Grattan Institute spins more immigration fairy tales

The ‘Big Australia’ boosters at the Grattan Institute have released another Panglossian report on Australia’s immigration program – essentially 154 shiny pages accentuating the positives and eliminating the negatives.

Of particular note, Grattan spruiks that “skilled migrants in particular tend to be younger, higher-skilled, and earn higher incomes than the typical Australian”, only to later admit that “the median (i.e. typical) wages for TSS [temporary skills shortage] visa-holders in Australia is $75,000 today, less than the median full-time wage in Australia of $82,000 a year” and that “a growing share of TSS visa-holders are employed on low wages with one quarter earning less than $62,000 a year”.

The below Grattan chart also shows that migrants tend to earn less than those born in Australia across age groups of 25-34 and above. This is especially true of migrants that arrived less than 10 years ago:

Migrant pay

Grattan then tries to argue that the collapse in immigration over the pandemic has not benefitted Australian workers:

Many Australians worry that migrants are going to take jobs or suppress their wages. But there is limited evidence that immigrants ‘take jobs’ or materially reduce the incomes of Australians, at least in aggregate…

The closure of Australia’s international border in response to the pandemic, together with the rapid recovery in Australia’s labour market, have led some commentators to conclude that border closures are the main driver of Australia’s recent strong labour market…

But fewer migrants largely reduced both the demand for and supply of labour in Australia, and is likely to have had little impact on the employment prospects and wages of Australian workers at the aggregate. Recent Grattan Institute analysis showed that unprecedented fiscal and monetary stimulus, rather than closed borders, is the main driver of Australia’s record-low unemployment rate.

MB comprehensively destroyed (here and here) Grattan’s shoddy analysis claiming “that unprecedented fiscal and monetary stimulus, rather than closed borders, is the main driver of Australia’s record-low unemployment rate”. If Grattan’s claim was true, then how have Australia’s unemployment and underemployment rates collapsed to a multi-generational lows:

When employment growth has lagged the pre-COVID trend?

And both the labour force participation rate and employment-to-population ratio are at all-time highs?

The answer is obvious to all but the immigration shills at the Grattan Institute: Australia’s labour supply has stagnated on the back of the collapse in immigration, meaning that jobs have gone to unemployed Australians rather than migrants.

As shown in the next chart, Australia’s civilian population aged over 16 has gone from growing strongly (circa 25,000 people a month pre-pandemic) to growing only slowly:

Had immigration continued at its pre-COVID level, Australia’s civilian population aged over 16 would be roughly 450,000 larger than it is currently. In turn, both unemployment and underemployment would be significantly higher and the employment to population ratio would be much lower (due to an increase in the denominator).

Don’t just take my word for it. Professor Bill Mitchell’s – Chair in Economics and Director of the Centre of Full Employment and Equity (CofFEE), an official research centre at the University of Newcastle – estimates that Australia’s unemployment rate would be 2.7% higher if immigration continued at its pre-COVID trend:

But wait, Grattan’s gaslighting doesn’t stop there. It also falsely claims that Australia’s capital stock has kept pace with the explosion in our population from mass immigration:

Some worry that Australia’s comparatively high levels of migration reduce the amount of capital, the equipment, buildings, land, and other assets that each Australian worker has to work with, thereby reducing their wages. Yet capital investment appears to adjust quickly to, and often in advance of, migration that adds to the labour supply. Australia is a small, open economy with good access to global capital markets. Australia’s capital stock per person has risen rapidly over time. Australia’s current immigrant intake is planned ahead and, despite some yearly fluctuations, relatively consistent.

Of all the heroic claims made it its report, this one is arguably the most egregious. It flies in the face of the lived experience of Australians in the 15 years prior the pandemic, whereby they witnessed all forms of infrastructure – both economic and social – become crush loaded under the never ending immigration deluge.

Grattan’s statement also contradicts its incessant complaints about housing shortages and infrastructure bottlenecks, as well as Australia’s declining productivity as immigration boomed.

If migrants are so much more productive than locals, and “Australia’s capital stock per person has risen rapidly over time… [and] appears to adjust quickly to, and often in advance of, migration”, then why has Australia’s productivity performance deteriorated so badly?

Finally, Grattan’s love affair with ‘Big Australia’ immigration highlights its broader contradictions across a number of policy areas, including:

To put it bluntly, the Grattan Institute suffers from a chronic case of cognitive dissonance surrounding immigration.

Grattan’s undying support for mass immigration directly contradicts its other policy goals.

Of course, advocating lower immigration would aggravate Grattan’s big business financial backers, so it wouldn’t want to do that, would it?

Unconventional Economist

Comments

  1. SoCalSurfCreeperMEMBER

    Of particular note, Grattan spruiks that “skilled migrants in particular tend to be younger, higher-skilled, and earn higher incomes than the typical Australian”, only to later admit that “the median (i.e. typical) wages for TSS [temporary skills shortage] visa-holders in Australia is $75,000 today, less than the median full-time wage in Australia of $82,000 a year” and that “a growing share of TSS visa-holders are employed on low wages with one quarter earning less than $62,000 a year”.

    This is clearly driven by racism and has nothing at all to do with poor quality, poorly educated migrants with severely limiting communication challenges. Someone should legislate equality of outcomes, stat!

    • Charles MartinMEMBER

      “Someone should legislate equality of outcomes, stat!”
      I’ll guarantee Labor/Greens have this already drafted and ready to go.

  2. sps179MEMBER

    The problem is, this report could pretty much have been written by Chalmers and Her Majesty’s Opposition. They too allow Frydenberg to claim credit for 4% UE. They too prefer unending mass migration to local jobs and wages. They too fib that we can build (“congestion bust”) our way out of the migration crushes in the big-city mortgage belts.

    • Grand Funk RailroadMEMBER

      Exactly….

      When it comes to Immigration …….

      We have choicest grade smooth progressive bullshit to the left (refined of unpleasant facts, and extra creamy )

      and

      Extra Pungent Conservative Bullshit on the right (with extra crunchy bullshit nuggets)

    • hareebaMEMBER

      Yep. Labor refuse to talk about why the Unemployment rate is 4%. Nearly everyone on here piled into Totes’ views on Labor and how they have betrayed the average worker. I still don’t see how he was wrong. To my eye Labor are the problem. No opposition.
      Morrison and co are horrible grubs but Labor on economic policy and corruption are much the same.

      • drsmithyMEMBER

        Nobody disagreed Labor abandoned workers.

        The “pile-on” was from a) trying to blame Labor when the LNP has been in power for 20 of the last 25 years, and implemented basically all of the root problems, including destroying unions (and manufacturing to achieve that), undermining workers rights, gutting the public sector and a migration program focused on high-volume, low-skill, temporary workers; and b) trying to argue it had something to do with “the left” when the outcome is entirely due to the significant shift to the right by both major parties.

  3. BoomToBustMEMBER

    The Gratten institute lacks credibility on many levels, when you understand where their funding comes from and the conflicts of interest are rife. For instance during COVID the advice provided aligned with thr narrative, a lot of their funding comes from the Bill and Melinda Gates foundation. Bill Gates is heavily invested in vaccines and is openly saying they have been an excellent investment (it’s on video somewhere). Before anyone listens to a word from these types of organisations first you must know who is paying them.

  4. “But fewer migrants largely reduced both the DEMAND for and supply of labour in Australia, ”

    Here they literally confirm it’s a Ponzi scheme, or at the very least faux shortages, the more immigrants arrive the more we need to service them! This is the excess of immigration we don’t require, remove them and perhaps wages, productivity & lived experience will improve.

    Their report is full of holes & contradictions.

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