Sloan nails immigration debate, Kelly & Morrison fail it

By Leith van Onselen

Australia’s real estate treasurer, Scott Morrison, yesterday ruled-out cutting Australia’s mass immigration program, citing spurious demographic arguments. From The Australian:

Mr Morrison said net immigration had decreased since the last “big Australia” debate in 2010, and current levels were necessary to keep the economy going given the decline in the working age population…

“Now, today, net overseas migration is running at about 170,000-180,000. Population growth is running at about 1.4, so that is a dramatically different situation from the last big Australia debate that we had,” Mr Morrison told Sky News.

“Population growth is currently running for the non-working population at around twice the rate of the working population, so it’s over two per cent for the non-working population and around one per cent for the working age population, so those who are advocates for cutting back on immigration, what that will simply do is make that gap even wider, and it means there’ll be fewer people in the working age paying for pensions, paying for services, paying for all the things that are very necessary.”

“I’m no great big Australia advocate, but I’m a pretty common sense politician and decision-maker when it comes to these sorts of issues.”

Morrison conveniently failed to mention that while immigration levels are below the 2010 peak, they are still running way above historical norms:

ScreenHunter_17784 Mar. 05 13.21

Morrison was joined by The Australian’s political editor, Paul Kelly, who delivered a long-winded spruik in favour of maintaining Australia’s mass immigration intake:

It is idle to pretend there is no relationship between immigra­tion, as it fuels demand, and house prices, but to justify major changes to the migrant intake on the basis of housing prices (as opposed to other demand and supply factors) lacks any sense of proportion…

In relation to the economic and housing impact of immigration, Reserve Bank governor Phil Lowe said recently: “I am fond of telling visitors 40 per cent of Australians were either born overseas or have a parent who was born overseas. I wouldn’t want to give up that kind of advantage just for property ­prices.”

It may be elitist but the point is valid. Immigration is pivotal to Australia’s economic and social success during the age of globalisation…

In the debate about immigration there are four benchmarks: the program has been a vital driver for economic growth; new migrants lower the age profile of the population; without ­migrants, the worker-retiree ratio would be worse; and migrants are vital in a connected world assisting our global networks.

Let’s quickly examine the arguments put forward by Kelly and Morrison.

First, it is undoubtedly true that immigration boosts the overall economy, since more inputs (people) equals more outputs. But this is a worthless metric to evaluate the immigration program, since living standards depend on people’s individual shares of the growing economic pie, as well as its distribution. That is, there’s little point growing the economic pie if everyone’s share is reduced, or if the majority of the population are made worse-off.

In the early-2000s, Australia massively increased its immigration intake, which saw population growth surge. And these mass immigration settings are expected to be maintained for decades to come, resulting in projected population growth into Australia of circa 400,000 people a year, the majority of which will flood into Melbourne and Sydney:

ScreenHunter_15215 Oct. 02 18.45

Yet over the same period that immigration was ramped-up, real GDP per capita has slumped to the lowest level on record – even below the 1980s and 1990s recessions – meaning that the ordinary Australian is not benefiting:

ScreenHunter_17716-Mar.-01-12.35

Worse, Productivity Commission (PC) modelling found that the benefits from increasing skilled migration accrue to the migrants themselves and capital owners, whereas existent resident workers are made worse-off. Here’s the money quote:

The increase in labour supply causes the labour / capita ratio to rise and the terms of trade to fall. This generates a negative deviation in the average real wage. By 2025 the deviation in the real wage is –1.7 per cent…

Broadly, incumbent workers lose from the policy, while incumbent capital owners gain. At a 5 per cent discount rate, the net present value of per capita incumbent wage income losses over the period 2005 – 2025 is $1,775. The net present value of per capita incumbent capital income gains is $1,953 per capita…

Owners of capital in the sectors experiencing the largest output gains will, in general, experience the largest gains in capital income. Also, the distribution of capital income is quite concentrated: the capital owned by the wealthiest 10 per cent of the Australian population represents approximately 45 per cent of all household net wealth…

Morrison’s and Paul Kelly’s argument that immigration improves Australia’s demography is also spurious, since any demographic benefits from mass immigration would only be temporary, because migrants themselves age. This fact has been noted many times by the PC, which Morrison and Kelly have conveniently ignored:

  • PC (2005): Despite popular thinking to the contrary, immigration policy is also not a feasible countermeasure [to an ageing population]. It affects population numbers more than the age structure”.
  • PC (2010): “Realistic changes in migration levels also make little difference to the age structure of the population in the future, with any effect being temporary“…
  • PC (2011): “…substantial increases in the level of net overseas migration would have only modest effects on population ageing and the impacts would be temporary, since immigrants themselves age… It follows that, rather than seeking to mitigate the ageing of the population, policy should seek to influence the potential economic and other impacts”…
  • PC (2016): “[Immigration] delays rather than eliminates population ageing. In the long term, underlying trends in life expectancy mean that permanent immigrants (as they age) will themselves add to the proportion of the population aged 65 and over”.

Hence, trying to overcome an aging population through higher migration is a Ponzi scheme.  It requires ever more migration.

Paul Kelly’s final benchmark that “migrants are vital in a connected world assisting our global networks” is really just a motherhood statement with little basis in fact. What are all these migrants achieving in a global sense? Getting more iron ore marketing done in Singapore? Selling more of our houses in Canton? Rustling up a new batch of Domino’s pizza drivers from India to come here and do vocational education courses which wouldn’t prepare them for a job here anyway?

