Frydenberg, Treasury ignore failed immigration experiment

Treasurer Josh Frydenberg has vowed to drive Australia’s unemployment rate to 4.5% after being advised by Treasury that this would help lift wages and drive inflation to its target of between 2% and 3%:

“We have a historic opportunity to drive the unemployment rate even lower back to where it was pre-pandemic and even lower still”.

This follows years of budget blunders whereby the Treasury consistently forecast that wage growth would rebound over the following three years:

Budget wage blunders

Years of Budget wage blunders.

Our contention has always been that a key driver behind Australia’s decade of falling wage growth is the federal government’s mass immigration policy. By adding 180,000 to 200,000 additional foreign workers to the labour supply every year, unemployment and underemployment were held higher than they otherwise would have been, resulting in lower wage growth.

Indeed, this was the very experience of Australia over the past decade, as illustrated clearly in the next chart:

Australian wage growth

The mass immigration program helped to push Australian wage growth to record lows.

Even the Australian Treasury’s Shaping a Nation report explicitly acknowledged that the overwhelming majority of Australia’s jobs growth went to migrants between 2011 and 2016, thus keeping unemployment elevated:

Recent migrants accounted for two-thirds (64.5 per cent) of the approximately 850,000 net jobs created in the past five years. For full-time employment, the impact is even more pronounced, with recent migrants accounting for 72.4 per cent of new jobs created.

Migrants stealing jobs

Migrants took most jobs between 2011 and 2016.

Professor Peter McDonald released similar findings:

The permanent and temporary skilled migration policies established by the Australian Government from 1995 played an important role in meeting that labour demand…

From July 2011 to July 2016, employment in Australia increased by 738,800. Immigrants accounted for 613,400 of the total increase…

With this background in mind, how can Josh Frydenberg realistically hope to achieve his 4.5% employment target when he plans to reopen the immigration floodgates to pre-COVID levels from next year?

Treasurer Josh Frydenberg said he believed in restoring migration to the levels seen before the pandemic as soon as the government’s health experts declared it possible…

“The borders will reopen when it’s safe to do so, and when they do, net overseas migration will increase, including skilled workers”…

Mr Frydenberg said he wanted to restore migration to the level seen before the pandemic, which was 239,700 in 2018-19…

“I believe in a generous, sustainable immigration program that reflects the best of who we are, which is an open, tolerant, diverse country.”

If pre-COVID level of migration are restored, an extra 180,000 to 200,000 workers would join the Australian labour market every year, driving up unemployment and placing downward pressure on wages (other things equal). This, in turn, would make Frydengberg’s 4.5% unemployment target an impossible goal.

Australians experienced a decade-plus of crushed wages and living standards on the back of mass immigration. This failed policy must not be allowed to return. It’s time for Labor to take a stand.

Unconventional Economist

Comments

  1. Agent 47MEMBER

    Labor stands for Big Australia and more permanent and less temporary migration – complete sleight of hand.

    Another solution needs to be found because voting for the same 2.1 globalist parties changes nothing.

    • Lord DudleyMEMBER

      “Labor stands for Big Australia and more permanent and less temporary migration” Ha ha ha ha! LOL! So does the LNP!

      As Jerry would say, “good luck with that”.

    • Labor taking a stand? More likely they’ll take the fifth. Under the present bipartisan power-elite structure, mass migration is real and compulsory, and it must return at any cost.

      Employment and unemployment rates are just tech numbers. Under the Master Narrator, they can be denied, doctored, fudged, redefined, any old stunt will do. He’s given Treasury a fake “Centre for Population”. Why not one for Employment too?

  2. The woke Women of labor who are only in because of quotas. They’re gonna take a stand. Righhht.

    • They’re in because for once they’re not being held back by jobs for (male) mates. Up until now for a woman to succeed she had to be 10 times better than any bloke.

      Fact: Dometic violence increases by 35% when the woman of a couple earns more than the male.

      • Cynical snake

        Fact:
        Unemployed alcoholics are prone to violence, and likely to earn less than their female partner, so what’s the actual cause?

        • Perhaps excessive alcohol intake has some correlation.

          I remember not having a job once. One thing I didn’t do was to drink too much and beat my wife.

          • Cynical snake

            So is that statement for or against the supposition of the first post? Did you not drink but beat your wife because she earnt more?

            Statistics are really slippery things and correlation is not necessarily causation, in fact it very often isn’t in complex situations.
            The statistics measure things that are easy to measure not necessarily relevant.

          • ‘statistics are like bikinis , they give you a bit of an idea, but they don’t show you the full picture’

      • You have said nothing that disagrees with anything I said. What exactly is your point? Oh and unreferenced statistics are not facts.

      • May be 10 times betterer than the bosses mates or son.
        But not the overworked underpaid plebs.

        I’ve worked with approx. Far call quality female architects. They epitomize entitlement and quotas flying the woman in construction flag.

      • Only in migrant households.

        Most Aussie blokes I know would happily stay home , smash out some tunes on the Gatorade sax whilst the woman sort it out

    • Living wage for restaurant workersMEMBER

      Or they could just pay chefs enough so they could afford to rent. Apparently overseas workers don’t need to be paid enough to rent a house.
      Or the customers could pay 3$ more a meal. As All restaurants have the same wage rate if there is no underpaid workers they won’t be undercut.

    • Nowhere in that ABC story does it say that those poor, desperate restaurateurs ever attempted to offer higher wages to solve their worker shortage. That would be a bridge too far, obviously

      I don’t know why people call the ABC left wing. On “skills shortages” they’ve been dutifully broadcasting the government’s propaganda, largely unchallenged. Did the incurious journo even think to ask the pay rise question?

