Malcolm’s ponzi plan for our major cities revealed

By Leith van Onselen

Prime Minister Malcolm Turnbull’s plan for our major cities has been revealed and it essentially involves importing millions of people to feed big business, and then building expensive heavy rail lines to transport them to their non-tradeable services jobs. From The Age:

Cities Minister Paul Fletcher has warned the federal government’s dream of new kinds of “heavy rail” networks moving large numbers of workers to new kinds of jobs will not come cheap…

“He [Mr Turnbull] is a strong believer in the role of public transport and heavy rail in our cities being efficient productive and liveable,” Mr Fletcher said.

“Heavy rail in particular, can move large numbers of people quickly and if you look at the great cities of the world, all of them have metro-style rail systems.”

The minister said the Turnbull government was enthusiastically supporting urban rail building around the nation, citing Gold Coast Light Rail, Flinders Link in Adelaide, Sydney Metro, the massive MetroNet project in Perth and the commitment of up to $5 billion for Melbourne Airport rail…

Railway lines are expensive to build, the minister said, but both he and Mr Turnbull believe that the advantages of trains make the high pricetags worthwhile.

“The great challenge of heavy rail is that it’s very, very expensive from a capital point of view but in the highest density parts of your city, it has some advantages that no other form of transport can have,” Mr Fletcher said.

This heavy rail plan will only be economic if density is drastically increased across our major cities, which necessarily means massive population growth via immigration.

This is a guaranteed recipe for lower living standards, as illustrated by Infrastructure Australia’s projections for Sydney and Melbourne, which show worsening traffic congestion and reduced access to jobs, schools, hospitals and green space under every build-out scenario as their respective populations balloon to 7.4 million and 7.3 million respectively mid-century:

Malcolm’s ponzi plan would also prove economically destructive for the nation.

The lion’s share of Australia’s export revenue comes from commodities and from Western Australia and Queensland in particular:

However, the majority of Australia’s imports and indeed private debt flows to our biggest states (and cities), New South Wales (Sydney) and Victoria (Melbourne), which are also the key magnets for migrants and projected to take the lion’s share of Australia’s population growth.

Increasing the number of people via mass immigration does not materially boost Australia’s exports but it does significantly increase imports (think flat screen TVs, imported cars, etc.). One only needs to look at both New South Wales and Victoria, which have driven huge trade deficits as the extra imports have far outweighed exports:

All of these extra imports must be paid for – either by accumulating foreign debt, or by selling-off the nation’s assets. Australia has been doing both.

Australia would improve its trade balance and current account deficit, as well as reduce the need to sell-off assets and binge on debt, if it simply reduced immigration and abandoned the ‘Big Australia’ policy.

Think about it. Australia would still ship the same amount of hard commodities and agriculture regardless of how many people are coming in as all the productive capacity has been set up and it doesn’t require more labour. However, we would import far less.

Essentially, by running a mass immigration program, Australia is diluting its fixed mineral wealth among more people, which necessarily lowers residents’ welfare.

Of course, Malcolm Turnbull isn’t interested in these considerations. All he cares about is providing an ever-expanding customer base for his ‘growth lobby’ mates in the property, retail, banking and infrastructure sectors, who will lazily expand their revenues and profits while ordinary Australian’s living standards are crush-loaded.

To wit, from Shadow cities minister says Labor, Anthony Albanese, who has belatedly recognised the groundswell of resistance to the mad mass immigration plan and, although he agrees with it, is offering his own band-aid to sooth a hurting polity, via The Guardian:

Anthony Albanese says Labor will overhaul Malcolm Turnbull’s city deals initiative with a new bottom-up program to promote urban renewal if it wins the next federal election.

The shadow cities minister used a speech to the Sydney Institute on Wednesday to flag the change in approach, pledging to work with local government on the commonwealth’s city partnerships rather than providing “funding commitments that are determined from the top down and tied to the electoral cycle”.

Albanese contends the current city deals program – one of the signature initiatives of Turnbull’s prime ministership, with the Australian program modelled on a similar initiative in the United Kingdom – “falls short of what is required to deliver real change”.

“The lack of rigour and independent oversight means city deals are subject to political whim,” Albanese said on Wednesday. “The absence of transparency and clear guidelines has left local councils unsure as to how they can best participate, and limited engagement with the private sector, and the lack of clarity around funding of projects means that all levels of government are missing out on potential value uplift.”

While he commended Turnbull for engaging with urban policy “in contrast with the former Abbott regime”, Albanese said the Turnbull program had either been rolled out in marginal electorates, framed around single election commitments, or the initiatives were “missing depth and detail”.

Albanese said a more rigorous structure was needed with the cities program, one that engaged all tiers of government and major stakeholders, because recent experience suggested “the short-termism of the electoral cycle sometimes functions as a handbrake on necessary national economic reform”.

He said overhauling the structure and design of the current program would overcome those challenges and ensure that immediate political priorities do not get in the way of the long-term national interest.

Labor will re-establish a major cities unit within Infrastructure Australia and give the bureaucrats independent oversight of the program, and the power to recommend worthy projects to the minister.

