It’s a political slogan that traces back into the 19th century, with claims in Australia in 1886 that it was “the duty of every man to have a home of his own. The home is the foundation of the nation”.
The great housing dreams or the idea that buying a house is a civic duty were central to the settler society nation-building projects of the 19th and 20th centuries.
So was immigration. Indeed, foreign nationals were encouraged to come to Australia and New Zealand, and to buy a house.
Many Chinese and other non-white people were formally restricted from settling in Australia by laws such as the White Australia Policy.
Arguably, the first land speculation measure appears only a handful of decades after the arrival of the first settlers in 1788.
In 1812 in Sydney, Governor Macquarie inserted a clause into each colonial land grant that forbade the resale of the granted land for a period of five years.
Stephen Roberts writes in 1924, Macquarie “had found as very prevalent practice ‘the obtaining grants for the sole purpose of selling them'”.
By 1898 George Sutherland was writing about land and housing booms and bust that had “taken place repeatedly from the very earliest colonial days”.
The issue, then, is not so much, as Jenny Sales, Associate Minister of Housing and Urban Development in New Zealand put it, “to ensure that our housing market here in Aotearoa, New Zealand is shaped primarily by New Zealanders”.
Rather, we might ask if Australia’s and New Zealand’s housing markets have ever been primarily shaped by a stable national population of rights-bearing citizens.
Housing can’t be split from migration
The current debate about foreign investment is littered with assumptions about Australia’s and New Zealand’s housing markets being isolated from the global economy and migration flows.
Or that the housing market can be insulated from global sources of finance, or new middle class and super-rich money.
Or that the national borders are rigid and secure, with the respective national populations already fully formed and uncontested.
Debate about the Trans-Pacific Partnership in New Zealand shows that global finance and business relationships are already shaping the foreign real estate investment landscape.
Australians and Singaporeans will be excluded from the Overseas Investment Amendment to protect existing trade agreements.
We need a new discussion
*Australia’s population is set to grow from 23.3 million in 2018 to 37.6 million by 2050.
The global sources of foreign money accompanying these new migrants will contribute to the local housing markets.
We need a new discussion about housing affordability, home ownership and foreign money.
The old narrative about the dream of homeownership and the duty of every citizen to own a home is a story from another time. It’s a story that was built on the back of the colonial project and discriminatory policy.
The problem with the housing system today will not be addressed by the restriction of foreign investors, although that is a debate we should have. The problem is the housing system itself.
The problem is the property-owning democracies that were built by the foreigners of the past are turning against us.
Dallas Rogers is program director, Master of Urbanism at the School of Architecture, Design and Planning at the University of Sydney.
Sydney Councils powers were diminished by the Greater Sydney Commission (the GSC) created to fast-track A Plan for Growing Sydney across the Sydney Basin for 8 or is it 9 million people by 2036? A plan for an Urban City to replace the Suburban City that we enjoyed!
THE GSC with its three strategic plans aligned; one for land, one for transport and one for infrastructure alleged to provide direction by “taking away the power of our Councils” with private certification, complying development (eliminated the D.A.), rezoning for higher density …
AS A WHOLE COHORT OF AUSTRALIANS REMAIN LOCKED OUT OF HOME OWNERSHIP …
COUNCILS are faced with:
-ensuring roads, parks, and other community infrastructure keep pace with the rapid expansion
-Council housing targets have been surpassed due to high immigration and visa manipulation through the Turnbull Government policies, and the Berejiklian Government following through …
With the strategic plans of local councils, known as Local Environmental Plans to be updated in accordance with the city-wide plans
Read more about the significant changes introduced by Planning Minister Roberts:
‘FASTER THAN SOME WOULD LIKE’: THE SYDNEY COUNCILS SURGING PAST HOUSING TARGETS
By Jacob Saulwick & Nigel Gladstone
12 August 2018
Some Sydney council areas are already pushing past targets for new housing development set only two years ago, prompting the state government to consider new measures to ensure local infrastructure keeps up.
In a week in which the national population surged past 25 million, other figures released this week show Sydney is on track to meet and exceed ambitious targets to house the swelling number of people in the city.
In the Hills Shire in the north-west for example, more than 8600 new homes have been approved since 2016. That is more than the Greater Sydney Commission’s target of 8500 new homes to be built in the area between 2016 and 2021.
Other council areas already pushing up against large housing targets set by the commission, when measured by the number of approvals, include Penrith, Liverpool, the Sutherland Shire, Hornsby and Fairfield.
“We are well and truly over the target,” said Wendy Waller, the mayor of Liverpool. “We’ve got the land available, so we’re very fortunate in that sense.”
But Cr Waller said the council’s challenge was to ensuring roads, parks, and other community infrastructure keep pace with the rapid expansion. And to helping establish the conditions for local jobs, so residents did not have to leave the area for work.
“We probably estimate we are looking at over $270 million just in traffic improvements alone… that’s nasty intersections and reconfigurations and so on,” Cr Waller said.
In the city’s north-west, it is understood the state government is soon to sign off on a new local infrastructure scheme.
The scheme would require new contributions from developers to meet a list of community needs, such as roads, water supply, footpaths and parks.
“Doing nothing to provide housing for our children is not an option,” said the Planning and Housing Minister, Anthony Roberts.
“It is critical that, just as generations before us built homes to house this generation, we need to build homes to house the next generation,” Mr Roberts said.
