

      FFS Australia, wake up. There is ONLY one way this can be fixed. THEIR political pain.

    • Dan, there is a political voice that is opposing it. Sustainable Population Party is #RedefiningGrowth: See it at http://www.votesustainable.org.au
      Also, Dick Smith, who endorsed SPP at the last WA Senate re-run, has registered his own party name and is pondering putting candidates up under that banner, focusing on the impossibility of endless growth in population and consumption.

  2. “But what is missing from Uren’s analysis is that while the big end of town is a clear winner from rapid population growth, it doesn’t wear many of the costs. That is borne by everyone else.”

    This surely must be starting to sink in to people soon. Lets hope that Dick Smith does get a political party together and gets the facts on the table and at least a couple voters wake up from their speculating and say:

    “Oh my house is worth more but the country seems pretty stuffed”

  3. the drive for big australia has an ideological component beyond the underlying desire to decrease wages and increase profitability for certain sectors of the economy. immigration proponents simply love immigration and dont want it to stop. opposing immigration makes you appear like a racist which is the absolute worst thing you can appear to be in modern western society; you can probably kill a person and eventually be forgiven faster than you can be forgiven for ventilating ‘racist’ sentiments in certain western ideological circles. immigrationists love seeing white people be reduced to ethnic minorities in their homelands because they basically hate their own race or they belong to members of other ethnicites and believe will collectively benefit from an increase in their absolute ethnic numbers.

    make no mistake about it, immigrationists are definitely heavily motivated by self-interest and economic reasons, but there is a strong ideological component that motivates these vermin as well. mainstream conservative eunuchs are powerless against the browbeating, sanctimonious ideological miasma of immigrationism because they have resigned themselves long ago to the ‘prevailing structure of taboos’, which has largely been constructed and ensconced by leukophobic cultural marxists (and an especially assiduous and energetic subset of a certain, unnameable, middle-eastern tribal clan) since the 1960s.

      • @Peachy. Such mindless comments do not belong where intelligent people are discussing an important issue. Fuck off.

      • Hey, @rich42, back up off me.

        I’m just trying to clarify what @don meant when he referred to “prevailing structure of taboos’, which has largely been constructed … by leukophobic cultural marxists (and …subset of a certain, unnameable, middle-eastern tribal clan) …”

      • Sorry Peachy. I just didn’t want yet another population debate railroaded by anti racism.

        It’s how it always goes. It’s a filthy lying pseudo left wing pro population trick. ABC, the Greens and most media are masters at it and a blindingly dumb, well meaning electorate fall for it.

      • hi peachy,

        i do not believe it is “the jews” fault. if you looked carefully at what i wrote, i said “a highly dedicated and assiduous **subset**”. the fact of the matter is that a section (but by no means all jews) of the jewish community have been part of the forefront of the high immigration movement into western countries, and a case can be made that this section has been doing so because they feel motivated by their own ethnic interests. here is a video discussing this as it relates to the united states:

        https://www.youtube.com/watch?v=7nBzJdQB5r4

      • Mate I havent gone through this discussion……

        But I would imagine there would be parties to this thread who are thinking you have got more bizarrely fringe by the day.

      • @3d1k

        i’m sorry 3d1k, a cursory inspection of your posts elsewhere in this thread leaves me with the impression that you are a tedious high-immigration spruiker. it is YOUR views that deserve to be relegated to the political margins, or better, banished to the maws of ideological hell where they belong.

      • Don, I’m not a high immigration spruiker. But I do support an immigration program that encompasses skilled migrants and has a refugee component.

        For mine, this nation was built on immigration. And will continue to be so. Aside from anything else the sheer number of residents hailing from nations around the world ensure family related migration will continue, our role as a compassionate developed nation carries responsibility to provide some measure of accommodation for refugees (possibly greatly increased in future years).

        My friends encompass a broad church of nationalities. Those that have emigrated here have brought with them skills and customs that blend well into our multicultural melting pot and we are fortunate to have them choose to call Australia home.

        And I’m delighted to welcome many more.

