Over the weekend, The AFR reported that the Morrison Government will use the Australian Treasury’s upcoming intergenerational report (IGR) as ammunition to reboot the mass immigration ‘Big Australia’ policy (see yesterday’s post).
The IGR will reportedly “show the country is getting older, more indebted and reliant on taxing younger workers, and driving up spending”. Therefore, rebooting mass immigration will be offered as a policy solution to: 1) slow population ageing; and 2) increase the ratio of workers to non-workers across the economy.
In yesterday’s post, I comprehensively debunked the mass immigration solution to population ageing on the grounds that:
- Migrants also grow old. Therefore, immigration can only slow population ageing, while also adding a host of other economic and environmental costs from having a substantially larger population (e.g. lower real wage growth, crush-loaded economic and social infrastructure, forcing people to live in apartments rather than houses, and environmental degradation).
- The empirical evidence of the prior 15 years of mass immigration was unflattering with Australians experiencing:
- Falling productivity growth;
- Falling real wage growth;
- Stagnant real per capita household disposable income;
- Stagnating growth in real GDP per capita;
- Rising congestion, smaller and more expensive housing and reduced liveability across Sydney and Melbourne due to extreme population growth; and
- Soaring infrastructure costs due to diseconomies of scale plus waste as governments desperately tried to keep pace with unforeseen extreme growth.
In short, the IGR and Morrison Government will myopically focus their attention on the costs of ageing on federal budget finances while ignoring entirely the costs of high immigration on state budget finances and the community at large.
Interestingly, around the same time as The AFR’s article went to print, Adair Turner – Chair of the Energy Transitions Commission and former Chair of the UK Financial Services Authority – published an article noting the important economic and environmental benefits from having stable or even declining populations:
A pervasive conventional bias assumes that population decline must be a bad thing… But while absolute economic growth is bound to fall as populations stabilize and then decline, it is income per capita which matters for prosperity and economic opportunity. And if educated women are unwilling to produce babies to make economic nationalists feel good, that is a highly desirable development.
Meanwhile, arguments that stable or falling populations threaten per capita growth are hugely overstated and, in some cases, plain wrong.
True, when populations no longer grow, there are fewer workers per retiree, and health-care costs rise as a percent of GDP. But that is offset by the reduced need for infrastructure and housing investment to support a growing population… By cutting that waste and spending more on health care and high technology, [countries] can continue to flourish economically as the population declines.
Meanwhile, a stable and eventually falling global population would make it easier to cut greenhouse-gas emissions to avoid climate change, and alleviate the pressure that growing populations inevitably place on biodiversity and fragile ecosystems.
And contracting workforces create stronger incentives for businesses to automate, while driving up real wages, which, unlike absolute economic growth, are what really matter to ordinary citizens.
In a world where technology enables us to automate ever more jobs, the far bigger problem is too many potential workers, not too few.
Adair Turner’s arguments are identical to those articulated by MB over many years.
Sadly, instead of using the coronavirus pandemic as an opportunity to reset Australia’s immigration program to sensible and sustainable levels that maximises community wellbeing, Australia’s policy makers are hell bent on returning to the lazy dumb growth policy of the prior 15 years that delivered falling living standards.