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The Forum > Article Comments > Immigration as the quick fix > Comments

Immigration as the quick fix : Comments

By Tim Murray, published 13/3/2008

Canada's temporary work visas and immigration policy offer some interesting lessons for Australia.

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PaulL

"I am not denying that immigration and council intransigence are contributing factors, merely that they are subsidiary to the main problem."

I believe the converse to be true, but I would use something a little less euphemistic than "intransigence". I find your claim to be deficient on several grounds.

Firstly, negative gearing has been a feature of the Australian housing market for many years. Paul Keating's abolition of negative gearing in 1985 resulted in increases in house prices and rents, as the resultant removal of capital from housing reduced supply more than demand. This real world example implied that negative gearing is in fact a housing market subsidy. Why would your theory be any less invalid today?

http://findarticles.com/p/articles/mi_qa5490/is_199906/ai_n21449586

Secondly, in any commodity, for a given cost of supply, the only way to cause a sustained increase in the price of that commodity in the face of increased demand, is where supply is restricted. Historically, instances of speculative buying of commodities, while often causing spectacular price increases, have ultimately collapsed as new supply found its way to market. In the case of the Australian housing market, there is ample evidence that the cause of unaffordability is the failure of supply to meet demand. e.g.

http://www.pc.gov.au/inquiry/housing

As Divergence has alluded to, it is not the cost of the building that is the problem. So if councils suddenly gave landholders more rights to develop their land, the housing affordability crisis would quickly resolve. Similarly, if immigration were substantially reduced, demand would substantially reduce, with similar effect. And yes, Melbourne in the 1890's provides a real world example of the latter, with a recession and plague outbreak thrown in for good measure.

"I don’t read enviro magazines because the environment has become a quasi religious topic where feelings have replaced facts."

In light of your belief in a theory which has proved to be false in practice, would you say that you have been hoist by your own petard old bean?
Posted by Fester, Thursday, 20 March 2008 9:36:45 PM
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"Therefore total arable land in Australia is 467,000 square kilometers. In Indonesia that figure is 110,000 square kilometers. Considering that we have 1/10th the population of Indonesia that means we have 40 times more arable land per person."

Isn't this a good thing? Is it a bad thing? And I would point out that your calculation ignores the fact that Indonesian arable land has about four times the yield of Australian arable land, and that the daily energy intake of Indonesians is only a little over half that of Australians. Then there is the consideration of the meat component of the respective diets. One unit of energy of meat takes about seven units of energy to produce. And will Australia's agricultural production increase or decrease in future? So in reality your fanciful 40 may in fact be three or less.
Posted by Fester, Thursday, 20 March 2008 9:40:08 PM
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PaulL,

The environmental or ecological footprint essentially converts consumption per person to notional hectares of land so that comparisons can be made. The Footprint Network

http://www.footprintnetwork.org

defines it as a way to measure "how much land and water area a human population requires to produce the resources it consumes and to absorb its wastes under prevailing technology". This is quite respectable, although there are criticisms of specific methods, as discussed in the Wikipedia article "Ecological Footprint". The University of Sydney does footprint calculations at its Centre for International Sustainable Analysis, and so do a number of NGOs, such as Redefining Progress

http://www.rprogress.org

New Scientist is a weekly science and technology news magazine. It covers environmental issues, but this isn't its main focus.

http://www.newscientist.com

The article and graph I referred to (the source of the "3 Earths to give everyone a European standard of living") was by Daniele Fanelli and on p. 10 of the 10/6/07 issue, but not available for free on the Web. You can work it out yourself from the Redefining Progress numbers though. The Wikipedia article has a graph showing footprint per person for different nations versus rank on the UN Human Development Index.

Indonesia's footprint per person is approximately one tenth that of Australia. Since they have about 235,000,000 people, they could therefore support a population of 23.5 million at an Australian standard of living. As Fester said, their arable land is much more productive than ours.
Posted by Divergence, Saturday, 22 March 2008 1:57:54 PM
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Fester,

For the past week the Sydney Morning Herald has been running stories about commuters wanting to be paid for time spent on the train, if they can show that they have spent it working. It seems that there are a surprising number of people who spend 4 hours a day commuting in the Sydney area. Many of them open up their laptops and get to work. Naturally the employers don't want to pay. Unpaid overtime is one way that they can take advantage of the greater bargaining leverage the government has given them via mass migration and other means.

