PC calls for a national population strategy

By Leith van Onselen

In 2006, the Productivity Commission (PC) completed a major study on the Economic Impacts of Migration and Population Growth, which modeled the impact of a 50% increase in the level of skilled migration over the 20 years to 2024-25 and found that it caused real GDP to be 4.6% higher than would otherwise have been the case in 20 years time (more labour inputs equals more outputs).

The PC also found that real income per person would increase ever so slightly. That is, 20 years later real income per head would be 0.7%, or $380 a year, higher than would otherwise be the case.

However, “the distribution of these benefits varies across the population, with gains mostly accrued to the skilled migrants and capital owners. The incomes of existing resident workers grow more slowly than would otherwise be the case.

Hence, according to the PC in 2006, opening the spigots to skilled immigration would make the existing resident workers worse-off because they would earn less income than would otherwise be the case.

Yesterday, the PC released its final Migrant Intake into Australia report, which again provided a cautious assessment of immigration’s impact on the economy and living standards.

In its latest modelling, the PC found that maintaining positive net immigration would boost economic activity in per capita terms by increasing the proportion of the population participating in employment. Although this boost would be transitory:

Assuming that net overseas migration (NOM) continues at the long-term historical average rate (0.6 per cent of the population), by 2060 Australia’s population is projected to grow to nearly 40 million, with NOM adding some 13 million people to the population.

The continuation of an immigration system oriented towards younger working-age people can boost the proportion of the population in the workforce and, thereby, provide a ‘demographic dividend’ to the Australian economy. However, this demographic dividend comes with a larger population and over time permanent immigrants will themselves age and add to the proportion of the population aged over 65 years.

The Commission’s economy wide modelling projects that with NOM continuing at the long-term average rate with its current young age structure, by 2060:

– real gross domestic product (GDP) per person is projected to be some 7 per cent ($7000 in 2014 dollars) higher than if NOM was set to zero. In practice, this result cannot be extrapolated — limits on Australia’s absorptive capacity in terms of economic, social and environmental factors mean the modelling results do not shed light on the likely economic impact of very high rates of immigration

– a higher employment to population ratio associated with immigration will relieve some of the pressure of ageing on government expenditures (as a proportion of GDP), and moderate wage pressures particularly in high growth sectors…

However, labour productivity is forecast to decrease under current immigration settings, as are real wages, versus a zero NOM baseline:

Compared to the business-as-usual case, labour productivity is projected to be higher under the hypothetical zero NOM case — by around 2 per cent by 2060 (figure 10.5, panel b). The higher labour productivity is reflected in higher real wage receipts by the workforce in the zero NOM case.
ScreenHunter_14902 Sep. 12 16.24

Thus, the PC’s latest modelling shows a situation whereby ongoing high immigration improves per capita GDP by 2060 by boosting the proportion of workers in the economy, but this comes at the expense of lower labour productivity and lower real wages. Moreover, the benefits on workforce participation would only be transitory, with the migrants themselves aging and dragging on growth after the forecast period.

Importantly, the PC does caution that higher real GDP per person does not capture the negative externalities from immigration, nor does it account for any distributional impacts. Hence, policy needs to take a broader focus that improves “community wellbeing”:

While the modelling suggests that the Australian economy will benefit from migration in terms of higher GDP per person, whether migration delivers an overall benefit to the existing Australian community will also depend on other factors, including the distribution of those economic benefits, and the broader impacts of immigration, notably the associated social and environmental impacts…

High rates of immigration put upward pressure on land and housing prices in Australia’s largest cities. Upward pressures are exacerbated by the persistent failure of successive state, territory and local governments to implement sound urban planning and zoning policies…

Urban population growth puts pressure on many environment-related resources and services, such as clean water, air and waste disposal. Managing these pressures requires additional investment, which increases the unit cost of relevant services, such as water supply and waste management. These higher costs are shared by all utility users…

Immigration, as a major source of population growth in Australia, contributes to congestion in the major cities, raising the importance of sound planning and infrastructure investment. While a larger population offers opportunities for more efficient use of, and investment in, infrastructure, governments have not demonstrated a high degree of competence in infrastructure planning and investment. Funding will inevitably be borne by the Australian community either through user-pays fees or general taxation.

