Alan Kohler: Australia is now just a people farming economy

By Leith van Onselen

Alan Kohler penned a timely article in The Australian over the weekend arguing that the Australian economy has morphed from being a resources economy to a “human beings” one, whereby the growth is being driven by mass immigration rather than productivity improvements, and individual living standards are sliding:

…two-thirds of last year’s economic growth came from population and most of that from immigration.

Australia is moving from being a resources economy to a “human beings” one. Domestic demand is growing strongly as a result of both population growth and tourism (which added 1 per cent to growth in the December quarter). Both net exports and real national income per capita fell.

So Australia’s actual national economic strategy, as opposed to the pretend one, is to simply add numbers — not to encourage jobs and growth through tax cuts — and it has been since 2005, when John Howard doubled average immigration from 100,000 per year to 200,000.

Subsequent governments have stuck with the program and as a result, population growth has averaged 350,000 per year for a decade, most of it clustered in the two big cities.

Absurdly, despite Australia’s sparsity overall, the place is now getting overcrowded where it counts…

But the problem — arguably the main economic problem for this country — is that immigration is a federal responsibility and housing the arrivals is up to the states.

The federal government gets the bouquets from the economic statistics while the state governments get the brickbats from congestion. And the whole country has to deal with the problem of housing affordability and excessive household debt…

Anyway the evidence is clear: Australia needs a national strategy combining immigration and housing or else cut immigration back to where it was pre-2005 and accept even lower GDP growth.

This is the ‘rat wheel’ economy MB has been describing for years: an economy where the economic pie has grown due to extreme population growth (immigration), but where everyone’s slice of that growing pie has been shrinking, and living standards are falling once wider impacts on livability are taken into account (e.g. worsening traffic congestion, environmental degradation, and smaller more expensive housing):

Clearly, Australians have become fed up with this growth model, with a Sky News poll held over the weekend showing that an overwhelming majority of respondents (72%) want Australia’s immigration intake cut:

This follows October’s survey by the Australian Population Research Institute, which showed that nearly three quarters of Australian voters believe the nation does not need more people:

With more than half wanting Australia’s immigration intake reduced:

Because population growth was putting ‘a lot of pressure’ on hospitals, roads, affordable housing and jobs:

Rather than letting the one percenters decide Australia’s immigration intake, let’s have a population plebiscite at the next election so that we can let the Australian people determine how ‘big’ and crowded they want the nation (and our cities) to become.

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  1. Foley and Kohler decide to make noise the day/night the ABC gives it coverage. What muppets.

    Next we will have Kohler’s son penning something similar.

    A ripple fast becoming a wave.

    But whatever change happens it will be ‘massaged’ and not enough.

    • Mining BoganMEMBER

      Massaged. Yep.

      Reckon they’ll make a little reduction but because the damage is already done there will be no immediate positive results and after three months the cry will be “See, it wasn’t the immigration, it was something else you racialists!”.

      Then back to normal programming.

      • This is the classic backflip strategy to benefit the “people like us”. Like the myth about negative gearing in the Keating years. As soon as house prices drop and GDP (overall , not per capita drops) open the floodgates.
        Don’t forget Labor and Rudd do the same tactics – they helped similarly, when they quietly opened unlimited existing house purchases to foreigners in the GFC to save the house prices from sinking.

    • The best 1% tactic was to no platform either in the media, or politically. What is said cannot be unsaid. If the no platforming fails in the media, then everything ultimately fails politically. The great taboo of the silence and platitudes surrounding the issue is broken.

    • Look out for the token gestures / distractions. Boat people, Manus Island and other patsies taking the heat out of this issue. Meanwhile … keep the gates open.

    • Kormanator_T800

      Government departments are also ignoring the change.

      I met a mate this weekend who works as an immigration lawyer. He says even though 457 visas should have been stopped on March 1st this year, but they have been told that applications will be accepted up to 30 June.

      He says the 457 business has never been busier!

    • There will be a big announcement about encouraging immigrants to settle in regional centres. They will start talking up 457 reductions. There will be a big conference on how Federal, State and Local governments can address infrastructure challenges. All this will add up to nothing changing.

      • Yeah – I’d like to see how many IT 457 visas you can cram in CoffsHarbour or Toowoomba, before you’re just adding fresh meat to the local bordellos rub-and-tug parlours.

