Cut immigration and interest rates


Australia’s greatest bore, Paul Kelly, wrote a long-winded dirge about inflation on the weekend. It included quotes from all the usual suspects: Warren Hogan (the hawk), Saul Eslake (the dove), and Chris Richardson (the fence sitter).

The piece told us precisely nothing other than one sentence:

The danger is that inflation may start to stabilise in the 3.5 to 4 per cent zone. The big drivers in the recent quarter have been education, rents, insurance and health costs.


Of the four, insurance is the odd man out. It is a global phenomenon driven by climate change and post-pandemic shifts in life expectancy.


The other three inflation drivers share one feature that applies immense pressure to supply-side capacity: overheated immigration:

Australian population change

This is both the cause and answer to persistent Australian service inflation. Immigration has been running too hot for too long, driving pricing pressures for crush-loaded critical services.


As we know, no houses are left for anybody, and rent is out of control.

Education is the primary pipeline for mass immigration, and on every measure, campuses are bursting at the seams.

Every measure of the quality and timeliness of health service delivery is blowing out at alarming speed.


This is the simple truth: the population is growing far too fast for the economy’s underlying capital structure to cope with, and inflation at the most exposed contact points is the direct result.

If the RBA hikes because of this (in my view, it won’t because immigration has also killed wage growth), Australians will be paying more again only to ‘make room’ for the immigration that is killing living standards in the first place.

This is not economic management, national interest policymaking, or political strategy. It is a corrupt elite (including Paul Kelly) gaslighting the population.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.