For these reasons, the PC urges the Government to develop a national population strategy, rather than flying blindly:

FINDING 3.1

With low and stable rates of natural population growth, decisions about the size of the permanent and temporary immigration intake amount to a de facto population policy.

The Australian Government’s judgments about immigration levels and population growth should be better informed by:

• a broad range of evidence which identifies, quantifies (where possible) and analyses the impacts of immigration and population growth on the wellbeing of the existing Australian community

• the Australian community’s values and perspectives on the importance of different impacts, that are well-informed by evidence

• the impact on future generations, incorporating a well-informed consideration of Australia’s absorptive capacity

• the effectiveness of policies that are best equipped to address these impacts. Enhancing the Australian community’s wellbeing is likely to be consistent with a range of immigration rates depending on the settings of many other complementary policies.

RECOMMENDATION 3.1

The Australian Government should:

• develop and articulate a population policy to be published with the intergenerational report

• specify that the primary objective of immigration and the Government’s population policy is to maximise the economic, social and environmental wellbeing of the Australian community (existing Australian citizens and permanent residents) and their future offspring.

Australia’s immigration and population policy should be better informed through:

• genuine community engagement

• a broad range of evidence on the economic, social and environmental impacts of immigration and population growth on the wellbeing of the Australian community

• a published five yearly review of Australia’s population policy. The Australian Government should calibrate the size of the annual immigration intake to be consistent with its population policy objectives.

MB has for a long time called for a frank and honest national conversation about population policy, which focuses on raising the living standards of the existing population. Not the current ‘grow and hope’ position displayed by the major political parties, which blindly assumes that mass immigration is beneficial, and maintains the current ‘Big Australia’ plan without community consultation and support.

Let’s hope this PC report gets the conversation and debate started.

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Comments

  1. The Traveling Wilbur

    The Australian Government should:

    • develop and articulate a population policy to be published with the intergenerational report

    • specify that the primary objective of immigration and the Government’s population policy is to maximise the economic, social and environmental wellbeing of the Australian property investment community (existing Australian citizens, permanent residents and foreign nationals) and their families and future offspring.

    Fixed!

  2. ErmingtonPlumbingMEMBER

    “The incomes of existing resident workers grow more slowly than would otherwise be the case“.

    Though there is much vested interest and propaganda valiantly trying to suppress any debate around immigration, it still surprises me how virtually No one, including Hanson, is calling for an “Immigration Plebiscite”.

    It seems to me a logical extension, to the virtually saturation coverage and debate over the Gay marriage plebiscite, that we would have people asking for one (a plebiscite) on an Issue that actually affected their and their families standard of living!

    A Conspiracy of silence?

    • That is a fair point actually. Why does Pauline not push for a referendum on immigration.

      Not sure if UKIP pushed for one on Brexit – but rather Nigel is great at talking and won many votes and PM Cameron thought that the Tories could stop the rise of UKIP up by having a referendum.

      Of course Turnbull will not have a referendum on immigration as most voters want 457 visas and immigration to be slashed.

      • Hanson is in the tent now after a prolonged period out in the cold…

        Dishevel Marsupial… she has acquired an appreciation of the finer things in life now and getting old can be scary….

  3. It is not skilled immigration though.

    A great percentage cheat on exams to come here and then bribe professors once they get here!

    Thus retrospectively making my degree worthless.

    And they end up driving trucks, buses, taxis. There was never a shortage of truck drivers – so slash 457 visas by 90% already.

    • Those barely-literate foreign students (not 457s) buy a BMW in their first week here and start attending real estate auctions in the second week, usually spending $1.5m+ on real estate within 6 months of arrival.