Michael Edger, the general manager of Hills Shire Council, said the rate of housing development in the area had been “faster than we re used to, and it’s been sustained for a fair period of time”.
“We’re conscious that the growth is faster than what some would like,” said Mr Edgar, who credited the state government’s rail line through the area for much of the impetus. “But we’re working very, very hard to provide the things that we can to accommodate it.”
“They’re not bad problems to have.”
One of the city’s largest housing targets was set for Camden, the semi-rural council area to the city’s south-west.
Two years ago Marcus and Angela Biady were the first people to move into their development, Crest by Mirvac in Gledswood Hills, a 10-minute drive from Leppington station on the South West Rail Link.
“Since we’ve moved in a year later we’ve got a lot of people living here,” said Mr Biady, who said he moved to the area for the back-yard and the rural feel.
“It reminds me of when I was a kid. We hang out at each other’s places. Everyone’s really willing to talk and hang out, which is really nice.”
The Greater Sydney Commission does not use housing approvals as the key measure to see if its targets are met; rather, the commission uses figures for the ‘commencements’ of new houses.
But the majority of approvals eventually become new homes. Developers said the industry was struggling to keep up with housing approvals granted in the past couple of years, though approvals had recently started to fall away.
“Construction activity still hasn’t peaked,” said Nigel Edgar, the General Manager of Residential NSW at Frasers Property.
“You’ll see it peak probably some time in the next six months or so,” said Mr Edgar.
The city’s largest targets for 2021 were set for Parramatta, the City of Sydney, Canterbury Bankstown, Blacktown and Camden.
Almost half of the 21,650 new homes slated for Parramatta by 2021 have already been built.
A spokeswoman for the Greater Sydney Commission said the organisation “happy with the progress councils are making on their five year housing targets and, in a number of cases, they are surpassing them.”
“The Commission is supporting councils to update their housing strategies and local strategic planning statements, which will inform the establishment of 6-10 year targets,” the spokeswoman said.
CORELOGIC predicts a fall in Sydney house prices of 10 to 15 per cent following the 6.5% fall to June 2018
We put it to UNSW Director of City Planning Hoon Han that Sydney house prices soared due to the Ponzi of a housing supply built for the overseas market, and that supply could not meet the foreign demand due to not only the sales overseas, but high immigration and Visa manipulation to gain residency following real estate buying spree …
THE CORRECTION will come when the community rises up to challenge political parties to reverse these policies
Global survey ranks Sydney home prices as some of the world’s most ‘overvalued’
Sydney is one of the world’s most “overvalued” cities, according to The Economist. Photo: Getty
Sydney is one of the world’s most “overvalued” cities, according to a new global house-price index, but declining property prices mean that could be set to change.
In its annual global house-price index London-based news magazineThe Economist compared residential property prices in the world’s most popular cities against each city’s median household income.
According to The Economist, post-global-financial-crisis property price booms that occurred in many famous metropolises, including Sydney, are “unsustainable” when compared to household incomes.
The average price of a home in 22 of the world’s most famous cities rose by an average of 34 per cent in real (or inflation-adjusted) terms over the past five years, according to the data.
Sydney ranked seventh on the global cities index, with home prices currently “overvalued” by 50 per cent when compared with household incomes, according to The Economist.
International cities with overpriced housing compared to wages include Auckland, considered to be 75 per cent overvalued, Vancouver at 65 per cent, London at 59 per cent, Paris at 70 per cent, and Hong Kong at 94 per cent.
Sydney’s current median price is $998,270 for houses and $746,431 for apartments, according to CoreLogic.
Home prices in the Harbour City rose by 47.1 per cent in real terms over the 10 years to June 2018.
However, after years of skyrocketing prices, some cities including Sydney, London, and Auckland, have begun to see small declines in values, with further reductions forecast.
In Sydney, prices fell 6.5 per cent in real terms between June 2017 and June 2018, according to CoreLogic.
“It is clear that on a historic basis housing costs are expensive and values are falling indicating that the prices that people are seeking are not prices that potential buyers are willing to meet,” CoreLogic analyst Cameron Kusher said.
In June 2018 the dwelling price to income ratio for Sydney dwellings was recorded at 9.1 times, up from 7.0 times five years ago and 6.8 times a decade ago, Mr Kusher said.
However, CoreLogic predicts a more moderate adjustment to Sydney home values than that suggested by The Economist.
“Being overvalued by 50 per cent would suggest that the cost of housing should fall by 50 per cent, which seems extremely unlikely notwithstanding the fact that after values peaked in July 2017 they have since fallen by 5.4 per cent over the following 12 months,” Mr Kusher said.
Instead, CoreLogic anticipates moderate dwelling value declines to continue over the next 12 months.
“A more likely scenario is one in which values fall 10 per cent to 15 per cent and then show little change over the coming year,” Mr Kusher said.
Property analyst Pete Wargent was also sceptical of The Economist’sfindings, and does not believe home values are set to crash in Sydney.
Sydney property is still likely to be a good medium to longterm investment, he said, so long as buyers ensure they’re able to service any mortgage they take on.
“If you’re looking for short-term gains you’re not going to get it, but if you’re taking a medium-term outlook as a home buyer the [current] buying conditions are actually much more attractive,” Mr Wargent said.
According to University of New South Wales Director of City Planning Hoon Han, soaring home prices in Sydney have largely been driven by a “large scale of committed infrastructure investment at the supply side, and underlying demand of increasing population at the demand side”.
