Lateline: Counting the economic impacts of immigration


By Leith van Onselen

ABC’s Lateline last night ran a well-balanced segment examining the economic impacts of mass immigration. The segment featured three guests:

  • ANU professor, Bob Gregory, a pro-immigration economist who has previously claimed that the past 12-year’s mass immigration has provided a bigger (and more permanent) economic boost to Australia than the mining boom.
  • CBA senior economist, Gareth Aird, who has recently argued that Australia’s mass immigration settings are lowering the living standards of the resident population.
  • Deloitte Access Economics’ Chris Richardson, a pro-immigration economist who has previously called for Australia to lift its already turbo-charged immigration intake.

The segment covered a range of topics, including:

  • Whether immigration is boosting living standards on a per head basis.
  • Whether immigration can prevent Australia’s population from ageing.
  • Deleterious impacts on infrastructure, traffic congestion and housing affordability.

As expected, CBA’s Gareth Aird makes the most sense, noting that the ordinary citizen is not benefiting from mass immigration and their ‘lived experience’ has deteriorated through sluggish income growth, deteriorating traffic congestion, and worsening housing affordability. Aird also calls for governments to take account of these issues, as well as productivity, when it sets the overall migrant intake, rather than just focusing on headline GDP growth.

Importantly, Aird also challenges the claim made by Chris Richardson that Australia can “substantially offset” an ageing population by “getting migrants”, noting that this is a temporary fix since immigrants also grow old, and equates to “kicking the can down the road”.

One big positive from the segments is that even pro-immigration Gregory and Richardson admit that immigration does have negative effects (which are often ignored) and that “bigger is not better” for living standards. While vigorously opposing halting immigration entirely, as advocated by Pauline Hanson, Gregory even acknowledges that immigration should probably be “adjusted down”.

You know you are winning the debate when pro-mass immigration economists like Gregory and Richardson will no longer defend current immigration levels (see below chart).

ScreenHunter_17868 Mar. 10 08.31

It’s now only a matter of time before politicians capitulate and cut the immigration intake to more sensible and sustainable levels.

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Comments

  1. What about also slashing all those bullshit student-into-residency visas and almost every 457, where both of them lead to increased local unemployment and the trashing of wages. I’m working in a joint where they have 457s and other variations of visas working under titles like “desktop systems administrator” when they’re doing graphic design. Given the volumes of kids we’re pumping through design courses do we really need imports? Or is it because we have already trashed our education system’s teaching quality via massively increased throughput that we can no longer turn out qualified and smart graduates?

    • They took Actuary’s and Surgeon’s off the skills migration list, left ICT on even though ICT has sustained negative wage growth​, ICT student enrollments have halved in a decade.

      Gives an indication of how it works.

      Moral of the story is to complain more.

      • Professional bodies like the AMA are fairly protective of their members wages. Unlike ICT and Engineering where the relevant professional bodies are actively promoting the 457 trade as they get paid a fee for assessing each applicant.

      • True. The ACS sold out, but APESMA’s (Professional’s Australia) membership is increasing, filing the gap in the market.

  2. Erwin Schrödinger

    It’s now only a matter of time before politicians capitulate and cut the immigration intake to more sensible and sustainable levels.

    The single and most assured instigator to a full blown housing crash.

    There are far, far too many powerful forces at work blocking a reduction in immigration.

    From Wesfarmers to Border Protection (soon to privatised), High Rise Harry, to LInfox – absolutely no one wants turn back from BIG AUSTRALIA.

    Its about as likely as APRA implementing 5%, FIRB engaging in the real estate market, LNP signing the anti-money laundering legislation, or Scott Morrison removing negative gearing.

    How many vegan foxes do you know ?

    • Until the right heads end up on pikes (or in jail) these vested interests will win. Our own Aussie version of the rent seeker/owner mafia need a name:

      Elite Terrorist?

  3. naturaltrustMEMBER

    Absolutely correct, Leith:

    “…the ordinary citizen is not benefiting from mass immigration and their ‘lived experience’ has deteriorated through sluggish income growth, deteriorating traffic congestion, and worsening housing affordability.

    Absolutely incorrect, Leith:

    Your past statements that a Universal Land Tax will not have a similar negative effect on the standard of living of Australians.