        We are going to grow. You can keep your heads up your agendas, or you can provide adequate infrastructure, improved housing and the Australian spirit of a fair go. We all came from somewhere.

      • @3d1k

        is 3d1k in a competition to see how much platindinual palbum he can throw into his posts, or is he a parody account? “fair go”, “nation of immigrants”, etc – it’s like reading a year 8 student’s presentation on multiculturalism he buttered up with cliches in order to impress his burnt out hippy social studies teacher.

      • Do you disagree? With all of my view, or only part.

        Tell you what though, I certainly don’t buy into fringe conspiracy theories around Jewish world control or whatever it is these loose minds concoct.

        Immigration has been the making of this nation. My heartfelt view a little simplistic for the obviously superior minds that are infesting this blog.

      • what “conspiracy theories” about “world jewish control” have been envoked here? i see nothing of the sort. to me there is something inherently suspicious about somebody who sees conspiracies everywhere, even when none have been broached. why so neurotic and rapid to resort to hyperbole, 3d1k?

      • …why so neurotic and rapid to resort to hyperbole, 3d1k?
        I am no fan of 3D but, I’m going to have a stab at speaking for him and say it probably has something to do with this.
        …an especially assiduous and energetic subset of a certain, unnameable, middle-eastern tribal clan..

      • no conspiracy, let alone one involving something as dramatic as “global control”, is necessarily implicated from that excerpt, alexd.

    • True racism from both sides of the argument here. Can we focus only on the economic question here. Is there overall a long term net benefit of any form from high immigration? Emotions aside I’m open to hearing all opinions and trying to see if I can see maybe three generations into the future. Then not only at Australia but at what you need for an open borderless world. I do think that in 2050 or sooner we will reach peak human population.

      • “but at what you need for an open borderless world”.

        That’s got to be the most insane comment I’ve read outside a QandA episode.

        There are 90 million more people in the world every year. A borderless world would destroy Australia with just 3 months growth.

        Can you describe to me what benefits there would be for my kids please?

      • @UE. It was a comment at Don. Your post covered the arguments in a balanced manner I didn’t agree with the discussion being derailed by bigotry.
        @Rich42. Your children are not the 3rd generation into the future. Do you wish for the same xenophobic world for your great grandchildren or would you like them to have a free choice to live and flourish anywhere and anyway that they choose? Would you deny them the opportunity to live on the shores of the Caspian sea in safety if that is what they choose?

      • @SaCo. “Do you wish for the same xenophobic world for your great grandchildren or would you like them to have a free choice to live and flourish anywhere and anyway that they choose? ”

        If you open borders there will be no choices. Do you think with open borders we get to keep our stuff? That’s the bit the lefties ignore. Take the rose coloured glasses off.

        Talking xenophobia. Most of the world hate us. Hey what about our culture? Who’s looking after that?

        We are already multicultural and it’s great. This part of the debate is a red herring, it has no relevance to whether we want more people of any colour or religion.

      • Some people think that we reached peak human carrying capacity 50 or more years ago.
        I agree. Just look around you. Just what is it that people see in densely populated areas that makes them truly proud of anthropogenic change and unfettered population growth. This interview with William Catton may help you form a considered opinion about this contentious issue.

        https://www.youtube.com/watch?v=oF6F0bgvARc

      • Thanks azx

        An all too rare measured and dispassionate discussion of finite carrying capacity is a breath of sanity in a growth-obsessed world that refuses to look past the next quarterly report or GDP read.

      • @azxylon, I was referring to peak human population not peak human carrying capacity. The debate on the latter has been going on for a while and there are some very good arguments from both sides of that debate.
        @rich42, difficult to respond. The rest of the world do not hate you, most couldn’t care less. My question is what do you expect the future to look like? Some commentators have already suggested that we are going to be the servants of the new first world in the future after we have bankrupted ourselves. I believe that the current third world’s standard of living is going to continue improve as they keep catching up just as ours keeps deteriorating. It may all level out in 50 years or as we’re going we may undershoot magnificently trying to eek out a subsistence living somehow in some 19th century workhouse. You’d be happy to escape to the former third world.