Dr Han expects to see a “correction” in Sydney’s property cycle in coming years.
THE number streaming into Australia has surged to 7260 in the past year …
The Department of Home Affairs data challenges claims that Australia’s high-income tax rate is discouraging international investors as an Asian-led millionaire boom drives investment in Sydney and Melbourne.
-visa applications for investors with more than $1 million in business assets, jumped by 74 per cent in 2016-17
-up from 5781 to 9051; of those 7260 were approved, compared to 6484 in 2014-15
By March 2018 2000 “significant investor stream” visas had been approved; stumping up with $5M for Australian bonds, shares and venture capital projects
AfrAsia Bank report revealed Australia had a net-inflow of 10,000 millionaires in 2017.
-Singapore, with its very famous 15 per cent tax rate, only attracted a thousand millionaires
-High Wealth individuals can access other visa classes e.g.
The report found:
-the relative strength of the local healthcare system compared to the US
-the absence of inheritance taxes
-the political instability of Brexit had been a boon
Mainland China remaining Australia’s number one millionaire source, closely followed by Hong Kong.
China accounted for 90 per cent of all high-net worth investors coming to Australia in 2016-17
The number of millionaires streaming into Australia has surged to 7260 in the past year, new figures show, delivering a multibillion-dollar investment boost as Australia becomes the destination of choice for thousands of the world’s wealthiest individuals.
The Department of Home Affairs data challenges claims that Australia’s high-income tax rate is discouraging international investors as an Asian-led millionaire boom drives investment in Sydney and Melbourne.
Visa applications in the Business Innovation and Investment Programme, which includes investors with more than $1 million in business assets, jumped by 74 per cent in 2016-17 up from 5781 to 9051. Of those 7260 were approved, compared to 6484 in 2014-15.
In the same category, a fast-track visa allows the government to plough foreign cash into local projects in exchange for residency rights in as little as 40 days without the person passing an immigration test of their education, English proficiency and employment qualifications.
Chinese investors have become Australia’s largest source of millionaire migrants.
The “significant investor stream” asks investors to stump up $5 million for Australian bonds, shares and venture capital projects. By March 2018 up to 2000 had been approved, delivering a $10 billion windfall to the Australian economy, despite a slow-down after property was excluded from the category in 2015.
The Business Council of Australia and Ernst & Young told a Senate inquiry in June that the top income tax rate needed to be cut to keep high-net worth individuals from tax havens such as Singapore but an AfrAsia Bank report shows Australia far outpaced its south-east Asian neighbours last year in attracting lucrative moneymakers.
Education opportunities, a favourable climate, the safety of women and political security were among the top reasons cited by investors in the New World Wealth survey of high-net worth clients.
“The high growth recorded in Australia and New Zealand is particularly impressive, as these countries are already well developed markets – they both make our top 10 wealth per capita rankings worldwide,” the report for 150,000 investors found.
“Normally countries that start from a ‘high wealth per capita base’ struggle to record this type of wealth growth.”
The report said Australia had a net-inflow of 10,000 millionaires in 2017. The Department of Home Affairs confirmed “high wealth individuals may also be granted visas through other visa classes [outside the business and innovation programme]” to explain the difference between the two figures.
“That is the highest net migration of millionaires to any country last year in absolute terms, let alone correcting for population,” said Grattan Institute chief executive John Daley.
“This is in a year where, Australia’s top marginal tax rate was relatively high [45 per cent] and cut in at a relatively low income [$180,000]. Singapore, with its very famous 15 per cent tax rate, only attracted a thousand millionaires.”
The report found the political instability of Brexit had been a boon for millionaire migration to Australia, as well as the relative strength of the local healthcare system compared to the US and the absence of inheritance taxes.
Australia’s proximity to Asia and its time zone were also cited by wealthy Asian migrants as key factors behind their decision.
Deepening political tensions between China and Australia appeared to have no impact on private Chinese migration in 2016-17, with the mainland remaining Australia’s number one millionaire source, closely followed by Hong Kong.
China has become the world’s fastest growing millionaire factory over the past decade, driven by strong growth in the high-tech, manufacturing, construction and healthcare sectors – a boom that is expected to continue as it transitions from a component manufacturer for US brands towards finished products.
China accounted for 90 per cent of all high-net worth investors coming to Australia in 2016-17, with the remainder made up by Malaysia, South Africa and Vietnam, a rapidly emerging market that has seen a 200 per cent growth in the number of high-wealth individuals over the past year on the back of a manufacturing and financial services surge.
One significant investor – who asked not to be named over concerns he would come to the attention of the Chinese government – said he made the decision to transfer his wealth to Australia to become eligible for the visa once his son started studying here.
“Australia has fresh air and pleasant climate for living,” he told Fairfax Media through a translator.
“The time difference between Australia and China is only two hours. If we have more business people [coming] to Australia, can be benefit to Australia’s economy, both win.”
LRG lawyers migration manager Mark Ryan said the visa was attractive to astute investors.
“If you had $5 million why would you not just do that? All you have to do is show up for 40 days,” he said
“It’s a great visa, they don’t have to come and work, it gives them the flexibility to invest $5 million, and then their kids can go to school here.”
Last year, Assistant Immigration Minister Alex Hawke announced a review of the visa. He was unavailable for interview, but suggested tougher language tests could be implemented in future at a Chinese in Australia seminar in 2017.
