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Population Growth and the Australian Economy

December 18, 2010

The economic arguments just don’t add up – that is, for high immigration .

My view has been reinforced after serving on the Federal government’s panel looking at population and sustainability. Take skills shortges, for example. Relying on immigration to fill shortages simply makes the shortages worse. Why ? Because almost every imported tradesperson brings dependents . They add to the pressures on infrastructure without, for the most part, making a contribution to filling job vacancies. Immigration adds more to the demand for labor than it contributes to the supply. Heather Ridout and the business lobby – businesses who want skilled workers on the cheap without spending money on training – don’t rebut this truth but simply resort to repeating ad nauseum the old slogan that prosperity can be only achieved by run-away population growth. There is, incidentally no OECD modeling that supports their link.

Here’s a truth : immigration does nothing to lift the living standards of the existing population. True in Australia, and confirmed by the House of Lords inquiry in the UK where Tony Blair presided over a great immigration surge that contributed to Labour’s defeat and is now regretted on both sides of politics.

By the way, the resources sector represents only three percent of Australia’s labor force. Their bleatings about shortages can’t be allowed to drive an out-of-control immigration policy that is putting huge pressure on Austrlian cities. ( It was a real factor in the six percent swing against the Brumby government which relied on population growth to drive the economy through urban sprawl and intensification ).

To put it another way, Howard doubled the intake and Rudd maintained this rip- roaring growth to satisfy the board room orthodoxy, the received wisdom inhaled from Financial Review opining.

All we got was a hothouse boom in building and construction that priced housing beyond struggling families and,beyond this sector,no economic gain – just grotesque pressure on infrastructure in south east Queensland as much as Sydney and Melbourne . We all support immigration but this debate has been about the level and ambition of the program.

The case for pegging it back is supported by the Australian people and they will expect the Gillard government to have lower annual intakes after the PM’s strong comments in the first week of the last Federal campaign. On this, the business lobby is wrong and can be politely ignored.

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