Bob Carr: Cut immigration in half to safeguard living standards

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By Leith van Onselen

Former NSW Premier and Foreign Affairs Minister, Bob Carr, has again called on Australia to reduce its immigration intake by half so that livability in the major cities is not unnecessarily destroyed. From The SMH:

The Ipsos Global @dvisor survey, which involved 18,000 people from 25 countries… points to a nation with a conflicted relationship to immigration…

Respondents were asked if they agreed or disagreed with the following statements

Q1: “Immigrants make your country a more interesting place to live”

Q2: “Immigration has placed too much pressure on public services in your country”

Australians are worried about the pressure that immigration-fuelled population growth has put on public services and infrastructure. A small majority agree that “immigration has placed too much pressure on public services in your country”, two points higher than the global average. Only one in five disagreed. Similar sentiments have fuelled the growing public anxiety over soaring house prices.

A relatively high proportion of Australians also fear immigration is making it harder to find jobs.

Former NSW premier Bob Carr is one of the few prominent politicians on the national stage who have directly challenged the unspoken consensus between the major parties that Australia should maintain such a high immigration rate.

The figure – the government has a target of about 190,000 each year – is double what it should be, says Carr.

Carr maintains that Australia’s three largest cities cannot hope to absorb such high population growth without severely eroding the quality of life of their citizens and budgets of state governments.

“Political leadership wants to look the other way while their constituencies, especially in Sydney and Melbourne, are being overwhelmed by their rates of increase,” he says.

Carr says that by the early 2000s the NSW government was spending about double what it had been in the 1990s on infrastructure and still struggling to keep up with increasing demands.

He dismissed the argument that the population growth could be accommodated with better planning. “Any idiot can say ‘it’s just a matter of infrastructure’, as though nobody had thought of that before.

“Every suburb of Sydney, except those with political protection like Point Piper and Ku-ring-gai, is being transformed.”

Carr also challenges the argument that high immigration benefited the nation by sustaining growth. “It is a pretty lazy growth model. It is as if we have given up any innovation for an economy based on throwing up apartment blocks and shopping malls.”

He believes high immigration is being sustained politically due to the disconnect between those who benefit and those who pay – federal governments benefit from economic growth immigration spurs, while a handful of state governments foot the bill.

“It is effectively a Canberra conspiracy against the rest of the nation…

Carr does not believe that new immigrants can be encouraged to spread across the nation either, in part because unlike the United States it does not have a vast inland river system. Population, he says, will continue to gravitate to the south-east, which will soon attain levels of density “you can’t even imagine”.

But Carr dismisses any suggestion that Australia’s civil society had suffered due to high immigration. Australia, he says, remains a happy and successful multicultural society.

Carr is one of those who believe that successive Australian governments have talked tough on asylum seekers and citizenship tests in order to distract Australians from serious debate about the immigration rate…

Great to see Bob Carr addressing the elephant in the room.

Australia’s population growth rate, driven mostly via immigration, is among the highest in the world and is more akin to a fast growing developing nation than a well-developed country:

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For some crazy reason, Australia’s policy makers believe that “bigger is better”, and have continued to funnel more and more people each year into Australia’s big cities without commensurate investments in infrastructure and public services. The result has been rising congestion levels, more expensive (and smaller) housing, reduced amenity, environmental degradation, and overall lower living standards.

Rather than representing the ordinary Australians’ interests, policy makers have instead sided with big business, which loves endless high immigration because it gets to enjoy an ever growing customer base and is able to increase sales without becoming more efficient.

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The wealthy elite also loves high immigration because of the inflationary impact it has on asset values (e.g. property values).

Whereas the federal government loves high immigration because it juices headline GDP growth, even though everyone’s share of the economic pie is diluted:

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Bob Carr is one of a few individuals who recognises that real wealth does not come from diluting the nation’s finite resources among millions more people. Nor does it come from importing loads of people so that you can sell them apartments with borrowed money (mostly from offshore) and cappuccinos, blowing-out the current account deficit in the process.

No, real progress comes from innovation, productivity and export-led growth.

Bob Carr’s prescription that Australia’s immigration intake be halved – from roughly 200,000 currently (including the humanitarian intake) to 100,000 is wise:

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Such an intake would still be very generous by global standards, but would see Australia’s population grow to roughly 35 million people by 2060, rather than more than 40 million under current settings:

ScreenHunter_15977 Nov. 09 07.44
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This lower intake would be the difference between Sydney and Melbourne growing to, say, 6 million people by 2060 rather than 8 million as currently projected, allowing infrastructure and housing a chance to catch-up.

In any event, Australians’ views have never 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.

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.