Wednesday, May 22, 2024

We need to talk (sense) about immigration

It’s a safe bet there’ll be much talk about immigration between now and the next federal election, due this time next year. Peter Dutton has seen to that. Trouble is, much of it will just be hot air, much of it will be misleading and much will reflect the vested interests of the person doing the talking.

And some of it will reveal us at our worst: our tendency to blame incomers for all our ills. The more ignorant among us will shout abuse at some poor soul they see on the street whose clothing or skin colour looks different.

But none of that says our immigration policy isn’t a legitimate subject for sensible debate. Personally, I’d like to see it a lot lower.

You know strange things are happening when the leader of the Liberal Party says he wants to slash immigration. The Libs are, and have always been, the party of high migration.

But they’ve fallen on hard times with the loss of so many heartland seats to the teals, and Dutton figures his best hope of winning is to pick up seats in the outer suburbs, where their social class says people should vote Labor, but their social values give them greater affinity with the conservatives.

It’s because many immigrants gravitate to the outer suburbs that the locals find it easier to blame them for traffic congestion and other overcrowding, rather than governments’ failure to build enough infrastructure.

Ordinary Australians have always tended to think there’s been too much immigration. But the Liberals support it because it’s what business wants. The easiest way to increase profits is to sell into a growing market. Consider what you’d want if you were in the business of building new homes.

In recent times, Labor has supported high immigration too, mainly because it doesn’t want to get offside with business.

Almost all economists support strong immigration. I suspect that’s because their obsession with economic growth makes them susceptible to the fallacy that bigger is always better. Not if it comes at the expense of quality.

The economists do have one sensible point to make. Many people fear the migrants will take all the jobs. But the dismal scientists refute this. The newcomers and their families add about as much to the demand for labour to produce more goods and services as they add to the supply of workers.

All this – the gap between voters’ doubts about immigration and the pressure on governments to keep it coming – helps explain what seasoned political observers know: the pollies professed enthusiasm for cutting immigration is a lot stronger during election campaigns than it is after an election’s become a receding memory.

As for Dutton’s proffered solution, it doesn’t amount to much and would do little to fix the problems he claims he wants to fix. By the same token, the government’s claims that his plans would hasten the end of the universe are exaggerated.

Here’s a tip. Any pollie banging on about what they intend to do to the “permanent migration” program either doesn’t know what they’re talking about or, more likely, is pretty sure you don’t. What affects the economy’s workings is not permanent migration so much as “net overseas migration”, which is arrivals minus departures (ignoring people coming or going on short visits).

This actually went negative when we closed our borders during the pandemic, but soared after we reopened them. Net migration exceeded 520,000 in the year to June 2023, and over the year to this June may be as much as 400,000.

This huge surge is what’s causing the fuss. A lot of the swing is explained by incoming overseas students, which the universities will tell you is a wonderful thing. It’s one of our biggest export earners, and the unis have come to rely on this income to fund much of their research work.

I have some sympathy for them. Successive federal governments have made them more dependent on overseas students by using this as an opportunity to limit the support the unis get from the budget.

Even so, it seems clear that the inflow of students needing somewhere to live has contributed to the recent acute shortage of rental accommodation and added to the jump in rents.

The Albanese government wants to see a big drop in net migration and, to this end, is talking about imposing caps on how many overseas students the unis can admit.

The unaffordability of home ownership is a good issue for the election campaign, but Dutton is drawing a long bow in linking it to immigration. Homes have become harder to afford over several decades for various reasons. The recent immigration surge won’t have made much difference.

What’s true is that the more people we let in, the more capital investment – in the form of homes, business equipment and public infrastructure – we need to meet their needs. When this investment fails to keep up with the growth in the population, problems arise and the benefits to the economy that the advocates of high immigration have promised don’t happen.