        Same goes for any kind of engineering. Hell – it’s hard getting a jerb in a large city, let alone in Buttf*ckistan…

  2. ” timely article in The Australian over the weekend arguing that the Australian economy has morphed from being a resources economy to a “human beings” one”
    Just fixing it up a bit
    “Kohler, in an article that is nearly 60 years too late, argued that the Australian economy has morphed, from an economy based on selling as much of itself to foreigners as it could, while relying on foreigners to dig up any and all possible resources, to a ‘people farming big cities are the ONLY thing that counts economy’ financed by foreign debt and even faster asset sales to foreigners.”

    I had a bit of back and forwards with Kohler years ago on this sort of stuff. His grasp of macro is minimal.

  3. The same AK who gave us this?

    Seriously, fvck this clown and his whole cohort. An entire generation has been sacrificed to keep them fat and happy, and when the SHTF there’ll be another put on the chopping block. Say goodbye to household formation, government services and your bank deposits.

    • Speaking as ‘Boomer’ of sorts the ads focusing on Boomers really seriously me off!!! There is on some stupid bloody woman talking about telling the kids about how when she was young she used to drink out of the end of the hose… if she really was some tough nut doing it tough!!! Strewth I wish she had done so. You could drink out of the end of a hose, and I still do, but you are risking your life if you don’t let it run a bit before you do!!! Stupid bloody woman!!! Stupid bloody ads!!! Just BS!

      I would repeat however that the inter-generational war thing is misdirected. It should be a war about productive and non-productive. In saying that I admit that Boomers created the conditions where being productive virtually guaranteed you a hard life with little reward. Sitting on your arse with Real Estate investments was the smart thing to do.

  4. JulieMacCallop

    This is fantastic…the population ponzi scheme has finally being seen for what it is.

    • Nop! It’s more of an “well, mistaken assumptions were made, we’ve just got to make new assumptions – everything else stays as is”.

      I’ll trust them when I’ll see it cut.

  5. mild colonialMEMBER

    You’re being very kind about everybody now seemingly lifting your work straight off the page. Spose it’s for the best. Ben Knight has almost exact same arguments as well in the promo for tonight’s big night.

      • You’re still a long way from getting anything meaningful done.

        Note that Fairfax (Mark Kenny in Sunday’s Age) is already devising a counter-strategy. They’re saying that the policy should be to maintain migration but require new migrants to go to the regions.

        Of course, they ignore Section 92 of the Constitution (“trade and intercourse between the States shall be absolutely free”). While it might be possible to place a temporary residence requirement on new migrants, it will certainly be illegal to force them into permanent residence in the regions. And the moment their indenture expires they will move to the metropolis like everyone else.

        That won’t stop them using it as their main diversionary tactic.

        This is a war, after all. Don’t expect people to fight fair.

      • Stephen,

        Not sure that many will buy the argument that people can be ‘made’ to live in the regions. I think most know that at best any requirement can only be temporary or limited – e.g. doctors.

        What they will buy however is a government promising that it will invest in the ‘regions’ so as to attract jobs and residents. Even it doesn’t happen – and it will not – it might be enough to defuse the issue.

        But if the Big Australia boosters really want a Big Australia there is a way they could sell the idea and probably get plenty of support.

        Have APRA direct the banks with regard to credit creation and give them quotas on credit creation for new productive capacity in regional areas. The banks still get to choose who gets the credit within those regions but they have to do so within the constraints of location and for new productive capacity.

        One of the great centralising forces in the last 30 years has been the deregulation of credit creation. Not surprising the banks went for the safest and best bets and that means advancing credit secured by property as close as possible to the GPO in the biggest cities – Sydney and Melbourne.

        Supported by Federal grants for the subsidized servicing of new residential land people will be attracted to the regions by the lower cost of living and lower cost of business.

        With immigration spreading across the country and regions we could easily absorb 200,000 or 300,000 per year. Its the unproductive concentration that is causing most of the complaints at the moment.

        Who is going to complain if the major regional towns start to rapidly grow?

        Even those with ideological objections to fiscal policy (as being too democratic) may accept that regulation of private bank credit by reference to a criterion like the creation of new productive is necessary if it means they can keep pumping up the population as fast as possible.

        Power in our system may tend to concentrate but money is money and if it can be made by decentralising that may provide a counterweight.

        At the moment we have power and money all working flat out to squash everyone into the smallest possible space.

      • While I am completely on-board with the argument (or rather, blindingly obvious fact) that population growth needs to slow for the greater good, getting immigrants to spread out to the regions could prove more challenging. One of the major reasons they are staying mainly in Sydney and Melbourne is because they can step out of the “old country” and feel at home in Syd/Melb owing to the pre-existing communities of their native nationality and culture.