      Do you really want to deny Australia this Kleptocratic demographic dividend?

      • Jumping jack flash

        I’ve met some barely literate 457s as well. A few people I worked with, Chinese mostly, could barely string a sentence together. They could code though.
        In one particular instance, back in 2008, when the company fell on hard times, one asked me whether he could take a pay cut.
        He was a nice young bloke.

  4. My beef is not with the notion of immigration, not the race of immigrants, nor the ability to take immigrants

    It is with the economic point of doing so….

    If we are setting ourselves up to be a nation which does nothing but dig things out of the ground or grow things on top of it then we don’t need immigration to support it.

    If there is an economic narrative which involves us having export competitive sectors which require larger workforces or more domestic consumers to support (for example) scales of production or scales of service I would support it. But at the moment there is no sign of that.

    Currently I think we are running immigration at higher per capita levels than any other nation on earth and have more foreign born people per capita than any nation than Saudi Arabia simply to have more bums on seats, to have more ‘juice’ for GDP stats.

    That makes the immigration we are running now:-
    • nothing but an intergenerational can kick (requiring more immigrants in future when the ones we bring in now require pensions and social welfare in years to come)
    • an aggravating factor for our competitiveness issues
    • a mask for policy issues to remain unaddressed by our politicians
    • a lever to support intergenerational housing ransoming
    • a factor facilitating Australia encouraging corruption in other nations

    I would like government to clearly and unambiguously make the case for Australian immigration as previous generations governments have done (up to Howard).

    I would also like the benefits of different types of immigration (ie refugees and SIVs) to be clearly mapped out with historical data to back it up. My guess (and it is only a guess) is that refugees will demonstrate a far greater and more lasting commitment to Australia, and that wealthier immigrants are often there largely for the passport only, with them generally having a larger commitment to retaining the access to offshore money generation.

    • Jumping jack flash

      “If we are setting ourselves up to be a nation which does nothing but dig things out of the ground or grow things on top of it then we don’t need immigration to support it.”

      If only.

      No, our economic strategy is far more simple than that. We borrow money from the banks and secure it against property prices. That debt causes property prices to inflate, then we use that inflation to secure more debt. The debt inflation drives the economic inflation.
      On paper, the numbers look great, and it is all operating within acceptable accounting rules.

      Now, THAT strategy does require immigration to be successful, because we need an ever-expanding pool of people to borrow money, or arrive already with money (this is preferred to minimise banks’ risk profiles) and hand it over to someone else.

    • I’d like to see immigration policy based largely on an assessment of the the economic and societal benefits that the immigrants bring to the country, with a dash of altruism thrown in for good measure. And right now, along with the beneficial folks, it seems we are importing large numbers of useless cooks and bottle washers, aged parents who will use services and contribute nothing, and violent arseholes. Google for the Apex Gang to see how that is turning out for people in Melbourne.

  5. Population cough “policy” will not be *effectively* set by the bought-off Judas clowns of the national circus. It will be “set” by either the tanking of the property bubble or anger in the streets, whichever comes first. When is impossible to predict.

    • Mining BoganMEMBER

      Property burst first. Folk only revolt when they feel poor or think something has been taken…like when their ‘wealth’ disappears.

      A wealth that never really existed to begin with. Fancy chucking a wobbly over something you never had. It’s kinda like democracy.

    • “When is impossible to predict”
      Apparently it is happening in six weeks
      Stick it in your diary peeps
      Monday 24 Oct 2016 – Crash day

      • Patty, you’re back!

        Why six weeks, have I missed a memo? It is traditionally 18-24 months away. Has been for over a decade. What’s changed?

      • ErmingtonPlumbingMEMBER

        Shit, 6 weeks!,…that doesn’t give me enough time to patch the cracks, paint the house, re turf the lawn and sell.

        You Sure Brother?

        ?

