For years, KPMG’s Bernard Salt – the self proclaimed “unabashed supporter of a bigger Australia” – has produced reams of articles pushing rapid population growth and warning that to not follow this path would lead to an economic and fiscal catastrophe.
Yesterday Salt penned an article in The Australian entitled “A land of sweeping plains, with ample resources to keep us rich”, which argued that Australia’s huge mineral endowment is the key ingredient behind Australia’s wealth:
We are the Australian people and nation; there’s 24 million of us. More people live in Texas (27 million) than in Australia. We are the only nation on earth to claim sovereignty over an entire continent…
Australia’s wealth comes from mineral and energy exports mined and tapped in the Pilbara, at Roxby Downs and in the Bowen Basin…
By the middle of this century Sydney and Melbourne will approach eight million residents. Southeast Queensland is expected to contain five million. Australia as a whole is likely to contain 38 million by 2051 based on Big Australia migration assumptions…
We are the down-under island-nation of Australia, more secure and richer than most.
We should be a prosperous people for 100 years purely on the basis of the scale of our resources relative to the scale of our population base.
Regular readers will know that I agree with Salt that Australia’s wealth is primarily derived from the nation’s immense mineral base. This can be illustrated, in its simplest form, by the below chart showing the dominance of primary production in Australia’s exports, which of course pays for the imports that we all consume:
The question for Bernard Salt is: does he still believe that pursuing a “Big Australia” agenda is in the best interests of Australians, and if so why? Surely all continued mass immigration would do is:
- dilute Australia’s mineral wealth across more people, making incumbent residents poorer; and
- exacerbate existing infrastructure and housing bottlenecks in our major cities, leading to worsening congestion, reduced housing affordability, and overall reduced livability?
Australia would improve its trade balance and current account deficit if it simply cut the immigration rate. Again, Australia mostly pays its way in the world by selling-off its fixed mineral endowment. Increasing the number of people does not materially boost exports but does increase imports. Moreover, it requires us to sell-off Australia’s fixed mineral assets quicker to maintain a constant standard of living (other things equal).
Put another way, Australia would ship roughly the same amount of hard commodities and agriculture regardless of how many people are coming in as all the productive capacity has been set up and it doesn’t require more labour. So basically we are wrecking the trade balance by more people coming in each year (mostly to Sydney and Melbourne) because of all the additional imports.
Meanwhile, the infrastructure deficits in both Sydney and Melbourne, along with congestion, housing affordability and overall liveability worsens each year as more and more people flood into each city and push against bottlenecks amid woeful planning.
Anyone disputing this view only needs to view the below charts showing the stalling of export growth amid the sharply deteriorating trade balances in NSW and VIC, which of course have been the primary destinations of immigrants:
Which has driven gigantic trade deficits in Australia’s two biggest states:
Again, how is Bernard Salt’s “unabashed” support of a Big Australia consistent with his view that Australia’s wealth is derived primarily from its mineral base?
Surely pursuing a population stabilisation agenda would result in greater living standards for incumbent residents, since Australia’s fixed mineral endowment wouldn’t need to be spread out as thinly?
