Red faces over the Immigration Department’s 'Red Book'.

It seems that DIAC, the Department of Immigration and Citizenship, can't grasp the idea of sustainable population.

The Australian Financial Review (6 January 2011) contained a scoop that has left red faces in the Immigration Department. [‘Bigger Australia a must: Immigration’, Steven Scott, 5 January 2011]. Under Freedom of Information, the Fin. Review has got hold of large chunks of the Department's "Red Book", the briefing papers it offered to the incoming Gillard government after the 2010 federal election. Though much was censored, even what remains is an eye opener. Steven Scott reports:

The Department of Immigration said "it is unclear what level or range of NOM (net overseas migration) is compatible with sustainable population growth". But it warned a figure of about 180,000 a year would be needed to "enable the labour force to continue to grow at around 1 per cent per annum, offsetting the impact of population ageing".

If the Red Book’s authors had been writing an undergraduate essay they might well have been failed for their failure to grasp the concept of a sustainable population. This has the well-understood meaning in biology of a human population that can live off its environmental "interest" without running down its environmental "capital". They also fail to mention the Australian Academy of Science’s advice that to push population beyond 23 million (not far from the present 22.5 million) would be irresponsible, and would damage both the environment and the quality of life of future generations. Why, despite computerization and automation, we need an ever-increasing workforce, is also not explained.

Nor do the authors of the Red Book seem to understand that there is no such thing as sustainable population growth, at least not if by growth you mean (as they do) steady percentage growth, a form of compound interest that rapidly accumulates - or rather, multiplies exponentially. The statistician Professor Albert Bartlett has pointed out that at a steady growth-rate of 1% a year (which the Red Book seems to regard as modest) it would take less than 18,000 years before the number of human bodies in Australia exceeded the estimated number of atoms in all the stars in all the galaxies in the universe! On a shorter scale, Java in 1800 had a sustainable population of under 5 million and a largely intact natural environment. It took less than 200 years of growth, at rates less than the Department has presided over in Australia, to turn it into one of the most crowded places on Earth. On a still shorter scale, Bartlett points out that our current 1.8% annual growth would, if continued, produce an unfeedable 100 million Australians before the end of this century.

It seems the authors of the Red Book tried to deter Gillard from her promise to the electorate that if re-elected she would discard Rudd’s “big Australia” in favour of “sustainable population”. Scott reports Labor has been told it faces a budget black hole from a large and protracted drop in foreign students wanting to study in Australia that will not be offset by increased business appetite for skilled migrants.

Note the assumption that immigrants bring major economic benefit, which the Department re-erects as an assumption despite repeated refutations, most recently from the Productivity Commission.

Scott continues:

Changes to the Migration Program have a direct budget impact through revenue lost from visa application charges and an indirect effect through migrants' net revenue contributions," the red book says. "This indirect effect is large and positively associated with the size of the Migration Program.

Note the absurd attempt to raise concern by suggesting that the Department’s visa fees are an important part of the national balance sheet, which will be lost if NOM falls. The Red Book fails to mention a crucial point made by Jane O’Sullivan in Online Opinion last year. Each extra Australian, whether added by natural increase or by net migration, imposes infrastructure costs of over $200,000. (Indeed William Bourke has since argued that the costs may be as high as $500,000 per person. Such costs utterly dwarf any economic benefit immigrants bring to the department's budget through visa fees, or indeed any contribution to campus budgets.

If living standards are not to fall, this extra infrastructure ought to be provided in advance of each newcomer’s arrival, in which case the pre-existing population will pay in full. If the provision of infrastructure is allowed to slip into arrears, then the newcomers (through taxes) will pay some of the cost; but both they and the pre-existing population will also pay in a different way, by suffering the frustrations of inadequate infrastructure (e.g.over-crowded trains, traffic jams, hospital queues). It is no secret that the areas of Australia with highest rates of population growth are showing exactly this problem. Moreover, even if one takes the lower figure of $200,000, O’Sullivan shows that at recent population growth rates it is simply not possible for governments to raise enough money through taxes to pay for the infrastructure required.

The Red Book's claim about the crucial value of "migrants' net revenue contributions" is thus an untruth. As reported in my book This Tired Brown Land, the Department made repeated attempts in the 1980s and 1990s to prove that immigrants are (on average) net contributors to consolidated revenue. The most that could be proved was that immigrant Australians eventually become, like the rest of us, net contributors. (After all, how would the law-courts or diplomacy, or indeed, government, be funded if citizens did not on average give the government far more money than they get back from it?) However the Department’s most thorough study, carried out by Professor Russell Matthews, showed just the reverse: that new migrants are a large net cost and have strong impoverishing effects on government budgets. It is alarming to find the Department implying otherwise.