It my make more sense but the above Infrastructure Australia outlooks of declining living standards are in all scenarios. We simply can’t keep up.

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Comments

  1. reusachtigeMEMBER

    Good on him for protecting the profits of his donors. That is what he is there for!!

  2. – Several (australian) governments seem to have misread (increased) spending as a sign that their policies (e.g. immigration and (fiscal) stimulation of the australian housing market) have been succesful. But it seems they overlooked the causes for that (sharply) increased spending. Those 2 causes are 1) income (the export of e.g. iron ore to e.g. China) and 2) the increase of debt. (Steve Keen’s formula: Income + change in debt = aggregate demand).
    – But I think that the people in e.g. Canberra, Sydney and Melbourne are about to be confronted by the harsh reality that their model, their assumptions are flat out wrong. All those nice plans will be delayed, postponed or canceled all together.
    – Is MB able to pull up how much iron ore Straya is exporting to South Korea ? Several sources says that S. Korea has gone through a housing bubble as well and is now – like Australia – in the first stages of a credit contraction/deflation.
    – “Wolfstreet” had some “interesting” information on how big the ship building bubble is in both China and Korea. And that doesn’t bode well for inron ore exports.
    https://wolfstreet.com/2018/07/07/big-three-korean-shipbuilders-in-a-world-of-overcapacity-and-collapsed-orders/

  3. Wino ShinyfaceMEMBER

    Minister Paul Fletcher is as corrupt as they come, as transport minister he stopped grey imports of cars going ahead after local manufacturing died as a gift to the car dealers, if he is now also cities minister then god help us

  4. DarkMatterMEMBER

    None of this stands up to the simple question – “What is the purpose of the giant city?”

    Questions like that should be the topic of that waste of electricity – QnA.
    Even if we got 40 minutes of virtue signalling and spin about big cities, it means their inane braying would be recorded for posterity.

    • People seem to like them – you don’t hear much about ‘ruralisation’. Even in Japan, where the total population of the country is falling, the population of the largest cities is increasing.

      In 150 years, the entire world’s population will dwell in four or five giga-cities, none of which will be in Australia.

    • I’m not sure people like them, but it is where the rentseekers have located most of the bullsh*t jobs.

  5. At the risk of sounding like a broken record: that Infrastructure Australia report is much worse than it looks.

    Between October this year and 2046 when we hit 7.5 million odd, there is not one single new hospital planned for Sydney. That 74% access figure is physical proximity to EXISTING hospitals (which are crumbling under the weight of 5.6 million as it is).

    It is meaningless to talk about how far or how close people are going to be to a hospital (which is what the report is talking about) when you are looking at wait times in ED of > 24 hours and standing in queues for hours outside in the cold / heat / rain before you can even get a seat in the waiting room.

    Looking forward to the vibrancy of Sydney circa 2046 though …

      • Looks like that’s where we’re headed, but it will be someone else’s problem by then. In the meantime, those at the top are feathering their nests for now. Clearly, that’s all that matters.

    • In Melbourne at 5M my wife has been waiting to see a specialist for a serious health problem for months, she did get to one specialist who didn’t know what the problem is, so this is the next try and it’ll be about two months minimum to get in. The pollies and AMA deny there are delays, but it the reality, and we have private health. So your point spells disaster if it all comes true, and I can’t see that any party are up to pause on population growth. I remember Gordon Brown saying that the UK only needed a consumption economy in the mid 2000’s, and the immigration gates opened wider. What we’re seeing is the same old neolib experiment.

  6. “Albanese rejected lowering Australia’s immigration levels as a way of relieving pressure on growing cities. “The question of immigration isn’t, I don’t think, that simple. What that [reducing immigration] ignores is that immigration also builds economic activity and provides a basis for economic growth.” He said population growth needed to be partnered with “investment in the right infrastructure”.

    https://www.theguardian.com/australia-news/2018/jul/11/anthony-albanese-speech-labor-cities-policy?CMP=Share_AndroidApp_Tweet

    Funny how the infrastructure always comes later (but never seems to arrive). Also, as per usual, the environment has no consideration, because we live in a magical land where rivers and air and beaches and forests just go on forever and stay clean and biodiverse all by themselves…

    (also pretty funny is Albo describing our FIRE economy as a knowledge economy lol)

    • But…But….it’s been the very core of economic knowledge, for at least the last 50 years, that FIRE is the road to real prosperity. We don’t need any of these things that drag the economy down like primary and secondary industries. Burn baby! Burn!
      It’s all good!!!

  7. ” immigration also builds economic activity and provides a basis for economic growth.”
    hmmmm how about…
    ” immigration also builds foreign debt and precludes any basis for real economic growth.”
    It’s a pity none of these moronic clowns can tell the difference between a ponzi scheme and growth.

    • Economic growth is always the politically correct go to. They don’t even need to say who will benefit.

      • Yep! Another one of those good slogans!! I felt like strangling someone – well Malcolm or Morrison, every time I hear about Jobson Growth. (Not sure who invented the Jobson personality but whoever it was gave me the opportunity to laugh a bit rather than looking to kick the TV screen in)