Don Argus, a former chairman of BHP Billiton and former chief executive of the National Australia Bank, has penned a long-winded rant in The Australian lambasting the debate over Budget “fairness” and arguing that Australia must instead seek to boost GDP, including via ongoing rapid immigration:
Fairness is one of the most insidious abstract nouns used in politics…
We are being entertained on how corporations, superannuants and those so-called rich people should shoulder the burden of incompetent past government officials and politicians leaving us with a public debt burden that is becoming difficult to service, and none of them has been called to account for this legacy.
…income inequality will not be solved by taxing the rich at higher levels. At some point that solution would reduce savings and therefore investment, and thus shrink the potential for economic growth.
To argue any differently is to argue with basic economics and simple maths…
Growth in gross domestic product has only two basic components: growth in productivity and growth in the size of the workforce. There is no magic fairy dust one can sprinkle on an economy to make it grow.
To increase GDP we have to actually produce more; that is why it is called gross domestic product…
We must continue to give business incentives to offer opportunities for our youth, but we should also be encouraging young, educated immigrants willing to work, which would assist productivity growth in outputs generated through efficiency, rather than adding more inputs.
While Argus’ comments about boosting productivity are sound, his claim that Australia should continue Third-world levels of immigration are not.
Sure, big businesses – like those that Argus has represented – have benefited massively from high levels of population growth, since they have gotten to enjoy an ever growing customer base and increased sales without becoming more efficient.
But the impacts on the rest of us are not particularly enticing. While rampant population growth has undoubtedly boosted Australia’s overall GDP (more inputs equals more outputs), everyone’s share of the economic pie has been reducing.
Consider the below chart, which shows that while headline GDP growth across Australia has held-up reasonably well over the past decade, thanks to high immigration, per capita real GDP has trending down so sharply that is has fallen to levels not seen since the early-1980s recession:
A decade ago, Australia opened the immigration flood gates, as shown in the next chart:
Which has led to a surge of population into our biggest cities, in particular, which averaged growth of 83,000 (Melbourne) and 70,000 (Sydney) people respectively each and every year since 2005:
Both major cities are now facing near record low housing affordability and shocking congestion as they push-up against infrastructure bottlenecks, thereby lowering average living standards for the resident population.
By all means talk about improving productivity, Don. But please don’t try to sell us on the population ponzi, which is clearly not delivering for the average Australian.