“The program has to be designed to meet the Australian economy’s needs,” he said. “The expectation from the Australian community is that migrants have competent English, I don’t think that is unfair.”
New wealth, new lifestyles
One of the world’s most expensive watches. A 3 Megawind, by MB & F, at the Baselworld watch fair in Basel.
Fly fishing, hotel run apartments and watch collecting. These are just three of the top trends for multimillionaires globally, according to the AfrAsia Bank, which runs market research for its 150,000 high-net worth clients.
Luxury trains including the Orient Express and the Royal Scotsman – costing up to £10,000 [$17,000] per person for a grand suite – have become a favoured mode of travel.
Among the sports, golf, tennis and horse riding have declined in popularity, while fly-fishing expeditions to Argentina, Alaska and New Zealand have grown.
The New York inspired “hotel residence” has gone global, allowing the ultra-wealthy to own a hotel room in places such as One Hyde Park in London, essentially allowing the owners permanent access to boutique services.
Art and classic cars also remain at the top of the investment lists. A $US24 million 1960 Ferrari 250 GTO is the most desired among the world’s millionaires, while AfrAsia Bank estimates that up to $US75 billion of fine art is now owned privately by the ultra-rich.
“I can’t remember signing up for this”: RBA Governor touts economic benefits of big immigration
With Australia’s population now surpassing the highly-anticipated 25 million mark, Reserve Bank governor Phillip Lowe has capitalised on the milestone to tout the economic benefits of excessive immigration.
This has stirred up some opposition.
The man at the helm of the RBA has said that the nation’s 1.5 percent a year population growth rate- among the highest in the world- is a “ basis for optimism about the future of our economy.”
The Australian’s Judith Sloan was quick to poke some rather invalidating holes in that argument. Though conceding immigration gives GDP a boost, Sloan says the yardstick should be per capita growth. Anything else overlooks the burdens of stagnating wage growth, infrastructural strain and congestion.
“Nobody is going to deny that if you bring in more people, that increases the size of the economy,” she tells Warren Moore.
“But that doesn’t mean people’s living standards are improving. That people are any wealthier.”
“I thought it was an extraordinary omission.”
Considering Australia’s population has ballooned by 1 million in 2 and a half years, Judith Sloan says the numbers need to be reined in and curtailed.
“The majority of people would like the immigration intake cut. I think a democratic government should be listening to those concerns.”
“Because I don’t know where we signed up for this. I can’t remember signing up for this.”
QUESTION why both the RBA and CBA push for population growth …WHEN:‘There is strong evidence to suggest that mass immigration is partly behind Australia’s trade and current account deficits, as well as the nation’s ballooning foreign debt.The lion’s share of Australia’s export revenue comes from commodities and from Western Australia and Queensland in particular …‘-the majority of imports flow to NSW (Sydney) and Victoria (Melbourne)-mass immigration increases imports (flat screen TVs, imported cars ..)-both NSW and Victoria have driven huge trade deficits as the extra imports have far outweighed exports
AUSTRALIA has been accumulating foreign debt and selling-off Australia’s assets to pay for the extra imports!
Yesterday, RBA Governor Phil Lowe gave a speech strongly supporting Australia’s mass immigration ‘Big Australia’ program, whereby Lowe spouted a bunch of benefits (most dubious) without considering the costs. You can read Lowe’s speech here along my initial response, which was scathing.
The pro-immigration mainstream media, such as SBS, has been quick to spruik Lowe’s comments in a bid to shut down dissenters.
Let’s be clear, the governor of the Reserve Bank, Philip Lowe, is not an expert on the economics of immigration.
In fact, it is very obvious that he doesn’t even understand the core features of our migrant intake.
He’s a “big Australia” man. He can’t get enough of extra immigrants because this makes economic growth look good even though the real situation in per capita terms is much less flattering. While we may have had over a quarter of a century of unbroken economic growth, this is not true of per capita income. The speech he made yesterday should have acknowledged this point.
And as for his laughable proposition that high rates of immigration slow the rate of the ageing of the population, what he needed to mention is that this Ponzi scheme only continues if the rate of immigration continues to be ratcheted up.
It’s just too obvious — migrants themselves age. If he had bothered to consult a number of important reports put out by the Productivity Commission, he would have learnt that immigration is not an effective tool to stop the ageing of the population. We are better to let it happen and adjust…
Lowe also thinks that having more than half a million international students in the country is an unalloyed plus…
How naive can you get? Second-rate degrees from second-rate universities where a very large proportion of international graduates don’t even work in professional or managerial occupations — less than half the proportion of local graduates — do not add to the nation’s useful human capital. It’s simply a means of many students gaining permanent residence.
Lowe really needs to get out more.
He is happy to foist the cost and inconvenience of additional infrastructure on the incumbent members of the population to cater for the needs of new entrants. It would be better to avoid the need for all the new expensive infrastructure in the first place.
There is no doubt that there is a conspiracy among businesses, property developers, universities and governments to promote migrant intakes much higher than the members of the population would actually prefer. We can add the Reserve Bank to the list of agents that are in on the conspiracy.
Lowe would be best advised to stick to monetary policy when he gives speeches rather than express gratuitous opinions on contentious topics about which he knows very little.