They also seem in need of the Carr Report’s lucid warnings against those who spread the Ageing Population Scare, and the myth that we are short of workers. [Carr, B 2010, Sustainable Development Panel Report, Chair the Hon. Bob Carr]. Yet as Scott notes, the Red Book follows the implausible claims of Heather Ridout, whose “Australian Industry Group” represents big employers and who has established herself, according to the Australian’s Niki Savva, as the government’s “business lobbyist of choice”. The Fin. Review article continues:

This argument backs pro-growth advocates such as Australian Industry Group chief executive Heather Ridout the leader of one of the advisory panels for the government's sustainable population policy, who argued that the economy needed population growth and could manage this with better co-ordinated urban planning and infrastructure.

Well they would say that, wouldn’t they? Big employers can save as much as $10,000 per employee if they can import them pre-trained rather than either providing apprenticeships or paying properly for skilled labour so that young Australians would find it worthwhile to acquire skills and degrees - and would stop taking their skills overseas. (Employers, in other industrialized countries with only a fraction of Australia’s per capita immigration levels have to pay world market rates for skilled labour). It’s no skin off employers’ noses if an Australian is left untrained and on the dole while they save their $10,000 - even if the taxpayer has to cough up for an infrastructure bill ten, or twenty, or even fifty times as high. Yet shouldn’t the immigration department be on the public’s side rather than on the side of the Big End of town ? - hard though that might be, when the Big End of town is already in bed with the government.

It is even more alarming to find the Red Book hiding behind the old cop-out that the environmental and resource costs of population growth don’t matter because better planning and “new infrastructure” will solve them.

The department rejected arguments about "an implied trade-off between growth in GDP per capita and other measures of well-being, such as environmental preservation and reduced congestion". It said this was a "false dichotomy" because "it is possible to mitigate environmental impacts and congestion through effective planning and provision of new infrastructure".

There are no grounds for such optimism in Australia’s recent State of the Environment reports, which identify population growth as a major cause of our declining environment, nor in the Academy of Science’s warnings, nor in the Australian Conservation Foundation’s recent (and superbly documented) application to have population growth listed as a threatening process. Indeed the government’s own 2009 report to the UN on its environmental situation lists population growth as a major problem. [See Australia’s fourth National Report to the United Nations Convention on Biological Diversity, 2009, p. 19].

What can have put so large a beam in the collective eye of the Red Book’s authors? I suggest the following explanation.

The public service selects its future high fliers from honours graduates in a wide range of disciplines. However it has long been obvious to ambitious public servants that economics is the government’s number one concern, and that a second degree, in economics, is almost essential. Till recently, most Australian students of economics were indoctrinated with an intense form of growth economics, which led them to see maximising GDP as a (or the) main aim of economic policy.

Now GDP is a measure of the amount of goods and services being produced and consumed. It is axiomatic that unless putting more people in the country makes them all very much poorer (a possibility neoclassical economists were reluctant to consider) then more people must mean more goods and services, and thus a “better” GDP figure. This simplistic assumption that population growth is good (and can go on forever) seems to lurk behind many of the passages the Fin. Review quotes. Many of the younger economics graduates in the public service are well aware of alternative economic theories; but it is a brave young bureaucrat who espouses ideas like those of Steve Keen or Herman Daly in front of superiors who have prospered through simple faith in growthist economics.

As well, Murdoch’s Australian behaves like an attack dog, reviling anyone who questions the worship of GDP. ["Dick Smith and the planet", The Sydney Morning Herald (Good Weekend), 13 November 2010, p. 12 ff.] Yet, as Ross Gittins recently remarked, “the economic case for rapid population growth is surprisingly weak”. Indeed two comprehensive articles by Gittins, written after the Red Book was produced but before its claims were made public, leave the authors with nowhere to hide. (See “Punters well aware of economic case against more immigration”, SMH November 24, 2010 and “A few facts would be useful in the migration debate”, SMH December 11, 2010).

This explanation might be reinforced by the Red Book’s revelation that the Department employs more people in communications and PR than in policy. There might be many legitimate reasons for this. However spin-doctors, unlike rattle-snakes, are not immune to their own venom. The presence within an organisation of numerous persons devoted to justifying its conduct, including the very high levels of net migration it has permitted (or has been instructed to permit), risks reinforcing a received wisdom that is contrary to evidence.

Not that the Red Book gets everything wrong. It nails the falsity in Minister Tony Burke’s claims that Australia’s population problem can be solved by intelligent decentralization. The red book says that no policy change is likely to stop about 90 per cent of migrants settling in major Australian cities.

It also admits that its medium-term forecast for immigration is still “above the 180,000 per annum level used by the Treasury in the 2010 Intergenerational Report to project a population of 35.9 million by 2050, a figure that prompted community concern about a 'big' Australia".

And the Department’s remedy ? Well, a section of the documents titled "reducing NOM below its forecast level" was blocked from publication under Freedom of Information laws on the alleged grounds that this could have an adverse affect on the department and was not in the public interest. One wonders…!