MB Radio: Immigration gluttony. Can the Aussie economy be force fed?

In the wake of the 2017 Federal Budget and with prices for Australia’s major commodity exporting slumping Gunnamatta spoke with David Llewellyn-Smith and Leith van Onselen about the Australian economy and its key drivers and outlook.  In a wide ranging discussion they cover the role that immigration is currently playing in sustaining Australia’s current economic data, while making little plausible sense for a nation remaining reliant on natural resources, and how this affects Australian politics, policymaking, real estate and infrastructure.

David looks at the dynamics in the iron ore, coal and gas markets, with the implications this has for the budget, and there is a detailed look at the implications of the Adanic coal mine in Queensland and proposals to build an LNG terminal for imports.  Leith explores the 2017 Budget’s reliance on wages meeting extremely optimistic forecasts, which he and David make clear are simply not going to happen, all ultimately leading to Australia expecting a sovereign downgrade, with the implications of this for the Australian economy and currency.

The discussion last approximately 75 Minutes and comes in 3 parts.

June 2017 Macrobusiness LVO DLS Pt1 Final

June 2017 Macrobusiness DLS LVO Pt2 Final

June 2017 Macrobusiness DLS LVO Pt3 Final

Comments

    • Time for an increase in population of protesters in Woollahra, Point Piper? Perhaps some 4am air horns.

      • Lucy Turnbull and other oligarchs are putting provisions in place to make it impossible for the riff-raft to access the pointy end of town.

        Step one is divide the city into three, so he poor people will instinctively figure out they don’t belong.

        Step two is to make it uneconomical for anyone west of the Anzac bridge to come into the East City by tolling all access ways.

        Step three institute a permit system in which non-residents will need a lawful excuse to come into the East City.

    • Jesus f#ck that’s a shit lot of schools, hospitals, police stations and public transport the Govt needs to build out in Western Sydney in the next 10 years. Call me dumb but I just can’t see where the hundreds of billions of extra public dollars are going to come from.

      • That’s the thing about structural inefficiency that really kills a society, the inefficiency eventually prevents the society from even catering for its own most basic needs. Labour inefficiency prevents you from properly deploying the resource that’s in greatest supply (Labour), exactly the resource that’s creating the problem (excess people) is the resource that can’t be deployed to fix the problem.
        Anyone that’s ever worked in an export industry understands the importance of maintaining an efficient labour force because this efficiency is is often all the differentiates you from your global competitors, typically labour and capital efficiency are the real source of corporate product margin.
        Structural inefficiency decimates our income just slightly before it destroys our society.
        But what would a blackfella know about labour efficiency and the social costs associated with having a large percentage of your local population that adds absolutely no value to the society but still consumes resources.

      • Welcome BlackFella
        Well said!!!
        Some of us have been trying to make this point for a very long time particularly those amongst us who have worked in export industries.

      • SchillersMEMBER

        Agree. The increase in net migration post 2004 is extreme and significantly exceeds the natural increase in population (which in itself is also growing due to post 2004 migrants having children.).
        And all for what exactly? “Jobs and growth” ?
        Oh, I see…

  1. You did not enable the download button on SoundCloud for offline listening. I asked Green Tech Media to enable the download button and they did.

  2. Paddy Finucane

    Great pod, cheers.

    sound is OK by internet in StP

    Did you have a few wines while you were recording? It sounded to me as though if there was to be another part you would have been singing it.

  3. It was foie gras and now it’s another wafer. As good as always, thanks. And no jargon from HnH this time, like [email protected]*&ed or ‘going to shit” which helps the non specialist follow the conversation.

  4. The Traveling Wilbur

    Called the top in the Aussie market too and local bonds have performed well.

    Was a Mr Holes post in response to a comment:

    https://www.macrobusiness.com.au/2017/06/australian-dollar-headed-time-lows/#comment-2885786

    My question is, if the ASX is back over 5900 in 3 months time, would that make the “called the top” assertion wrong?

    Isn’t the current drop even less of an issue than the minor 2015 pause, so it’s hard to see the ASX being at current levels for long.

