Why opening international borders could ruin Australia’s economic recovery

Below is an article I wrote for News.com.au:

It’s been hailed as “early Christmas” gift for hospitality, but reopening international borders could have a big downside.

This week, the Morrison Government announced that Australia will re-open its international border to overseas students, skilled visa holders and working holiday makers, with Home Affairs Minister Karen Andrews expecting that at least 200,000 migrant workers will arrive in Australia by July 2022.

This decision effectively brings forward the Intergenerational Report’s projection of 235,000 annual net overseas migrants from 2025-26 onwards.

The various business lobbies and universities have hailed the decision, with Restaurant & Catering CEO Wes Lambert stating: “This is the biggest early Christmas present the hospitality industry has ever received.”

There is no doubt that rebooting the ‘Big Australia’ mass immigration program is good for business and the Australian economy as a whole.

Increasing the supply of labour via immigration necessarily reduces worker bargaining power and prevents wages from rising too quickly, lowering costs for business. It also abrogates the need for employers to provide training.

Thus, just as wage pressures were beginning to build across the Australian economy, the Federal Government has come to the rescue with a plan to flood the nation with migrant workers, thereby killing prospects of decent wage growth.

More people via immigration also means more consumers to buy goods and services, lifting overall economic growth.

That said, economists’ and policy makers’ obsession with aggregate economic growth is misguided.

Importing more people to simply stimulate economic activity and reduce costs for business is classic ‘Ponzi’ economics that does nothing to boost per capita growth nor living standards.

There is no point growing the economic pie if everybody’s slice of that pie does not improve. This is especially so given the many external costs not captured in the broad statistics, such as increased congestion and worsening housing affordability.

Almost everyone would agree that the pre-Covid mass immigration program of 2005 to 2019 was managed appallingly and crush loaded everything in sight, resulting in widespread infrastructure bottlenecks across Australia’s major cities and reduced liveability.

Lost decade for Australians

The decade leading up the pandemic was a lost decade for Australian living standards and provides a harbinger of what lies ahead for the Australian economy once Big Australia immigration is rebooted.

Australia’s net overseas migration (NOM) jumped from an average of 90,500 between 1991 and 2004 to an average of 219,000 between 2005 and 2019 – representing an annual average increase in immigration of 140 per cent.

In fact, between 2005 and 2019, Australia experienced the fastest population gains among large developed nations, with Australia’s population ballooning by 6.6 million people (35 per cent).

Over this period, Australia’s economy became increasingly reliant on population growth.

While overall gross domestic product (GDP) grew at a solid (albeit slowing) rate, the growth of per capita GDP (which gives a better indication of living standards experienced by the population) fell to historically low levels.

In fact, the Productivity Commission ranked the 2010s as the worst decade for per capita GDP growth in 60 years of data, even excluding the impacts of the 2019-20 Covid-19 recession.

It is a similar story for real per capita household disposable incomes (HDI), with the 2010s recording the weakest decade of growth in data dating back to the 1960s.

Sowing the seeds of another lost decade

Rebooting the same mass immigration policy will achieve similar results – another decade of anaemic per capita outcomes.

What is the point of importing hundreds of thousands of people every year if it does not increase the material wellbeing of the incumbent population and erodes broader living standards by:

• Suppressing wage growth;

• Forcing people to live in smaller and more expensive housing;

• Placing increased burden on infrastructure, driving up congestion costs;

• Degrading the natural environment; and

• Increasing inequality?

The only groups that benefit from high immigration are those that have already hoarded assets and capital, namely the already entrenched, wealthy and corporate interests. Think big business, the property industry, and the education-migration industry.

Sadly, those are also the groups that pull our policy makers’ strings, with the wellbeing of ordinary Australians ignored entirely.

By announcing the return of ‘Big Australia’ mass immigration, the Morrison Government has killed the economic recovery for Australians.

Unconventional Economist
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Comments

  1. Well done, just saw it on News.com.au and was shocked at the honesty of it. Then I saw the MB graphs and knew it was you. Haha. I’m surprised it wasn’t nuked by the editors.

