Perrottet: “Adding more people isn’t a sustainable economic strategy”

Yesterday, I reported on the NSW Government’s dastardly plan to double Australia’s pre-COVID immigration intake to more than 400,000 people a year, which would “see the population swell by 2 million by 2026”:

Mr Perrottet on Monday said the borders need to be opened up amid a “general labour” shortage to ensure a healthy economic recovery.

“If we lose this opportunity, those skilled migrants will go to other countries,” he said. “We won’t get those engineers, those accountants, they’ll commit to other projects”…

I won’t go into the reasons why this plan is reckless, since I mentioned these yesterday.

Instead, I’ll simply relay Dominic Perrottet’s own arguments against “extraordinarily high rates of immigration” from when he was NSW Treasurer.

First, here’s an extract from an Op-Ed written by Perrottet published in The Australian in November 2018:

Merely adding more people isn’t a sustainable economic strategy…

More important, we can’t pretend that high immigration comes without a cost, and we believe growth should not impose an unfair burden on those already here.

Excessively rapid growth puts downward pressure on wages and upward pressure on housing ­prices, both of which have sorely stung workers and aspiring homeowners in Sydney and other parts of NSW for a decade.

It also means more people on trains, more cars, more students in our schools and more patients at hospitals. And it’s the NSW government, not the federal government, that is responsible for providing the necessary support for the surging population.

When you look at the numbers, it’s no surprise communities in Sydney are feeling the pressure…

In 2006, annual net overseas migration to Australia increased to roughly double its average pace across the preceding 25 years…

Even if the NSW population stayed at today’s level, it would take time to complete the work so that our communities could be more liveable, our commute times more manageable, and our schools and hospitals more capable of offering exceptional care rather than just coping.

Instead, extraordinarily high rates of immigration risk pushing those outcomes beyond our grasp. And it’s a problem state governments are powerless to solve on their own because we have no say in the national immigration rate.

Second, here is a Radio 2GB interview from 2018 whereby Perrottet described mass immigration as “lazy economics”:

“We don’t have a seat at the table when it comes to the rate of immigration into the country and there’s no doubt a lot of that immigration comes to Sydney”

“Whilst the federal government gets the benefit of the income tax, it is the state government that has to foot the bill for the infrastructure associated with that intake.”

“Simply because the Treasury bureaucrats might tell you that putting more people, economic growth continues to drive, that is lazy economics. What is more substantive is actually getting productivity reforms across a whole range of areas. But at the same time, what we are asking for here is a breather on immigration, to have a seat at the table and make sure that NSW as we grow, we grow well”.

Finally, here’s Perrottet complaining in 2019 that states like NSW wear the costs of immigration:

“We continue to not get our fair share of infrastructure investment,” NSW Treasurer Dominic Perrottet said.

“Victoria and NSW have the lowest rate of commonwealth infrastructure investment on a per capita basis. The federal government get all the benefits of immigration but we get all the costs.”

Maybe Dominic Perrottet should follow his own advice instead of pursuing lazy and destructive mass immigration-led growth.

If NSW Labor leader Chris Minns had any sense, he would run hard on a lower immigration platform.

Unconventional Economist

Comments

  1. Similarly, Premier Gladys in 2018 said that NSW should take a “breather” and “halve” migration. Similarly, Immigration Shadow Keneally said in 2020 we didn’t want migrants to return in the “same numbers”. Both were quickly shut down.

    Long story short, no LibLab politician can ever be trusted on this question. It was bad enough before, when Morrison and Albanese were agreed on an insane 235K net migration, post-COVID.

    Now Perrotet has abruptly doubled the ante – presumably at the behest of the same old property and industry interests that also buy and sell Morrison? But also note, Shergold from UWS was in on the statement – so it’s edu-migration too.

    • Jumping jack flash

      Its the same story with the problem of house prices. They simply can’t be fixed because they’re not actually a problem.

      Slave labour by way of immigration is a useful and essential component of the New Economy now. It enables business owners to live their expected lifestyles at the expense of everyone else.

      But when the pie isn’t growing it all becomes a matter of distribution.

