Ross Gittins: Abandon a ‘Big Australia’

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I have been waiting for The SMH’s economics editor Ross Gittins to reenter the immigration debate following the release of last week’s Intergenerational Report (IGR) by the Australian Treasury.

Today, Gittins arrived, calling for policy makers to bin aspirations for a ‘Big Australia’:

  • Gittins says that a ‘Big Australia’ would lead to the “erosion of the nation’s ‘natural capital'” by harming the environment.
  • “It’s notable that, though the intergenerational report projects a consequent slowing in economic growth over the next 40 years, it expects this to have little effect on economic growth per person and thus on living standards”.
  • “Whereas real GDP is projected to slow from 3 per cent a year over the past 40 years to 2.6 per cent over the coming 40, annual growth in real GDP per person is projected to slow only marginally from 1.6 per cent to 1.5 per cent”.
  • “Even that small slowing seems to be explained not by lower population growth, but by a similar fall in the assumed rate of average annual productivity improvement”.
  • “Taken at face value, this is an admission by the report’s authors that faster population growth makes little or no contribution to the improvement of our material living standards. The immigrants may gain by moving to Australia, but the rest of us don’t gain from their coming”.
  • “Advocates of high immigration always point to the benefit of greater economies of scale, while brushing aside the costs of the increased housing, capital equipment and public infrastructure that a bigger population and workforce must be provided with to ensure the productivity its labour doesn’t fall”.
  • But “it’s possible our high rate of population growth is a factor contributing to our weak rate of productivity improvement”.
  • “The budgetary costs and benefits of immigration are not spread evenly between federal and state governments. The feds pick up most of the tax that immigrants pay, while the states pick up most of the cost of the extra infrastructure and services needing to be provided”.
  • “This reveals a major distortion in the intergenerational report’s continual claim that higher immigration does wonders to improve the budget”.
  • “Finally, there are the environmental consequences of a bigger population that both the intergenerational report and most business people, economists and politicians refuse to come to grips with”.

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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.