Gaslighting Grattan spins more immigration propaganda

By Leith van Onselen

The Grattan Institute has been quoted extensively in The Australian today spouting more pro-‘Big Australia’ propaganda:

Marion Terrill, a Grattan Institute researcher who recently has finished an analysis of the big five capitals’ resilience to immigration, says they could comfortably take more people…

“People coming to cities are voting with their feet, and there are a lot of economic and community benefits of people doing that”…

Terrill says a bigger city isn’t necessarily harder to get around.

“… from 2011 to 2016, a period of strong population growth, the distance people travelled and commute times have barely changed”…

As I noted last week, Grattan’s latest spruik directly contradicts its 2014 book entitled City Limits, which argued that Australia’s cities had become dysfunctional with workers increasingly separated from employment:

The divide between where people live and work in Australian cities is growing, with most new jobs being created close to city centres while most population growth is occurring in the outer suburbs…

The distance between where people live and where they work is growing fast. The housing market isn’t working, locking many Australians out of where and how they’d like to live. The daily commute is getting longer, putting pressure on social and family life and driving up living costs…

In large outer areas of Australia’s biggest cities, less than 10 per cent of all jobs in the city can be reached in a 45-minute drive…

One in four full-time employees in Australia’s big cities spends more time commuting than with their children.

The evidence also unambiguously shows rising congestion costs in the migrant hotspots of Sydney and Melbourne. Here’s TomTom’s traffic index:

Here’s the Bureau of Transport and Regional Economics (BTRE):

Along with Mike Seccombe’s explanation in the Saturday Paper:

The Bureau of Infrastructure, Transport and Regional Economics estimates the “avoidable” social costs of traffic congestion in the eight Australian capitals cities. They reckoned it to total $16.5 billion in the 2015 financial year, up from $12.8 billion in the 2010 financial year. By 2030, they forecast, the cost of congestion would rise to between $27.7 billion and $37.3 billion. That is roughly the cost of the National Disability Insurance Scheme, fully implemented.

And here’s Infrastructure Australia’s projections for Sydney and Melbourne, where congestion is projected to soar and access to jobs, schools, hospitals and open space will all decline by 2046, irrespective of how these cities build-out to cope with populations of 7.4 million and 7.3 million people respectively:

Grattan has clearly morphed into a ‘Big Australia’ propaganda outfit.

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Comments

  1. No environmental amenity or degradation index in there either. Local National Parks and beaches more crowded and more degraded (as well as more regulated to try and limit the damage). They truly live in their own arcane inner city world where their only interface with the environment is via the local green group mooching for more money.

  2. “People coming to cities are voting with their feet, and there are a lot of economic and community benefits of people doing that”…

    Another metropolitan rent-seeker blind to metropolitan rent-seeking.

    Economists are happy to consider rent-seeking by individuals. They’re happy to consider rent-seeking by firms. They’re even happy to consider rent-seeking by cartels of firms.

    But rent-seeking in Australia is of a different type, and economists have a blind spot when it comes to identifying it.

    The most pernicious rent–seeking in Australia is by communities, cartels of individuals living in geographic proximity to one another. Specifically, rent-seeking in Australia generally involves:

    • taxing (either direct government taxing or “private taxing” through oligopolies and protected industries) those industries and regions which enjoy a comparative advantage – agriculture, mining, energy, some tourism – which are largely in the regions; and

    • redistributing the proceeds largely per capita to the metropolitan rent-seekers in the State and Territory political capitals.

    Examples of this include:

    a) at the State level, mineral royalties prop up Brisbane and Perth;

    b) top class health and education facilities concentrated in the capitals;

    c) arts and sports funding concentrated in the capitals;

    d) lucrative public works contracts are handed out to Mates in the capitals;

    e) at the federal level, company tax on commodity exporters is disbursed – largely per capita – to the capital cities;

    f) special imposts such as fuel excise act as a “tax on distance”, sucking money out of the regions (and even from the poorer outer suburbs which rely more on car transport) to be disbursed to the capitals;

    g) specific industry protections inflate metropolitan incomes. The policy of mandatory superannuation (for example) is now diverting over $32 billion a year into the hands of Sydney and Melbourne funds managers and their support industries. But just because thousands of people are running around in circles complying with the red tape of a needlessly inefficient pensions system does not mean that they’re producing anything of value. It is properly accounted for as part of the deadweight loss of rent-seeking: a pointless mis-allocation of resources that exists only so that politically powerful rent-seekers can divert income into their pockets;

    h) the acceptance of oligopolies in major (metropolitan) industries further increases metropolitan incomes;

    i) the acceptance of – and even the creation of – private monopolies or near-monopolies in ports, airports, land transfers, stock exchanges, and many other industries.

    This has led to allocative inefficiency on a continental scale with the bulk of the population squeezed in the capital cities engaged in activities which enjoy no comparative advantage (such as expensively retro-fitting infrastructure, like Westconnex, to take just one example).

