Finance Finance News The time has come to turn immigration rates on their head
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The time has come to turn immigration rates on their head

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Australia has a high birth rate, but even higher immigration. Photo: Getty
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One of the issues certain to feature in the next federal election is Australia’s rampant population growth, more than half of which is due to immigration.

It’s a vexed debate because it is usually conducted just a hair’s breadth away from xenophobia or blatant racism – making it a well of support for politicians who wish to ‘dog whistle‘ on those issues.

That’s a pity, because as economist Judith Sloan noted in The Australian on Tuesday, the issues need a much better hearing: “…we are effectively being asked to look over there – we are deporting a few hundred failed asylum-seekers – while the large-scale immigration program is simply allowed to roll on.”

While it continues, it is blamed for a host of social ills.

Economist Leith van Onselen, for instance, has railed for years against the high levels of immigration that became the norm during the years of the Howard government (see chart below).

In particular, he focuses on the way the flood of new Australians:

  • pushes up house prices by ensuring demand continues to outstrip supply;
  • puts strain on creaking infrastructure, particularly road and rail; and
  • inflates headline GDP numbers, while per capita GDP growth remains weak.

They are good arguments, especially for the bulging capitals of Sydney and Melbourne where house prices are ridiculous, trains are packed tight and major roads are grid-locked twice a day if not more.

 

There is, however, a political danger that comes with these arguments – beyond the obvious whipping up of xenophobia.

Admission of failure

If we got the balance wrong in the past 15 years on housing/population, infrastructure/population and growth/population, cutting immigration would seem to be the obvious answer.

But attacking the population side of the equation is a bit like the old joke about religious puritans – that they ‘don’t like sex, because it can lead to dancing’.

When it comes to immigration, we ‘don’t like people, because they can lead to policy failure’.

But it’s the policy failure we need to stay focused on, and to do that we need to see ourselves in a global context.

For the sake of meaningful comparisons, it’s important to remember that ‘habitable’ Australia is not as big as it seems. About 90 per cent of our landmass is out of bounds, if you go by where our population actually wants to live.

What’s interesting about the remaining 10 per cent is that it is sparsely populated by global standards.

Taiwan, to take an extreme example, is an island with a population very close to the size of our own, but with a ‘habitable’ strip along its west coast about one-sixtieth (1.7 per cent) the size of Australia’s habitable regions.

Of course, we shouldn’t all become apartment dwellers, crammed into the kind of dense conurbation seen in Taiwan.

But it’s not hard to see that Australia isn’t full of people – only full of politicians who have stoked a property bubble without boosting supply, failed to invest in adequate infrastructure, and have tricked the nation into believing that jobs will flow from a historic run-up in private debt.

Glimmers of hope

There are some signs this destructive pattern will be broken in the years ahead.

In this year’s budget the Turnbull government committed to the nation-building Melbourne-to-Brisbane inland rail project as well as the second Sydney airport.

It has pledged billions to other transport programs across the country – a tacit acknowledgement that now is the time to stimulate job creation and boost productivity through better infrastructure.

And it has been openly discussing relocating public service jobs to regional centres to boost their economies and draw workers away from capital cities.

That’s all a start, but the government continues to defend the tax breaks flowing to property speculators that have sucked capital away from genuinely job-creating investments in the past 15 years.

Tax breaks for the regions, or for genuinely productive industries, would have produced a better outcome.

In short, the government has to take its share of the blame for creating an under-populated nation that ‘can’t afford’ to house new migrants, or provide them with services and jobs.

So in the short-term immigration levels will need to be cut. But in the longer-term we need to stop blaming willing, hard-working, would-be migrants for the policy failings of Canberra.

We are – or at least should be – much bigger than that.

Disclosure: The author is a first-generation migrant

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