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The Forum > Article Comments > Immigration is the elephant in the election room > Comments

Immigration is the elephant in the election room : Comments

By Peter Wilkinson, published 22/6/2016

And it is a very big elephant; the bipartisan target is over 200,000 for 2015/16, about the population of Hobart.

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I am a town planner and can assure you that our current rate of population growth is unsustainable. The solution is to return to our long-term net migration average of 70,000 a year. This was the figure before the Howard years. I recently wrote this article outlining the reason why we shouldn't ignore this important topic: http://www.candobetter.net/node/4858
Posted by Nedlands, Thursday, 23 June 2016 7:42:47 AM
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Rhian,

There have been a number of economic reports on immigration from around the world, such as the 2008 House of Lords report in the UK. They all seem to agree that mass migration only has a small per capita economic benefit, if that. See also the graph on page 155 of the Productivity Commission report. Male wages in the US have been mostly stagnant or declining since the 1970s, despite high immigration.

http://www.stateofworkingamerica.org/chart/swa-wages-figure-4c-change-real-hourly-wages/

How is this possible if immigration is as wonderful for the economy as you say it is? How are those men better off, especially with massive inflation in costs for higher education, health care, etc.? There are more opportunities for women, but there are also plenty of exhausted mothers who wish that they didn't have to work so many hours.

Our GDP per capita has gone up, but it has been fairly stagnant compared to our previous growth. Has it occurred to you that we need more of it than other OECD countries because of the infrastructure demands due to the population growth? Assuming an average 50 year lifespan for infrastructure, a country with a stable population would need to spend about 2% of the original real cost of the infrastructure on repairs and replacements, which Jane O'Sullivan has estimated at about 13% of national income. If your population is also growing at 2%, then your need to spend on infrastructure doubles because the new arrivals need the full complement of infrastructure immediately. At the same time your tax base has only gone up by 2%. The newcomers will (probably) eventually pay for what they use, but it may take decades.

Our infrastructure is overstretched and crumbling because the politicians aren't game to raise taxes sufficiently to cover it. They could borrow the money, but then they would have to stop the Population Ponzi in the future to allow it to be paid back.

Hasbeen is correct. There will be some pain in moving away from the Ponzi, but it is unsustainable anyway. The pain can be minimised with careful management of the transition.
Posted by Divergence, Thursday, 23 June 2016 9:36:10 AM
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For every extremism, there is an equal and opposite extremism.
Posted by Shockadelic, Thursday, 23 June 2016 10:52:28 AM
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Divergence

I agree that the economic benefits of migration for the resident population are not large. But most studies do show a net positive.

Australia has a larger proportionate migrant intake than the USA, and here real wages have risen steadily for years, only recently taking a small backward step. According to the ILO, Australia’s real wage growth has been the strongest of the developed G20 economies in recent years, followed by Canada (another high migration country).

http://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/@publ/documents/publication/wcms_324678.pdf
(Figure 5 page 7)

The recent slowdown in wages has coincided with a sharp decline in net overseas migration, down from a peak of 315,700 in 2008, to 167,600 in the year to September 2015. Typically, the periods when Australia experiences the fastest growth in net migration are also periods when it experiences the strongest real wages growth.

To me this is not at all surprising. Migrants are attracted when the economy is strong, but net migration falls when it is weak. The common cause behind these trends is the business cycle, and especially in Australia the boom and bust in commodity prices and demand in recent years. Real wages are falling due to the loss of high-paying mining and engineering construction jobs, and relative growth in low-paying sectors like tourism.

The data refute the proposition that high migration causes real GDP or wages to stagnate.
Posted by Rhian, Thursday, 23 June 2016 12:25:01 PM
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Rhian,

Of course there are other factors involved in wages, but I am glad you agree that the per capita economic benefit is small. The Productivity Commission model in the 2006 report showed a per capita benefit of less than $400 by 2024/5 You don't discuss the infrastructure issue, even though it has a serious impact on people's lives if they have to waste hours every week on crawling through heavy traffic or circling in a frustrating hunt for expensive parking, or if their child's school is overcrowded and demountable classrooms cover the playground.

There is good evidence that there is displacement and wages are depressed in the community for some groups of existing residents. See

http://articles.latimes.com/1988-03-18/news/mn-1878_1_illegal-aliens

http://www.ijreview.com/2015/06/337514-disney-world-fires-tech-workers-requires-train-immigrant-replacements/

The data certainly don't refute the position that those black janitors' or tech workers' wages were caused to stagnate, or rather disappear.
Posted by Divergence, Thursday, 23 June 2016 2:37:39 PM
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Hi Divergence

Yes, we need more houses, roads, schools and hospitals with a growing population, but we also have more taxpayers and consumers to pay for them. For some infrastructure, economies of scale mean that average costs are lower when population is larger. Other services need a minimum population level to be viable. That's why Sydney has a opera house, but not Wagga Wagga.

It may be that black janitors in LA suffer lower wages because of competition from illegal aliens. But white miners in WA clearly don’t. The USA has far less regulated labour markets than ours, and illegal immigrants are often not covered by the few rules that do exist. In our labour market, 457 visa workers can only be recruited if there is no suitable local labour available, and must be paid the same as local employees.

Perhaps I should have said “The data refute the proposition that, in Australia, high migration causes real GDP or wages to stagnate”.
Posted by Rhian, Thursday, 23 June 2016 3:18:16 PM
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