The AFR has proven once again that it is a propaganda outfit for big business, publishing without context shameless ‘Big Australia’ propaganda from leading immigration spruikers.
Here’s Peter McDonald:
…demographer Professor Peter McDonald said congestion was a “spurious argument” for cutting migration arguing Australia’s optimal migration growth rate was between 160,000 and 220,000 people per annum, with the government’s reduced cap on migration now at the very bottom end of the scale.
I already comprehensively destroyed Peter McDonald’s flimsy ‘optimal immigration argument last year. In a nutshell, his so-called 160,000 to 220,000 “optimal immigration” range directly contradicts his parliamentary research paper in 1999 whereby he concluded that it is “demographic nonsense to believe that immigration can help to keep our population young”, claimed that “levels of annual net migration above 80 000 become increasingly ineffective and inefficient in the retardation of ageing”, while also recommending “a population of 24-25 million within 50 years”:
There is no question that immigration, at least the first 80 000 immigrants, provides a worthwhile reduction in the extent of ageing of the population. However, immigration cannot ‘solve our ageing problem’. Substantial ageing of the Australian population over the coming decades is absolutely inevitable. To illustrate the lack of power that immigration has in relation to our age structure, we investigate the levels of immigration that would be required to maintain the proportion of the population aged 65 and over at its present level of 12.2 per cent. In doing this, we maintain the fertility and mortality assumptions of the standard but allow annual net migration to change.
To achieve our aim, enormous numbers of immigrants would be required, starting in 1998 at 200 000 per annum, rising to 4 million per annum by 2048 and to 30 million per annum by 2098 (Table 6). By the end of next century with these levels of immigration, our population would have reached almost one billion… The problem is that immigrants, like the rest of the population, get older and as they do, to keep the population young, we would need an increasingly higher number of immigrants…
It is demographic nonsense to believe that immigration can help to keep our population young. No reasonable population policy can keep our population young…
Levels of annual net migration above 80 000 become increasingly ineffective and inefficient in the retardation of ageing. Those who wish to argue for a higher level of immigration must base their argument on the benefits of a larger population, not upon the illusory ‘younging power’ of high immigration…
There is an upper limit to annual net migration. We argue that there were difficulties in the late 1980s when net migration rose for just two years to over 150,000 per annum. While it is not possible to be prescriptive, a sustained net migration level of 120 000 per annum is at the high end of what Australia seems to be able to manage.
It’s also worth noting that McDonald’s “optimal immigration” model only looked at the impact of immigration on per capita GDP, while ignoring all other pertinent issues:
At the same time, increases to migration add constantly to the population and this increases the burdens associated with the provisioning and servicing of a growing population. This gives rise to the question of balance. At what point do the disadvantages of increased population outweigh the advantages to the economy of increases in immigration? This is a very large question and is beyond the scope of this report. Instead, this report examines one component of this question. Is there a point where further increases in immigration lead to substantially lower marginal increases in the growth of GDP per capita? (p. 19, emphasis added).
Anyone worth their salt knows that per capita GDP is a very poor measure of wellbeing, since it ignores vital issues like the degradation of the environment, the depreciation of natural resources, worsening inequality, and declines in individuals’ quality of life (e.g. traffic congestion and having to live in smaller and more expensive housing).
In this regard, the Productivity Commission is blunt, noting that “GDP per person is a weak measure of the overall wellbeing” in its 2016 Migrant Intake Australia report:
While the economywide modelling suggests that the Australian economy will benefit from immigration in terms of higher output per person, GDP per person is a weak measure of the overall wellbeing of the Australian community and does not capture how gains would be distributed among the community. Whether a particular rate of immigration will deliver an overall benefit to the existing Australian community will crucially depend on the distribution of the gains and the interrelated social and environmental impacts.
Interestingly, the final paragraph of McDonald’s “optimal migration” report concluded with the following warning that if infrastructure doesn’t keep pace with population growth, then both productivity and living standards will suffer:
While this report argues that immigrants will be important to the construction of productive infrastructure in Australia, if increased immigration proceeds without investment in new infrastructure, especially urban infrastructure, the result could be reductions in productivity through increased congestion and inefficiency. Thus, a plan relating to Australia’s future levels of immigration must be coordinated with policy for urban infrastructure especially housing, transport, water and appropriate energy supply. With constant fertility and net migration at 180,000 per annum, Australia’s population would rise to 35.9 million by 2050. This is a large increase and most of the additional population would be settled in the existing cities all of which are already under strain from infrastructure shortages. (p. 45)
Given that Australia’s infrastructure has unambiguously failed to keep pace with mass immigration, and that traffic congestion (among other liveability indicators) has unambiguously worsened, surely this renders McDonald’s “optimal immigration” argument null and void?