  2. Absolute BeachMEMBER

    Keep the rage Leith. I am furious. I am an employer, and happy to pay a bit more AND train- because it secures more stable long term employees. Temp migrant workers are the antithesis of good long term business planning.

    • I think the next week or two will be interesting to see what happens.
      if it got to hong kong it might be here already.

      • The UK has shut the borders to southern Africa but Fortress Australia is still wide open. ” no quarantine required ” says ill Health Minister Hunt.

      • steven.grellmanMEMBER

        “Too little, too late.” – a sign on the outside of the WWII era 9.2″ concrete gun emplacement at East Point, Darwin NT. Describes Australia’s leadership to a tee.

        “Australia has no plans to restrict flights from South Africa, despite the emergence of a new variant of Covid-19 which has prompted the UK to shut its borders to the country.

        As the World Health Organisation called an urgent meeting to discuss the new variant detected in South Africa, Australia’s health minister, Greg Hunt, said on Friday that officials were assessing the threat posed by the strain and would not yet introduce restrictions on arrivals from southern Africa.” – Michael McGowan, The Guardian, Fri 26 Nov 2021.
        https://www.theguardian.com/australia-news/2021/nov/26/australias-border-to-remain-open-to-south-africa-despite-emergence-of-new-covid-variant

  3. Check out what fun stuff Scummo has just announced

    Joint Media Release Date:25 November 2021
    Further support for international education sector and international students
    Ministers:
    The Hon Alan Tudge MP
    Minister for Education and Youth
    The Hon Alex Hawke MP
    Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs
    The Morrison Government will introduce further targeted measures to support the international education sector to roar back, as international borders reopen.

    More than $37 million will be available to support those international education providers most affected by COVID-19. Extended regulatory fee waivers and additional grants are elements of this.

    In addition, changes to visa settings will also provide much needed flexibility for international students as they set to return to Australia.

    The new settings will extend measures to protect the post-study work rights of international students as well as extend the temporary graduate visa from two to three years for masters by coursework graduates.

    Minister for Education and Youth Alan Tudge said the announcement would accelerate the COVID-19 recovery process for the 2022 academic year.

    “This will help ensure the rapid return of international students,” Minister Tudge said.

    “It provides clear incentives for institutions and students and ensures students are not disadvantaged from being prevented from coming to Australia earlier.

    “The extension of the Innovation Grants will help English language providers who have been hit particularly hard by COVID.”

    While the latest data (as at August 2021) shows international student enrolments are down 17 per cent overall compared to August 2019, the ELICOS sector has experienced the greatest decline in enrolments at 71 per cent for that same period.

    Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs Alex Hawke said changes to visa settings for the international education sector gave students some much needed reprieve as Australia’s borders were set to reopen.

    “The changes are targeted to not only support international students but are also a crucial component of our economic recovery and will help us retain and attract skilled workers.”

    The package includes:

    $27.8 million in regulatory fee relief for the duration of 2022, including certain fees for Australian Skills Quality Authority (ASQA), Tertiary Education Quality and Standards Agency (TEQSA), Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) registrations, and the Tuition Protection Service (TPS) Levy.
    Extension of the current FEE-HELP loan fee exemption until 31 December 2022, benefiting around 30,000 undergraduate higher education students studying at institutes of higher education and public universities.
    An additional $9.4 million to extend the Innovation Development Fund, delivering further short-term targeted support to private English Language Intensive Courses for Overseas Students (ELICOS) providers to diversify their education offerings into online and offshore delivery.
    The new visa settings mean:

    Temporary Graduate (subclass 485) visa holders who have been unable to travel to Australia as a result of COVID-19 international border restrictions will be able to apply for a replacement visa. This will allow current and former Temporary Graduate (subclass 485) visa holders whose visas expired on or after 1 February 2020 to re-apply for a new subclass 485 visa of the same duration as their original visa.
    Additionally, the Morrison Government will increase the length of stay on the Temporary Graduate visa from two to three years for Masters by coursework graduates, matching that of Masters by research graduates. Vocational Education and Training (VET) sector graduates will also receive a two year Temporary Graduate visa.
    The new visa settings will also extend existing measures for students and temporary graduates to recognise time spent offshore studying online to count towards qualifying for a temporary graduate visa.
    These measures will support implementation of the soon-to-be-released Australian Strategy for International Education.