Can Paul Kelly please explain how these so-called connections with the globalised world are helping in any way to establish any particular competitive advantage for Australia that does not rely on us digging up natural resources or selling assets?

Besides, low immigration mono-cultures like the Chinese, Japanese and Germans aren’t exactly struggling in the globalised world. In fact, they have each become export powerhouses without the need for mass immigration.

Conveniently, both Morrison and Kelly have failed to account for the extra taxes that would be required to fund all the extra economic and social infrastructure to cope with an expanded population, nor all of the negative external costs that come from running a Big Australia program. Again, they would do well to consider the PC’s view on these matters:

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.

None of the above sounds like a slam dunk for mass immigration, does it? Quite the opposite in fact. If you want to lower workers’ income, have traffic congestion get worse, pay more for utilities and housing, and see the environment get degraded, then continue with current mass immigration settings.

Thankfully, The Australian’s Judith Sloan provided a much better entry into the immigration debate, drawing the obvious link between immigration and housing affordability, as well as questioning its economic merits:

…there is now a legitimate debate emerging about the link between immigration and housing affordability. The “progressive” view is that it is ridiculous to think there is a link and we would be mad to forgo the benefits of immigration…

[But] if it is true that there isn’t a link between housing affordability and immigration, a demand factor, there is logically no link between housing affordability and negative gearing/capital gains tax, also a demand-side factor. You can’t have it both ways…

It is simply common sense that high population growth associated with immigration will cause house prices to rise because the supply of housing cannot keep up with the surge in demand…

Australia has the largest formal immigration program, in relative terms, of all developed economies. Net overseas migration contributes well over half to population growth, and our population growth is highest among all English-speaking countries…

It’s a big call to think that population growth of this magnitude will not affect housing afford­ability in the context of supply constraints that are slow to ease and the increasing preference of residents to herd into Sydney and Melbourne…

But what is the evidence on the economic benefits of immigration? If we take the most definitive recent estimate from the Productivity Commission, in fact those benefits are very modest and only occur in the long term.

In 2060 (in more than 40 years’ time), it is estimated that GDP per person will be 7 per cent higher relative to zero net overseas migration. But if the age profile of immigrants more closely resembles the age profile of locals, the net economic benefits fall sharply.

Moreover, as the PC concedes, these economic benefits are partly the result of the fall in the relative wages of locals with the same skills as migrants. And there is no account taken of the costs of congestion, loss of social amenity or environmental impacts…

Businesses love high rates of immigration (more customers, ready supply of workers), but some local workers lose out…

The reality is that our immigration program is not as skewed to skills as its supporters make out and that the contribution of immigration to population growth has been consistently higher than 50 per cent since 2005.

While there are several factors explaining the deterioration in housing affordability, immigration cannot be ruled out as one of them.

Judith Sloan was the Commissioner in charge of the PC’s 2006 review into the Economic Impacts of Migration and Population Growth, so on this topic she carries significant weight and her views should be taken seriously. And, not surprisingly, Sloan has found only modest economic benefits from immigration, but significant costs to ordinary workers’ wages, congestion, housing affordability, and the environment.

Sloan’s point about Australia’s immigration program not being sufficiently targeted towards skills is also an important one. The below graphic, which comes from the PC’s Migrant Intake into Australia report, shows that the immigrants overall have experienced lower median income, lower labour force participation, and higher unemployment than the Australian born population:

ScreenHunter_15659 Oct. 24 14.47

Moreover, research by Bob Birrell and Ernest Healy found that while 69.3% of Australian graduates aged 25-34 had managerial or professional work in 2011 and only 9.5% were not employed, only 30.9% of non-English-speaking-background [NESB] migrants who were graduates of the same age, who had arrived between 2006 and 2011 had managerial or professional work. And a full 31.1% were not employed. Most of this group of graduate arrivals (79%) were of NESB background (see below table).

ScreenHunter_15660 Oct. 24 15.04

There goes the whole notion that immigrants are more productive than the incumbent resident population.

High immigration is a growth fig leaf for governments and associated rent-seekers to pretend they’re doing a good job rather than pursue the more difficult but ultimately much wider benefits of productivity directed reform. As an old champion of the latter, it’s time Paul Kelly recognised it. Same goes for Scott Morrison.

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Comments

  1. How does this website want immigration to be slashed?

    I think immigration should be restricted to just: refugees, spouses of Aussies, and those with an income of over $150k.

    • stagmalMEMBER

      cut it to below 50,000 a year and keep it there. that’s not just NET that’s total immigration. bring on the smaller population imo. none of this “lets get infrastructure a chance to catch up,t hen raise the rates again” – we don’t need no more stinkin’ people in this country.

    • Simple, just up the standard of PR and TR. For example, require GPA of 3+ for PR, eliminate all 457 rorts, and only offer student visa for real universities, not those dodgy training colleges.

      That will definitely bring the numbers down to long term average and probably more.

    • drsmithyMEMBER

      The problem is a minimum salary is a very blunt tool. $150k is probably reasonable for targeting skills shortages in private industry, but might be a bit high for targeting researchers and academics in fields without a lot of money to throw around. Might need to have a few more metrics to apply.