    Land Taxes do not boost effective supply except insofar as Land Taxes cause more dwellings on the same site.

    That is and Taxes take away green space, back yards, front yards and put more people into a smaller space.
    Living like sardines cannot be called progress.

    You are continuing to misspeak to maintain your untruth, Leith.

    As I wrote previously:

    “Your Professor Cameron Murray clearly states that it is an objective of Canberra’s Universal Land Tax to reduce the amount of land homeowners can have. In other words…Live in small dog box apartments and dog box boundary to boundary houses on very small blocks of land.”

    It is time you admitted that the goal of Land Tax is to put more people in smaller homes; that is dog box apartments and no back or front yards.

    Other interested people can look on page 6 of the report.

    QUOTING THE REPORT (My capitalization):

    “Many specific objectives were nested within
    the overarching ones. For example, one objective
    outlined in the Review was for INCREASED DENSIFICATION TO PROVIDE EFFICIENCY BENEFITS of
    lower infrastructure costs for new dwellings
    and commercial uses and meet equity objectives
    by charging rates based on the value of
    the consumption of land (Professor Cameron Murray).”

    https://www.prosper.org.au/2016/09/12/the-first-interval-evaluating-acts-land-value-tax-transition-full-report/

    It is time to admit it, Leith, in an effort to look smart and promote this insidious Land Tax you are not disclosing the truth even when it is clearly stated by your cherished ‘Prosper Australia’ research

    • Yes, Land Tax is not the correct way to go.
      A much better way is a tax on Improved Capital Value (aka a Property Tax). This will then capture each apartment owner, each owner of the expensive big house, each owner of the house plus granny flat.
      Such taxes are used in some big US cities, and they work fine.
      By keeping the same % rate across the city it also means the poor people who must live a long way out from the CBD are taxed the least. Very fair.

      • naturaltrustMEMBER

        The tax you propose opens up another can of worms, MaudeLynne. Your proposal is the same tax that gave birth to Proposition 13 in California.

        “PROPOSITION 13

        On June 6th, 1978, nearly two-thirds of California’s voters passed Proposition 13, reducing property taxes by about 57%.

        Prior to Proposition 13, property taxes were out of control. People were losing their homes because they could not pay their property taxes, yet government did nothing to help them.

        In the finest tradition of the Boston Tea Party, California taxpayers stood up and said “No more!” to excessive taxes.

        The Proposition 13 Revolution swept the country and made headlines around the world. It began a change in thinking about the tax burden property owners had to bear. Proposition 13 also started a revolution in the people turning to the initiative process to gain greater control over their lives. (Howard Jarvis Taxpayers Association)”

        As I have frequently warned Land Tax promotes smaller and smaller blocks of land. Say goodby to homes with yards and say hello to Soviet style apartment living in smaller and smaller dog boxes.

        Professor Cameron Murray clearly states that it is an objective of Canberra’s Universal Land Tax to reduce the amount of land homeowners can have. In other words…Live in small dog box apartments and dog box boundary to boundary houses on very small blocks of land.

        Murray says, in Orwellian speak, on page six or the report (my capitalization):

        Many specific objectives were nested within
        the overarching ones. For example, one objective
        outlined in the Review was for INCREASED DENSIFICATION TO PROVIDE EFFICIENCY BENEFITS of
        lower infrastructure costs for new dwellings
        and commercial uses and meet equity objectives
        by charging rates based on the value of
        the consumption of land.

        It is clearly the case in California that houses are built on smaller and smaller blocks due to property taxes even since Proposition 13. Likewise apartments, (smaller and smaller) are in abundance and, partly due to property taxes, are very expensive to rent.

      • I do remember Proposition 13 in California, but that was a case of strangling the goose that laid the eggs (golden or otherwise).
        In Sydney in the 70’s people were being forced out of their homes by increased council rates after their land was rezoned for units, and the value went up. This was fixed by government changing the rules.
        There are property taxes (on Improved Capital Value – ie the value of how much you could sell the residence for, not just land value) in NY and Chicago which are not forcing people out of their homes. It all depends on how it is implemented.
        And yes, the intention in ACT may be to force more units onto small blocks of land, but that is not a natural consequence of implementing a property tax (on Improved Capital Value) regime. It is a consequence of government policy.
        In any case, our state governments must raise money via taxes, and Property Taxes are easy to impose, and difficult to avoid. Most importantly, they are as fair as taxes can ever be.