  4. Muttafukaburrasaurus.MEMBER

    It’s been incredible how badly all leaders of mainstream organisations, unions, business groups and most of all political parties have misread the concern of everyday Australians. Inflation (transitory or not) congestion, stagnant wage and crap conditions are all asserting presure to degrade living standards.
    Those CV19/ antivax… whatever protests will eventually find a unifying scapegoat, and there is no limit to the number of occasions throughout history that it’s been immigrants.
    Racist or not, mass immigration is not in the interest of the everyday Australian, and everyone knows it. Tolerance has a limit and the snap back will be fast and furious.

  5. The nu strain from SA may see borders slammed shut again. The Scrotumo knows quarantine will fail and the proletariat will blame him, not the Premiers…

    • My fingers and toes are crossed Swampy. I love the vaccine but I also love the ever evolving virus when it defeats the wicked plans of the LNP.

  6. BaldbadgerMEMBER

    Well written and argued but to me you are preaching to the converted.
    I would be focusing more on what high immigration
    levels do to our natural environment, talk about climate change, limited resources and water scarcity. We worry about enough water and rainfall for the population we have already yet you want to increase that?
    These are issues that the more left leaning worry about and this will bring them onside as well.
    We can increase our refugee intake for humanity reasons showing compassion as well.
    Just my two cents to broaden the argument to those who see high immigration only as cultural diversity and we can all live together.

      • BaldbadgerMEMBER

        I don’t disagree with that but you’re not writing to that audience. It’s the general population and giving a more “left sided” argument will win over those that only see increased population as cultural diversity and we can all live together peacefully.

        • It’s the general population and giving a more “left sided” argument will win over those that only see increased population as cultural diversity and we can all live together peacefully.

          This is a straw man, so refuting it won’t do much.

        • kierans777MEMBER

          I see your point. I think both “types” of articles are important. We need to attack the issue from multiple angles. Getting published with a good angle is a great step.

          • Totes BeWokeMEMBER

            Smith doesn’t want to attack the issue at all.
            He does everything he can to undermine the attack.

            Smith has no more loyalty to Australian kids than the kids of the rest of the world. That’s how the extreme left think. That’s why they’re globalists. No borders nutters.

    • The trouble with this line is that most environmental destruction in Australia will continue regardless of immigration as it is centred on export industries like mining, farming, logging, etc.

      Australia’s actual emissions in the context of climate change are ultimately irrelevant on a global scale, and pursuing that line is typically perceived as a one-step-removed justification for doing nothing to reduce consumption (which is fundamentally where the bulk of change needs to be made since all those people are still going to exist somewhere else, even if it isn’t here). The tends to be reinforced since many people who have suddenly discovered environmentalism as a reason to reduce immigration have a propensity to not care much for other steps – eg: EVs or renewable energy.

      Water security is a solid point, and should be emphasised more IMHO.

      I also agree with UE that the economic arguments in favour of high immigration to to be actively and frequently refuted as well.

      • Totes BeWokeMEMBER

        “Australia will continue regardless of immigration as it is centred on export industries like mining, farming, logging, etc.”

        BS. Almost all the environmental damage is being done on the coastal strip due to development for settlement of people. In addition, more people more industry and exports required to support an otherwise entirely unproductive country.

        Left wing nutters should remove themselves from sensible population debate.

        • Your talking out of your backside, Tokes Bewoke! Murry-Darling Basin, Queensland’s cotton growing country, SW of WA (wheatbelt area), Pilbara, Kalgoorlie goldfields and that’s without having to think about anywhere else like the impact of farming on the GBR. The list is endless.