    Whilst moving away from the taxation of non-rent to the taxation of rent is not bad in itself, it will not produce the benefits it might if the proceeds of rent continue to be returned to the rent-seeking communities.

    One of the reasons economists at the Grattan Institute are blind to this rent-seeking is that they themselves are beneficiaries of it. [As am I. I am a metropolitan rent-seeker living in a State capital city. But I at least recognise what I am doing.]

    Communal rent-seeking is not going away without a change to the institutions of government. In economic terms, government is the biggest monopoly of all!! And it is used by those who exercise power though it to sustain their rent-seeking activities.

    The Westminster system of government is especially prone to governmental rent-seeking. Under the Westminster system – with its generally supine Legislature – the Cabinet has vast discretion to disburse economic rents to the Ministers’ favourites. Combined with the proximity bias this creates a powerful centripetal force drawing people in towards the “Fountainhead of Rents”, the Cabinet. Proximity to Cabinet is a “positional good”.

    This phenomenon has been known to historians (but apparently not economists) for centuries. It is the reason that Courtiers had to remain at Court. Absence from Court was a death sentence.

    With the evolution of Absolute Monarchy into the Elective Dictatorship of the modern Westminster system, this effect has not gone away. Court has simply been replaced by Cabinet. Ministers reward those modern-day courtiers – the “primary rent-seekers” – who are physically proximate. Primary rent-seekers need to live within “lunching distance” of the Cabinet.

    The elevated incomes of the primary rent-seekers draws in a second circle of “secondary rent-seekers”, who in turn draw in further circles, the ripple of rents radiating outwards from the “fountainhead”.

    Possible remedies include:

    • structural regulation: constitutional separation of Legislature and Executive;

    • reinvigorated federalism (competition-by-comparison);

    • cooperatisation (i.e. directly democratic methods);

    • proportional representation to reduce party dominance.

    • Leith, before you delete this long post, let me relate it back to the issue of immigration.

      Metropolitan rent-seeking and high population growth go hand-in-hand. There was no point putting up a tariff wall around Victoria’s hopelessly uncompetitive manufacturing industries if there was no-one to buy the over-priced goods they produced. There is no point creating a protected funds management industry in Sydney if there is no-one to use its shoddy expensive services.

      To turn industry protection into cold hard cash for the Mates, it is essential to keep bringing in millions of new customers who will be forced to buy their uncompetitive goods and services.

      High immigration, the protection of globally uncompetitive industries and allocative inefficiency on a continental scale all go hand-in-hand.

      And until there is a change in the system of government that makes rent-seeking less attractive than doing something useful, they always will.

      • “There was no point putting up a tariff wall around Victoria’s hopelessly uncompetitive manufacturing industries if there was no-one to buy the over-priced goods they produced. There is no point creating a protected funds management industry in Sydney if there is no-one to use its shoddy expensive services.”

        Thanks for raising this point — it is poorly understood and very rarely alluded to. It speaks to increasing centralisation (the EU being a prime example). Big Business wields power through Govt and the more the Govt controls the better it is for Big Business.

    • Excellent work Mr Morris. I always look forward to your insightful contributions on MB, particularly the thought provoking concept you’ve raised that the 20th Century was an aberration, and we are returning to a new feudalism.

      I’ve always thought that we are still ruled by Machiavelli’s Great Princes, only now they wear suits instead of robes, and call themselves investment bankers etc.

    • https://grattan.edu.au/about-us/affiliates/
      Grattan receives money from its endowment supporters and affiliates, which include The Myer Foundation, National Australia Bank, Susan McKinnon Foundation, Medibank Private, Google, Maddocks, PwC, McKinsey & Company, The Scanlon Foundation, Wesfarmers, Ashurst, Corrs, Deloitte, GE ANZ, Jemena, Urbis, Westpac and Woodside. The Higher Education Program was established with funding from the Myer Foundation.

      • Thank you cee.

        I see Grattan as one of the most cunning big business apologist lobby groups, advocating the interests of their donors under a Trojan horse of feigned social justice.

        At least most of the others’ agendas are fairly transparent.

      • Thanks cee – and one wonders if that should be listed as a ‘conflict of interest’ like any half ethical publisher would demand?

        And that’s the entire benefit of being a ‘think tank’ – you don’t need peer review and can publish whatever tosh suits your ideological purpose.

        A ‘Think Tank’ is in effect a way of concentrating a lobby effort and making it ideologically consistent. Any pretence of independence goes out the window once you have researchers lined up by funding bodies and a stated and assumed ideological position. Think Tanks should be registered as lobbyists and we need to re-double our efforts to make universities able to provide independent advice. The same vested interests listed here also fund university ‘demography’.

        Get big money out of politics and most certainly out of public research.

        It is the Australian people who will decide who comes to Australia and in what quantity – not big business or Stink Tanks. Argue against that Grattan Institute. Tell us how the Australian people have no say in the matter – because this is what you are in effect implying. Have the balls to come out and tell us that an elite will determine the nature our society and its values and that will be based upon labour market economics.