      • drsmithyMEMBER

        It is clearly the case in California that houses are built on smaller and smaller blocks due to property taxes even since Proposition 13. Likewise apartments, (smaller and smaller) are in abundance and, partly due to property taxes, are very expensive to rent.

        What’s been causing it in Australia for the last few decades ?

        Why could that case not be the thing driving change in California ?

      • naturaltrustMEMBER

        I see MaudeLynne that you are happy to leave your life decisions, and the lives of other Australians, to the vicissitudes of bureaucratic and political self interest and connivance.

        You clearly show this when you write:

        “In any case, our state governments must raise money via taxes, and Property Taxes are easy to impose, and difficult to avoid. Most importantly, they are as fair as taxes can ever be.”

        Property taxes are not as fair as can be…That is simply your unsubstantiated fantasy.

        You cannot get much clearer than this MaudeLynne:

        “Many specific objectives were nested within
        the overarching ones. For example, one objective
        outlined in the Review was for INCREASED DENSIFICATION TO PROVIDE EFFICIENCY BENEFITS of
        lower infrastructure costs for new dwellings
        and commercial uses and meet equity objectives
        by charging rates based on the value of
        the consumption of land (Professor Cameron Murray).

        I suggest you do some thinking about Land Tax and Property Tax, MaudeLynne, as you are keen to use any correlation you can pick to justify your pre-established conclusions. For example; Chicago is a basket-case economically and for many years has been a location where real estate is at rock bottom give-away prices. One reason why it is at give away prices is because people have to pay property taxes and cannot afford to buy or keep the property.

      • naturaltrustMEMBER

        drsmithy:

        Higher property prices, as exist in some parts of Australia over recent years, also cause people to buy smaller blocks of land and move towards dog box accommodation.

        Land and/or property taxes also have the same effect.

      • drsmithyMEMBER

        Higher property prices, as exist in some parts of Australia over recent years, also cause people to buy smaller blocks of land and move towards dog box accommodation.

        And that’s not what happened in California because…?

        Land and/or property taxes also have the same effect.

        So you would argue that a land tax is literally incompatible with a property market that delivers a wide range of dwelling sizes and types ?

      • naturaltrustMEMBER

        drsmithy

        What I am saying is that each variable; Land Tax or High Property prices, will cause people to buy smaller blocks of land and move towards dog box accommodation.

        Both variables can occur together or separately.

        I don’t think I can say it any more simply than that.

      • drsmithyMEMBER

        Right then. So you are saying Land Tax is incompatible with a wide array of dwelling types and sizes.

        How do you explain Texas ?

      • OK naturaltrust, I looked up Cameron Murray – thanks for the link, btw. He recently was awarded his PhD, but is not, as far as I can tell, yet a professor.
        His hope that, “by charging rates based on the value of the consumption of land” it will result in “increased densification” is just that, a hope. He offers no evidence that it will do this. Furthermore, if that is a consequence of levying property taxes then it has been a dismal failure in states such as Texas, which are about as low density as you can get.

        Chicago is an economic basket case, but that is more to do with its unfunded pension schemes than property taxes. It’s true it does have depressed property prices in some areas. West Englewood is an example. It has high unemployment, few jobs, low incomes, high rates of crime, and low property taxes.
        It also has neighbourhoods with low crime, good schools, good facilities, police and fire departments, sanitation, high incomes, high property prices , and high property taxes to pay for the services. People like to live in such areas, which is why the prices are high.

  4. We rarely in economics, refer or discuss the 101 concept of ‘externalities. Why ? Because you don’t matter !

    In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit. Economists often urge governments to adopt policies that “internalize” an externality, so that costs and benefits will affect mainly parties who choose to incur them.

    • Moved back to Australia less than 4 weeks ago after 17 years in the Middle Kingdom. I finally watched the ABC news (Melbourne last night). Wow, the anger in the protests expressed in the first two news items covered (Sunday penalties/taxi compensation)… The thing that struck me (apart from my old man sticking his fingers up at John Howard and taking vicious pleasure at that rats discomfort upon stumbling into the CFMEU at the rally) was that the people most upset were all migrants. The cleaning lady angry about her Sunday penalty was a newer migrant from Asia, but the taxi families were more mixed, and had obviously been here longer and had awesome migrant Aussie English and they were absolutely furious.

