On Monday, News.com.au published the findings of CBA economist, Gareth Aird’s, excellent report warning that high population growth (immigration) is eroding the living standards of Australian households (read Aird’s report here).
Strategically placed above this article was the above video featuring BusinessNow Editor and video presenter at The Australian, Chris Kohler (son of Alan), telling people not to worry about immigration and population growth as to do so is “ignorant”:
“Australia welcomes a new immigrant every 2.39. Now, whatever you do, don’t worry about population growth. It’s a waste of time and it is ignorant. Population growth drives economic growth, and we need lots of births and immigration to keep the country healthy.
If you don’t think that’s true, have a look at Japan, which has tight immigration policies, low birth rates, and long life expectancy. That economy is in real trouble because the burden falls to family members and the state to support the fact that they’ve got over 10.5 million people aged above the age of 80″…
The “ignorant” senior economist at CBA clearly touched a nerve.
First, why has Kohler chosen the false binary choice of zero population growth or high population growth? How about moderate population growth – you know, the kind that existed throughout the post war period until John Howard opened the immigration flood gates in 2004?
Second, while it is true that population growth boosts overall economic growth (more inputs equals more outputs), there is strong evidence that it has made individual living standards worse.
Since 2003, Australia’s population has grown by a whopping 22% – way faster than other advanced English-speaking nations and 2.5 times the OECD average:
Since the immigration flood gates were jammed open in 2003, Australia’s per capita GDP and disposable income has grown at an anaemic rate compared to the previous corresponding 12-year periods (see below charts).
And this comes despite growth in the terms-of-trade being most favourable across the most recent 12-year period (see next chart).
Blind Freddy can see that qualitative measures like traffic congestion and housing affordability – which are not captured in the above data – have also been made much worse due to the high population growth, thus lowering individual living standards even further.
Third, why has Kohler chosen to use Japan in his straw man argument to support high population growth? Over the period 2003 and 2015, there were five OECD nations that experienced declining populations. These are charted below against Australia’s population ponzi:
If it was true that population growth was such an economic boon, then you would expect that GDP per capita would have experienced anaemic growth in these countries. And yet the data shows anything but, with the nations experiencing the biggest population declines – Hungary, Germany and Estonia – experiencing stronger GDP per capita growth than Australia:
Finally, Chris Kohler has frequently complained about the cost of housing (see here and here). Chris lives in Sydney, whose population surged by 18% over the 11 years to 2015. Moreover, it is projected to rise by 85,000 people per year to 6.4 million over the next 20-years:
With a flood of new migrants projected to inundate Sydney, Chris’ desire to own a home will be made all the more difficult. Maybe he should mull that while stuck in traffic or on an overcrowded train on the way to work.