    • Freeze the non-humanitarian intake until education, health and environmental benchmarks are met and maintained for 12mnths

  2. Good on you for using graphs and data, but the bottom line is, the wages in the 3rd world are a fraction of what they are in NZ, and so firms love importing staff from the 3rd world rather than NZ, England, Scandinavia. And 3rd world staff are willing to work here for $6/hour.

    If I had a 3rd world passport, perhaps I too would be willing to work in AUS for illegal wages. Understandable but illegal and unacceptable. Time is overdue to slash low-wage immigration by 90%.

  3. GunnamattaMEMBER

    1800 words on immigration and the Doyen doesn’t have a point to make (except don’t mention the economy) ………

    Next populist showdown is all about immigration
    • Paul Kelly, Editor-At-Large
    • The Australian
    • 12:00AM March 4, 2017
    http://www.theaustralian.com.au/opinion/columnists/paul-kelly/next-populist-showdown-is-all-about-immigration/news-story/2bd84bdb6c3c5be77c3e67683d8dab3a

    Although normally firmly against putting the contents of the Rupertarian anywhere near anyone’s mind, I find myself again in the position of needing to highlight one of Uncle’s pieces – for the purpose of highlight just how banal they can be.

    Paul Kelly is our man this week, and that should be pronounced ‘Paul Kelly’ as though one is doing a funeral oration – that’s how much gravitas is involved. When it comes to gargoyles in the Rupert stable, this man is pretty much pre-eminent. Once upon a time one of the finest journalists of his era (admittedly suited best to John Winston as PM) he has in his later years been preserved for the big games, having reached the stage of his writing career where he is wheeled out in such a way as to terrify the opposition by name alone rather than what he writes. If you can bring back the big battle scenes of Lord of the Rings to your frame of reference, Kelly isn’t one of the base grade trolls or goblins who get slaughtered like the worthless hacks they are for the cause of their Master. He is the skeleton in a cloak with a crown who rides around on a dragon and is pretty much Mr Invincible. Just the thought of his presence unsettles the opposition, rather than any particular slaughter he himself partakes of.

    That’s possibly a good thing too. For the astute observer of anything he actually writes these days in his guise as Editor at Large, will notice very high levels of long winded conservative writing masturbation, usually around conservative policy cornerstones.

    So it is for this week’s offering – the Rupertarian is dawning to the possibility that immigration is the great battle of the day and age next on the national psyche menu. And like the halcyon days of Christendom when icons were brought out and paraded around the walls to remind everyone who was on their side and terrify oppositions with a reminder of the sort of religious backup which could be called upon in the righteousness of their cause, the big artillery is wheeled out with Paul.

    The piece is big. 1800 words of waxed loquacious diatribe, fulminating against the evil that a debate on immigration portends, and relaxing comfortably in the armchair position (suiting past their best windbags of days gone by brought out for morale purposes) that any questioning of immigration is probably racist.

    As someone sometimes accused of being long winded (from elsewhere in the political spectrum) I would note I can forgive his verbosity, but I just wish he would make his fucking point – and this weeks serve of Kelly is 1800 words with a general theme but completely missing points, trying to massage little points into something bigger, and trying to allude to some points but ultimately failing to get there with them. It is possible that there were editors at the Rupertarian who thought he had simply served up a load of old bollocks, but refrained from the temerity involved in actually suggesting he cut it down. It is equally possible that given the loss leader function of the Rupertarian and the subject matter involved maybe there was need for a bigger piece to provide room for sponsors. Who knows.

    The populist tide now surges towards a truly big target — Australia’s immigration intake, which was lauded by Donald Trump this week as a model — with the anti-immigration arguments based around city congestion, housing affordability, centralisation problems and the Muslim integration issue.

    Tony Abbott has called for reduced immigration in recognition this is now the de facto stance of much of the conservative Right. Pauline Hanson wants a halt to further immigration. Liberal defector Cory Bernardi has called for the intake to be halved on economic grounds and expresses alarm about Muslim immigration. And Trump is invoked at nearly every stage of this political campaign.

    The opening stanza sees Paul present himself to the cognoscenti as a defender of the faith in the face of a populist tide. His deployment of the Trump effigy is overt from the get go, but interestingly he slips in Donald’s compliment for Australia’s approach to immigration when those who would call up Trump as representing cause to cut it. He is laying claim to the Donald first and painting the others as heretics. He is also – as anyone who ever saw Shane Warne bowling to Darryl Cullinan would testify – going for an early bamboozle in the sure knowledge that even if it doesn’t work first up it will soften up the unaware. The 3 introductory villains served up by Paul for his piece are TestosterTone a former righteous leader forever embittered by the cruel vicissitudes of political fate and the fears of lesser men, Cory Bernardi a defector (what more does one need to say?) and Pauline Hanson the female embodiment of contemporary evil. It’s going to be an epic contest (albeit an all right wing Torynuff and sundry other nutters affair).

    There is a rich field of grievance for exploitation and Hanson is its most lethal manipulator. “High immigration is only beneficial to multinationals, banks and big business seeking a larger market while everyday Australians suffer from this massive intake,” she said in her maiden speech in the Senate. “Our city roads have become parking lots. Schools are bursting at the seams. Our aged and sick are left behind to fend for themselves. I call for a halt to further immigration and for government to look after our aged, the sick and the helpless.”

