Australia becoming “two nations divided by immigration”

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By Leith van Onselen

Fairfax’s Nicholas Stuart has penned a thought-provoking article imploring Australia’s politicians to address the ‘elephant in the room’ – Australia’s mass immigration program:

It’s time to discuss seriously the one issue that’s threatening, more than any other, to tear the country apart: immigration…

[QLD’s election] result depends almost entirely on the votes of the third of the electorate who are disgusted with the policies of both main parties. At the moment, they’ve turned to One Nation, but that’s (at least in part) a surrogate. The flashpoint is immigration, but it’s just a flashpoint. The real problem is that Australia is rapidly becoming two countries: environmentally, economically and ethnically.

No one understands this better than writer (and former journalist) George Megalogenis… He’s crunched the numbers and adduced the (inevitable) result. Australia is rapidly becoming two countries. The reason is simple. It’s all about immigration.

No one wants to discuss this. Doing so immediately risks accusations of racism. Yet the reality is that Australia is changing fast, and not in a good way. Neither of our main major political parties wants to touch this issue, either. They’re both doing very nicely, thanks very much, leaving things exactly as they are. They’re happy to pocket the steady stream of dollars accompanying the immigration program and don’t want anyone questioning the supposed consensus about how good this is.

It’s not that simple.

…under Howard the immigration program boomed… Howard wasn’t dumb. He saw a pathway to growth and he plunged on, unconcerned about the consequences… The political class was hooked. Migrants equalled growth. No one bothered thinking about the effect on the environment; how many people can live on this fragile continent. Nor did they worry about long-term integration…

Megalogenis… wondered where they are all going. The answer is they are becoming concentrated in Sydney and Melbourne. These metropolises are already beginning to look very different to other Australian cities and the regions. They are also becoming far more difficult to live in.

At one time, Sydney appeared regularly among the top rankings of the world’s most liveable cities. It doesn’t today. Megalogenis correlates this with the simple fact that its suburbs are cramming more than 5 million people into an increasingly constricted space. Life is more difficult; people are under stress.

No one, least of all our politicians, is asking the key questions. How do we want to live? What makes a good life?

The answers have nothing to do with GDP growth and everything to do with other questions the politicians would prefer not to answer.

Both political parties are engaged in an obscene rush to pack the continent with immigrants. Watch how that changes after the Queensland election. It’s time our politicians answered some basic questions, such as how big should Australia be.

Back in May, George Megalogenis warned that the immigration flood into Sydney and Melbourne is “potentially catastrophic” and called for a concerted policy of decentralisation:

“If most of the population growth that’s already in train for the next 10, 20, 30 years ends up in Sydney and Melbourne, we’ve got a problem. But if we are able to pull-off decentralisation – something we’ve been talking about for more than 100 years as a nation… – we may be able to fit the next 10 or 20 million people a lot easier than otherwise would be the case”…

“You look at Sydney’s topography and it can’t fit another million people easily. And you look at Melbourne’s, and it will fit in another million but at the expense of livability because they just keep pushing the boundary out. That next million, that next two million, that each city knows is in train could be divided quite neatly across not just the Eastern Seaboard but inland…”

“The default setting to me could potentially be catastrophic for the country over the next 20 years if people just end up in Melbourne and Sydney”.

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There are two inherent problems with Megalogenis’ decentralisation argument.

First, hoping for decentralisation to happen is a pipe dream. The uncomfortable truth is that the settlement pattern of new migrants into Sydney and Melbourne has become extreme over the past five years, according to the latest Census. As noted by Tim Colebatch:

…the third wave of migration we are seeing now is almost completely city-centric. In Sydney on census night, the 224,685 Chinese migrants… But in the rest of New South Wales, with its 2.65 million people, the census found just 9578 Chinese migrants. Only 4.2 per cent of those in New South Wales live outside Sydney.

Sydney is also home to 96.3 per cent of the state’s Vietnamese-born population, 97.4 per cent of its Iraqi migrants, and 97.6 per cent of its Lebanese…

Migrants to Victoria are similarly concentrated in Melbourne. The few square kilometres ruled by the Melbourne City Council houses four and a half times as many Chinese-born residents as the 210,000 square kilometres of regional Victoria, which includes cities like Geelong, Ballarat and Bendigo. Melbourne is home to 97.2 per cent of Victoria’s Chinese migrants, 96.8 per cent of its Sri Lankans, 94.9 per cent of its booming Indian-born population, and 98.0 per cent of its Vietnamese…

Migrants usually flock to the cities. It’s natural that newcomers go where they have friends or family. But what we are seeing now is that natural tendency carried to extreme lengths.

Second, if current immigration flows continue, Brisbane and Perth will also experience extreme population growth, hitting some 6.2 million and 7.0 million people respectively by the end of the century, with Sydney’s and Melbourne’s populations each topping 11 million people:

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Assuming that Australia could magically divert immigration from Sydney and Melbourne, how may more people could these other cities realistically take? And why would it be desirable?

Indeed, former Treasury Secretary, Ken Henry, made similar observations back in May:

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“The Australian population’s growing at somewhere around about 350,000 to 400,000 a year… It’s also true that the cities are growing very strongly – Sydney and Melbourne are growing by around 100,000 people a year. And for fairly obvious reasons, new immigrants do tend to settle in areas of population concentration – cities – because that’s typically have been the places for easiest integration into the economy and integration into society…

“We think maybe 7 million more will fit, somehow, into Sydney and Melbourne by that time [mid-century] – they will be cities of 8 million each. Very large cities by international standards, Sydney and Melbourne…. But even then there will be something like 8 or 9 million living outside of Sydney and Melbourne”…

In short, there would be extreme population pressures across Australia, not just in Sydney and Melbourne.

Therefore, the only genuine solution to alleviating the pressures that come from mass immigration is to drastically cut the intake and stabilise the population at a sustainable level.

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Even if Australia’s immigration intake was merely halved from roughly 200,000 people per year currently (including the humanitarian intake) to 100,000 – still very generous by global standards – this would see Australia’s population grow to roughly 35 million people by 2060, rather than 41 million under current settings:

ScreenHunter_15977 Nov. 09 07.44

This lower intake would be the difference between Sydney and Melbourne growing to, say, 6.5 million people by 2060 rather than more than 8 million as currently projected, relieving the strain on infrastructure, housing, and the environment.

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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.

In any event, Australians’ views have never been sought over how big they want Australia to become. For this reason, Australians 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.

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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.