Sadly, Sloan’s colleague at The Australian, and shill for a ‘Big Australia’ – Greg Sheridan – well and truly drunk Lowe’s Kool Aid and penned the following drivel:
Hooray! I now live in a nation of 25 million people. This is good news for Australia and good news for the world…
Our globe, and our nation, both benefit from more Australians. Fewer Australians would mean a poorer nation and a poorer world. And a much less secure Australia…
Tudge believes that not only the total size of our economy but the per-capita income of every Australian increases over time because of immigration.
He is right on this. The modelling which attempts to show little or no per-capita income gain is utterly ropey and routinely fails to take into account factors such as the huge amounts of capital that immigrants bring with them.
It is better to try to model backwards. Australia has grown when it has had immigration. We have been a high-immigration country all the way since World War 11 and we are vastly wealthier per capita than then.
Below are some ‘fact checks’ on Phil Lowe’s and Greg Sheridan’s claims about immigration being a boon for the Australian economy and living standards.
ECONOMIC IMPACTS ON EXISTING RESIDENTS
First, Lowe’s and Sheridan’s claim that immigration boosts the economy in per capita terms is misleading and largely debunked by the PC’s various modelling.
Historical rates of immigration, whereby population hits 40 million by 2060; and
Zero net overseas migration (NOM), whereby the population stabilises at 27 million by 2060.
The PC’s modelling did find that GDP per capita would be 7% ($7,000) higher by 2060 under current mass immigration settings. However, all of the gains are transitory and come from a temporary lift in the employment-to-population ratio, which will eventually reverse once the migrants age (i.e. after the forecast period):
The continuation of an immigration system oriented towards younger working-age people can boost the proportion of the population in the workforce and, thereby, provide a ‘demographic dividend’ to the Australian economy. However, this demographic dividend comes with a larger population and over time permanent immigrants will themselves age and add to the proportion of the population aged over 65 years.
The PC also explicitly acknowledges that per capita GDP is a “weak” measure of economic welfare:
While the economywide modelling suggests that the Australian economy will benefit from immigration in terms of higher output per person, GDP per person is a weak measure of the overall wellbeing of the Australian community and does not capture how gains would be distributed among the community. Whether a particular rate of immigration will deliver an overall benefit to the existing Australian community will crucially depend on the distribution of the gains and the interrelated social and environmental impacts.
It is worth pointing out that the PC’s modelling unrealistically assumed that Australia’s infrastructure stock would keep pace with the extra population, which is vital if economy-wide productivity is not to diminish and for the PC’s GDP per capita forecasts to come to fruition:
Specifically, the expansion in labour supply through migration is projected to lead roughly to the same proportional growth in capital and output in most industries including infrastructure industries. That is, the modelling broadly assumes that there are constant returns to scale in production…
As the modelling broadly assumes that there are constant returns to scale in production, the economy-wide modelling results are broadly linear. Hence, while the modelling provides insight into the economic impact of NOM, in practice limits on Australia’s absorptive capacity (including environmental factors) mean that constant returns to scale are unlikely to hold for very high rates of immigration.
Clearly, this assumption is at odds with the Australian economy’s actual experience, whereby massive infrastructure deficits have accumulated over the last 15-years of hyper immigration, particularly in the major cities.
Most importantly for incumbent Australian workers, the PC’s 2016 modelling found that labour productivity and real wages are projected to decrease under current mass immigration settings versus zero net overseas migration (NOM):
Compared to the business-as-usual case, labour productivity is projected to be higher under the hypothetical zero NOM case — by around 2 per cent by 2060 (figure 10.5, panel b). The higher labour productivity is reflected in higher real wage receipts by the workforce in the zero NOM case…
With zero NOM, real wages are projected to increase over time, and at a rate greater than in the business-as-usual scenario. That is, in the zero NOM scenario labour is relatively scarce which puts upwards pressure on real wages and causes a substitution towards capital, contributing to the marginally higher labour productivity relative to the business-as-usual scenario (figure 10.5, panel b). Higher rates of labour force participation through immigration in the business-as-usual case is projected to moderate such wage pressures.
Therefore, according to the PC’s most recent modelling, high immigration improves per capita GDP by 2060 by boosting the proportion of workers in the economy, but this comes at the expense of lower labour productivity and lower real wages.
Moreover, beyond the forecast period (2060), the migrants will age and retire, thus dragging down future growth – classic ‘ponzi demography’.
As noted by the PC above, its latest modelling also did not take account of the distribution of gains to per capita GDP, which is vitally important. Thankfully, it’s 2006 major study on the Economic Impacts of Migration and Population Growth did, and the results were unflattering for existing residents.
Here, the PC modelled the impact of a 50% increase in the level of skilled migration over the 20 years to 2024-25 and found that “the incomes of existing resident workers grow more slowly than would otherwise be the case”. Below is the money quote:
The increase in labour supply causes the labour / capita ratio to rise and the terms of trade to fall. This generates a negative deviation in the average real wage. By 2025 the deviation in the real wage is –1.7 per cent…
Broadly, incumbent workers lose from the policy, while incumbent capital owners gain. At a 5 per cent discount rate, the net present value of per capita incumbent wage income losses over the period 2005 – 2025 is $1,775. The net present value of per capita incumbent capital income gains is $1,953 per capita…
Owners of capital in the sectors experiencing the largest output gains will, in general, experience the largest gains in capital income. Also, the distribution of capital income is quite concentrated: the capital owned by the wealthiest 10 per cent of the Australian population represents approximately 45 per cent of all household net wealth…
Of course, the PC’s Migrant Intake Australia report also went to great lengths to stress that there are many costs associated with running a high immigration program that are not captured in the modelling but are borne by incumbent residents and unambiguously lowers their welfare. These include rising congestion, smaller and more expensive housing, environmental degradation, and more expensive infrastructure. For example, with respect to infrastructure, the PC noted:
…where assets are close to capacity, congestion imposes costs on all users. A larger population inevitably requires more investment in infrastructure, and who pays for this will depend on how this investment is funded (by users or by taxpayers). Physical constraints in major cities make the costs of expanding infrastructure more expensive, so even if a user-pays model is adopted, a higher population is very likely to impose a higher cost of living for people already residing in these major cities.
