GDP growth through immigration

Growth Through Immigration isn’t a Reality Australia Should Count on

Australia’s GDP growth has been in the spotlight recently, with the federal government proposing a budget heavily reliant on rosy growth predictions.

But are our assumptions about economic growth reliable?

Australia’s GDP grew by 2.4 % last year. Not a bad number. But it’s less impressive when you understand that much of it came not from organic growth, but from imported productivity.

As Foreign Minister Julie Bishop said on 11 April:

…we can take as many migrants as we believe is appropriate in Australia’s national interest to drive economic growth…

Sure, an increase in GDP is great. Immigration is also great, when it’s making Australia wealthier. But artificially inflating GDP growth just by adding more people to the economy doesn’t make us richer. Not in real terms.

Allowing age-specific population growth from immigration caters to labour demand and even result in fewer people being unemployed. But remember that saying, progress for progress’ sake? Well it can also be a dangerous thing.

And that’s what you should think of when it comes to the Productivity Commission’s modelling around immigration.

Especially when we note that at best, it is limited and cannot reflect real life.

In reality, we should be thinking of the Aussie workers who will be made worse off by falling wages. And the wider knock on effects like more congestion, higher infrastructure costs, and less affordable housing.

Per capita GDP versus national GDP

Dubbed the Unconventional Economist, Leith Onselen raises some very important questions about per capita GDP versus national GDP.

Firstly, an ageing population will eventually result in fewer people working, and deduct from per capita GDP. Making the benefit to GDP per capita from immigration only transitory.

The Productivity Commission’s Migrant Intake Australia report, realised September 2016, compared the impact on real GDP per capita from two hypothetical situations. First from maintaining historical rates of immigration, hitting 40 million by 2060. Second from zero net overseas migration, resulting in population stabilising at 27 million by 2060.

This found a 7% ($7,000) increase by 2060 under mass immigration settings.

But we should consider where this shift comes from. Often it will stem from temporary gains and a temporary lift in the employment-to-population ratio.

Of course, people age. Migrants we take will also, and eventually add to the amount of the population aged over 65. Importing working-age people boosts the economy. But as those people in turn age, unless we have another solution, we can only continue the system by adding ever more migrants.

In addition, this lift in GDP fails to take into account many of the costs of a higher population. Costs in terms of housing, infrastructure, the environment and strains on our natural resources, even water. GDP doesn’t measure any of these reflections of our quality of life.

Even if you do accept GDP growth as the be-all and end-all of measuring economic health, it seems clear that propping it up with immigration is a short term solution. Like any Ponzi scheme, it will inevitable collapse under its own weight.

Without action and innovative solutions, these high rates of growth could intensify already existent problems, in infrastructure, housing and the environment.

Simply adding more immigration is not a sustainable solution.

PS: If you think your cash is safe in the bank…think again. Find out what you could do to protect your cash and financial privacy here.

Leah Wallace

The Australian Tribune Editorial

The Australian Tribune Editorial

The Australian Tribune is an unorthodox news service. Your Australian Tribune editorial team deliver the unfiltered stories that could impact your daily life — political and economic stories you’re unlikely to get anywhere else. And we’re not afraid to step on some toes to do it. We are honest, conservative and never dull. We are an independent service, meaning we don’t answer to shareholders or outside advertisers. This helps avoid conflicts of interest that inhibit mainstream sources, which keeps our voice independent. The Australian Tribune is owned and operated by Port Phillip Publishing.
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Comments: 2

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  1. The writer says “Immigration” actually it’s more like Colonization as most of the “Immigrants” do not share
    the same ideology as Contemporary Jews “The Creators” of this Civilization. So by not adding to the
    same thinking as these people, they only seek to replace us,send money back home to families
    overseas and generally turn the place into a shithole where they come from..
    Of course Sydney and Melbourne are already full and we’re fed up…..

  2. The writer commented on additional strain being put on infrastructure and the environment, adding “even water”. Considering that water supply is already an issue for Australia with the size of it’s current population, how can anyone think that adding more people requiring water is going to do anything to help the nation.
    To increase water supply is going to require a substantial increase in desalination capacity, a somewhat expensive and energy consuming method of obtaining water.
    Then there is the problem of those wanting to carry out coal seam gas extraction, a process that uses the injection of chemicals under high pressure. As the earth has many seams in rock, these seams may allow chemicals to travel considerable distances and enter the subterranean water supply. This possibility of course is not discussed by government (who will collect taxes from it) and those that will increase their wealth through it.
    Water is without a doubt the greatest problem for our nation, any thoughts of increasing the population by a considerable number needs to be thoroughly investigated and economical and sustainable solutions identified before any increase is commenced.
    Only 3% of the world’s water is drinkable and 90% of Australia’s drinkable water comes from subterranean water supplies.
    There has been a considerable increase in energy costs over recent years and problems with the reliability of the energy supply, one has to consider the nation’s capacity for providing the additional water supply that would be required for any increase in population. The problem of course would be compounded if the subterranean water supply was to be polluted.