Next, The AFR quoted MacroPlan’s Brian Haratsis, who warned that Australia’s population was not growing enough to have critical mass and, therefore, Australia would miss out on the economic benefits of emerging industries:
“Our regional locations don’t have enough scale and many industries have already exited, like cars, and so we are about to miss out on the autonomous vehicles boom that’s about to come and we’ll miss out on the associated industries, things like artificial intelligence, because we don’t have enough scale,” Mr Haratsis said.
This is asinine closed economy thinking by Haratsis. The world has 7.4 billion people. We don’t need to import them to sell to them.
Cutting immigration would lower the Australian dollar (other things equal), rebalancing the economy away from ponzi consumption-led growth towards productive tradeable growth. It would help to lift wages and would improve Australia’s current account, since Australia would import far less and the nation’s mineral wealth (and exports) would be shared among less people.
On the last point – the current account – notice below how so-called economic engines of Sydney and Melbourne have driven gigantic trade deficits?
Basically, all the extra migrants that have flooded into these two cities have barely lifted exports, since these cities don’t actually produce much that is tradeable. By contrast, imports have skyrocketed via more purchases of consumer goods like flat screen TVs, cars, furniture, etc. These net imports must be paid for, either by increasing the nation’s debt or through selling-off the nation’s assets. We’ve been doing both.
The truth is mass immigration promotes ‘dumb’ growth, concentrated in urbanisation and household debt, and associated sectors benefit (think Highrise Harry and Gerry Harvey). This has its limits, as we are already seeing in debt stress everywhere and declining liveability, as it benefits the few over the many.
But it’s not the preferred model of growth. Far from it. Productivity enhancement and competitiveness are a better model over the long run as they lower debt while boosting incomes per capita, are more meritocratic, and will send the 40% of the economy that is tradeable into overdrive.
Once immigration is cut there’ll be an adjustment period while the real exchange rate tumbles. But the Australian economy will be far better off in the medium and long term, as will living standards.
Next, The AFR featured Shane Geha, managing director of EG – “a leading real estate investment fund manager” – whose business profits directly from mass immigration. Geha’s vested interest has been exposed previous by MB. Here’s what Geha had to say this time around:
Shane Geha, of urban planning consultancy EG, agreed Australia needed a larger population for economic growth and argued that with 407 people per square kilometre, as was the case in Sydney, the country could get much denser “without feeling very much at all”…
“Density is the friend of the city. Density is what will make public transport work,” Dr Geha said.
Dr Geha argued Australia needed to increase the 20 to 60 age group of taxpayers, “to fund our lifestyles going forward and to improve the infrastructure that needs to be paid for”.
“Here’s my dream: a big Australia, what do you think we could do if we had 50 or 60 million people in this great country? We’d be the most powerful regional economy south of the equator.”
How does Geha explain the fact that only one city ranked in the top 10 of the 2019 Mercer Quality of Living Index:
Has an urban population of greater than 3 million people?
- Vienna: 2.6 million
- Zurich: 1.8 million
- Auckland: 1.7 million
- Munich: 6 million
- Vancouver: 2.5 million
- Dusseldorf: 1.2 million
- Frankfurt: 2.3 million
- Geneva: 1 million
- Copenhagen: 2 million
- Basel: 550,000
Nor the fact that traffic congestion is getting much worse under the endless population crush:
And future Australians living in the big cities will be forced to live in high-rise dog boxes:
Even Infrastructure Australia projects that Sydney’s (and Melbourne’s) liveability will unambiguously decline irrespective of how the city builds-out, with worsening traffic congestion, longer commute times, and reduced access to schools, jobs, hospitals and green space as Sydney expands to a projected 7.4 million people by 2046 (let along to nearly 10 million by 2066, as projected by the ABS):
So how does a much bigger population and greater density equate to improving living standards? Doubling Sydney’s and Melbourne’s populations to around 10 million will obviously make economic and social infrastructure requirements much larger, thus adding to the already chronic problems.
Shane Geha clearly believes in ponzi economics. He conveniently takes no account of the extra costs created from having more people (e.g. infrastructure, public services, liveability and environment). He also ignores the fact that these migrants will also grow old, thereby requiring an ever larger immigration intake.
Let’s be brutally honest here. The empirical evidence unambiguously shows that Australia’s 15-year experiment with mass immigration has been a cataclysmic failure, as evidenced by worsening quality of life across all key metrics in our major cities, which is projected to continue under the Big Australia policy according to Infrastructure Australia.
For Shane Geha and the other spruikers to then advocate doubling down in order to fix the problems caused by mass immigration is akin to claiming the cure to alcoholism is drinking more alcohol.
All of which reminds me of Upton Sinclair’s famous quote:
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”