    There is now intense competition between the Turnbull government and Shorten opposition over cracking down on the 457 visa system for temporary foreign workers. Bill Shorten flirts with his own version of Trump’s populist America-first mantra, saying he believes in “buy Australian, build Australian, employ Australian”.

    Trump has made the attack on illegal migrants and Muslim immigration central to his presidency. In Britain, the absence of border controls was pivotal to the Brexit result, while migrant numbers and controls will be critical in the European elections, notably in France.

    He states there is a rich field of grievance, but gives it no more examination that a bird shit on the bonnet. He slaps possibly the most resonating point Hanson has ever made (high immigration only beneficial to multinationals banks and big business) and hides it behind a standard Hanson non sequitur, with the aged left to fend for themselves. From there he shuffles off to the Torynuffs and ALParatchiks haggling over 457 visas, when even the 457s aren’t the mainstay of the immigration numbers – of course the point of 457s to provide employees of a type Australia cannot, and the fact we have them delivering our pizzas he leaves well alone. The theme of a man either too lazy to avoid considering the issues, or too shifty to refer to them as he might come to an uncomfortable conclusion, comes back over and again.

    Spurious assertions are what he is about. He sure doesn’t want to get into a discussion about how the benefits of growth over a generation have fuelled Brexit and Trump, or what the impact of high immigration has been for various sectors of those societies (does it have an impact, Paul? Should we examine that impact and seek to mitigate negatives?), and doesn’t want to acknowledge that both the US and UK have had major Islamic inspired terrorist attacks on their soil.

    For this reason too his immigration debate is about ‘Big’ or ‘Small’ (or even ‘all’ or ‘nothing’) – he wouldn’t go near a factual and data backed consideration of the benefits and negatives of immigration – does it support industry? Is there a skills case [and if there is a skills case does this mean we have some sort of vision about economic sectors required for the future?] are there any costs? Should we try and limit immigration to those making a genuine commitment? Should we be looking at screening out beneficiaries of corruption?. Questions all over the shop, but nary a one does Paul pick up.

    Kelly’s piece descends more from Shakespeare than any journalist. His characters are motivated by greater forces, and his story is about characters. Cluttering his narrative with data logic or reason is not his strong suite, and he sees no reason to belittle the gods of his narrative with thought and consideration of issues. Without looking at what the drivers, issues or implications are of any differences between the government or opposition he lends a little Shakespeare to Shorten. All the world may be a stage, but what a lot of people would like, and never get, is a real look at issues and some real data to back that look up. Kelly is definitive of the journalism of an age, in that he sometimes writes well but always writes at his best in exhortation mode. He suits readers who want someone to make their thoughts sound noble or morally upright, but he hasn’t the generosity of intellect to engage with people who want to think about why or where or who.

    Australia’s situation is conspicuously different to that of both the US and Europe but it is idle to think such sentiments will not resound here. The immigrant issue or “big Australia” bogy lurks permanently below the surface, waiting to be unleashed.

    Yet the foundations of Australia’s immigration policy, built over decades of trial and error, are far superior to that of nearly every other developed nation. Immigration Minister Peter Dutton tells Inquirer: “My approach as minister has been to return to and restore the Howard values and approach to immigration. This means we don’t have to apologise for seeking the best people from around the world to come to this country, and there are currently about 65 million people looking to migrate. We don’t need to be embarrassed about this.

    “The objectives of our program are to employ Australians first but commit to skilled migration based on integrity and public confidence in the scheme. That means a hard-nosed approach. The immigration program is not some feel-good exercise. Our goal is to bring to this country people who will work, earn, contribute, educate their children and learn English.”

    The principles are entrenched: strong border protection based on zero tolerance for asylum-seekers by boat; a lawful entry program geared heavily to the economy and labour market; separate principles for permanent and temporary entry; and a settlement philosophy geared to integration and embrace of Australian norms despite the radical wing of the multicultural lobby seeking to undermine this.

    Kelly next gives more discussion to the Australian backdrop, but overlays it with pathos. We are different from the US and EU – but mainly insofar as we are supporting an entire economy on the output of raw resources production (which employs about 2% of the population) which makes every last economic decision made by government in Australia (including immigration) about distributing the benefits of that production; not making what we do better or more efficient or new technology, just adding more bums on seats. Paul doesn’t go near this either. He does close the paragraph with a good example of the dog whistle in written form – the ‘bogy’ waiting to be unleashed may be racism, but is not immigration per se, and certainly not ‘big Australia’ (particularly not when numbers of studies have shown Australians generally don’t want a big Australia) – if you weren’t paying attention then you could arrive at the end of the paragraph a racist when all you did was question immigration numbers.

    He slips back into the armchair for a paragraph of national self worship for our immigration policies of the past, without touching the fact that our immigration over the last decade has run at about four times what it was running the previous thirty years, with his usual worship of John Winston Howard echoed and underlined by Peter Dutton (please let him become the next Torynuff leader). One assumes that he thinks this tub thumping passes for analysis of immigration in Australia. He doesn’t touch the question raised by using the Dutton statement about seeking the ‘best’ – what is the best, and the best for who? And why are the ones we take the ‘best’ or are they simply the wealthiest we can get without asking questions? – and then, in using Dutton’s ‘people who will work, earn, contribute, educate their children and learn English.’ completely misses people who will contribute the Australian economy of tomorrow, bringing new skills and attributes for Australian employees, or themselves developing companies in Australia which add to national economic opportunity or competitiveness, and don’t just soak up the benefit of whatever productive economic activity is already being done in Australia.