    • Yes. Lets mire an important debate on the structural limits of immigration growth relative to quality of life, environmental amenity and available infrastructure into a mindless belt on racisim.

      If we got this debate right we could potentially increase our refugee intake.

      We are talking about finding sustainable growth rates that result in better living conditions for citizens not worse – racism is not part of the debate.

  4. “Faster population growth means stronger markets for retailers, home builders, health providers, banks and the countless array of consumer-facing businesses.It has also added to the demand for infrastructure”

    Anyone notice anything about that statement? Every single benefit he named requires more imports. There is not a single consideration for any exports.

    So David, to pay for just, say for the moment, the imports costs relating to your high immigration for next year, in addition to the $60 BILLION dollars worth of assets we have to sell already, what OTHER assets do you plan to sell to foreign interests so you and your FIRE secvtor mates around Sydney and Melbourne can make more money?

  5. “Australia’s GDP per person has only been rising at an average of 0.7 per cent”.

    I would gladly give up ten latte’s a year to be able to get from Glebe to Bondi in less than 4 hours. Fuck these idiots running this country.Or take my work trip back ten years when IT TOOK HALF THE TIME.

    “Elevated population growth has lifted total economic growth to an average of 2.5 per cent over the last six years”.

    99% of us are only feeling the negatives. Vote LNP, Labor and Greens last below the line and cleanse our country of these filthy festered corporate corrupted puppets. OR. just keep complaining about it.

    Start this weekend in NSW. Stop being so lazy, muster up the strength and exhausting time to number them all below the line, leaving these weasels last. Send a mass fucking message, WE’VE HAD ENOUGH.

    • You only talked about how to vote for the upper house. Also you haven’t actually said who to vote for, there are plenty of parties who are even worse than ALP or the Greens, e.g. Family first, one nation, or PUP.

      Also who do we vote for for the lower house? The bunch that forms government.

      • I would not care who won. It would even out among the NEW MEMBERS of parliament. Let’s start by eliminating every incumbent member.

        It would be world news and the media would have to ask, wtf happened. The new members either comply with what we want (as opposed to doing exactly what their donors want) or the same happens next election.

        It is absurd that we actually vote for the clowns running Australia. Hardly anyone I know is happy with any of them. So, get rid of them.

        Perhaps you can tell me the answer to your questions (real request).

      • ” Let’s start by eliminating every incumbent member. ”

        Yep!!!!!

        Unfortunately we can but dream!

      • @flawse. The ONLY thing stopping it happening flawse are those around you and me. It’s not the politicians stopping us doing it, it’s the people you’re looking at right now. We are our worst enemy. It defies logic but it’s how it is.

      • I don’t think anyone is worse than LNP, Labor or Green.

        Family first, one nation, or PUP seem far better. At least these three seem to do what the voters want.

        LNP, Labor and Green trick people into voting for them, and then look after their donors foremost. Get rid of them.

      • rich – unfortunately I don’t think ‘what voters want’ at the moment is much good for us as a society. I think the Laberals are giving the voters what they want….BS!

      • “Family first, one nation, or PUP seem far better”

        We all stopped listening right there. There is no doubt in my mind that all three of these parties are worse than the Greens and ALP, an possibly the LNP as well.

        What next rich? Vote for Fred Nile?

      • Stop talking for everyone the lorax.

        My point is that no party is worse than what we have. Just get rid of LNP, Labor and Green.

        At least the others MIGHT listen to what the electorate want.

      • At least the others MIGHT listen to what the electorate want.

        No they won’t. They’re all right of the LNP. PUP exists to protect Clive’s mining interests, One Nation are racists, and Family First are social conservatives who think stopping gay marriage is priority #1. Family First Senator Bob Day is a property developer FFS, who’s main aim in life is to build as many McMansions as possible.

        Your views on population and sustainability are most closely aligned to The Greens but you can’t possibly support them because of your Caspar Jonquil tendencies.

      • “Your views on population and sustainability are most closely aligned to The Greens but you can’t possibly support them because of your Caspar Jonquil tendencies”.

