Salt of the ponzi tumbles into hypocrisy

By Leith van Onselen

For years, KPMG’s Bernard Salt – the self proclaimed “unabashed supporter of a bigger Australia” – has produced reams of articles pushing mass immigration and warning that to not follow this path would lead to an economic and fiscal catastrophe.

Salt has been given his own show on Sky News and this week he’s discussing the future of Australia’s cities with the chief commissioner of the Greater Sydney Commission, Lucy Turnbull, and the NSW Executive Director of the Property Council Australia, Jane Fitzgerald – both of whom are also strong supporters of mass immigration and a ‘Big Australia’.

In the video trailer for the show (watch it here), Bernard Salt begins with the following ridiculous statement:

“Australia we have a problem. We have too much space and not enough people. However, our sprawling, spreading cities are simply not sustainable in their current form”.

The clip then shows Lucy Turnbull spruiking how “we are actually cultivating key centres, strategic centres – three great Sydney’s within Greater Sydney”, which is code for further densification and more people living in high-rise towers.

What I find particularly galling about Bernard Salt’s position is the notion that Australia’s current population of 24.4 million is somehow a “problem”, therefore, necessitating the continuation of immigration levels that are so far above historical norms:

Australia's immigration

And which would see Australia’s population hit some 40 million mid-century:

Australian population projection

With Sydney and Melbourne ballooning to around 8 million each.

I also don’t believe that Bernard Salt truly believes that having Australia’s population grow so quickly via immigration is sensible. In January, Salt wrote in The Australian:

“[Australia is] a land of sweeping plains, with ample resources to keep us rich… Australia’s wealth comes from mineral and energy exports mined and tapped in the Pilbara, at Roxby Downs and in the Bowen Basin… 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”.

Salt, thus, explicitly acknowledged that Australia’s huge mineral endowment is the key ingredient behind our wealth.

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:

Australia's major ecports

The question for Bernard Salt then is: why does he support pursuing a “Big Australia” agenda when all continued mass immigration would do is:

  1. dilute Australia’s mineral wealth across more people, making incumbent residents poorer; and
  2. 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:

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:

NSW Trade Balance
VIC Trade Balance

Which has driven gigantic trade deficits in Australia’s two biggest states:

Australian Trade Balance by State

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, as well as relieving strains on housing, infrastructure and the environment? It’s not rocket science.

Feel free to drop a comment below the KPMG YouTube video as I have. Most big firms closely monitor their social media presence, so there’s an opportunity for MB readers to have their say on this issue.

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Unconventional Economist
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    • I would think that Mr S is ok with an interview and I have a dialog with him. I could put it to him if Leith wants to do that interview?

    • He probably won’t hear the questions over the sound of how awesome he is… but – by all means – try.

  1. Mmmm. I placed a comment as a link to this story and could see that 3 comments had been made, but I can only see mine. Strange indeed.

    • Yes, I went over there to read Leith’s comment, but it is hidden, as all 3 comments apparently are.

    • I wonder if a comment were left heaping fulsome praise on Mr Salt and his unbridled genius at supporting big Oz, would that get hidden?

  2. Q: if we choose NO to Big Australia, who will pay for all the oldies?
    A: The oldies, with the equity earned via $2m homes.

    Salt wants to have his smashed avo, and eat it, too.

  3. Strategic centres. Ha ha. Ie a Westfield and a whole heap of Meriton apartments. Just needs some immigrants and gen ys with beards and tatts to populate them.

    Well at least boomers care about themselves. Can’t say that so much for the other generations.

  4. Salt’s show may well be the FIRE sectors reaction to the increased airtime Latham’s population concerns are getting on Sky.
    The Big Australia crew do not enjoy the endless growth narrative being questioned.
    Expect more of the same