    He babbles on about strong borders and floats the words ‘labour market’ and ‘economy’ into that, but doesn’t lay a glove on either, He looks less closely at the labour market need for immigration or the impact of immigration on the economy than Dracula would at garlic.

    Net Overseas Migration Australia 1901 – 2006. Note that for the whole period there were only 3 years in which Net overseas migration was more than 150 thousand in a year 1919 (returning soldiers), 1950, 1988 and 2006. In the decade since then it has run at more than this every year. Yet Kelly posits 160-200 as being somehow ‘normal’

    The test, however, is surely coming. In his speech nine days ago, Abbott drew the nexus between immigration and housing affordability, saying: “If we end the ‘big is best’ thinking of the federal Treasury and scaled back immigration (at least until housing starts and infrastructure have caught up), we can take the pressure off home prices.”

    He warned that Australia had “land in abundance” but “Sydney’s house prices are close to Hong Kong’s”. The risk is obvious: linking house prices and immigration will become a media fashion and populist cause.
    It is idle to pretend there is no relationship between immigra¬tion, as it fuels demand, and house prices, but to justify major changes to the migrant intake on the basis of housing prices (as opposed to other demand and supply factors) lacks any sense of proportion.

    Presumably the link between immigration numbers and house prices has become so obvious that it is no longer credible to completely deny the relationship. Just a few years ago positing any link would have seen real estate lobby minions out in their droves to say there was no skerrick of a link whatsoever and that any suggestion of it was surely racist. Kelly goes near the subject, but you sense he does so without enthusiasm, and certainly doesn’t want to examine it. It is presented in the arena by his tragic anti-hero in Abbott.

    His rejection of the idea of reducing immigration because of the effect it has rests upon his sense of proportion . Presumably that sense of proportion is different for people having to hack out a deposit of 200 thousand for a 3 bedder 40 klm from Sydney’s CBD as their wages don’t grow because all these migrants are keen to work, while the auction scene is chock full of mid twenties corruption beneficiaries driving Audis to their classes in between property portfolio acquisitions.

    Annual Population Growth rate – 1992 – 2012. Note jump post 2004.

    The anti-immigration wave moves in cycles. Recall that when Julia Gillard became prime minister she launched a cynical Hansonite assault, exploiting Kevin Rudd’s blunder in calling for a big Australia. Gillard repudiated this notion, saying it was “time to reconsider whether our growth model was right” and declaring that our “clean beaches and precious open spaces” must be protected. It was a focus group project.

    As part of his current tactics to fight for Australian workers, Shorten accuses some companies of exploitation and says nurses, carpenters, cooks, childhood educators, electricians and motor mechanics are missing out because “too many work visas are being used as a low-cost substitute for employing an Australian”. It slots perfectly into the crackdown demanded by the trade unions.

    When he states anti immigration moves in cycles the only cycle he has n mind is the electoral cycle – he just wants to slip some of the mainstream left into the narrative as whipping boy. As always he doesn’t go near looking at the substance of any suggestion that possibly importing ‘nurses, carpenters, cooks, childhood educators, electricians and motor mechanics’ has a negative impact on some sectors of the economy, or that seeing as almost none of those add anything economically productive to Australia’s economy and almost all are recipients of largesse redistributed from someone else doing the economic lifting, maybe we should ask some questions about importing them.

    For Hanson, lower immigration is a crusade. She has generated huge support for immigration cuts from the conservative media bandwagon that promotes her. In her maiden speech Hanson said: “We have reached a population of 24 million this year, 17 years ahead of prediction. Governments have continually brought in high levels of immigration, so they say, to stimulate the economy. This is rubbish. The only stimulation that is happening is welfare handouts — many going to migrants unable to get jobs.”

    Hanson’s campaign has a heavy religious bias. There is no doubt that Australia, like other Western nations, has a Muslim integration problem. But Hanson pushes this to intolerable extremes, saying: “Now we are in danger of being swamped by ¬Muslims who bear a culture and ideology that is incompatible with our own.”

    There is no point simply condemning Hanson. She has a misconceived response to one of the challenges of the age. Political progressives seem clueless about the extent to which ordinary Australians are worried about the ability of Muslims to integrate. The issue needs to be confronted, not denied, but banning Muslim immigration cannot be an answer for Australia.

    Pauline Hanson is now wheeled out for excoriation.

    Again he doesn’t go anywhere near looking at the substance of what he quotes Hanson as saying, particularly on the economy, but is far more comfortable having a pop at Hanson’s views on Moslem migrants. Interestingly he exhorts ‘The issue needs to be confronted, not denied’ with regard to Islamic immigration (and indeed it should – Islamic migrants are a minor part of Australia’s migrant intake, Islam is the religion of about 2% of Australians, and the relationship between ADF operations in the middle east and Islamic migration could be more clearly articulated ) but doesn’t extend that intellectual stance to immigration per se.

    In relation to the economic and housing impact of immigration, Reserve Bank governor Phil Lowe said recently: “I am fond of telling visitors 40 per cent of Australians were either born overseas or have a parent who was born overseas. I wouldn’t want to give up that kind of advantage just for property ¬prices.”