  6. Jumping jack flash

    Seriously all they need to do to keep me happy, and by all means I’m not that difficult to please, is have a 457 exit strategy.
    They have none. Nada. Zip.
    Instead they have a 457 to PR conduit. I’m sure that shouldn’t be part of the deal.

    So what happens when we arrive at this very point in time when it becomes glaringly obvious to all that there are no skills shortages, and possibly never were, and a ton of 457s still in the country, and still more arriving?

    It makes my confidence in their abilities to manage something so important = 0.

    Once they recognize the shortages have been well addressed, they should immediately put a halt on new 457 entrants, and perform an analysis of the state of the labour markets that shortages were originally identified in to see how many people can be removed and still maintain a labour surplus.

    What are they scared of? It isn’t like the employees we asked to help temporarily thought it was a permanent thing, and besides, they had a good time in our country and earned valuable AUD while they worked here. It isn’t like they weren’t properly compensated for their trouble.

    Would you imagine a place like Dubai handling their temporary work visas in the same way we have? Not on your life!

    • Dubai sent a lot of foreigners home in 2008 due to a recession or lack of work.

      Rudd had a stimulus package instead! And the irony is that I met an Indian guy (with a 3rd world passport) who was being paid to install insulation by Rudd!

      How stupid is the ALP? They should have slashed 457 visas by 90% instead.

  7. NOM should be managed no differently that inflation – within a target band. That band should be a percentage of current total population, rather than an absolute number.

    At 24.2 million, a target band of, say, 0.4% to 0.8% would yield a NOM of near 100,000 to 200,000 net migrants. A grown-up debate about what this band should be would be more productive than the polarising “shut the gates” and “big Australia” arguments.

    The management towards the lower or upper ends of the band would be driven by economic factors i.e. lowering in recessionary environments and raising in high growth environments.

    The more difficult bit is the management of the mix of net migrants. This is often distilled down to humanitarian factors (refugees and family reunification) and skills needs. But I tend to think the greatest skill anyone possesses is a desire to work hard for their family’s future. Sorry hairdressers and cooks – end of the line please.

    A final and contentious piece of the population “strategy”. No one should be denied a visa application on the basis of religion – but everyone should be denied (and revoked) if they do not explicitly agree to abide by the principles of a secular society. If your extreme interpretation of a religion does not allow you to “tick this box” – then this wonderful multi-cultural society is not for you.

    • Inflation is so low that capping 457 visas to 10,000/year for the next 5 years will be good for Aussies.

      I would be ok if they imported maids and butlers and not give them PR visas – if Aussies were given a universal income.

      How many Aussies want to work as maids?

  8. We need to start by employing some decent police who are prepared to run a few sting operations.
    Monitor a few medical centres and record all visitors for a couple of days. Then check all records and verify that all patients were legal and legally using any medicare cards. Anyone caught cheating, if not born in Australia, then jailed, then deported for fraud.

    Run a sting operation around the roads of Chatswood. Any drivers exhibiting low skill levels are stopped, identified and ordered to undergo a driving skills test. If fail and not born in Australia, then jailed then deported for fraud.

    Police run a sting operation in University … jailed … deported.
    Police .. rental housing .. jailed .. deported.
    7/11 .. shopping trolley pushers .. farm workers .. taxi .. restaurant .. jail/deported etc

    Then after all this low hanging fruit and low level fraud has been removed, the police should look at politicians.

    • A sting operation!

      Like one done by the media to spot fix a cricket match and catch Mr Salman Butt.

      Yep. The media should do one to catch a boss on camera agreeing to hire a foreign worker on illegal wages.

    • ErmingtonPlumbingMEMBER

      I don’t like the Idea of large scale deportations, that’s got a kinda Fascist ring to it.

      How about we just dramatically lower the current yearly intake and see how that goes.

      • How would you react if one of these Chinese drivers runs down your child on a crossing?
        They are already here mate. They can’t drive and they get their license by fraud.

  9. 1:26 Then God said, “Let us make mankind in our image, in our likeness, so that they may rule over the fish in the sea and the birds in the sky, over the livestock and all the wild animals, and over all the creatures that move along the ground.”

