Blaming a rising population is easy. Finding solutions is hard but it can be done | Greg Jericho | Business
As Australia reached a population of 25 million this week there was much discussion about whether or not we were growing too quickly and whether or not we should scale back immigration. While such a debate can often see racism and xenophobia come to the fore, it is also far too often used by politicians eager to look like they have found easy solutions. We should not let them get away with it and demand more, not just of our debate but of government policy.
For those like me who favour migration the argument is always rather more difficult than for those who would see migration as the cause – and its cutting as the solution – of so many problems.
Low wages growth, congestion, poor schooling, crime – pretty much whatever you want can fit under the “if only we cut back migration things would improve” argument.
All you need to do is point to problems and then hark back to some mythical better time. You of course hasten to add that you are very much in favour of multiculturalism, and think migration has been great for Australia; you’re just worried that things are changing too fast and that, well, look at the congestion on the roads, look at the state of our schools, look at our low wages …
It seems logical, but it really only looks at half of the equation.
Tony Abbott captures the essence of this argument quite well when he suggests “it’s an iron law of economics that more supply cuts price, hence the impact of high immigration on wages; similarly more demand boosts price, hence the impact of high immigration on housing affordability”.
It is a perfect example of only seeing what you want to see or, as economist Tom Westland stated rather drolly, how “for anti-immigration types, migrants exist only on the demand side of the housing market and only on the supply side of the labour market”.
Yes, migrants affect the supply of labour, but they also increase the demand for goods and services, which creates a demand for more workers to produce those goods and deliver those services. Yes, they increase the demand for housing, but the market reacts to this by increasing the supply of housing. That can be a slow process, especially in times of a large increase in the demand for housing, but oddly we don’t actually have a fixed stock of housing or labour – both respond to demand and supply.
A speech by the governor of the Reserve Bank, Philip Lowe, this week noted that this response is now occurring as the “growth in the number of dwellings” has been “exceeding growth in the population over the past four years”.
The reality is our housing affordability issue is not just about supply and demand but that government policies at a federal, state and local level are, as Ross Gittins noted, massively skewed in favour of home owners at the expense of would-be home buyers.
Lowe’s speech was a very timely push back to some of the pretty lazy claims against migration, and pointed to the actual economic benefits it brings.
The suggestion that migrants are over-supplying our labour market is an interesting one. Yes, Australia has had low wages growth, but so too has a host of countries which have not seen anywhere near our level of migration growth.
And were the influx of migrants leading to residents missing out on jobs, you would expect the percentage of adults in work would fall. After all, if Abbott’s supply of labour fallacy were to hold, you would expect the population to increase faster than the employment.
However, the percentage of 25- to 64-year-olds in employment is higher now than at any time in our past. This is mostly because of more women working now than in the past, but even the 83% of men aged 25 to 64 who are employed is not much below the post-1990s recession high of 84% that occurred just prior to the GFC.
The level of men working full-time is lower (about 73% compared with an average since 1990 of 74%), but that is due to the changing nature of work in our economy, and anyone telling you slowing migration will halt the shift towards the services sector and part-time work is selling you snake oil.
Lowe noted as well that migrants are more educated and younger on average than residents – meaning that they not only boost our national capital and productive capacity, they also have greatly helped the problem of our ageing population.
While much has been made in the past week that we reached 25 million much faster than expected, because of immigration we are also a much younger nation than expected.
In 2002 the median age of Australians was by now expected to be 40. Instead it is 37. Back then it was projected to hit 45 by 2040; now it looks likely to be just above 40. This means the ratio of people in retirement to the working-age population is rising much slower than other nations in the OECD, an important factor when it comes to the government being able to fund health and social services for those in retirement.
But this does not of course make the increase in migration an easy step. It’s true that our infrastructure has not kept pace. But the argument that we should ease back migration while we wait for infrastructure to catch up suggests, much like a mythical past where apparently we were all happy with the level of migration and multiculturalism, that in the future we will see a time when people will think we have enough infrastructure to cope and will thus be open to more migrants.
The pressure should not be for governments to cheat the way to improving the situation by cutting migration, it should be on them to actually deliver the services that are needed.
The calls for cuts to migration gives governments an easy pass. We should pressure governments to deliver the needed services, to look for ways to fund them and not have then cut taxes and then claim later that there is no money and blame migrants.
The calls for lower migration (or worse the euphemism of a “sustainable” Australia) often leads to some pretty dark places, but just as bad it lets governments off the hook. Yes the solutions to a growing population might be hard, but finding them is what they are paid to do. If they can’t, then we should elect someone who can, not someone who wants us to re-elect them because they are seeking cover by blaming others.
• Greg Jericho is a Guardian Australia columnist