    It may be elitist but the point is valid. Immigration is pivotal to Australia’s economic and social success during the age of globalisation (and it’s not going to disappear despite Trump).

    Next man paraded around the ramparts is RBA governor Phil Lowe suggesting ‘I wouldn’t want to give up that kind of advantage just for property ¬prices.’ Which brings to question – what advantage? What advantage does Australia actually get from having people from all over the world in its midst if the only thing that Australia does productively as an economy is dig things out of the ground and sell them raw offshore? I get the diverse restaurants, the multitude of languages the improved awareness of the rest of the world – but what is the real benefit if we are still nothing but a quarry or a farm and everything done here is nothing but redistributed income from those sectors? Wouldn’t there be a case for being richer on a per capita basis and visiting places offshore, rather than bringing the offshore here and being poorer for it (on a per capita basis that is)?

    From there he asserts ‘Immigration is pivotal to Australia’s economic and social success during the age of globalisation’ – huh? Australia’s success during the age of globalisation has been economic restructuring and improved competitiveness done during the Hawke Keating era, the expansion of private debt from the late 1990s through to now, and a mining boom from which we have derived sweet FA economic benefit from because we spent it as tax cuts and welfare for property speculators and have a national economic model revolving around tax avoidance, and which was used to disguise the ramp up in immigration that Kelly could be writing about if he was prepared to look at immigration levels over the longer term. Australia’s ‘success’ during the age of globalisation has gone to disproportionately few who have used ramped up immigration to hide their take, and has stored up a vast range of social and economic issues which high levels of immigration may only exacerbate – And this is what needs to be discussed, and what Kelly doesn’t go near doing with this piece.

    The relatively good news is that Australia is buttressed to some extent to meet the coming political onslaught. Our immigration program is even more geared than normal to economic and labour market needs. Net migration numbers (permanents plus temporaries) have been slashed by more than a third from their record high under Rudd. The 457 temporary worker visa program has been reduced and tightened under the Coalition.

    Net overseas migration peaked at a huge 305,900 in the 12 months to March 2009. It became the zenith of the big Australia beloved by Rudd, who had genuine ambitions to build up Australia’s global weight. Since then, no prime minister has used the phrase, as the implications are too electorally risky.

    In the current climate, any figure beyond 300,000 annually would be untenable in both economic and political terms. Officials looking back on that period are apt to use the phrase “out of control”. The peak was driven by student visa programs in which an education and migrant package could, in effect, be purchased together. Labor subsequently removed these concessions.

    He weighs in with a little bit of blame apportionment for Rudd on 457s (rightly enough, though the Torynuffs have never really come to grips with reducing 457s substantially either) and slips in an ambit claim of 300 thousand immigrants annually as being the limit of ‘acceptable’ when it is about 4 times the average immigration intake of the 30 years to 2005, before a fresh piece of blame apportionment (again rightly enough but again nothing the Torynuffs have ever thought worth addressing) for the ALP over the fact that Australia has taken its once respected education sector and wiped its arse on it through allowing it to become a backdoor immigration gateway.

    The net overseas migration figure (which counts people if they are onshore for 12 out of the previous 16 months) has fallen on a sustained basis to around 170,000 in 2014-15 with the current government using the working assumption of a 1 per cent annual increase to labour force growth, meaning numbers in the 160,000 to 2000,000 range.

    Looking at the main component, the permanent immigration intake, the story has been a model of stability for a number of years. It sits at a 190,000 annual cap, extending from Labor’s final year through the entire Abbott-Turnbull period. This intake is high by our historical norms and high in per capita terms judged against other developed nations. To a large extent, this reflects Australia’s superior economic growth performance. Scott Morrison reminded us this week that Australia is growing faster than any of the G7 countries.

    In his recent speech to the Australia-Canada Forum, Lowe said both nations had strong population growth for advanced industrial economies but that over the past decade Australia’s population growth had averaged 1.7 per cent compared with Canada at 1.1 per cent, though these rates were now coming closer together.

    As we get into the tail of his piece Kelly next comes around to providing us with some numbers. Net overseas migration has fallen to circa 170k per annum, and he posits a figure of 160-200k per annum. But Why? What does it do for Australia as a nation, what does it do for our economy? What socio economic impacts does it have? Paul doesn’t ask. He also doesn’t ask why the intake was upped from an annual take of about 70 thousand per annum over the 30 years to 2002 (in only 12 years of the 30 between 1972 and 2002 was the net overseas migration figure more than 100 thousand) and why about 70 thousand a year should be roughly the starting point.

    Kelly again tries to link a superior economic performance with immigration, though he doesn’t seem sure about whether he is positing that we need more migrants because the economy has been performing well or whether it performs better because we take more migrants, and some spurious comparison with Canada. Again, a data set too far for someone who wants to rant rather than have us think.

    In relation to 457 visas, there has been a sharp downward trend since the peak that reflected Labor-initiated ambitions for foreign workers. Under Labor, the program expanded from about 70,000 to 110,000 in September 2013. Now Malcolm Turnbull and Dutton are hammering Shorten for his hypocrisy.

    The current 457 numbers are running at 81,000.

    “We are cleaning it (the 457 program) up because Labor made a mess of this migration program when they were in government,” Dutton says. “During the glory years of Rudd-Gillard-Rudd during which the Leader of the Opposition was the employment minister, the number of 457 visa, primary visa holders, went from 68,0000 to 110,000 people. This was at the time the Leader of the Opposition, the then employment minister, was saying to Australians that he was putting workers first.”

