Big Australia mouthpiece demands more immigration

Program director for the United States Studies Centre at the University of Sydney, Stephen Kirchner, has demanded that Australia emulate the post-World War II immigration policy of increasing population growth to help the economy recover from the COVID-19 pandemic:

“Restoring pre-pandemic levels of net overseas migration will be essential to economic recovery,” he said.

“The pandemic affords an opportunity to rethink the immigration policy and planning framework the federal government adopted prior to the pandemic.”

Dr Kirchner said the government should emulate the post-World War II immigration program…

Dr Kirchner said the cap on net migration should be dropped…

The prior 15 years of extreme net overseas migration (NOM) was unambiguously deleterious for Australia’s productivity and living standards.

It crush-loaded everything in sight: the labour market, roads, public transport, water supplies, schools, hospitals, open space, you name it. It also diluted Australia’s fixed mineral endowment among more people, lowering wealth per capita.

Ordinary Australian workers suffer most from the ‘Big Australia’ policy, as they are forced to compete harder for jobs from lower wage migrants, as well as paying more for basic essentials like housing.

On the first point – the labour market – consider the below empirical evidence from the Department of Home Affairs’ Continuous Survey of Migrants. This report shows that migrants have had 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 focusing only on the skilled stream shows that both median earnings and unemployment are far worse than the general population:

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

Therefore, returning to the Big Australia mass immigration policy will further damage Australia’s productivity and living standards going forward.

It’s easy to see why.

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

By contrast, 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.  Moreover, 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 drove gigantic trade deficits?

This is not a coincidence.

Essentially, all of the extra migrants that piled 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 fact is, 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). It reduces liveability as it benefits a small number of elites over the many, thereby increasing inequality.

Therefore, restoring mass immigration post COVID will only further stifle productivity, worsen the unemployment queues and further depress wages, smashing Australia’s working class.

The mass immigration policy needs to be junked for the sake of productivity, liveability and equality. Instead, policies that focus on productivity enhancement and competitiveness should be the focus as they lower debt while boosting incomes per capita, and are more meritocratic.

On this front, Australia’s policy makers should 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 clever countries do.

Unconventional Economist
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Comments

  1. boomengineeringMEMBER

    .In case you missed it, all that effort just to open the floodgates in later years.

    reusachtigeMEMBER
    November 16, 2020 at 8:25 am
    What happened to the good old days where only the loosers were held to account for war crimes? Fire bombing of Dresden was ace and Little Boy taught those nips a lesson they’d never forget!!

    REPLY

    ErmingtonPlumbingMEMBER
    November 16, 2020 at 8:29 am
    I see your embracing you aristocratic cultural heritage there Reusa

    REPLY

    boomengineeringMEMBER
    November 16, 2020 at 8:41 am
    He’s referring to,
    Our most decorated soldier may have to face war crimes along with his mates killing civilians and unarmed captives.

    REPLY

    I’ll Stir Fry You in My WokeMEMBER
    November 16, 2020 at 9:16 am
    My grandfather’s journal indicates he was most sour about only being able to strafe barges from his Spitfire over Morotai.

    REPLY

    boomengineeringMEMBER
    November 16, 2020 at 11:00 am
    Did your grandfather join the mutiny consisting of , Wilf Arthur, Kenneth Ranger, Clive Caldwell, Bobby Gibbs, John Waddy, Bert Grace, Douglas Vanderfield and Stuart Harpham against Air Commodore Cobby and Joe Hewitt ?

  2. “This is not what clever countries do”

    Has Australia ever claimed to be clever? In fact, this country seems to want to chop down successful people more than anything else. Being dumb is celebrated. Saying that you are no good at basic math, for example, is something to be proud of. It gives you cred amongst the other dummies.

    They do look up to those who got successful via property though. Because everybody is just aspiring to do the same thing, and so looks up to those who have been successful at it as a potential model to follow.

    If the average person was halfway decent at math, property prices would have never got so high.

    If Australia was a company, you’d think it was in terminal decline.

  3. NoodlesRomanovMEMBER

    Post WWII immigration was to address underpopulation from a defensive standpoint. With Chamberlain/Churchill having their own issues, if US didn’t come along, watashitachiha nihongo o hanashimasu.
    Gov at the time didn’t want to be caught out. Add in a lot of it was humanitarian as well.

    • Immediately post war Aus was building houses and suchlike, we brought in a lot of skilled carpenters from the Baltic’s. The Mediterranean’s grew food, fed us in cafes and restaurents and built, plastered and cemented everything. Good kind people who diluted the English prison camp hangover. The poms, well they whinged but some were very glad to be Australian. It’s a far cry from that now, nothing brought in that we need. No respect for Australia. And yes we were the clever country with our science and creativity but post Whitlam CSIRO funding systematically cut, and the superb STEM curricula in schools was diminished .

    • Haywood JablomeMEMBER

      I second that motion. More than a little tired of these self appointed experts talking their own books to the detriment of the rest of us.

    • “Restoring pre-pandemic levels of net overseas migration will be essential to economic recovery,” he said.

      The sad thing is he may be right, We dont have anyone in parliament and almost no one in business who can see anything else as an option. So until we either round up the bastards or open the floodgates we wont have a good stable recovery.

  4. A necessary correction, LVO, from the Sydney Morning Morrison. Which recently had Rob Stokes (of all people) saying “we just can’t rely on population growth”. Life is so much easier, if everyone sticks to the correct songbook.

  5. Dr Kirchner needs to recognise that the world has reverted to the 1930s not late 1940s.
    The limiting factor in Australia right now is not properly paid labour but investment, and that is different to the late 1940s.
    Yes there are people demanding slaves at a fraction of minimum wage but a Government wanting to win elections should be looking to working and middle class voters, not the exploiter sociopaths. The US made that mistake and now so many of them have been scrap-heaped by globalisation policies that they have knowingly elected a nasty conman as President for 4 years to stop those policies.
    Right now we should be bringing manufacturing home so that we are not relying on aggressively malicious foreign countries when it comes to providing essential services for our citizens. Globalisation relied on assumptions that have been contradicted by Chinese government in particular and therefore a new constrained optimisation is required.
    I am very suspicious when the answer is always to ramp up immigration … reminds me of a hammer salesman treating everything as a nail.

    • It may well be that in 10 years, we have changed infrastructure to the point where insufficient labour is the constraint and therefore increased immigration would be a sensible policy. Right now we are not in that position.

      • boomengineeringMEMBER

        Have you seen what the latest robots can do, two legs, two arms, run jump climb, somersaults stacking shelves. Those are the cheap labour we should be making.

        • The Chinese are already pumping hundreds of billions into robotics. They seek to own the founding technology and all the technology branches related to robotics. If we use robotics it will more than likely be Chinese IP. We have no focus and should be investing in robotics to help industry sectors like agriculture.

  6. He said we need to remove the cap on Net overseas migratiion, when there is in fact no cap on net overseas migration (unfortunately). Yet another one who doesn’t understand the difference between Net and Permanent migration, it seems.

  7. He has an article in The Conversation, published yesterday in the Business and Economy section. All comments have been disabled after two critical posts.

  8. If ever a referendum was needed, it’s for this – how many immigrants the vast majority of us actually want and can cope with in any one year.