  5. There is one feature of the ponxi that hasen’t as yet been sufficiently explored, that is that population can and will go into reverse. I believe we might lose millions (more likely the better quality recent immigrants) as the reality of their having been duped !

    • St JacquesMEMBER

      I think Spain’s example is good guide if there is a sudden crash instead of just an endless grind, where in a few years they lost about half a million, mostly the more educated immigrants, but above all their best young people who cost them a fortune to educate, while being left stuck with uneducated or unskilled immigrants from the third world.

      • In Ireland lots of migrants left and the streets were far more empty, but now the economy is picking up again so it’s back on again. I think the same will happen here. Lots of economic migrants will leave and return home. Too hard basket. Only the dedicated will stay.

  6. The are called the Labor party because they want to increase the ‘labor force’ by trillons of people lifting them all out of poverty and we will all be better off. Well not all but around 10 % will be better off. 90% will be much worse off but while those 90% think their part of the 10% its all good !

  7. St JacquesMEMBER

    Coalition game plan?
    Surely by now even the dumbest of parliamentarians understand that mass immigration and work visas are slowly but surely grinding away at the living standards of most Australians, adding huge costs to the community through congestion in transport, schools, hospitals, everything, and pushing land prices to levels that make Australian businesses uncompetitive in international markets, while slowly crushing most peoples’ wages, and that the mass immigration as a way of maintaining total domestic demand for goods and services is the highway to political hell. But the Coalition also knows that doing anything serious about it could easily crash this sick, private debt bloated economy in the short run, and that they’ll end up wearing the blame for at least a generation. So they might as well run the immigration/visa scams full tilt for the short time they’ve got left, given they’re going to be slaughtered at the next election anyway, and let the ALP face the economic fall out and wear the blame for the next generation. Politics in Australia is all about timing and blame shifting, not competence.

    • TailorTrashMEMBER

      Think you got it …..when we have bulldozed all the beautiful old homes in Sydmelb that were built over generations of hard work,frugal lives and sensible savings and replaced them with concrete cells based on mega debt ….then what ? ……..what will replace all those construction jobs ?……..or will we just keep going until we are one giant megopolis along the entire east coast ? …….I do suspect that is the vision splendid ……….the view from point Piper will still look good though……..tough titties plebs !……..hope the plebs revolt against all major parties before all is lost …..

      • Those homes were built when labour had more share of productivity and better job longevity. RE in this period was supposed to basically track inflation and be a form of savings [deferred spending] for ones retirement. This all changed after productivity and wages diverged with the advent of the new dominate economics of the 70s onward.

        Due to this even RE construction was crapified as industry sought to reduce skilled labour share by establishing new methods of construction and materials used. With the advent of RE becoming a short term investment vehicle in search of yield, like a stock, the market viewed its risk differently, as such its warranties and reps changed to reflect that.

        The financialization of RE and resultant bundling of long term risk to then off load on the market created even more perverse incentives, due to lack of regulatory controls and basic errors [assumptions] in market players attitudes [rational agent models et al].

        Then to top it all off there is the issue with offshoring, short term-ism, unrestricted capital flows, tax havens, and endemic corruption in both private and public spheres.

        disheveled…. that’s the short of it, yet, this was just the result of what the market demanded.

      • TailorTrashMEMBER

        Yes skip …..the dangers of leaving it to ” the market”………I’m not a total socialist but a bit of government guidance of the market is always needed else you get the gross distortions we are now seeing in Sydmelb.
        ……..unfortunately the “crapification ” is so far advanced now
        that I’m not sure any government can undo it ………short of going down the heavy handed Singapore route .

      • TT…

        Concur, no national socialist here, sure I forward social democratic governance in a capitalist state, take the edge of the Free Market or Laissez Faire Capitalism and its propensity to blow up all the time [too the point of destroying productive capital (and people)].

        Drama is now the whole market is so tightly coupled and path dependent that any event[s could pull the rug out from the entire thing. Nations such as Australia or similar just don’t have the ability to make their own destiny anymore, from a political stance, its all market driven by the BSD and Bond holders, not to mention the consolidation of Mfg, shipping and Ag.