          I don’t disagree about the impact on the coastal areas, but to claim almost all environmental damage is coastal is bs. Have family in the enviro area and your claim is rubbish.

          • Totes BeWokeMEMBER

            I have personal experience on the inland water systems. They are near dead. They’re gone. Won’t survive.

            Ditto the reef.

            Our environment has been dying for 200 years (mostly inland, now we’re killing the coast). It’s going backwards. Yet we teach kids that if they recycle everything will be okay.

            Do we think more people doesn’t mean more mining and farming?

            The coast can be saved. It’s robust. If we continue to populate it’s fked.

            I understand the science backwards.

            Immigration is the biggest environmental problem in Australia X 100000.

        • BS. Almost all the environmental damage is being done on the coastal strip due to development for settlement of people.

          All of the urban areas in the country only sum to a fraction of a percent of land use.

          Yobbos up in the Far North probably clear more land for laughs than developers do for new housing.

        • As long as dropped-on-the-head right-wing nutters like you stay away from any debate we’ll all be better off.

      • Totes BeWokeMEMBER

        “Water security is a solid point, and should be emphasised more IMHO.”

        It’s by far the weakest point.

        There is so much fat in the water system it’s not funny. Add desal plants too. Are houses flushing their toilets 15 times a day X 9 litres with greywater, or even saltwater yet? No.

        No surprise you misunderstand it.

      • Totes BeWokeMEMBER

        “all those people are still going to exist somewhere else, even if it isn’t here”

        Not true. The reason global population growth has slowed is resources can’t be stretched further outside of the west.

        Bringing a 2 unit carbon emitter to a 10 unit carbon emitting country is stupid on multiple levels.

        • Not true. The reason global population growth has slowed is resources can’t be stretched further outside of the west.

          LOL. China’s massive (and continuing) uplift disagrees. Not to mention the sub continent and Africa.

          Bringing a 2 unit carbon emitter to a 10 unit carbon emitting country is stupid on multiple levels.

          They’re going to become big emitters in their own countries anyway as those develop. And Australia’s overall emissions are negligible in a global context.

          • Totes BeWokeMEMBER

            You are so full of it.

            “And Australia’s overall emissions are negligible in a global context.”

            Per capita, we are as high as anyone on the planet.

          • Totes BeWokeMEMBER

            If we are talking about people coming from a 2 to 10, we are talking per capita, and you know it.

          • Drsmithy to suggest that any countries emissions are negligible in any context is stupid and anti-social.

            Let’s say you are holding some rubbish. An empty chip packet say. You look at the ground around you and see some litter. Do you also litter, drop you chip packet and comfort yourself that “my bit of litter is negligible”?

            Emissions are exactly the same. Every bit counts. Every bit. Unles you are one of the [email protected] that litter in which case your litter and emissions don’t make a difference and you’d be the excrement of the community.

          • Drsmithy to suggest that any countries emissions are negligible in any context is stupid and anti-social.

            As a justification for not doing anything about them, sure.

            But that’s not what I’m saying.

            Simple maths says nothing we do about our emissions will change the climate change outcome over the next century.

            The only thing that would is to stop mining and exporting coal.

            You need to aim your criticism at Totes, mate. He’s the one who thinks something meaningful can be done about climate change by adjusting immigration and therefore we don’t need to worry about consumption, et al, just people (ie: it’s OK to keep littering so long as fewer people are doing it).

          • Totes BeWokeMEMBER

            “we don’t need to worry about consumption,”

            That’s the opposite to what I said. We are big consumers. It’d be great to fix that. Meanwhile it’d be beyond stupid to increase our numbers.

            You leftists are so soft you can’t see how dumb your ideas are. Clouded by emotions. You miss most of any given situation.

  7. I'll have anotherMEMBER

    I agree at this point immigration has been too high over the previous decade and adding this number of new immigrants will erode civil standards.

    Polls seem to show a large majority of Australians agree.

    Question is: What the hell can anyone do about it?