Zero immigration and sustainable populations

In April 2006 the Australian Government Productivity Commission published a report entitled Economic Impacts of Migration and Population Growth. The study included economic modelling of an increase in skilled migration of an extra 50,000 migrants per year, for 20 years, compared to the skilled migration numbers in 2004-05. Some of the conclusions were:

• economic gains accrue mostly to skilled migrants and capital owners (page 151);
• hourly wages will drop slightly under high immigration (page 161);
• the incomes of existing resident workers grows more slowly than would otherwise be the case (page 151);
• these results are consistent with research both in Australia and overseas (page 161); and
• environmental impacts are likely to impose a drag on productivity and living standards, but the details are "too hard" to quantify (page 122).

This is not a report by some racist group that wants to limit immigration to keep Australia white. This is not a report by some deep green environmental group that wants everybody to live in communes and wear jute shirts. This is the Productivity Commission. The Productivity Commission - primarily an economic research organisation.

If the economic case only benefits the capital owners and makes the average citizen worse off economically, without even considering environmental and sustainability impacts, why is it being done?

The obvious answer seems to be that the capital owners are running the show for their own benefit, at the expense of the average Australian. And why shouldn’t they. Their goal is to maximise profits and high immigration helps them do that. High immigration increases the supply of workers. Increased supply of labour, lowers the cost of labour. Lower labour costs means an increase in profits.

High immigration also increases the supply of consumers. Increased demand means higher prices. Higher prices mean increased profits. It’s a double bonus. Higher profits from lower labour costs and higher demand. Whoopee.

But something that obvious would be quickly exposed by the ever diligent media. Or perhaps they have other incentives. On October 28, the Sydney Morning Herald ran an editorial entitled “Keep the doors open”. The sales pitch is that Australia needs high immigration to have solid economic growth and then the implication is that this economic growth will benefit every Australian. But it just isn’t so. The editorial writer’s trick is to say that “the 2006-07 migrant intake benefited the economy by $516 million in the first year” and then we are supposed to think that we got some of that $516 million. The SMH is smart enough to make sure they don’t mention that the average Australian gets none of that massive $25 per person.

With a significant part of newspaper profits coming from real estate advertising, it is not hard to understand why newspapers pump up the housing market, but how far can their logic be stretched. They admit that there is a housing shortage, rents are too high and finance is hard to get in the current climate, so the answer is … wait for it … bring in a lot more people to increase the demand for housing. That will make housing harder to obtain, rents will become higher and finance harder to get, but it will increase profits for the housing industry. At least we know who comes out ahead.

Another angle we hear is that we need immigration because we have a skills shortage. What that really means is: we have a skills shortage at the salaries we are willing to pay. We never have a skills shortage for investment bankers. We always have plenty of them, because they get paid a motza. We have a shortage of qualified tradesmen because it is a really tough job that doesn’t pay very well. If the pay was increased, there wouldn’t be a shortage of qualified tradesmen, but that would reduce the profits of the construction companies and factory owners. The easier solution, for business, is to call for increased skilled immigration to keep wages down and profits up.

The skills shortage is a major change from the usual “can do” attitude of business. For example:

• ask business what we should do about climate change and they respond, “Business can sort that out - use market forces with a carbon trading scheme and use geosequestration in coal fired power plants”;
• ask business what we should do about water shortages and they respond, “Business can sort that out - build new desalination plants, dams and pipelines”;
• ask business what we should do about Fossil Fuel depletion and they respond, “Business can sort that out - replacements for petroleum will be found as soon as the price gets high enough”;
• ask business what we should do about depletion of farmland and they respond, “Business can sort that out - market forces from higher food prices will give farmers incentives to repair their land”; then
• ask business what we should do about the skills shortage and they respond “Oh, nothing we can do. Government needs to bring in lots more skilled migrants or the Australian economy will fall apart.”

Another issue sometimes associated with immigration is the ageing population. Most commentators know that increased immigration doesn’t significantly slow the ageing of the population, because the average age of migrants is only a little less than the average age of the overall population and migrants age, just like existing residents. Not everybody is clear about that, though.