        No, I can’t support them because they are filthy liars. I have zero problem with anything from the left as long as it doesn’t hurt anyone else (especially me). If you want to see men marry men. Women marry women. Fine with me. I could not care less. I couldn’t care what you want to do or who you want to sleep with as long as it doesn’t hurt me. I have a unique way of looking at the world and resent continually being labeled red neck because I call the FW Greens out for what they are. They are a disgrace that for some bizarre reason you etal want to defend.

        Find some other good gay party and let this horrid Green scam of a party die. There can be no party worse than the three running Australia atm.

      • “Your views on population and sustainability are most closely aligned to The Greens but you can’t possibly support them because of your Caspar Jonquil tendencies”.

        Greens aren’t about sustainability. They just say they are. Filthy lying treasonous scum.

      • Stop talking for everyone the lorax.

        Now there’s a laugh.

        My point is that no party is worse than what we have.

        Well, actually, the Liberals without the moderating factors of Labor’s slowly dying conscience and the Greens would be far, far worse.

        Just get rid of LNP, Labor and Green.At least the others MIGHT listen to what the electorate want.

        3/4 of the population always vote Liberals or Labor. That’s what they want.

        I have a unique way of looking at the world and resent continually being labeled red neck because I call the FW Greens out for what they are. They are a disgrace that for some bizarre reason you etal want to defend.

        Pretty much everything you write about the Greens is wrong in either fact or intent, and this has been repeatedly demonstrated.

        That’s not “defending” that “correcting”.

        I cannot even wrap my head around the cognitive dissonance necessary for someone 90% aligned with Greens policy to prefer Family First or One Nation.

  6. Imagine these sniveling pricks on Sunday asking “what happened?”

    Rip their snouts out of the trough. Leave them all last below the line.

    • “Imagine these sniveling pricks on Sunday asking “what happened?”

      🙂 Crikey! That would be a good laugh!

  7. moderate mouse

    Heaven forbid we could actually have a grown-up debate about how best to accommodate a growing population. But no, we are presented with a binary argument: either squeeze evermore people into Sydney and Melbourne, or shut the gate we’re full.

    It’s like the owners of a 20 bedroom mansion discussing how they will squeeze a tenth set of bunk beds into the front two bedrooms while the rest of the house is empty.

    It’s fabulously Australian.

  8. Seems to be a lot of road rage out there!

    Traffic congestion is more than just population growth, although that undoubtedly is a component. I remember at school we had large bicycle racks, now if you sent your kid off to school on a bike you are more likely to be reported to docs!

    There is some truth to David Uren’s analysis but I believe the benefit is more to do with repairing some of the demographic cliff we are facing than absolute numbers per se.

    Of course those that would rather not have immigration will get their wish in less road congestion as there won’t be any work to drive to.

    That’s when the real blame game will start.

    • “with repairing some of the demographic cliff”.

      They’re lying to you. The average age of immigrants is the same as the average age of the population. It’s a scam. If we can’t live within the limits of our population now while we still own a few assets, what fucking hope have we got when we’re 50 million and have sold everything? If you can’t answer that, your view needs revising.

      • My point entirely. Not all immigration is the same. It should be targeted effectively to address our underlying demographic issues.

    • Yes it is astounding to think there are actually functioning productive economies in the world with a population less than 20 million and lower population growth, that have a higher standard of living than Australia.

      • In my opinion, it is actually costing Australia to populate. That cost is hidden in Australian asset sales.

        So essentially it’s selling the country to transfer the wealth to big business.

  9. It’s not as simple as saying we don’t want immigration or we want a big Australia. There needs to be serious debate about the amount and type of immigration we should have in the context of our aging population and below replacement TFR.

    Similarly, and more importantly, there needs to be timely debate around the infrastructure needs on a growing and/or aging population.

    Taking one or either extreme does not solve anything.

    • I agree flying fox. But until there is a plan, the immigration intake should be cut to pre-mid 2000s levels.

      I am not a “zero immigration” guy. But I am strongly against the mindless pursuit of growth currently being pursued, along with the false arguments used to support it, which rarely considers any downsides.

      • But until there is a plan, the immigration intake should be cut to pre-mid 2000s levels.