    • naturaltrustMEMBER

      Yes, you are right Stephen.

      The robotics revolution will concomitantly be deflationary or neutral for inflation.

      That gives us further opportunity to expand government deficit spending for high tech research, development and manufacturing.

      Few in government know how to tap this opportunity and it is likely to be squandered as have the past 8 years of deflationary opportunity.

  5. Lucky also for modern economists that there is no such thing as the external account. The effect of bringing in hundreds of thousands of immigrants each year and parking them in Sydney and melbourne is a direct increase in the CAD and foreign Debt resulting in the necessary sales of more and more of our profitable and economically strategic assets to foreigners.
    I suppose it would be expecting way too much of the ABC, with a budget of $1.22 BILLION, would actually have ONE thinking person in it to ask questions around this.

  6. “Whether immigration can prevent Australia’s population from ageing.”

    How is it remotely possible that this is even a subject of debate? Are there actually people who are not aware that people get older, and therefore if we import a bunch of young people we’ll eventually end up with them turning into a bunch of old people?

    Stupid shit like this being blandly spouted by lizards in suits really gets my blood boiling. It’s so insulting that they think I’m stupid enough to accept this.

    • How can you tell which ones are lizards? I thought that was the problem.
      We know the Royal family are, and the Bushes from memory.

    • DarkMatterMEMBER

      The only way to achieve this is to bring in young immigrants at a percentage of the current population. This is then geometric or exponential growth, since the number of immigrants increases with the population. What this means is that although you stop the average age of the population from increasing, the problems of old age and infrastructure also increase exponentially. It is madness that only a politician or economist could approve of. Also, since we are not a productive society, the only way to pay for all this is with magic puddings.

      You would think that this Big Australia plan would be an obvious dud, however the people in charge don’t actually believe in exponential growth. They think it is fairy tale nonsense, or something that won’t affect anyone until thousands of years in the future.

    • Actually, immigration can help. I read somewhere that immigrants live forever, so there should be no problem. 🙂

      • mild colonialMEMBER

        yes, if no one dies, the papers just get passed on that could be true.

        anyway, perhaps the logic is that a third of migrants usually go back to their home country so there won’t be so many of them in old age.

  7. adelaide_economistMEMBER

    Saw this too but was followed by some Minister (I think, I only started paying attention when I heard garbage) who just flat out told mistruths – including the continued reference to the skilled migration program only. He kept saying ‘its been 180,000 for 5 years’. Yes, it has been. It’s just a shame that huge numbers of 457s and ‘students’ also transition from temporary visas to permanent residents as well. The earlier segment (with the three noted interviewees) even referred to the 300,000+ annual migrant figure and yet the Minister wasn’t even quizzed on this apparent anomaly.

    • adelaide_economistMEMBER

      To add some context – there were more than 700,000 international student enrolments in Australia in 2016.
      https://internationaleducation.gov.au/research/International-Student-Data/Pages/InternationalStudentData2016.aspx

      The Minister on Lateline was all ‘we need that’ (though he didn’t mention numbers, oddly enough). By ‘we’ and ‘need’ he is of course referring to some service exports and a huge pump to the local housing market (which is only ‘needed’ by those who own investment properties).

      Yes, we totally need huge numbers of students debasing the value of an Australian education (ask an academic how much of their time is spent dealing with academic dishonesty), doing courses in ‘motor mechanics’ operating from the 12th floor of an office tower in the CBD, working illegally (and often under illegal conditions) thus depriving huge swathes of Australian citizens from obtaining employment and providing an avenue for the parents to buy a house here and then bring gran over to get some heavily subsidised medical treatment.

      The numbers are only declining overall (457s in particular) because the economy is crap. None of our governments (of any stripe) have taken any real action to cause this – it’s basically the end of the mining (construction) boom.

      • brian560MEMBER

        Make it so that overseas students have to return home after their course completion and then apply for migration (as it used to be) and then see whether education is still our third biggest export earner. We are basically selling PR for export income and experiencing an explosion in immigration fraud in the process. We could also ban 457 holders from applying for PR onshore. Make them go home and then apply for migration.