    Shorten, in reply, has pointed to the resources boom as justification. The bigger point is that the politics are now pointing one way — limiting the number of 457 visas while still trying to cater for the demands of the economy.

    Dutton says the government will run migration policy according “to the settings that are most effective”. This means “we can’t take people that don’t have the required skills or that can’t make the economic contribution we want”.

    More mud slinging at the ALP (deserved) comes in the form of the 457 numbers. Shorten is a hypocrite, no doubt about it, though Kelly lionising Peter Dutton makes one wonder if this Torynuff focussed piece is about making Dutton more plausible as a leader for when they give Malcolm the hot poker. But he does add an interesting Dutton quote with ‘the economic contribution we want’ without asking what exactly is the economic contribution we want from our migrants and what does that imply about the economy we want and where can the ordinary Australian get the politicians we elect to level with us about the narrative and data behind that? Maybe it would be nice if someone could ask Mr Dutton to explain to us what is the role of migration and their contribution to the economy we want?

    Ultimately even with the 457s he doesnt get to the issue for most Australians. Most Australians think to themselves that if there are 81 thousand 457 visas being given out, then that means that there are 81 thousand positions available which the relevant employer can find no Australians for, and 81 thousand positions for which the employer has tried to find Australians, when the experience of a large number of workplaces is that this is certainly not happening, no attempt is being made to find Australians, and that the 457 visa regime is simply an exercise in getting cheap employees from offshore for those employers who want to use them to nail wages and conditions – take a bow retailers, Domino’s pizza, 7/11 and probably every other petrol retail chain out there, plus every other restaurant everyday Australians pop into.

    The feature of the program these days is the heavy bias to skills over family reunion compared with the pre-Howard era. For instance, in 2015-16 the family numbers were 57,400, compared with the skilled component running at 128,550.

    “It was the Howard government that rightly set in place the fundamentals that exist today,” Dutton says. “They were abandoned during the Rudd-Gillard-Rudd period. But we have now returned to those principles.”
    In the debate about immigration there are four benchmarks: the program has been a vital driver for economic growth; new migrants lower the age profile of the population; without -migrants, the worker-retiree ratio would be worse; and migrants are vital in a connected world assisting our global networks.

    The piece concludes with a bit of hagiography for the Howard era before a spurious positing of four benchmark in the final sentence of the piece, almost none of which bear up to scrutiny.

    the program has been a vital driver for economic growth -Immigration has been largely irrelevant in comparison to a debt binge and a mining boom in the wake of economic restructuring in the 1980s. What high levels of immigration have done is hide the degree to which neo liberal ideology has allocated the benefits of national economic endeavour to the 1%ers and embed low wage growth, worsened infrastructure outcomes, and higher house prices as our national economic bequest to future generations of Australians.

    new migrants lower the age profile of the population – they do in the first instance, but once here they mean that the age profile ages more quickly than would otherwise be the case and that we are essentially running a population Ponzi with regard to tomorrows population and pension requirements.

    without ¬migrants, the worker-retiree ratio would be worse – as above, they would be, but once the migrants are here they simply age the worker retiree ratio more quickly and bring us back to the population Ponzi with regard to tomorrows population and pension requirements.

    and migrants are vital in a connected world assisting our global networks. – to do what? To get more iron ore marketing done in Singapore? To sell more of our houses in Canton? To rustle up a new batch of Domino’s pizza drivers from India to come here and do vocational education courses which wouldn’t prepare them for a job here anyway? Could someone please ask Paul Kelly if the connections with the globalised world help in any particular way to establish any particular competitive economic endeavour in Australia which does not rely on digging up natural resources or growing them?

    Anyone looking at this Weekends Rupertarian would actually be far better off reading through Judith Sloan’s piece (and for me to say that is really underlining just how much utter bilge Kelly has piled on the subject here)

    • One wonders if Kelly is as much of a climate denier as his masthead’s editorial decisions seem to suggest. Because if he is, he is voting for a vast increase in undocumented migrants down the track. Unchecked AGW, fulminating on the back of Adani-style mining ventures, will mean a gigantic increase of climate refugees in the future, on that fact all experts are in agreement. I wonder if Kelly has the intellectual horsepower to join the dots between his organ’s climate denial and the hundreds of thousands of boats that will arrive in the future?

      I think he can join the dots, but holds the denial line at the behest of Rupert, which means he is hopelessly intellectually compromised in his current position, and would resign if he had any moral fibre.

  4. Nice work UE, really interesting data there on employment rates and wages. It’s refreshing to see some different plots.

    I wonder if the government has ever floated an increase in visa costs for (non-refugee) permanent residents? Or set some yearly levy if income tax is not being paid? If we’ve got 175,000k coming in every year, why not simply up the fees by 10% at least? It would do a lot towards budget repair.

    • You don’t seem to get it Kipron.

      Forget greater taxation on immigrants. Our cities are clogged to the eye balls.

      It is all about quality of life. And most of us are sick of sitting in traffic let alone the visa scams and housing unaffordabilty.

      Fully expect you to come back with some garbage justifying your stance. Why do you want the continuation of immigration levels when all the benefits are to big business and absolutely no one else?

      • Hi Hareeba, sorry to hear you’re still stuck in traffic. Maybe you should take the train.

