After NSW Premier, Gladys Berejiklian, yesterday demanded that immigration be halved, Prime Minister Scott Morrison fired back, effectively blaming the states for Australia’s infrastructure woes. From 9News:
[Morrison said] that working with state governments on population does not give them a “leave pass” when building major projects.
“The infrastructure has to get built, and it has to be done efficiently and in a very timely way to ensure there is as little disruption as possible, so small businesses don’t get impacted by the management of those projects,” he said…
A senior NSW Minister told 9NEWS it was a bit rich of the Federal Government to lecture the state on its building program.
“We are building $87 billion in infrastructure over the next four years, the Feds are building $10 billion in the next ten years,” the source said.
The above spat highlights the dysfunctional nature of Australia’s federal system. Because of the vertical fiscal imbalances embedded within this system, the Commonwealth collects 82% of total tax revenue versus the state’s and territories’ 15%, and local government’s 3%. This has left the states critically starved of funds to cope with the population influx hoisted upon them by the federal government’s mass immigration policy.
This vertical fiscal imbalance is why the federal government loves mass immigration so much, because it collects the lion’s share of the financial benefits that come from the increased personal and company taxes.
The states, by contrast, carry the cost of infrastructure and services to support population growth, such as roads, public transport, schools, hospitals, water and sewerage.
Indeed, analysis by the Grattan Institute in 2014 showed that “unprecedented infrastructure spending by states and territories” since the escalation of population growth from 2004 is “largely responsible for a $106 billion decline in their finances since 2006“, and that “after a threefold increase in capital spending over the last 10 years, states are paying 3 per cent more of their revenues in interest and depreciation”.
Separately, Grattan executive director, John Daley, recently noted that “state governments were struggling to deal with rapid population growth in their major cities and the quality of life of residents – represented by the rapid growth in house prices in recent decades – was suffering”.
Sure, the federal government has committed $75 billion for infrastructure projects over the next decade. However, this is a pittance compared against the 3.5 to 4.0 million in population expected to be added over this 10-year period, nor will it backfill the infrastructure deficit that has accumulated over the past 15 years as Australia population has soared on the back of mass immigration.
Remember, the Productivity Commission (PC) in 2013 estimated that total private and public investment requirements over the next half century will need to be more than 5-times the cumulative investment made over the last half century:
Moreover, these infrastructure requirement projections from the PC were made off lower population projections (38 million mid-century) than exist now (40 million mid-century). Thus, Australia’s projected infrastructure needs over the next half century would be even greater than stated above.
Clearly, the federal government carries the primary blame for Australia’s infrastructure woes arising from rapid population growth, due to its mass immigration ‘Big Australia’ policy.
The most obvious and least cost policy solution, therefore, is to significantly dial back Australia’s immigration program and forestall the need for costly new infrastructure projects.
By persisting with mass immigration, the federal government has locked Australians into declining living standards just so it can print some nice budget/growth optics and so it can claim to be a good economic and fiscal manager.
The wellbeing of the ordinary Australian is a distant priority.