Accordingly, the PC explicitly asks that these costs be considered as part of any cost-benefit analysis on the immigration intake, rather than blindly following the results of its modelling, which is inherently limited and a poor measure of ‘wellbeing’.
MIGRATION IMPACTS NOT THAT SKILLED AFTER ALL
The claim that Australia’s migration program is ‘skilled’ and is lifting Australia’s human capital and productivity is flawed.
Recent research by Dr Bob Birrell from the Australian Population Research Institute, based on 2016 Census data, revealed that most recently arrived skilled migrants (i.e. arrived between 2011 and 2016) cannot find professional jobs, with only 24% of skilled migrants from Non-English-Speaking-Countries (who comprise 84% of the total skilled migrant intake) employed as professionals as of 2016, compared with 50% of skilled migrants from Main English-Speaking-Countries and 58% of the same aged Australian-born graduates:
This accords with a recent major survey from the Bankwest Curtin Economics Centre found that 53% of skilled migrants in Western Australia said they are working in lower skilled jobs than before they arrived, with underemployment also rife:
Therefore, Australia has effectively stolen ‘skilled’ workers from developing nations – where they are needed most – so they can work in lesser jobs in Australia!
These reports help to explain why the Australian Bureau of Statistics (ABS) latest Characteristics of Recent Migrants report, released in June, revealed that migrants have generally worse labour market outcomes than the Australian born population, with recent migrants and temporary residents having an unemployment rate of 7.4% versus 5.4% for the Australian born population, and lower labour force participation (69.8%) than the Australian born population (70.2%):
The PC’s recent Migrant Intake Australia report also stated that around half of the skilled steam includes the family members of skilled migrants, thereby around 70% of Australia’s total permanent migrant intake is not actually ‘skilled’:
…within the skill stream, about half of the visas granted were for ‘secondary applicants’ — partners (who may or may not be skilled) and dependent children… Therefore, while the skill stream has increased relative to the family stream, family immigrants from the skill and family stream still make up about 70 per cent of the Migration Programme (figure 2.8)…
Primary applicants tend to have a better fiscal outcome than secondary applicants — the current system does not consider the age or skills of secondary applicants as part of the criteria for granting permanent skill visas…
The PC also showed that while primary skilled migrants have marginally better labour market outcomes than the Australian born population in terms of median incomes, labour force participation, and unemployment rates, secondary skilled visas, and indeed all other forms of migrants, have worse outcomes:
IMMIGRATION CANNOT SOLVE AN AGEING ISSUE
Lowe’s claim that immigration can mitigate an ageing population has debunked many times by the PC for the simple reason that migrants age:
PC (2005): “Despite popular thinking to the contrary, immigration policy is also not a feasible countermeasure [to an ageing population]. It affects population numbers more than the age structure”.
PC (2010): “Realistic changes in migration levels also make little difference to the age structure of the population in the future, with any effect being temporary“…
PC (2011): “…substantial increases in the level of net overseas migration would have only modest effects on population ageing and the impacts would be temporary, since immigrants themselves age… It follows that, rather than seeking to mitigate the ageing of the population, policy should seek to influence the potential economic and other impacts”…
PC (2016): “[Immigration] delays rather than eliminates population ageing. In the long term, underlying trends in life expectancy mean that permanent immigrants (as they age) will themselves add to the proportion of the population aged 65 and over”.
In a nutshell, trying to overcome an ageing population through higher immigration is a Ponzi scheme. It requires ever more immigration, with the associated negative impacts on economic and social infrastructure, congestion, housing affordability, and the environment.
BROADER IMPACTS NOT ACKNOWLEDGED
There is strong evidence to suggest that mass immigration is partly behind Australia’s trade and current account deficits, as well as the nation’s ballooning foreign debt.
The lion’s share of Australia’s export revenue comes from commodities and from Western Australia and Queensland in particular:
However, the majority of Australia’s imports and indeed private debt flows to our biggest states (and cities), New South Wales (Sydney) and Victoria (Melbourne). Sydney and Melbourne also happen to be the key magnets for migrants – a point acknowledged by the Grattan Institute.
Clearly, increasing the number of people via mass immigration does not materially boost Australia’s exports but does significantly increase imports (think flat screen TVs, imported cars, etc.). One only needs to look at both New South Wales and Victoria, which have driven huge trade deficits as the extra imports have far outweighed exports (Chart 15):
All of these extra imports must be paid for – either by accumulating foreign debt, or by selling-off the nation’s assets. Australia has been doing both.
Australia would improve its trade balance and current account deficit, as well as reduce the need to sell-off assets and binge on debt, if it simply reduced immigration.
Australia would still ship the same amount of hard commodities and agriculture regardless of how many people are coming in as all the productive capacity has been set up and it doesn’t require more labour. However, we would import far less.