        Just to put it out there I find it curious when people bang on about NBN over costs, but, don’t understand that there are not that many contractors out there with the ISO standards to do the work. In some cases, I know of, there is only one contractor in an entire region and in one specific case the contractor used the income to buy out everyone else even associated with services and other construction. Hence the government has only one tender and ends up paying the private sector inflated costs. Hell the Gov does not even have the ability to set up its own shop and do it, the knowlage and institutional memory is gone. Its just there to hand over the funds and take flack for anything wrong.

        disheveled…. sigh…. watching people use nook and cranny rollers to do weather boards or linear boards on Queenslanders because [supposedly] noone can lay off with a brush any more. Its just so Devo….

    • They all know it. Should have seen them answer the housing affordability question the other day on Q and A. Talk about tap dancing. Shorten doesn’t look like the kind of guy that wants to wear anything but big bucks. Their negative gearing policy will be a big lie imo. Any banking royal commission will be more lettuce.

      The only people that wouldn’t know are maybe the Greens. Even Pauline and her lot know the score.

      • St JacquesMEMBER

        Yeah, it’s really become a game of pass the parcel, or bomb. No doubt, they’ll make much ado about nothing type reforms, just like all the noise over insignificant visa changes now. All window dressing.

      • Had to add….

        “Neoliberalism is an anti-human economic prescription for life. It is an ideology which denies the existence of community, society and even humanity, reducing life on earth into decimal points on a balance sheet. It is a series of ones and zeros in a computerised market system in which we exist only to serve the financial ends of multinational corporations. Any benefit, financial or otherwise that we derive from work is purely coincidental. Paraphrasing economist Bill Fink, Neoliberalism believes that markets are more efficient than humans can ever be. It believes corporations can do no wrong, and celebrates inequality, claiming it encourages productivity because people envy the rich and try to emulate them.

        Neoliberalism is a form of economic nihilism, an ideology designed to rationalise our humanity. An anti democratic system that thrives on our confusion, despair and desperation. All that is left now is the pursuit of profit.”

  8. Thanks for the effort you put into these audio streams MB team. Excellent discussion and intriguing as always. Cheers.

    • GunnamattaMEMBER

      You’re welcome mate.

      We do them to try and get people thinking about what is unfolding and where we are going as a nation in an economic sense.

      Australia currently has an economic model of facilitating investment in collapsing commodity prices, tax avoidance, gouging the Australian public and low wage growth, buttressed by increasing numbers of bums on seats.

      The more people thinking about that the sooner we are a chance of coming up with something better (or at least stop buying the bullshit being peddled by the controllers of the present)..

  9. The frequency of #SardineSydney public transport stories seems to be increasing.

    http://www.smh.com.au/nsw/sydney-commuters-bear-brunt-of-overcrowded-trams-on-inner-west-light-rail-20170608-gwntil.html

    With 330+ construction cranes going hard in Sydney and Peter “Honey, I lost control of the borders” Dutton pumping 200,000 new immigrants into Sydney and Melbourne – mostly – per year, Matt O’Sullivan will be very very busy covering pissed off Sydney-siders for the next decade.

    Can’t wait till the penny drops for Western Sydney when they start paying, on 1 August 2017, those nice big fat tolls $4.50 each way) to drive the few surface km between Parramatta and Homebush bay drive. Apart from an extra lane each way this is exactly the same stretch of road they spent 20 years paying off.

    https://www.westconnex.com.au/NewM4tolls

    They have been quiet to date but when their wallets start bleeding every month they will get pretty vocal. $45 per week will sting.

    If they are travelling some of the way of the M7 they are looking at possibly another $7.00 each way. Bingo – $23.00 per day to get from Leppington to Olympic Park. $115 per week. About $6,000 per year after tax income. What is that in pre-tax income?

    The problem for Gladys is that the congestion egg is hatching now and will continue to hatch relentlessly while the cranes build and Dutton stuffs people in but all of her hideously expensive ‘solutions’ are about a decade away.

    Plenty of time for Matt O’Sullivan to roll out endless copy on the fiasco.

    The Westconnex thought bubble will prove to be one of Sydney most expensive underground car parks.