  2. Glenn CahillMEMBER

    Was just watching the ABC this morning and they had a reporter from the Age gloating about how the argument that immigration pushes up house prices has been blown out of the water as a result of this pandemic (i.e. no immigration but house prices went up).

    This will be the new narrative from the Big Australia people I fear…

    • It is true though, immigration is not the biggest driver that has pushed up the house prices. It is a contributor.

      Not arguing for immigration, it needs to be curtailed drastically.

      • Jumping jack flash

        Yes I’ve been saying that for a while. High immigration is a symptom of the debt economy. It enables wage theft which is vital for redistribution of finite resources for a select few to obtain the amounts of debt they need.

      • without adding more families to the demand for the houses, the minimum cost of a house/land remains fixed to cost of production. Once there is too much demand, the minimum cost becomes more than the poorest families can afford to bid. The rest of the equation is just leverage and fuel on the fire from fundamental shift in the pricing model.

        • That pricing model left the housing market decades ago. We have eye-watering prices with no immigration. And for 18 months before that with eye-watering levels of immigration, we had a modest correction because banks were prodded to be a wee bit honest by the Hayne RC.

          Credit growth is what matters and it will be juiced no matter what. If immigrants can do that, great, if not, then the rates, numerous government grants and equities, access to super will do that for you.

          I feel we are wasting energy arguing immigration as the root case of house prices when it is not, and make it easier for vested interests to shout us down with R word.

          • Welcome to the club, but here’s a tip, don’t let on that you’re not completely convinced of the direct connection between Immigration and sky high house prices. Unfortunately everything you say after that statement will be labeled as “trolling”.

          • “I feel we are wasting energy arguing immigration as the root case of house prices…”

            I agree. It’s a factor though. Excessive immigration is also an “everything issue” that exacerbates almost every problem that Australia has: housing, infrastructure, inequality, environment, low wage growth, etc.

          • I feel we are wasting energy arguing immigration as the root case of house prices when it is not, and make it easier for vested interests to shout us down with R word.

            You are in the wrong place to be arguing that immigration is not the root (or, at least, most important) cause in any problems Australia has.

        • Here is a little simplification I posted repeatedly years ago:

          The shortage determines how many families miss-out on independent housing.
          Credit determines at what price they miss-out on housing.

          Each poster here has to decide what bothers him/her the most. Is it how many families are missing out? If so you need more supply and less need. eg Build more AND/OR less immigration.

          Is it price only that you care about? Then credit rationing and higher interest rates are your best bet. If so, the lucky few will get a cheaper house. But many will still miss-out due to the shortage.

          • yeah, true. People ^^^ may argue that immigration isn’t the root cause. Perhaps it’s possible the shortage would occur without immigration. I think it’s safe to say that the first requirement to speculate in an asset is a shortage. If property for accomodation was in excess, and more readily available to buy – there’d be no speculation that drags in the rest of the variables.

    • The COVID experiment showed that halving interest rates while higher income earners still have jobs and in fact spend less on holidays leads to a 30% price gain.
      So House price increase drivers s are 60 % low rates, 10% govt tax breaks, 10% COVID savings, and 20% endless population growth.

      The apartment investors had plugged in high immigration forever and held on, and now are looking ahead – assumed that the drop in immigration would be 1 year temporary.

      If the drop stayed then vacancies would stay high and some would have had to sell. Fortunately the plan is now 500K immigration (the SURGE) next year to make up and fill up the rentals.

      • Prices fell in Perth during the border closures though didn’t they, with the same low interest rates, same access to credit, and the same everything else. The difference for them is that they get hardly any immigrants compared to Sydney and Melbourne, and therefore didn’t have a shortage of homes like Sydney and Melbourne had prior to the pandemic, so there wasn’t a need for everyone to rush in and buy a home. Also, they don’t have the expectation that those in Sydney and Melbourne have, of a flood of new migrants competing with them for housing once the border re-opens.. It all comes back to Immigration levels.

    • the ABC this morning and they had a reporter from the Age gloating about how the argument that immigration pushes up house prices has been blown out of the water

      It is NOT the job of a reporter to look at statistics over the short-term and draw specious conclusions about correlation.

      If a few vaccinated people die will that same “reporter” moron claim that vaccine efficacy is blown out of the water? Of course not. His elite bosses are not pushing that narrative.