  3. Lord DudleyMEMBER

    TOTES OFFTOPIC WARNING: just saw this on the ABC: https://imgur.com/IcSMrMs

    “Letting a child say ‘no’ to a hug from grandma might seem rude, but it’s part of teaching them about consent” is the headline link on the ABC front page.

    So what’s the deal here? Is this an attempt to white-ant the ABC by making it so woke that no sane person would ever consider funding it? Or are there hyper-woke nut-jobs doing editorial there?

    Posting here because I’m not a member (used to be, great site, stepped away for a bit, might resume soon), so I can’t post in ‘links’. At least it’s somewhat relevant, because it falls under the umbrella of ‘Australian propaganda’, in the same manner as all the big-Australia guff.

    • Lord DudleyMEMBER

      Got Membership again… love your work, Dave, Leith, and co. Anyhow, I’ll repost this in ‘links’, but next weekend is some time off, so if people want to reply here, great!

    • Good to have you back Lord Dudley (I used to be Philly Slim, now anon!). I had a about 7 years in the USA and worked in finance so returned back in ’08 (GFC). Great place and I love visiting but am still up in the air as to whether I could make the move full time. There are pro’s and con’s of life over there vs here. I LOVE being a consumer over there and the choice is amazing and cost of living is cheap … BUT, I was living in north east (Philly then NYC) and the winters shook me every year.

      Where exactly are you based? I reckon West Coast would probably be an easier cultural move (weather wise).

      • Lord DudleyMEMBER

        I’m in CO. It’s sunny most of the time. The cold here isn’t extreme, and it doesn’t last long. It’s very dry, so cars don’t rust and mold isn’t a thing. It’s booming here like crazy, because there are jobs, a good supply of land, and unlike Texas and Florida, the government here is actually sane and fairly competent.

    • drsmithyMEMBER

      Something like 30% of child sexual abuse is committed by family members. Surely teaching children it’s OK to say no to things that make them uncomfortable is a good thing ?

      • Lord DudleyMEMBER

        Teaching them what abuse is and how to say “no” to that and report it is a good thing. Teaching them that *anything* they feel uncomfortable with may be refused without consequence is a recipe for raising gormless idiots who have no tolerance (e.g. refusing to hug grandma), or sense of proportion (e.g. all the me-too’ers who conflated being hugged with being sexually assaulted).

        Also, look at the way this trash headline is phrased. It’s almost designed to infuriate people from cultures with stronger family ties. I live in the US, and this kind of garbage is EXACTLY the reason that the Hispanic vote for Trump rose in 2020. In Australia, you have Italian, Greek, Indian etc… cultures, who value family ties much more strongly than those of Anglo background on the whole. The headline is so toxic to anyone from these cultures, I wonder if it was actually written by an extreme right winger to make the Australian left look completely crazy. Poe’s law applies; there’s no way to tell.

        Meanwhile, you have NSW cops ACTUALLY abusing kids as part of drug strip-searches… and the kids can’t say “no” to that abuse. But lets all encourage kids to refuse to hug grandma, because that’ll help apparently?

        I have actually given up on democracy… US and Australian democracy are doomed; they’ll both be done in the next 20 years. The reason? Once Biden (a moderate) is gone, the extreme wing of the Democratic party will likely go full woke, and it’ll drive every centrist, Indian, Hispanic, and Asian to vote for Trump 2.0 (whoever it is), because a corrupt clique of oligarchs is quite frankly preferable. After that, the Republicans will ensure that a Democrat never sits in the Oval Office again by rigging the elections even more than they already are (red states are currently introducing legislation to effect this). Once US democracy falls, Australian democracy won’t last 10 years.

        Meanwhile, in Australia; the Labor Party will never hold power again. The LNP and their cronies will hold all the power, and the power they exercise will keep increasing. Meanwhile, the woke amongst you can whine about kids being forced to hug grandma, while at the same time the unopposed party in power has cops forcefully strip-searching children for drugs that they rarely find.

        We know who the authoritarians are and what they want. It’s the woke extremists who go about telling people that they can’t make their kid hug grandma who will be the end of democracy. This quote applies:

        “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

        • drsmithyMEMBER

          Indeed. I mean, it’s trivial to explain to young children what abuse and exploitation and grooming is. Not like they need to lead into it at all, or teach the larger concepts that underpin why it’s wrong in the first place.

          Meanwhile useful idiots like you are exacerbating the problem you’re complaing about, encouraging and supporting divisive right-wing culture warriors, rabbitting on about how some people want to stop kids hugging their grandparents. Talk about missing the point. 🙄

  4. Jonathan Sobels

    The Government have 3-5 years of a ‘stable population’ to manage, before embarking on higher immigration. I hope but don’t believe they will learn the benefits of low immigration from this forced circumstance. We need more diversity in employment, not same same jobs in hospitality where 70% employees are casual travelers. COVID19 has shown vulnerability in that business model. Just a thought: if we must import people, suggest refugees from war-torn regions. As evidenced by post WW II migrants, there are none so grateful or hard-working as people given security, and where their children can be educated. There is no evidence that more people improves our standard of living. There is physical evidence that more immigrants lowers our standard of living, and GDP per capita is not an effective proxy measure.

    • Cynical snake

      You seem to fail to grasp the governments motivation here. They don’t care about the lot of the plebs, beyond election results anyway.
      What it all means for big business is all that matters…