Judith Sloan: No link between immigration and prosperity


By Leith van Onselen

The Australian’s Judith Sloan has re-entered the immigration debate today, debating the benefits of mass immigration and calling for a national debate on whether Australian’s want a ‘Big Australia’:

Malcolm Turnbull is fond of asserting that Australia is the most successful multicultural society in the world. He repeated this claim during his recent overseas trip…

The prize citation read: “Prime Minister Turnbull has maintained a strong non-discriminatory immigration program, helping to make Australia a land of opportunity for peoples from all around the world…

Also note that, in 2011, Turnbull made the astonishing claim that “anyone who thinks that it’s smart to cut immigration is sentencing Australia to poverty”…

Here’s a tip, Malcolm: there are plenty of countries without a substantial flow of immigrants and with low rates of population growth that are not sentenced to poverty. Indeed, if you look at the relationship between population growth — in Australia, immigration accounts for more than half of it — and GDP per capita, there is no statistical correlation at all…

From 2003, there has been a surge in immigrant numbers as well as an influx of temporary entrants… The net overseas migration numbers have varied between 150,000 and 300,000 a year. You don’t have to be very good at arithmetic to realise that we are adding another Canberra in the space of a few short years, or another Adelaide in just a few more.

But here’s an important feature of the flow of migrants: they overwhelmingly go to Sydney and Melbourne, which some would argue are bursting at the seams…

One of the arguments put for such a substantial immigration program — and avoiding poverty is not one of them — is that the ageing of the population can be slowed. But the recent Productivity Commission analysis has dismissed this link…

This is one reason why some commentators refer to immigration as a sort of Ponzi scheme: any impact on the age profile of the population is only sustained if the program continues to be ramped up…

Returning to the analysis undertaken by the PC, by 2060 — a very long time away — it is estimated that per capita GDP will be 7 per cent higher based on the continuation of our immigration program compared with zero net migration.

But the PC makes it clear that no account is taken of the costs that immigration imposes on urban congestion, rising house prices, loss of social amenity or environment impacts. And compared with no net migration, real wages and productivity are actually lower with ongoing mass migration. The economic gains are simply the result of the (assumed) higher employment-to-population ratio…

Are people really happy that Australia’s population will exceed 40 million in 2060? Are we really testing for skill when we set the visa categories? Has the migration program simply become a way of allowing universities to charge very high fees to international students on the understanding that the graduates can attain permanent residence?

These are the questions we should not be afraid to pose and politicians should not be afraid to answer.

Beautifully said, Judith. Nailed it.

Nowhere in the whole immigration debate have Australian’s views been sought over how big they want Australia to become. For this reason, Australian’s deserve to have a plebiscite seeking their views about the nation’s future population size, the answers of which would then be used to formulate Australia’s immigration intake to meet the said target.

Here is an example of the type of question that could be taken to the Australian people:


Australia’s population is currently 24.5 million. Under zero net overseas migration (NOM), it is projected to reach 27 million by 2060.

ScreenHunter_15977 Nov. 09 07.44

By 2060, do you believe Australia’s population should be:

  • 27 million;
  • 30 million;
  • 35 million;
  • 40 million;
  • 45 million?

Obviously, there is room to move on the language and the chart should be updated to show the level of NOM corresponding to the choices, but you get the idea. The important thing is that Australian’s views are sought and this consensus is then used to formulate a national population policy.

In it’s recent Migrant Intake Australia report, the Productivity Commission explicitly called for a national population strategy, rather than flying blindly. It’s time our federal politicians adhered this advice and took a population plebiscite to the Australian people. It’s the democratic thing to do.


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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.