      • mild colonialMEMBER

        how interesting is that page! I had heard that there will be 600,000 students in Australia this year and thought it was an increase but we’re either talking different measurements or there’s a drop. certainly doesn’t feel like a drop in my city, rental vacancy wise.

        oh and yes the horror stories one hears from academics nowadays, its a tragedy. plagiarism, weeping, wailing, the unfairness of being expected to turn up to class, inability to actually write at a tertiary level.

  8. SchillersMEMBER

    “While vigorously opposing halting immigration entirely, as advocated by Pauline Hanson”

    One Nation advocates replacing all permanent and long term departures from Australia with an equal number of permanent and long term arrivals. This effectively means they support a skilled migration intake of roughly 200,000 annually. Something they are quite open and frank about on their website. Where they differ from just about everyone else is calling for a temporary halt to net increases in migration,over and above the numbers that are leaving.

    From the ON website:

    “One Nation believes in balanced, zero net immigration (subject to review depending on economic conditions) and that coming to Australia is a privilege that must not be undervalued. THIS DOES NOT MEAN ZERO IMMIGRATION
    ‘Zero net’ means we replace the numbers that leave Australia with new migrants.
    The justification for our policy of not exceeding zero net immigration is that environmentally, Australia is near her carrying capacity. Economically, immigration is unsustainable and socially, if continued as is, will lead to a further ethnically divided Australia. Current government policy is encouraging large numbers of illegal migrants and it is time Australia, while recognising the contribution made by migrants in the past, sends to the world the message that mass immigration has passed its “use by date.” It is now critical to develop a population policy for Australia in order to decide immigration numbers rationally and in the best interest of Australians. The immigration policies of the major political parties to this day have proven disastrous, proceeding as if there were no balance of payments problem, no foreign debt and no geographical or environmental constraints to population growth. If continued, such an immigration policy will irreversibly alter the natural and urban environment, economic viability…”

    • Economists are dunderheads as none of them can articulate how an economy generates economic wealth and consequently their policy prescriptions make things worse. These is nothing wrong with migration if its planned. Uncontrolled migration will continue to be an evolving and growing disaster that reflects the selfish narrow vested interests that are driving it. This malaise is also reflective of the lack of a vision and strategy that politicians have for the nation. Too busy making sure their $300m+ property portfolio is okay I guess.

      • Stephen Morris

        The problem lies in the system. The mathematics of elective government (as opposed to Democracy) suggests that the “winner” will not be the one who appeals to the fabled “Median Voter”, let alone the majority. In a multi-dimensional policy space there is no “median”.

        The mathematics of elective government suggests that the winner will be the one who picks off enough single-minded minority groups to form an overall majority.

        Consider:

        Voter A is passionately concerned with policy W but less intensely supports not-X, not-Y and not-Z;

        Voter B is passionately concerned with policy X but less intensely supports not-W, not-Y and not-Z;

        Voter C is passionately concerned with policy Y but less intensely supports not-W, not-X and not-Z;

        Voter D is passionately concerned with policy Z but less intensely supports not-W, not-X and not-Y;

        (To put some meat on the flesh, one might – for example – strongly support same-sex marriage but oppose privatisation, immigration and live meat exports.)

        You can readily see what happens. A politician could win by offering W, X, Y and Z . . . even though a majority of voters was opposed to each and every one of those policies!!

        Each voter gets to cast only a single vote. So if A wants to get W he must hold his nose and accept X, Y and Z. The same goes for every other voters.

        As if that weren’t bad enough, the system is likely to “adversely select” the most megalomaniacal political agents, as Nobel laureate James Buchanan describes:

        [S]uppose that a monopoly right is to be auctioned; whom will we predict to be the highest bidder? Surely we can presume that the person who intends to exploit the monopoly power most fully, the one for whom the expected profit is highest, will be among the highest bidders for the franchise. In the same way, positions of political power will tend to attract those persons who place higher values on the possession of such power. These persons will tend to be the highest bidders in the allocation of political offices… . Is there any presumption that political rent seeking will ultimately allocate offices to the ‘best’ persons? Is there not the overwhelming presumption that offices will be secured by those who value power most highly and who seek to use such power of discretion in the furtherance of their personal projects, be these moral or otherwise? Genuine public-interest motivations may exist and may even be widespread, but are these motivations sufficiently passionate to stimulate people to fight for political office, to compete with those whose passions include the desire to wield power over others?” (James Buchanan and Geoffrey Brennan, “The Reason of Rules”, Cambridge University Press, 1985, p64.)

