IGR admits immigration will destroy living standards

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What a ludicrous document the Australian Treasury’s latest Intergenerational Report (IGR) is: an entire assessment of Australia’s future predicated on extreme levels of immigration that Treasury itself claims is detrimental to living standards and unrealistic.

Recap that the IGR projects that Australia’s population will grow by a whopping 13.1 million people (~50%) over the next 40 years to 38.8 million people. This is the equivalent to adding another Sydney, Melbourne and Brisbane to Australia’s existing population.

Moreover, 74% of this growth will come directly from net overseas migration (NOM), which has been projected to increase to 235,000 annually from 2025-26 onwards versus 215,000 per year in the 2015 IGR:

Australian population projections

Back to ‘Big Australia’.

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However, in making these heroic assumptions, the IGR also warns that Australia’s immigration intake needs to be at a level that is “at or below the capacity” of destination cities to absorb them, and requires “careful planning by all levels of government”:

The economic and social pressures and capacity constraints that result from an inward flow of migrants also need to be managed carefully. Migration should be kept at or below the capacity of the destination city or region to absorb new migrants, taking into account impacts on incumbent populations…

Governments at all levels need to ensure that planning and infrastructure provision keep pace with current and future migration rates and ensure that migrants have access to essential services – such as public transport, support services and housing – and can meaningfully integrate into society.

This requires transparency, consistent decision making and careful planning by all levels of government.

In the 20 years before COVID hit, Australia’s population increased by 6.5 million people – exactly half the level projected by the IGR, with Sydney and Melbourne each adding around 1.6 million and 1.8 million people respectively over that time.

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Thus, if Australia’s population was to follow the IGR’s trajectory, we would effectively twice repeat the population growth experienced over 2000 to 2020, with Sydney and Melbourne each growing by another 3.2 million and 3.6 million people respectively over the next 40 years!

Does anybody honestly believe that having Sydney and Melbourne add another 3.2 million and 3.6 million people over just 40 years would be “at or below the capacity” of these cities “to absorb new migrants”? Or that such strong population growth would be “managed carefully” with “planning and infrastructure provision keep[ing] pace with current and future migration rates” and “consistent decision making and careful planning by all levels of government”?

The mass immigration program of 2000 to 2020 was managed appallingly and crush loaded everything in sight, resulting in widespread infrastructure bottlenecks across Australia’s major cities and reduced liveability.

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Repeating the experience twice over again, as projected by the IGR, and expecting positive results this time around is obviously delusional and the very definition of insanity.

Australia’s living standards would be destroyed by the IGR’s population projections and climate change would ensure that Australia runs into chronic water supply problems long before the population hits the projected 38.8 million people.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.