Former electronics entrepreneur Dick Smith launched another anti-immigration campaign this week, claiming to be tackling a vital issue that the media is wilfully ignoring.
However, by approaching the topic with the same oversimplifications contained in his 2010 documentary Dick Smith’s Population Puzzle, Mr Smith is introducing further risk to our vulnerable economy.
That risk comes through stoking the kind of populist fears being spread by Canberra crossbenchers, including Pauline Hanson’s One Nation Party, and independents Cory Bernardi and Bob Katter.
Those politicians, like Mr Smith, link population growth to urban congestion, soaring house prices or the threat of terrorism.
And because their arguments operate at an emotional level, like Mr Smith’s wildly over-the-top ad, they have little to say about the real economics of population growth.
Focus on real causes
Urban congestion results from poor town planning and inadequate transport infrastructure, soaring house prices are primarily driven by ridiculous tax laws and record-low interest rates, and terrorism has little or nothing to do with immigration rates.
But those arguments are too difficult, it would seem. Just slash immigration and everything will be great!
Actually, if the crossbenchers could extract such a promise from either major party, we’d be in a lot of trouble.
While immigration is not the main driver of house price inflation – the number of residents per dwelling in Australia has remained virtually unchanged since the housing boom began – a sudden collapse in demand would not gently cool the market. It would crash the market and precipitate a long recession.
What the numbers really reveal
Moreover, attacking headline ‘net overseas migration’ figures is pretty meaningless according to James Raymer, Professor in the School of Demography at the Australian National University.
It is far more useful, he told The New Daily on Wednesday, to look at individual components of the net figure.
For instance, when the Aussie dollar was sky-high in 2011-12, 74,000 students arrived in Australia and 48,000 departed – giving a net figure of 26,000.
Last year, 150,000 arrived and only 25,000 left – which is a ‘surge in immigration’ but also an ‘education exports boom’.
As a former university lecturer, I know first-hand that the education exports sector is fraught with problems – the cash cow of overseas students can end up trampling teaching quality, for instance.
But that would be a real issue to debate, rather than ignoring the economic advantage hidden beneath the net migration figures.
As the chart below shows, there are other questions that need asking beyond the headline numbers:
Those debates would make a lot more sense than Mr Smith’s assertions.
At the launch of the campaign he claimed: “At the present growth rate of 1.78 per cent, we’ll have 100 million in Australia at the end of this century.”
Umm, no we won’t. The current growth rate is 1.6 per cent, based on ABS figures, and nobody has suggested that the total could ever rise that high.
“Our birth rate is about replacement level,” claimed Mr Smith.
Actually, Australia’s fertility rate is 1.8 births per woman. It has been below the replacement rate of 2.1 since 1976, according to the ABS.
Australians are living longer, so the net effect of ‘natural increase’ is positive – just over 40 per cent of Australia’s population growth is due to natural increase.
The other component of growth, net overseas migration, is what Mr Smith is calling for to be slashed. But not to 70,000.
The Department of Immigration and Border Protection estimates that in the 2016-17 financial year, net overseas migration was 257,000 people – down from the 2008-09 peak of 300,000, but a lot higher than the 143,000 when the mining boom was getting underway in 2004-05.
As he did seven years ago, Mr Smith is skating over important facts in his rush to generate populist attention.
He might succeed. But if he does, he’ll be smashing large parts of the economy as he goes.
Deary me. Is this ignorance or deliberate obfuscation? Temporary migrants are by definition temporary. That is, they leave. The key figure is the permanent migrant intake which is hovering at record highs:
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As well, Burgess’s argument’s lack sense. Authorities have proven time and again that they lack the will, brains and resources to address mass immigration strains. They are unable to plan effectively for a population increase equivalent to a Canberra every year, with Sydney and Melbourne growing by at least 80-100k per annum. Given that is the case, it’s obvious that the poor planning is the juiced migrant intake. Burgess himself basically admits as much when he whines about foreign property buyers driving up house prices which is all a part of the same open borders regime.
Finally, Burgess is not an economist’s elbow when he argues that student numbers will fall if you cut the permanent migrant intake. Although it is true that some students come for the lure of citizenship, if you cut the permanent intake then pressure will come off asset prices and both interest rates and the dollar will fall, boosting the competitiveness of education. As Burgess himself admits, the currency is the key to the sector and any numbers lost from would-be migrants will be picked up on price. Probably more so.
You’re bloody confused, Rob. Either do the research or stop writing on the population subject and for God’s sake put away the racism dog whistle.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