        And what makes this all the more extraordinary is that there exists a system that is mathematically guaranteed to return the preference of the median voter in any vote.

        That system is the indefinite-pass initiative-and-referendum system with an open-ended number of binary votes. In any one such binary vote the majority must by mathematical necessity include the median voter! And the open-ended nature means that no subset of voters may determine the outcome by strategic agenda setting (i.e. by determining the order in which binary options will be voted upon). At any point it is possible to initiate another vote until equilibrium is achieved.

        Now, it is conceivable that an indefinite-pass initiative-and-referendum system would choose to abolish itself in favour of purely elective government, but history suggests that this never, ever happens. Those who manage to achieve Democracy hang on to it.

        For those who deny the right of the citizens to choose the form of government they prefer for their country or state, the critical question is:

        When were you granted your ‘Charter from Heaven’ authorising you to make this decision on behalf of everybody else??

  9. Aussie1929MEMBER

    So many people these days have explained how this land is made up of
    immigrants. Maybe we should turn to our history books and point out
    to people why today’s Australian is not willing to accept the new
    kind of immigrant any longer.
    Back in the 1900s (after federation) when there was a rush from all
    areas of Europe to come to Australia, people had to disembark a ship
    and stand in a long line in Sydney, Melbourne, Adelaide, Perth and
    be documented.
    Some would even get down on their hands and knees and kiss the
    ground.
    They made a pledge to uphold the laws and support their new country
    in good and bad times.
    They made learning English a primary rule in their new Australian
    households and some even changed their names to blend in with their
    new home.
    They had waved good bye to their birth place to give their children
    a new life and did everything in their power to help their children
    assimilate into one culture.
    Nothing was handed to them. No free lunches, no welfare, no labour
    laws to protect them. All they had were the skills, craftsmanship
    and desire they had brought with them to trade for a future of
    prosperity.
    Most of their children came of age when World War II broke out.
    Australians fought alongside men whose parents had come straight
    over from Germany, Italy, France, Japan, Czechoslovakia, Russia,
    Sweden, Poland and so many other places.
    None of these first generation Australians ever gave any thought
    about what country from which their parents had come.
    They were Australians fighting Hitler, Mussolini and the Emperor of
    Japan. They were defending the Freedom as one people.
    When we liberated France, no-one in those villages was looking for
    the Ukrainian-Australian or the German-Australian or the
    Irish-Australian.
    The people of France saw only Australians and we carried one flag
    that represented our country.
    Not one of those immigrant sons would have thought about picking up
    another country’s flag and waving it to represent who they were.
    It would have been a disgrace to their parents that had sacrificed
    so much to be here. These immigrants truly knew what it meant to be
    an Australian.
    Here we are in 2017 with a new kind of immigrant that wants the same
    rights and privileges, but not to learn or speak English. They want
    to achieve it by playing with a different set of rules, one that
    includes an Australian passport and a guarantee of being faithful to
    their country of origin.
    That’s not what being an Australian is all about!!!!
    Australians have been very open-hearted and open-minded toward
    immigrants, whether they were fleeing poverty, dictatorship,
    persecution or whatever else forced these people to flee their
    homeland and to those people who truly did ADOPT our country, our
    flag, our morals and our customs, and left their wars, hatred and
    divisions behind.
    I believe the immigrants that landed in Australia in the early 1900s
    would be appalled the country they created is being used and abused
    by those waving foreign country flags, fighting foreign battles on
    our soil, making Australians change to suit their religions and
    cultures and wanting to change our country’s fabric by claiming
    discrimination when we do not give in to their demands. Our
    forefathers deserve better than that for the toil, hard work and
    sacrifices they made for the future of this country.
    It’s about time we get and stand up for our rights, we are
    AUSTRALIANS!
    Lest we forget it!!!
    NO MORE POLITICAL CORRECTNESS. NO MORE not saying CHRISTMAS in our
    stores and in our schools. (This country is and always has been
    based on Christian ideals!) I eat pork, I drink beer and I want my
    Australia back!