Australian Treasury pumps immigration ponzi propaganda

The secretary of the Australian Treasury, Dr Steven Kennedy, wants to see Australia’s immigration level return to pre-pandemic “usual” levels, claiming it is essential to boost the “dynamism” of the economy:

“It would be good to see Australia’s migration return to our previous levels but it has to be done with management of the virus.”

He said there was a lot of dynamism to be gained for the Australian economy through a vibrant migration program.

The immediate priority in terms of international flights is getting Australians home, but then looking at students, business travellers and skilled migrants.

Dr Kennedy said the government was giving active thought to safely scaling up migration.

“We have to take these things one step at a time because of the level of uncertainty that’s in front of us.

“But then, as the government has made clear, they will look at building the program more back to its usual levels.”

He said productivity would also be key to economic growth, but it was still unclear how the coronavirus shock would affect it.

There was nothing “usual” about Australia’s pre-COVID level of immigration:

The past 15 years of extreme net overseas migration (NOM) was clearly an aberration from Australia’s historical norm.

It is also clear that this extreme NOM was deleterious for Australia’s productivity and living standards.

The Department of Home Affairs’ Continuous Survey of Migrants report shows that migrants have significantly worse labour market outcomes than the general population:

In particular:

  • The unemployment rate of surveyed migrants (12.6%) was more than double the general population (5.5%) in 2017;
  • The median annual full-time earnings of migrants was $16,500 (22%) below the general population in 2017; and
  • The median annual earnings of migrants was $5,900 (10.2%) below the general population in 2017.

Even if we only focus on the skilled stream, both median earnings and unemployment are far worse than the general population:

Therefore, according to the actual empirical data provided by the federal government, Australia’s mass immigration program unambiguously increased unemployment, suppressed wages, and reduced average hours worked – all bad outcomes for the economy.

Australia’s productivity has also been negatively impacted by high immigration.

Allowing Australian firms to grab cheaper migrants instead of paying higher wages to local workers has necessarily discouraged these firms from innovating and adopting labour saving technologies, which would boost the economy’s overall productivity. It also prevents creative destruction by enabling low productivity firms to remain in business.

Stemming the flow of low-wage migrants would force the least productive firms to contract and go bust, transferring workers, land and capital to more productive businesses. In turn, this would raise average productivity across the economy.  Further, all firms, observing higher wages, would invest more in labour saving technologies and restructure to lift productivity.

There is a reason why construction firms, farms and manufacturers in advanced nations usually involve a handful of workers operating heavy machinery, whereas in low-wage developing countries these are manned by many workers doing manual labour. The higher cost of labour in advanced countries forces these firms to invest in labour saving machinery, which lifts overall productivity.

Lower immigration will also reduce another major drag on Australia’s productivity: infrastructure bottlenecks and congestion. And it will improve Australia’s current account, since Australia would import far less and the nation’s immense mineral wealth (and primary exports) would be shared among less people.

On the last point – the current account – notice below how Australia’s two biggest migrant magnets of Sydney an Melbourne have driven gigantic trade deficits?

This is not a coincidence.

Essentially, all of the extra migrants that flooded into these two cities over the past 15 years barely lifted exports, since these cities don’t actually produce much that is tradeable. By contrast, imports 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 by selling-off the nation’s assets. Australia has been doing both.

The truth is that running a mass immigration ‘Big Australia’ policy promotes ‘dumb’ growth, concentrated in urbanisation and household debt, and associated sectors benefit (think Big Property, Big Retail and banking). This has its limits, as we have seen in debt stress everywhere and declining liveability, as it benefits a small number of elites over the many, thereby increasing inequality.

But it’s not the preferred model of growth. Far from it. Productivity enhancement and competitiveness are a far better model over the long run as they lower debt while boosting incomes per capita, are more meritocratic.

Returning to the mass immigration ‘Big Australia’ policy post COVID will only further stifle productivity, worsen the unemployment queues and further depress wages, smashing Australia’s working class.

The policy needs to be junked for the sake of productivity, liveability and equality.

The Australian Treasury needs to get with the program and dump its Three-Ps policy (population, productivity and participation) in favour of Two-Ps (productivity and participation).

Treasury should instead follow the lead of the Nordic countries – Sweden, Denmark, Finland and Norway. They are renowned as being among the wealthiest, happiest, best functioning nations in the world with the highest living standards. They also achieved this success without mass immigration-driven population growth:

The world has 7.6 billion people. Australia doesn’t need to import them to sell to them. This is not what smart countries do.