      Besides, the “argument that immigration pushes up house prices” is moronic. Immigration is only one factor. Immigration combined with low supply pushes up the shortage. A worsening shortage will push up the buying power of the strongest loser – IF ALL OTHER THINGS REMAIN THE SAME.

      For example if there are 14 families for every 10 houses, then 4 families must miss-out. Price will be just above the buying power of the 4th poorest family.

      If govt adds 2 more families via immigration and adds only 1 house per rata, then there are 16 families for every 11 houses, and then 5 families must miss-out. Price will be just above the buying power of the 5th poorest family.

      In this example you would expect price to be pushed up, but it really depends on how rich or poor were the two added migrant families. If they are rich, they will slot in to the group that can afford houses, and price will move from the buying power of the 4th poorest local family, to the buying power of the 5th poorest local family – that is a price increase.

      However if the two added migrant families are very poor then they will be added to the group that misses-out on housing and the extra house will go to the local family. In this case price will fall, even though the physical shortage has gotten worse.

      I could show you the working, but I would prefer if you did some thinking yourselves.

  3. ErmingtonPlumbingMEMBER

    Come on fellas If we want to be able to stand on our own 2 feet economically AND be able to independently face the military power of China alone then we need to get the population to at least 250 million.

    50 million dollar houses will be a small price to pay for this new found Greatness!
    It’s our manifest destiny!

    Who’s with me!

  4. Jumping jack flash

    Obviously the kickbacks from the realestate, retail and services lobbies are just too sweet to pass up.

    But realistically they dont have anything else except immigration at this point, its not like they can increase production and productivity on all those state-owned factories building useful items to sell the the world to create new national income in an environment where the private sector sees no value to do so.

  5. Interesting tactic though. Drag that unholy abomination out of its shadowy hiding place for all eyes to take in its abhorrent form. The population ponzi.

    Had people talking about it yesterday. And it was damn hard for people to argue that it wasn’t a ponzi.

    4D chess.

  6. Post the covid and even before the covid particularly Vic and NSW were basket cases and now each have over $100 bill of debt and if interest rates rise then austerity will have to be imposed. Already there is a huge deficit in these state in hospitals ,infrastructure etc and they have bloated public services immune from hardship. Watch Kean and Pallas come hard for WA GST!! As Leith has argued so often the mass immigration is a ponzi and must crash without some sort of value adding plan.

  7. Camden HavenMEMBER

    Defined benefit pensions are owed to a couple of generations of NSW public servants police teachers et al.

    That is what is driving the policy, UNFUNDED obligations to boomers. (ps I’m a boomer)

  8. Ok, I’m going against my natural instinct here and the likely balance of probabilities outcome BUT… So far all we know is that

    – Domenic has expressed strong views against this strategy in the past
    – The scum at the top of the pond is well aware of this and thus they has an action plan ready to go from day 1
    – That action plan involved gathering a large group of ‘names’ to publicly bombard him with their lobbying demands (aka economic research) within days of his inauguration which is a pretty standard play in any power transfer right?

    What we don’t yet know is if he will/can resist this or simply succumbs to the lobby and goes turn coat.
    What he needs now is a ‘group’ with equally impressive sounding titles that will publicly refute the lobby scum on his behalf.

    I don’t see the latter happening to any great degree, given that debate on such issues is a dog whistle to every fake progressive/woke warrior out their (‘see, we told you so, he is a xenophobic catholic’ plays so much better than ‘he’s a conservative catholic’ ).

    But hey, I will reserve judgement until the man speaks on the issue, or more importantly, acts on it.

  9. Perrotet made some comments to the AFR about the push for higher migration in today’s paper. It seems he is still on the cautious side which is good. Unfortunately it is behind a pay wall, so no point linking the article here.

  10. I suspect that this whole discussion is stage-managed.

    So far we are told that certain unnamed big shots want 2 million extra immigrants.
    Perrotet will then come out and say he has listened to the people’s concerns about lack of infrastructure and he shares their concerns and will protect them.
    Perrotet will then announce a massive reduction in immigration, DOWN from the 2 million to just an extra 500,000 immigrants.

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