For years, I have wondered why state premiers don’t push back harder on the federal government’s mass immigration policy.
The federal government collects around 80% of the nation’s tax revenues, while the states and local governments collect only around 20%.
This ‘vertical fiscal imbalance’ means that the federal government collections the lion’s share of benefits from mass immigration via the increase in personal and company taxes.
By contrast, the bulk of the costs of mass immigration – including infrastructure and public service provision (e.g. schools and health care) – falls on the state governments.
The states have responded to 20 years of high immigration by selling-off all manner of public infrastructure, alongside engaging in public-private partnerships (PPPs) to supply toll roads and other infrastructure and public services.
These privatisations and PPPs have, in turn, raised user costs for residents.
Despite these asset sales and cost-shifting, Australia’s state government’s are drowning in debt, while roads, railways, hospitals and schools have become increasingly crush-loaded under the never-ending immigration flood:
Source: Alex joiner (IFM Investors)
The states are, therefore, the victims of the federal government’s mass immigration policy and the political system’s vertical fiscal imbalances.
Finally, the states have pushed back, making a joint submission to the federal government’s migration review, which demands a greater say in the nation’s immigration policy as well as more federal funding for infrastructure:
“State premiers are seeking a bigger say on the country’s migration intake out of growing concern at the population pressures in the major cities, as they slam the federal government for cancelling funds for road and rail projects.”
“Angry at the $11 billion cut to future projects, the premiers want to overhaul the visa system to give state authorities the right to name the skilled occupations they need to fill workforce shortages.”
“NSW Premier Chris Minns on Monday called for more federal help to deal with the state’s growing population after Victorian Premier Jacinta Allan warned against the federal infrastructure changes and Queensland counterpart Annastacia Palaszczuk attacked the “outrageous” cuts to future projects…”
“Minns said NSW citizens contributed more than a third of federal taxation revenue and deserved more support on road and rail projects when the population was growing”….
“We’ve got the biggest population and we’ve got the biggest expected increase in the population in the coming two years.”
“We need critical infrastructure to keep this state going, to keep the economy moving and that can only happen from the deeper pockets of the Commonwealth government.”
I’m sure the federal government would be far less enthusiastic about running a ‘Big Australia’ mass immigration policy if it had to split the financial costs with the states.
I recommend that state governments demand $100,000 in funding per permanent migrant that settles in their state to cover the lifetime cost of their infrastructure and services.