    But both Gladys and the invisible man of state politics – Luke Foley – ALP Leader – remain HUUUUUGE fans of high speed immigration into Sydney……for now at least. Their brain dead enthusiasms may wilt in the months ahead.

    • St JacquesMEMBER

      “The Westconnex thought bubble will prove to be one of Sydney most expensive underground car parks.”

      Yep. I love how these giga-projects that are gonna “solve” all our problems; by the time they’re finished half their supposed “benefits” fpr the public will have already been wiped out by the massive immigration and within 5 years you’ll be stuck in traffic that’s even worse than before the shiny new toll way opened, except now you’re paying through the teeth for the privilege. Got to love that Big End of Town rent-seeking. Our politicians are such perfect tools.

      • Yes,

        Once upon a time there would at least be a period when using the new roads was an improvement …before more population growth choked things up again.

        Now the population growth into Sydney and Melbourne is so fast that the new infrastructure struggles to do more than slow the rate of congestion. Actually reducing it is not possible.

        It is going to be interesting watching Gladys try to spin the congestion in Sydney as it is going to get much worse and quickly. There are tens of thousands of units coming on line in Sydney and filling up and many more on the way.

        Gladys needs a bucket load of infrastructure right now not in ten years. New rail lines, duplicated lines, more rolling stock etc and she has already spent most of the dough she made from flogging off the electricity system.

        When Western Sydney go nuts paying $9 each day to drive on a bit of road they have already paid for (the underground bit is still years away and will cost another $6 return) Gladys will vanish into the usual retirement for pollies these days – a cosy gig working for a bank, finance outfit or builder of tax farming infrastructure.

      • Cramming people into western Sydney is smart, if cynical policy. It’s got a high proportion of 1st and 2nd generation immigrants, i.e. the direct beneficiaries of #sardinesydney policies. And who may well have ambitions of bringing in additional family in the future. They mightn’t like the crush loading and rip off tolls, but will they really question high immigration?

        The people who would question it seem to be nicely protected in areas with relatively low population growth.

        Carry on Gladys, looks like calm seas and favourable winds.

      • On the other side of the country, the plans are for decent (in Perth’s terms) size infrastructure investments that will improve congestion. All forward planning is done on the basis of 60,000 new residents moving to Perth every year for the next 15 years, and another 20,000 moving to rural WA, with a combined total growth projections of 80,000 new residents per year steady for the next 15 years. After 2031, the rate of growth drops to 40,000 to Perth plus 20,000 rural WA, for combiner 60,000.

        Reflect upon those numbers and then take a look at one of the recent WA updates from this site. From memory, absolute peak was 85,000 per year and current rate around 25,000 per year and falling.

        Looks like Perth might benefit significantly more than anticipated.

    • I’ll do a nudey run if Sydneyites mention the elephant in the room en masse. They think they’re brash movers and shakers by default, but they are brain dead sheep easily manipulated by the likes of Gladys and they haven’t noticed that NSW Labor are still the same do nothing bureaucratic crooks when Obeid was running the party. Most people honestly think that enlightenment starts and ends with their respective media. For instance News Corp or ABC, or the mobs of savages on social media like reddit and whirlpool.

  10. The problems are global. That means the whole system of today rentier capitalism stinks and is decaying. There is no one or two or even three policies which can repair the colapsing of the aged sclerotic system. The only problem is there is no leadership in the world, which can save it from the disease. It will be very painful….anyway.

  11. – Can I download the podcasts anywhere (in e.g. MP3 format) ? Don’t have the time to listen to them right away. Although I suspect what the message will be.

  12. I have nothing against this woman particularly, but faaark she came over on a 457 (doing what exactly??) and expects to stay as a family member. Worse still she pleads that she sold up all her sh#t in South Africa when she came here (on a temporary, non resident visa) and is now trying to use that fact to support her claim to stay. WTF???? Dutton has put a freeze on her being sent back so he can review it after reading about her case in the paper. WTF part 2????

    Perth grandmother fights looming deportation to South Africa

    No doubt the c#nt will let her stay. OK that’s 1 more, so what? But what about the 200,000 primary immigrants he brings in each year for whom he does not build or fund any infrastructure? How many of them have relatives planning to come over here on any basis possible then plead to stay as family members??