        Agree completely and I suspect this will happen regardless of what the government wants as unemployment rises.

        But I am strongly against the mindless pursuit of growth currently being pursued, along with the false arguments used to support it, which rarely considers any downsides.

        Agreed again. But I think the understanding needs to be there that a fairly large chunk of this was due to accommodating the mining boom (workers) and education being an export. The politicians then got addicted.

      • “The politicians then got addicted”.

        What kind of moronic electorate stands by and watches that happen?

        FFS, open the borders and let the idiots of this country get what they deserve. I’m sick of trying to steer debate towards what’s good for people. Fthem. Open the gates.

    • Agreed @flyingfox but must say the baby boomer is a red herring kicking the can down the road. A 30y adjustment of how to recalibrate the economy to a shrinking workforce while balancing quality of life I think is the discussion to have.

  10. UE, The other issue you don’t mention is that GDP is a blunt measure of the value of transactions in an economy.

    Since overpopulation causes more congestion and increasing illness due to pollution, the resulting increase in fuel consumption for cars in traffic and more visits to a doctor to offset illness caused by the impact of overpopulation actually raises GDP! Clearly some of that increase in GDP is actually a result of negative externalities of growth which are actually decreasing quality of life.

    • Create a less mal-invested economy and a high rate of population growth is not necessary.

    • Quite right Patrician.
      The concept that continual population growth is inevitable is not only ridiculous, it is mathematically and environmentally impossible. Human beings are smarter than yeast. They can and do make a considered decision about the population number that best suits their community and environment. Australia’s first inhabitants knew that had practiced family planning. Most of Australia’s population growth is purely discretionary as 60% is due to net overseas migration.
      Most other OECD nations have much lower rates of population growth. They can develop better infrastructure for health, transport and education that adds to quality of life.
      In a steady-state population, about 2% of the built infrastructure needs to be replaced or renewed each year as it breaks or becomes obsolete. If population grows at 2% pa (which is just above recent Australian experience) the budget/requirement for new power, roads, schools, water, sewerage, hospitals and other infrastructure will have doubled (+100% growth 2% + 2%) while the tax base will have risen by 2% at most! That is Ponzi economics at it finest and is really the “Red Queen Syndrome” where an economy runs just to try to stay still.
      Governments around Australia are being sent broke trying to pay for all this new infrastructure.
      Australia can limit 457 visas as well as other scams and reduce immigration intake to around 70,000 pa. Population would still grow at around 160,000 pa from organic expansion, but that is a lot lower than the +400,000 pa (a new Canberra every year!) that it has had to cope with over past years. As the demographic bulge works its way though the population pyramid, population could then stabilise at around 26 million.

      • Caspar. (aka rich42),

        Bill Shorten “Immigration levels can go up” (ABC TV), Tony Abbott “Australia should be home to as many people as possible” (ABC radio) and Christine Milne “Australian has boundless plains for all”.

        With that lot we are in great peril. Australia needs to redefine growth to secure:
        => a prosperous economy based on innovation, education and careful management of finite resources,
        => a healthy environment with clean energy supplies, sustained biodiversity and care for other living things on this planet as well as conserving recreational spaces
        => a better quality of life through affordable healthcare and housing while planning for congestion relief and a clean environment.

        These things are impossible to deliver in the face of rapid population growth. The focus needs to be on better and not bigger through real growth and not population growth.

        ‘Nuff sloganeering from me!

    • Boosting worldwide migration boosts growth

      http://www.bloomberg.com/news/articles/2015-03-26/here-s-one-way-to-double-the-world-s-80-trillion-economy-scrap-migration-restrictions

      “While a freer flow of goods alone can boost global gross domestic product by a modest amount, loosening of restrictions to international migration could lift growth worldwide by 67 percent to 147.3 percent, according to economists’ estimates cited in research by Mark Wynne, vice president of the Federal Reserve Bank of Dallas. (Global GDP will probably be $81.5 trillion this year, International Monetary Fund estimates show.)”

      • Free markets in everything eh 3d?

        Well, RT for one wouldn’t like it because he only wants good Christian folk here.