ABC: RBA and Morrison on immigration collision course

There’s revolution brewing at the ABC. A fightback against the fake left editorial viewpoint that played a major role in destroying Australian worker’s living standards in the last cycle via its defence of unbridled immigration. In the last few months, ABC’s Ian Verrender has led on the issue. Now Gareth Hutchence has joined in:

  • Morrison intends to reopen borders and restore mass immigration.
  • That will weigh on the wage growth being sought by the RBA.
  • ANZ economist Daniel Gradwell said “if anything, they’ll be suppressing wages growth”.

Bravo. As we have chronicled exhaustively, the structure and scale of the mass immigration program under the Coalition government destroyed wages growth in the last cycle. The evidence is unequivocal. At the macro level, the perpetual labour supply shock of mass immigration prevented the output gap (a measure of excess supply in the economy) from ever closing enough to trigger wages growth. The OECD is now predicting a much worse output gap in Australia for 2022 (though I expect this will be revised up a little given the stronger recovery than expected):

Australia's output gap

Mass immigration drove a gaping output gap.

At the micro-level, the evidence is everywhere. From an unprecedented pandemic of wage theft to omnipresent examples of individual wage rorting cases targeting migrant workers especially, to the desperate rhetoric of business lobbies led by the Australian Industry Group CEO Innes Willox who is also, bizarrely, chair of the Migration Council.

The flood of evidence has forced the immigration-cheerleading RBA to finally incorporate such effects. It recently acknowledged the problem for wages:

  • increased competition in goods markets, which makes firms very conscious of cost increases
  • the trend towards more services being provided internationally
  • advances in technology, which have reduced the demand for some types of skills and increased the demand for others
  • changes to the global supply of labour and regulation of labour markets.

A restored Morrison immigration program will do exactly what it did in the last cycle:

  • Kill wages growth.
  • Kill productivity via capital shallowing, crush-loading and dis-economies of scale in infrastructure.
  • Kill per capita growth and income.
  • Fatten the purses of a very few retail and dwelling construction billionaire parasites.

It’s time for the RBA to join the ABC and come out openly and strongly against the Morrison government’s plan to destroy Australian living standards for another cycle via restored mass immigration.

Houses and Holes
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      There’ll be no ‘rehab’ here as torrid immigration is the *only* policy they know to keep Straya’s economic rivets from pulling free.
      Instead of a dialogue on how to revitalize our ‘future’ in a very competive world market, they’ll chose the short-term fix which guarantees our long-term stay in oblivion and inevitable collapse.
      You know it; I know it; and ‘they’ know it.

    • Ritualised Forms

      The RBA will be the one thrown under the bus.

      They have consistently massacred forward estimates for a decade – they are at least as guilty as the government for the housing bubble, they have said nowt about immigration and its effects on GDP, they have looked the other way while fixed inflation (start with power bills) has been excluded from CPI calculations . The decision-making processes of the RBA are fairly in the ‘handed down from almighty god’ category and they have been wrong, and gods with feet of clay get turfed.  Sure they have only one tool, but the way they have used it has led ordinary Australians into an economic evolution cul de sac from which there is no exit without considerable pain. With the exception of MacroBusiness, Crispin Hull and maybe Michael West, maybe Martin North, Phil Soos and Lindsay David the entire Australian media commentary landscape has been singing backing vocals to the RBA – they too are frauds

      At least the government can point to the scoreboard and say it has been reelected.  They have another year.

      If their game plan is that they still think they are a chance of winning that election and retaining a hand on the tiller they will throw everything under the bus.  Although they (rightly) stink at the moment, and will be limbering up as a fourth term government which has achieved less in their first three terms than any other Australian government, and although they are mired in corruption and hypocrisy they would be all too aware that the contemporary ALP has an incredibly, staggeringly, slim grasp on public belief, and that they – the most reviled government in our lifetimes – may still yet win that election.  There remains considerable doubt about whether the ALP can overcome their own internal contradictions (how can they be open borders and in the interests of working Australians? How can they be as pro-China as they are seemingly committed to being? How can they be meaningful about trying to reshape an economy without squarely addressing the rentseeking interests at its core? How can they address ‘diversity’ without acknowledging that working white men are not all toxic?) sufficient to actually get a majority, and if they are elected with those questions unresolved what would this imply for them in office?

      The government will no doubt point to the largesse funded Covid rebound.  We are already seeing they will splash more to spakfill the holes in their credibility – witness the weekend reports vis spending on women’s issues (for the most part rightly so).  Their positioning seems to be to exhort the conservative ‘balanced budget’ mantras while taking a leaf from Keynsianism (at least while they have political control) and deploying that to favour their own backers.  Their risks comes the moment the iron ore revenues dry up – that still looks a year away.