    1:27 So God created mankind in his own image, in the image of God he created them; male and female he created them.

    1:28 God blessed them and said to them, “Be fruitful and increase in number; fill the earth and subdue it. Rule over the fish in the sea and the birds in the sky and over every living creature that moves on the ground.”

    1:29 Then God said, “I give you every seed-bearing plant on the face of the whole earth and every tree that has fruit with seed in it. They will be yours for food. And to all the beasts of the earth and all the birds in the sky and all the creatures that move along the ground—everything that has the breath of life in it—I give every green plant for food.” And it was so.

    We took all this on board; took the basic message to heart, big time. When the wind blew us over here a while back we spread ourselves all over a beautiful, natural Australian landscape, and messed with it. Couldn’t help ourselves; had to meddle. He said it was all ours after all. Great mess we’ve made, and most still don’t think that it needs fixing. But that’s why people take “holidays”. To get away from the mess they’ve made in their own locale. They like to mess with someplace else instead. He must be pulling his hair out up there. And what is really interesting is this habit of creating human anthills all over the place so that we can call ourselves “cosmopolitan”, frequent bars, gyms & coffee shops, and endlessly prattle on. And this concept of “progress” being predicated by having more people in the anthill. Isn’t that one crazy idea? Well, maybe not. If it means we get Light Rail, then doubtless all that progress was worth the effort.

  10. The quotes from the Productivity Commission reports that Leith refers to are good and sensible. However my reaction is a “Duh” or “No shit Sherlock”. Seriously this stuff is at a 3rd graders level.

    If Australia brings in a lot of top dogs in any area then of course this makes the existing Australians become lesser dogs.

    the distribution of these benefits varies across the population, with gains mostly accrued to the skilled migrants and capital owners. The incomes of existing resident workers grow more slowly than would otherwise be the case
    No shit Sherlock!

    The current economic paradigm is based on ordinary people having to sell their labour and then buy other people’s labour and also buy or rent licenses on natural resources and licenses on human constructs from elites.

    In other words an ordinary Aussie has to work to and pay for living space to elites. At a basic selfish level each person wants:
    A) less sellers and more buyers of what the Aussie is selling
    B) more sellers and less buyers of what the Aussie is buying

    To give an example, let’s say I am a barber specialising in gay blondes. I like surfing and wish to buy a beachfront house one day. I like to eat a lot of meat.

    I would want:
    A1) less gay blonde barbers around. No immigration of barbers
    A2) more gay blonde people. High immigration of gays and blondes and encouragement of gay lifestyle
    B1) more surfing beaches, more meat farmers, more meat imports.
    B2) less swimmers, less meat eaters, ban on meat export. Less beachfront house buyers.

    As you can see it gets complicated. As a gay barber I would not like to see rich Asians immigrating here and buying beachfront houses. However I would not support a complete ban on immigration as that would reduce the number of blonde gays coming here. Also I would like more poor Asian butchers and cooks to come, but not surfers.

    A further issue to consider is what is the effect of Australias skilled/unskilled immigration policy on the places where the people are coming from? Is it fair for another country to train-up people and then have them go to Australia to work?

    So the real situation is both ridiculously simple in the basics, and ridiculously complicated in the detail. Faced with this our politicians tell us that high immigration is good for the economy so we must have it.

    • What you want are rich immigrants who would pay more to have a haircut and not want to work as hairdressers themselves.

      You do not want poor immigrants from the slums of the 3rd world who can only afford a buzz cut.

      And AUS gives PR visas to poor people from the 3rd world.

      To take your analogy further: a lot of people coming to AUS are Sikhs who never cut their hair!

      Not that we should restrict immigration on the basis of religion.

  11. Immigration should be literally decimated and we should be focusing on genuine skills shortages first. Not just shoveling in numbers, somehow thinking that’s a good thing in the long run. The middle and lower middle class are getting destroyed.