Unconventional Economist
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Comments

  1. Your answer is here……and its all about real estate.

    ‘It’s totally dead now’: Overseas student exodus cost Sydney’s economy $2.5b https://www.smh.com.au/national/nsw/it-s-totally-dead-now-overseas-student-exodus-cost-sydney-s-economy-2-5b-20201106-p56c5y.html

    Sam Karatasas, principal of Raine and Horne Kingsford, said properties that were rented for about $600 were now renting for $200 less “because the international students aren’t here”.

    • PaperRooDogMEMBER

      I’ve had two people msg me recently basically saying “I have a side hustle, if you know anyone who is looking to buy property ….” admittedly they move in the same circles so likely working for the same full time agent or something, but wonder if it’s a sign things not so good, here in Sydney. Or maybe it’s just agencies having laid off full time agents during COVID now trying to fill gaps without employing full time agents?

      • Sorry, I’m silly and I don’t get it. Are these people ‘on their side hustle’, getting kickbacks from RE agents for referring people to them who will buy property? So basically trying to talk their friends and family into buying so that they can get a slice of the commission? Is this amway on a bigger scale?

    • The secretary of the Australian Treasury needs to declare in any speech or on any article how many investment properties he and/or his partner owns. Should be mandatory for anyone proposing policy, anyone lobbying government and anyone in a government/council role.

      • exactly – the RBA board and MP’s all own many investment properties. This is the reason Aussie property will never fall

        • Federal MP’s own a combined portfolio of well over $300m. For all politicians across Australia it must be around a billion dollars.

      • And also declare, when he shamelessly abducts, someone else’s threadbare cliche. “Dynamism” is well and truly pre-owned for years, by the one and only, the million-dollar Morrison hand-maiden, Phil “Mr Magoo” Lowe.

        LVO and DLS, I’ve been saying to you for months, Morrison and his lapdog Treasury are deadly serious, about restarting Big Australia tout de suite. Here’s further proof, they can’t see beyond “GDP growth”. Any kind will do. At any cost.

    • It seems not that long ago that certain posters on here tried to dismiss the pricing effects of supply and demand with their bs non-linear multivariate hypothesis.

    • Worth looking at the comments of that SMH article. Seems no one liked the hordes of Chinese and Indian “students”

  2. happy valleyMEMBER

    Treasury are just implementing ministerial policy as all departments were told to do by Scotty The Impaler after he won the election. Remember the LNP are the best ever at everything.

    Breaking news – Joel Fitzgibbon has resigned from the ALP frontbench … to be able to throw lumps of coal from the backbench.

  3. Have a look at Qlders – clearly they are pretty happy about stopping interstate migration. Less: people, congestion, developments. More nature.

  4. chuckmuscleMEMBER

    I think if you have to use the words “vibrancy” or “dynamism” without clearly articulating what that actually is, then you have immediately lost the argument. Personally have this battle with my family on a weekly basis (Green voters, sigh), so I push for greater definition of both terms and what they mean for both productivity and standard of living… Never fails.

    • Haywood JablomeMEMBER

      It is damning that a public servant of that rank feels confident to voice an opinion on key policy in such a feeble and unsubstantiated fashion.

      Reminded me of an old record label – His Master’s Voice.

    • I wonder how you measure this thing called “vibrancy”?

      I suspect you’d need to ask REUSA for some measurable KPIs.

  5. Yes I agree Leith, however after a long fight I am ready to give up.
    The world is run by elites. The Elites own the assets, and they will implement policies that support those assets.
    The Elites in my book are the top 10 -15% of earners.
    The wealth inequality has been extended by mass immigration.
    You can forget about the mass uprising. The Left is run by elites as well.
    CCP policies will be rapidily adopted by the ” democracies “.
    UBI will keep the masses feed and passive.
    All assets will be owned by the top 10%
    All media will be owned by the top 10%
    Social media will determine elections ( why do you think CCP banned Facebook, Google and Twitter )
    It is now a full on race for the life boats, and wealth is the life boat.
    The door is closing on the bottom 75%
    Its is going to be a Hunger Games world.

  6. With the CoronaVirus raging in the Northern Hemisphere (yes raging , USA 1,000,000 new cases in the past week) how are the migrants going to get here?
    If The Scrotum of Marketing tries to throw open the international boarders he will be cruicified by the outraged plebs

    • blacktwin997MEMBER

      Yes agreed. Though it was kind of heartwarming to see that some protestors got a crack at Scrotum’s car with the red paint. Who knows what people can get up to once they really get mad?