      If they go to the polls and they still have scope to credibly spend (credibly as in the public opinion – not as those of us reading MB would consider credible) then they will.  If they need to toss the RBA, APRA or any other public sector entity, or even a lot of private entities under the bus they will.

      • Yep, which is why the RBA will acquiesce and slowly lose the wage growth focus from its agenda. If it was ‘independent’ it might have stood a chance but time and time again we see lapdog Governors just meekly fall into line. Wonder who signs their contracts?

  1. SnappedUpSavvyMEMBER

    Bizarre scenes in Hobart on the weekend, in front of parliament there was a throng of white hippy protestors waving climate change and BLM banners and on the roads surrounding them were wealthy Chinese in V10 Bentleys and V8 Porsches looking mystified by these strange people while heading off to homes formerly half the price and owned by Tasmanians

  2. For all of million-dollar Phil’s heart-warming conversion to workers’ rights, Treasury still calls the shots.

    Come May 11, let’s see what’s in the thingy we never discuss, good old Appendix A of Budget Paper 3. Once again, I expect Treasury will demand mass migration in the out-years. Once again, I expect Major-Domo Albanese won’t say a peep.

    • It is the only card they have. And they will flood this country and hence make themselves look great,
      They will then do major infrastructure projects to support these people, creating jobs!!! Just brilliant

    • Strange EconomicsMEMBER

      Treasury executives promotion and bonuses are in charge of sending Growth forever secenarios to the Treasurer until they get a job in a bank. RBA mandate is only bank stability. Who expects Treasury to recommend a scenario of lower immigration, lower bank profits, lower house prices, lower GDP, instead with higher worker wages and higher GDP per capita. Doesn’t sound like that will get out the door.

      • Even StevenMEMBER

        Disagree RBA mandate is only bank stability. That is shared by RBA and APRA, probably more so the latter.

        RBA is empowered to comment on any matters that influence financial stability, full employment, stability of the currency. That they don’t comment frankly on all these matters is pretty shameful (career risk). The fish rots from the head (politicians).

    • Even StevenMEMBER

      You have it right. Policy is dictated by Government / Treasury.

      RBA knows what is going on, but won’t run risk of losing their cushy jobs (and in some manner perhaps think “it’s not our job to set or comment upon Government immigration policy or housing policy” (although I think they’re wrong on this).

      Similar deal with APRA on housing policy although they have a much more narrowly defined mandate than RBA. And their mandate is incompatible with commenting upon immigration.

      In order of preference:
      1. A good government that genuinely focuses on immigration cost/benefits and housing policy
      2. Empowered public service / regulatory structures which facilitate provision of frank and fearless advice (hahaha…)

      We have neither.

  3. I was at a conference last week and Danielle Wood from the Grattan Institute spoke about the state of the economy. She didn’t once mention immigration. I called her out on it in question time, in particular the prospect that lower immigration will lead to higher wages. Her comment in response was:

    “The economic research is pretty clear on the link between immigration and wages… it’s not a fixed pie in the immigrant takes that job or increases the supply of labour so that wages are lower. They add to demand, they bring skills, complementaries. Most research suggests that it [immigration] has a negligible or slightly positive impact on wages”

    In fairness, she did go on to say that you do need the right sort of immigration (when it comes to skills) and she didn’t think we had it correct pre pandemic or that it looks like the settings going forward are probably wrong as well. So she did end with “it is a really important conversation”.

    • Ritualised Forms

      Good on you for raising that in a reasonable manner and – by the sound of things – getting at least the acknowledgement that it is a discussion which needs to be had.

      • Interestingly, her opening comment before the quote above was a nervous chuckle followed by “I need to be careful how I answer this”.

        It suggested to me that even celebrity left leaning economists can get captured by the people who pay them.

    • Ever notice how it’s always “……a really important conversation” or a ‘discussion we need to have’? Seems odd that for the past 15 years it’s been coincident with the gates being completely open the entire time. Nothing about discuss first then act, just let it run at warp speed whilst we discuss……….eventually.

  4. Buttzilla Returns

    lol, they can ‘restart’ as much as they want. There will be NO mass migration without China on-board. get ready. sell everything.

  5. Could someone explain further to me the revolution brewing at the ABC on Immigration? it seems so pre-immigration to me, I’ve almost given up watching it. It s so politically correct towards any other culture other than Australian I feel like moving to another country!