Essentially, by running a mass immigration program, Australia is diluting its fixed mineral wealth among more people, which necessarily lowers residents’ welfare.
As Judith Sloan said, “Lowe would be best advised to stick to monetary policy when he gives speeches rather than express gratuitous opinions on contentious topics about which he knows very little”.
Overseas migration to Australia hits record high: data
New data released by the ABS revealed that 539,000 international migrants arrived in Australia in financial year 2017, the highest-ever figure for a single year.
315,000 arrived on temporary visas, including:
-150,000 international students
-50,000 on working holiday visas
-32,000 as workers on temporary skill visas
WHAT does the offset of 276,000 people who left Australian shores consist of?
Were they permanent migrants or made up of those on temporary visas?
If Visa holders are wealthy they can gain residency through investment, but if they have come here to work on a 457 Visa they may not be so fortunate …
Source: Xinhua 2018-07-27
CANBERRA, July 27 (Xinhua) — The number of people arriving in Australia as migrants has hit a record high, statistics have revealed on Friday.
New data released by the Australian Bureau of Statistics (ABS) revealed that 539,000 international migrants arrived in Australia in financial year 2017, the highest-ever figure for a single year.
Of the 539,000 people, 315,000 arrived on temporary visas, including 150,000 international students, 50,000 on working holiday visas and 32,000 as workers on temporary skill visas.
The figure was offset by 276,000 people who left Australian shores in the same period, resulting in a net migration gain of 263,000 people, slightly lower than the record net overseas migration rate of 300,000 people in 2008-09.
According to the ABS, 377,000 people moved interstate within Australia, the highest figure in 13 years.
New South Wales (NSW), Australia’s most populous state, had the largest net overseas migration rate with an additional 103,000 people but lost a net 15,200 people to other states, the largest loss of any state.
Victoria, the nation’s fastest-growing state, had the largest gain in population from interstate migration followed by Queensland.
“In 2016-17, 86,700 people moved from another state or territory to Victoria and 68,500 people from Victoria moved interstate. This produced a net gain of 18,200 people, Victoria’s highest ever figure,” Myles Burleigh, Director of Migration Statistics at the ABS, said in a media release on Friday.
What the stats gathered here do not reveal is that from the latter part of the Howard Government (2004 – 2007) the floodgates were opened for migration with as many as 300,000 migrants per annum, and the Howard Government introduced the 457 Visa …
Then take into account …
Visa manipulation … with Visa holders buying real estate to gain a Residency Visa.
The FIRB ruling 2008/09 allowing developers to sell 100% of “new homes” overseas particularly in China
THUS a whole Cohort of Australians have been locked out of home ownership!
The Anti-money Laundering Legislation for the Real Estate Sector has been shelved for more than a decade which means there is no legislation to prevent the onshore Proxy laundering black cash in our real estate for foreign buyers
Not only can Australian homes be purchased off the plan, but through RE Agents in China, or through a Proxy agent here in Australia. It appears that the majority in fact purchase a home to gain residency to migrate. Or through a Significant Investor or Investor Stream Visa …
Students are able to apply for a Family Visa to enable family members to join them in Australia … hence the 32% through the Family Stream
In Australia due to the manipulation of both 457 and skilled visas Australian workers have been made redundant
The top country of birth we believe needs to be looked at with Hong Kong a quasi independent registry, and the United Kingdom and Hong Kong indispensable partners … and the ability of the Chinese to use London (a low tax environment) to appear as though they are coming from the U.K.
IT would seem with the comment from the Prime Minister that “Australia’s immigration and population growth was constantly under review” that would indicate with a mere 10 per cent (214,656 people) on humanitarian visas from 2000 to 2016 that the focus is on capturing the high wealth from China
The PM then ventured to say the Federal Government was building new projects, like the Western Sydney Airport, to meet rising demand. Does that mean for “new homes” in Sydney … cough … cough
About 78 per cent of those applying for humanitarian visas were offshore applicants. They were the most likely category of migrants to apply for their visas overseas, compared to those on the family stream (72 per cent) and skilled migrants (60 per cent).
The figures also revealed that about 54 per cent of permanent migrants aged 15 years and older, were buying or owned their own home.
Migrants in the family stream were the most likely to own their home outright (14 per cent), followed by skilled migrants (8 per cent) and humanitarian migrants (4.7 per cent).
The data comes as migration numbers in Australia hit a 10-year low.
Liberal senator Dean Smith this week called for a review into Australia’s population policy as the nation approached 25 million residents.
But Prime Minister Malcolm Turnbull said Australia’s immigration and population growth was constantly under review.
He also said the Federal Government was building new projects, like the Western Sydney Airport, to meet rising demand.
“We are getting actively involved, we’re building infrastructure ourselves,” he told 3AW radio in Melbourne.
Home Affairs Minister Peter Dutton said last week that the annual intake of permanent migrants fell by 20,000 last year to 162,000, with both skilled and family visas down.
This was the lowest in a decade and attributable to tighter vetting procedures, he said, with dishonest applications in the Government’s crosshairs.
“We’re making sure that people who do become part of our Australian family are coming here to work, not to lead a life on welfare,” he told reporters in Brisbane.
“If you have a robust migration program like we have, and you are assured of the entrants coming in through the program, that they are going to be productive, that they are going to work hard, they aren’t going to lead a life on welfare … you will see increased economic benefit.”
