Doomsayer. Gloomster. Recessionista. Mischievous grumpy bum. These are all names used against housing bears in Australia.
But now we’re all racists as well. RBA Governor Phil Lowe yesterday lamented the ‘insidious’ resentment of immigrants caused by the over-crowding of Australia’s major cities, and called on governments to dramatically lift infrastructure investment. From The AFR:
“Our population has been growing quickly but we have not built enough transportation infrastructure,” he told told an Australia-Canada Economic Leadership Forum in Sydney…
“Population in our cities is becoming more and more crowded. People are getting frustrated. They partly blame immigrants and so it really is insidious”…
He said infrastructure spending would help the economy by boosting demand at a time of weak business investment, improve the supply side of the economy and also improve housing affordability by linking new residential areas to jobs. “There are ticks all the way down,” Mr Lowe said.
While it is fair enough that Dr Lowe weigh in against the rise of One Nation, this formulation of the issues is only going to make matters worse. Australians don’t resent immigrants: we are a mature multicultural immigrant nation. What people resent is excessive levels of immigration that push house prices and congestion up and living standards down. Lowe is positing a false binary that will only feed the rise of fringe parties.
Advertisement
Since John Howard initially opened the immigration floodgates in 2003, Australia’s population has grown at nearly 2.5 times the OECD average (see next chart).
And under the government’s own projections, Australia will grow by nearly 400,000 each year, with Sydney and Melbourne accounting for roughly half of this growth:
Advertisement
The fact of the matter is that it is immigration that is the fundamental determinant of Australia’s overall population size. According to the Productivity Commission (PC), Australia’s population would peak at just 27 million under zero net overseas migration (NOM) but would grow to over 40 million mid century under current migration settings:
Advertisement
Therefore, the immigration intake will have major implications for living standards, including:
Whether you can afford a decent-sized home;
How long you spend stuck in traffic;
Environmental sustainability; and
Productivity.
Rather than viewing mass immigration as a fait accompli and then lamenting inadequate infrastructure provision, Phil Lowe should instead question whether growing by more than 1 million people every three years, or a Melbourne every decade, is sensible and sustainable, and whether such mass immigration is likely to raise incumbent residents’ living standards by more than under a moderate immigration intake.
Advertisement
The PC’s recent Migrant Intake Australia report called for a national population strategy that maximises benefits for the incumbent population, rather than flying blindly with the RBA bubble managers.
Crikey might take note as well, as it attacks Dick Smith with more fake news:
Dick Smith has long been a Little Australia man, steady in his opposition to immigration. If anything, he’s become more so in recent years, making videos, running a website, announcing a political party that had as its central tenet that immigration was a “giant Ponzi scheme” based on “perpetual growth”. There’s never been anything racial, discriminatory or bigoted about Smith’s hostility to immigration — it’s based on his economic and ecological views. But when the cancer of One Nation has returned to the Australian body politic, and anti-immigration populism is surging across the West and here, you’d hope Smith — who remains an iconic and influential figure for most Australians over 40 — would choose his arguments and facts with care.
Advertisement
I’ll let MB’s own PFH007 respond, as he did in Crikey comments:
Dick Smith versus the migrants?
It does not sound like it. Mr Smith sounds like he is opposed to a rate of immigration that is excessive.
The problem for Mr Keane is that it is very hard to argue against that proposition. While migration does increase GDP (just about everything does) the GDP per capita has been falling or flat lining as the Australian population has swelled since Howard gave a Big Australia the greenlight. Considering we don’t do much beyond financial services and digging up minerals the butter is only going to be spread more thinly.
Arguing that we should have done better in building lots of expensive infrastructure to support very high rates of immigration does not change the fact that we did not. Plus I don’t recall ANY of the major parties taking policies to an election arguing that taxpayers should pay more tax to build new infrastructure to support a high population growth rate. Perhaps, they don’t take those kinds of policies to elections because they know what the reaction will be.
As for house prices it is fair to say that an excessively high rate of immigration does not provide a full explanation (the massive unproductive capital inflows that Mr Keane supports enthusiastically as a “free market man” are much more responsible for that) but it is a significant part of the mix as low residential vacancy rates help justify property speculation and those vacancy rates have remained very tight despite massive levels of construction in Melbourne and Sydney.
It is disappointing that Mr Keane could not resist the temptation to associate, however gently, concerns about an excessively high rate of immigration with ‘racism’ and ‘xenophobia’ but then that is what we have come to expect from the neoliberal Big Australia spruikers.
Precisely. As it privileges form over substance in policy debates that address those marginalised by an unreconstructed open borders agenda, the insufferable Left strongly represented at Crikey has now become Pauline Hanson’s number one recruitment office.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
