Adair Turner exposes Treasury’s mass immigration myopia

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.

Unconventional Economist
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Comments

  1. > The IGR will reportedly “show the country is getting older, more indebted and reliant on taxing younger workers, and driving up spending”.

    I dont see how higher house prices is going to advantage Australia.

    If I cant buy a house without going into debt, then I dont want it. You shouldnt have to have a mortgage just to buy a house. Its ridiculous. I’ll live in a toilet before I have a mortgage.

    Im also never renting again. I’ll live out of a van before I rent again.

  2. Just make everybody’s birth date 10yrs after, if you were born before Yr 2000. Voila, the population is much younger. Seriously the government are hellbent on bringing in migrants to keep wage demands low forever, rotten mongrels.

  3. Seems like they are about to give 75million Brits access to our jobs and housing as part of the free trade (mass immigration) deal.

  4. When Howard cranked up “Big Australia”, the pretext was “skilled” migration and the mining boom. Beazley ushered Howard through, assuring ABC he’d always been a “high immigration man”. Though the boom wound back 2012, the policy has lurched on, through Gillard-Rudd and three Coalition prime ministers.

    Even under the COVID migration shutdown, it turns out Australia can carry on, as a gung-ho earth-digger with “jobs n growth”. Nevertheless, the IGR will reset net migration post-COVID to a crushing 235,000, with nil regard for electors or environment. It’s still private LibLab men’s business, behind the fig-leaf of “advice” from lushly-remunerated Treasury execs.

    Truly, Howard’s “Big Australia” is zombie policy that can never die.

  5. economic nationalist

    is a good term, and like nationalist socialist, or any type of nationalist you can be sure there are a bunch of fascist muppets standing behind the ideology.

  6. Lord DudleyMEMBER

    I don’t see the word “profit” in this analysis, which is a shame, because the most important thing is preserving profits of people who own all the natural monopolies and limited natural resources. The worse the living standards for the unwashed masses, and the more hyper-competitive they are with each other, the more economic surplus can be extracted from them. This is good for profits of the people that matter like Gina. People who don’t own are basically just worthless eaters, stealing economic surplus from the owners who deserve it.

    Australians need to learn their place… and it’s not at the table. At best it’s downstairs in the servants’ quarters.