Immigration remains a talking point in Australia, amid concern about jobs and overcrowding in major cities.
The Labor Opposition welcomed the drop in migration numbers but said the Government must do more to help those in offshore detention, where hundreds still remain in limbo.
A Sydney family from Myanmar, who arrived as refugees, are now proud Australians.Source:News Corp Australia
“We have seen suicides, we’ve seen a range of mental health conditions being identified and the Government has got that element of the policy wrong,” senior Labor MP Anthony Albanese said.
Migrants trying to enter Australia by sea have been sent to camps on Papua New Guinea’s Manus Island or on Nauru in the Pacific for processing, with even those found to be genuine refugees barred from Australia.
The policy has been criticised by rights groups as well as the United Nations, which has slammed Canberra’s harsh treatment of asylum-seekers who arrive by boat.
Dutton defended the policy as a deterrent against people-smugglers and added that it allowed Australia to offer refuge to those seeking asylum through legitimate channels.
“Last year we had the biggest offshore intake (of refugees) into our country that we’ve seen in decades,” he said. “We did that because we’ve secured our borders.”
Australia’s humanitarian intake — which it excludes from its permanent migration count — was close to 22,000 for its 2016-17 program, which included a special assistance provision for 8200 people affected.
Former prime minister Tony Abbott wants Australia to cut its immigration intake to what it was under the Howard government.
He told an internet radio station on Tuesday afternoon that “we’ve got to get the numbers down, and get them down very significantly”.
“[John] Howard got them down 30 per cent in the first couple of years of his prime ministership,” he said to the Daily Telegraph show.
“We should look to getting [the migration intake] back down towards 110,000 a year, which was the average of the decade of the Howard government.”
The declaration follows comments from Home Affairs Minister Peter Dutton last week where he signalled “we have to reduce the numbers where we believe it’s in our national interest”.
Changes in Australia’s immigration sector were significant under Mr Howard, but not because his government kept the permanent intake — now at 190,000 visas per year — low.
Share of population growth
Every year since John Howard lost the 2007 election to Kevin Rudd, more of Australia’s population growth has been attributed to migration than a natural increase due to births.
The period under Howard was transitional, but brought substantial migration growth in its later years.
Migration as proportion of population
Stretching back to the first half of the 20th century, the above chart from Treasury’s 2015 Intergenerational Report identified three separate phases in Australia’s rate of migration.
Treasury describes the rate in the past decade as exceeding the rate of any period since World War II.
Much of Mr Howard’s time as prime minister was linked — by the Treasury’s chart — to a period of low migration.
However the latter years of Mr Howard’s prime ministership delivered significant increase to net overseas migration as a proportion of the population.
The planned size of the migration program — the number of permanent visas the government plans to grant each year — was reduced in the early Howard years.
Those reductions were more than made up for in later years.
By the time of the 2007 election, his government had doubled the permanent intake.
Permanent visa streams
The growth to the permanent program under Howard came in the “points tested” category of the skilled stream, as noted in the above chart from the Productivity Commission’s 2016 report on the migrant intake.
Under the points scheme, applicants are scored based on their background. More points are given for characteristics deemed preferable, like superior English and employment experience.
In contrast, the employer-sponsored permanent visas — where migrants have already lined up jobs — has been the source of growth in the years following Mr Howard’s time as PM.
Student and 457 visas
A major change to the migration program in recent decades has been the increase in temporary migration.
Many temporary visa holders come to Australia to work, and even those who come to study can work up to 20 hours in a typical week.
In both the 457 — temporary business visa — and overseas student categories, Mr Howard oversaw significant growth from the turn of the century.
The Unconventional Economist has raised these key points concerning the impact
on Australian citizens with the turbo charged immigration:
• Having to live in smaller and more expensive housing;
• Having less access to common goods, such as parks, beaches and open space;
• Increasing traffic congestion;
• Infrastructure costs ballooning because of dis-economies of scale (e.g. the need for tunnelling, land buybacks, etc);
• Environmental degradation;
• Downward pressure on wages; and
• Diluting Australia’s fixed mineral endowment among more people.
WHAT THIS MEANS …
A population growth of 400,000 extra people per annum in Australia … let alone some 1.4 million Visa holders currently all needing housing, jobs, health care …. etc
With planning law changes in NSW lots have been reduced to as little as 200M2 and a price tag of $550,000 or more in Greater Sydney
-developers are land-banking parks and open space, and business parks with ever more people crowding out what remains …
-traffic congestion is greater with high growth, and commutes not only by workers but by families travelling to school out of their area
-land buybacks for toll roads/infrastructure through compulsory acquisition with home owners cheated of the market value of their properties; tunnelling resulting in damage to homes
-a mere 9% remains of the Cumberland Plain woodland across Western Sydney, loss of urban bushlands, loss of trees, shade, fauna and flora …
-with hundreds of people applying for a job … that’s to an employer’s advantage … derr
WE USED TO HAVE IT ‘SO GOOD’!!
-the Australian tax revenue has to go even further! As tax evasion and avoidance has become a growth industry …
“His claims about immigration improving Australia’s ageing profile is true only in the short-term and has been debunked ad nauseum by the Productivity Commission, since immigrants also age. Lowe also failed to mention that migrants (even skilled) have much higher unemployment than the Australian born population, nor the many downsides for productivity that comes from excessive population growth.”