        I know if I were to emmigrate to a country where English was not the first language and the Anglo-western culture I am familiar with was not present, I would most certainly seek out an “Aussie enclave” to set up home. And probably stay there for good. A completely natural human thing to do.

        Encouraging immigrants to spread out into regional parts of this country completely dominated by “Aussie” (go define that) culture and native-born Australians might seem akin to moving to Mars to them.

      • On reflection, the best counter-counter strategy would be to dismiss the “regions” promise as being akin to the “infrastructure” promise: those who benefit from high population growth (certain business interests and politicians who get a kickback from them) will make all sorts of promises about how they’re going to manage that growth, but in practice they do whatever is most profitable for themselves.

        Let them demonstrate the feasibility of decentralisation first, then talk about increasing the population.

      • Stephen,

        I agree.

        At the moment all we are getting from the supporters of high rates of immigration are fluffy comments like

        “We just need to think smarter / plan more / be creative / be flexible / do infrastructure better”

        …and that is only when they decide to switch strategies from shouting xenophobe or racist.

        To misquote a movie

        “Show us the plan”

    • Yeh yeh yeh. But we had the Westminister system back in 1970 and we were not wrecking the joint then as we are now.

      • TC
        In 1970 much less than 58% of the population didn’t live within the confines of Melbourne, Sydney and Brisbane and their satellite cities.
        We can expect all policy to become even more and more non-productive city oriented.

      • Yes – the Westminister system certainly has a role but the difference in the last 30 years has been the deregulation of the credit creation powers of the private banks.

        Given their key role in the monetary system – once they concluded that the safest and most profitable forms of credit creation was lending secured by residential real estate it was only a matter of time before that produced highly concentrated asset price rises.

        The immigration ponzi is about nothing more than providing fresh fuel for the private banks preferred business model.

        Start imposing explicit regulations with regard to how the private banks create credit and the environment will change and change quickly.

        As we have seen even minor tweaks on the terms of investment / speculation lending can have significant effects very quickly.

        All with no change in interest rate settings by the RBA.

      • pfh
        “”Start imposing explicit regulations””
        Just make interest rates significantly RAT positive and control the capital accounts. That’s all the regulations we need.

  6. Try telling this accurate picture to a lot of people out there. They accuse you of a lot of things. Wake up people, look what is taking place. I am all for immigration at sensible levels where everyone who lives here has a fair go. As noted on this site, the only people it really benefitsis big business – so they can keep earning bigger profits and in turn paying you and I less.

  7. What I don’t get is how the pro full speed immigration pollies are blind to the environmental, and sustainable damage they promote. Water for one, and it’s impact when the things get tough. We may not be that far off a long term water crisis for one let alone an economic one. I won’t be watching 4 Corners tonight and I doubt there will be any truth to it.

      • Likewise Andrew. It’s hard to know what’s true these days. I’m 100% over them…no going back. The bias can be viewed as lies. All i see is our kids future bring damaged and they just don’t care.

  8. ”… a Sky News poll held over the weekend showing that an overwhelming majority of respondents (72%) want Australia’s immigration intake cut”


    72% of Australians are RACIST!

  9. Alan Kohler is a hack. This is the first time he has mentioned some of the negative issues of high immigration. Some 6-11 years ago after the changes to immigration policies I used to write on his Business Spectator blog (part owned by him and Gotti) about the costs of high immigration and that Oz was running a population ponzi where the benefits of immigration were captured by business (either via higher demand for goods and services and lower wages) while the costs were imposed on the general public, and that it was driving the economy to be too focused on the finance, insurance and real estate sectors. They also used to be very pro the sale of Oz assets to overseas interests claiming that this was a good form on investment in Oz, which I also sometimes challenged. After a while my posts were increasingly moderated or simply not posted so I gave up reading their one sided crapola.

    This article by Kohler is simply his need to try to stay relevant as the message has finally sunk into the minds of Aussies that they are being duded by mainstream media. I agree that opinion leaders will try to derail the story with claims that its something temporary, can be fixed by redirecting people into the regions, the government is at fault for not building enough infrastructure and restricting land availability so its just a planning issue, and they will keep the population spigots open for as long as possible.

    Interestingly the supporters of the Greens are the most pro-high immigration.

  10. Wow Alan!! You do get it!! Careful with spilling too much honest truth in a single piece of analysis, the ABC might never invite you back

  11. Kohler’s researchers have seen the people are revolting and he wants to be their tribune. And next week he’ll write how big business is not treated with respect in the people’s revolutionary republic of Straya.
    But his commitment to the argument will gain wider coverage. Conformity being the guiding rule of public life.