Immigration a shot term Capitalist scheme

Sent: Tuesday, August 03, 2010 11:46 PM
Subject: Stop beating about the bush and talk about Big Australia


Stop beating about the bush and talk about Big Australia
August 4, 2010

Something significant has happened in this hollow, populist election campaign: the long-standing bipartisan support for strong population growth - Big Australia - has collapsed. Though both sides imagine they're merely conning the punters, it's hard to see how they'll put Humpty Dumpty together again. Which will be no bad thing.

The original bipartisanship was a kind of conspiracy. The nation's business, economic and political elite has always believed in economic growth and, with it, population growth, meaning it has always believed in high immigration.

Trouble is, stretching back to the origins of the White Australia policy, the public has had its reservations about immigration. Hence the tacit decision of the parties to pursue continuing immigration, but not debate it in front of the children. That's why we've never had a formal population policy.



Illustration: Kerrie Leishman

John Howard used his harsh treatment of boat people to divert attention from his rapidly growing immigration program. Kevin Rudd continued the high immigration, but without the camouflage.

Growing punter angst about the return of the boat people collided with Rudd's announcement of Treasury's latest projection that, given various assumptions, the population could reach 36 million by 2050 and his happy confession to believing in a Big Australia. The punter reaction was negative. Rudd never used the phrase again, but appointed a minister for population whose main job was to repeat that the 36-million figure was merely a Treasury projection, not a policy or a target.

Fanned by the shock jocks and an opportunist opposition, the angst about boat people grew. In her efforts to neutralise the asylum-seeker issue - and, no doubt, informed by focus-group research - Julia Gillard judged it necessary to say she did not believe in a Big Australia. She wanted an Australia that was sustainable, and had added that word to the population minister's title.

But then she claimed population had nothing to do with either natural increase or immigration, which suggests her intention was to make soothing noises rather than change policy. Not to be outdone, Tony Abbott popped up with a policy to get immigration to levels ''we believe are economically, environmentally, and politically, if you like, sustainable''. He planned to rename the Productivity Commission the productivity and sustainability commission and get it to advise which population growth path it considered sustainable.

Gillard and Abbott have attracted criticism from commentators wedded to the old way of doing things, but the end of the conspiracy of silence is a good thing. Whatever the public's reasons for frowning on immigration, it does have disadvantages as well as advantages and the two ought to be weighed and debated openly.

The two leaders' adoption of the term ''sustainable'' has been attacked as vacuous - who, after all, would want any policy that was unsustainable? - but we do need to be sure the population policy we're pursuing is sustainable. That, in Abbott's words, it does not ''rob future generations of the quality of life and opportunities we currently enjoy''.

It's true politicians and economists have used the term to mean whatever they've wanted it to mean, but that's why it needs to be held up to the light. I suspect those scientists who argue we're close to the limits of our natural environment's ''carrying capacity'' are right, and the economists' airy argument that technological advance will solve all problems is wrong.

So let's get both sides out of their corners to debate the issue in front of us. We can't continue treating the economy like it exists in splendid isolation from the natural environment. And even when you ignore the environmental consequences, the proposition that population growth makes us better off materially isn't as self-evident as most business people, economists and politicians want us to accept. Business people like high immigration because it gives them an ever-growing market to sell to and profit from. But what's convenient for business is not necessarily good for the economy.

Since self-interest is no crime in conventional economics, the advocates of immigration need to answer the question: what's in it for us? A bigger population undoubtedly leads to a bigger economy (as measured by the nation's production of goods and services, which is also the nation's income), but it leaves people better off in narrow material terms only if it leads to higher national income per person.

So does it? The most recent study by the Productivity Commission found an increase in skilled migration led to only a minor increase in income per person, far less than could be gained from measures to increase the productivity of the workforce.

What's more, it found the gains actually went to the immigrants, leaving the original inhabitants a fraction worse off. So among business people, economists and politicians there is much blind faith in population growth, a belief in growth for its own sake, not because it makes you and me better off.

Why doesn't immigration lead to higher living standards? To shortcut the explanation, because each extra immigrant family requires more capital investment to put them at the same standard as the rest of us: homes to live in, machines to work with, hospitals and schools, public transport and so forth.

Little of that extra physical capital and infrastructure is paid for by the immigrants themselves. The rest is paid for by businesses and, particularly, governments. When the infrastructure is provided, taxes and public debt levels rise. When it isn't provided, the result is declining standards, rising house prices, overcrowding and congestion.

I suspect the punters' heightened resentment of immigration arises from governments' failure to keep up with the housing, transport and other infrastructure needs of the much higher numbers of immigrants in recent years.

This failure is explained partly by the rise of Costelloism - the belief all public debt is bad - but mainly because the federal hand has increased immigration while the state hand has failed to increase housing and infrastructure.

At its best, the message to the elite from the unwashed of the outer suburbs is: if you want more migrants, first get your act together.

Ross Gittins is economics editor.