      • Maybe he doesn’t live near a train? Maybe he doesn’t work in the CBD, which is about all trains are good for? Maybe the train is too slow and crush-loaded (like many in Melbourne/Sydney)?

        Simple statements like “maybe you should catch the train” are utterly useless and add zero value to the debate around mass immigration.

      • ^
        UE, my comment was tongue in cheek..

        If he doesn’t live near a train, maybe we should be building more trains, don’t you agree?

      • “maybe we should be building more trains, don’t you agree?”

        Phew, glad we’ve got that sorted out. See how easy that was everyone! Infrastructure shortfall… solved!

  5. “Morrison conveniently failed to mention that while immigration levels are below the 2010 peak, they are still running way above historical norms”

    How can you compare 80,000 norm in the 1950’s when the population was around 10m to today’s 24m population?

    What of the 80,000 in 1910’s?

    Doesn’t make sense to compare does it?

    • Escobar. Look at the chart again and tell me how the last 15 years is not way out of whack with historical experience? You can’t.

      It’s the population numbers that matter, not the rate. Using your logic, population growth of 500,000 per year mid-century would be fine because it would only represent 1.25% growth on a base of 40 million people, and would be a lower rate of population growth than the past.

      Besides, Australia was nation building early last century and needed the people. Now we are sufficiently populated and have reached sufficient scale. So pursuing mass immigration makes no sense anymore. We are big enough (probably already too big in Sydney and Melbourne).

      • The Patrician

        Spot on Leith
        Using the rate (and ever increasing actual numbers) is the same flawed ponzi logic that got us here in the first place
        The FIRE sector prefer it that way

  6. Indeed, Senor Escobar. Better to cast the debate of rate of immigration to a percent of current population.

    I would be a fan of having a set NOM band – as we do for inflation – that a government then manages within. For the purposes of an example only, if the band was set at 0.25% to 0.75% of current population, the NOM would be near 60,000 to 180,000.

    The government of the day could then target the lower or upper end of the band, depending on the prevailing economic conditions.

      • “Auld: this is probably a less-than-ideal idea from an XXX perspective”

        Reads much nicer for a potential subscriber, no?

      • Heh “freeloading”
        If by freeloading you mean reading comments, sure.
        Maybe you can ban non subs or lock all posts

        The ROI isn’t clear to me yet. I’m not being a smart #rse, I’m being honest. I don’t see the ROI.

        UTSC/Ringing the Bell had a clear benefit for me, as do others, but for me the return isn’t clear.

        Just honest feedback, for what it’s worth.

      • Thanks UE.
        Yes I agree that the number matters. But I also believe that rate of absorption (against a population’s existing infrastructure) is relevant.
        A developed country with a population of 2.4m should be able to absorb a NOM of 6,000; a developed country of 24m should be able to absorb a NOM of 60,000; and a developed country of 124m should be able to absorb a NOM of 300,000.
        [PS. I’m OK with “dumb”. That’s because sometimes I am]

      • Sorry, that was a poor choice of words by me.

        I do get your point. But I am a firm believer that actual numbers matter far more than the rate. Australia’s cities are struggling to cope with the current comparatively ‘low’ population growth of 1.3%. And under current projections, 1.3% growth would represent more than 500,000 people a year mid-century.

      • “A developed country with a population of 2.4m should be able to absorb a NOM of 6,000; a developed country of 24m should be able to absorb a NOM of 60,000; and a developed country of 124m should be able to absorb a NOM of 300,000”
        …and so on ….Where does the nonsense end?
        This is classic ponzi logic.
        The carrying capacity of a finite space does not increase because its population increases. On the contrary from an environmental/health perspective, the opposite may well be the case.
        “there is no major problem facing our planet that would not be easier to solve if there were fewer people; and no problem that does not become harder — and ultimately impossible to solve — with ever more. “

      • Patrician , UE

        I would have read Auld Koger and what I was alluding to as an “all things being equal” argument.

        I guess you’re saying were already close to finite space, energy. ….

  7. The Patrician

    “Now, today, net overseas migration is running at about 170,000-180,000.”
    “fallen on a sustained basis to around 170,000”
    Wrong Scott. The latest NOM has increased to 182,200.

  8. Jumping jack flash

    “…so those who are advocates for cutting back on immigration, what that will simply do is make that gap even wider, and it means there’ll be fewer people in the working age paying for pensions, paying for services, paying for all the things that are very necessary.”

    Oh, so he acknowledges the population ponzi?
    Tell me, who is going to pay for the immigrants as they get old?

    How about raising taxes to pay for our services instead of cutting them and then wondering why there’s no money any more?
    The only reason taxes could be cut all those years ago was because of the steady sale of essential public services to the private sector, which, at the time was essentially a once-off windfall that was treated as though it was going to last forever. The money was spent 4 times over on different projects simultaneously, as well it being used to justify taxes being cut.

    This is, of course, standard government budgeting technique.

    • “Tell me, who is going to pay for the immigrants as they get old?”

      No one needs to pay for them. Soylent green.

  9. …and of course the National Manager, Policy and Research of the Ponzi Council of Australia Morrison does not mention natural population growth which has also increased to 155,700 p.a. (that’s nearly 3000 extra residents a week from natural growth alone)….because that doesn’t fit the PCA narrative, does it Scott?