The problem with just abolishing planning controls is that people with little or no choice are going to be forced into situations that will make them miserable. In modern cities it is too dangerous (mostly because of traffic) for children to be allowed out to play without constant adult supervision. Prof. Bill Randolph has studied (in Sydney) some of the damage high density living does to children's physical and social development

http://www.aracy.org.au/AM/Common/pdf/2006_ChildFriendlyCities/2006301006%20Children%20in%20the%20Compact%20City.pdf

I also recall a happiness survey by Robert Cummins of Deakin University, showing that people are happier on average at lower densities, even if they have less money. This isn't surprising. Humans didn't evolve as hive animals.

A better solution might be to stop driving up the population and to create opportunities elsewhere for the population growth that is locked in. The tropical North perhaps?
Posted by Divergence, Saturday, 22 March 2008 2:26:36 PM
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Fester.

After reading the productivity commissions inquiry into first home ownership I could find little in the way of support for your conclusion. Indeed in the key findings there was this comment

“in the last couple of years … house prices surpassed levels that are explicable …, with some additional investment seemingly predicated on unrealistic expectations (in a ‘supportive’ tax environment) of ongoing capital gains.”

And this.

Interactions between negative gearing, ‘capital works’ deductions, post-1999 capital gains provisions and marginal income tax rates have lent impetus to investment demand during the housing boom.
http://www.pc.gov.au/__data/assets/pdf_file/0016/56302/housing.pdf

No mention at all about immigration, I suspect that this is because the increased labour force of builders and tradespeople from targeted immigration outweighs the effect on the market of slightly increased demand.

Your simplistic analysis of the effects of two years without negative gearing during the Keating era does not stand up to any scrutiny. Your point, that prices didn’t drop during that time, therefore negative gearing doesn’t increase the cost of housing is not in any way scientific, relying as it does upon mostly anecdotal evidence. There were many aspects of the Keating changes which were perhaps inappropriately implemented, for example the limiting of the negative gearing provisions to housing, which without a doubt shifted new investment to other more favourable markets. And the introduction at the same time of Capital Gains Tax also had a negative effect.

“In the case of the Australian housing market, there is ample evidence that the cause of unaffordability is the failure of supply to meet demand. e.g.”

Well aren’t you the one for pointing out the obvious. High prices are the inevitable result of supply not meeting demand. In my opinion, and that of the Australian journal of taxation and the productivity commisions’ inquiry, demand is being fueled by the middle class welfare that includes negative gearing and capital gains exemptions.

In light of having your head stuck up your arse you might like to rethink your position or at least attempt to gather some evidence for it, old bean.
Posted by Paul.L, Saturday, 22 March 2008 4:15:18 PM
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www.theaustralian.news.com.au/story/0,25197,23393323-601,00.html

Thanks billie, Fester, Divergence, Paul L and others for interesting posts and of course, thaks Tim for the article. Articles by Tim Murray can also be found on his own web site at http://sinkinglifebot.blogspot.com and mine at http://candobetter.org/tim This article can also be found at http://candobetter.org/node/365

I see that Murdoch's Australian Newspaper is using figures which which, seemingly contrary to Tim's evidence about Canada, purportedly show that immigrants earn more, rather than less than their Australian equivalents, to further bolster its clamouring for larger numbers of skilled immigrant workers.

See the article "Migrant workers scoring top pay" of 18 March 2008 http://www.theaustralian.news.com.au/story/0,25197,23393323-601,00.html

SKILLED temporary migrant workers are earning on average
$15,000 more than their Australian counterparts, undermining
trade union claims that the system is being abused to undercut
local wages.

Figures obtained by The Australian show that holders of 457
visas, which allow temporary skilled migrants to work in Australia
for up to four years, are earning more than the average salaries
of local workers across all industries in which they are employed.

The figures have reignited the debate over the use of foreign
workers, with the Opposition seizing on the data as "dispelling the
myth" that temporary skills workers are driving down wages, but
unions and the Rudd Government insist that many visa holders are
exploited by unscrupulous employers.

As this is more than I can fit in here, I have turned it into a short article 'Do claims of higher immigrant wages answer objections to record Australian immigration levels?' and put it on my own web site at http://candobetter.org/node/376

Comments here or there are welcome.
Posted by daggett, Saturday, 22 March 2008 5:35:54 PM
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