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A turn against immigration would devastate Australia

Beware the nativist inclination: The economy’s 26-year expansion would not have been possible without a huge influx of human capital

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Australia just wrapped up its 26th consecutive year of economic growth. It’s always happy to trumpet that, but one major cause doesn’t get enough respect.

I’m not talking about the ascent of China, the country’s biggest trading partner, which certainly played a part. Nor do I mean Australia’s mineral wealth or the fiscal stimulus unleashed in 2008-2009 to fight the global slump.

The quiet force behind this growth streak is immigration. Or as squeamish politicians sometimes call it, “demographics” and “population growth.” Policymakers should be full-throated about the role immigration has had in sustaining Australia’s near-record run. There is a good story to tell, and the world ought to be listening. Who doesn’t want economic expansion?

Some, it would seem. Australia has its own right-wing nativist rabble. The urban-rural divide familiar to Northern Hemisphere readers is changing the contours of discourse Down Under — though less starkly, in part because compulsory voting maintains the sway of dense population centres and mainstream parties. There’s a risk that immigration becomes more of a whipping boy and the two major political parties, seeking to stem an erosion of support, go cold on population renewal as well. The irony is that just as Australia cools to its points-based immigration system, that approach is getting buzz outside the country. Potential migrants are ranked according to the nation’s need for their skills. They also must pass health and character tests. There’s an English-language test on the country’s constitution, history and values.

Philip Lowe, governor of the Reserve Bank of Australia, reminded an audience last year not to be drunk on international praise for the economic expansion. It hasn’t been 26 years of gangbusters growth for all: There were three periods of rising unemployment during that run, even if gross domestic product didn’t contract. He also worries that average growth in per-capita incomes over the next quarter century will be lower than in the previous quarter century. Population growth, much of it through immigration, has swelled the national headcount by 50 per cent over the past three decades, as noted by my Bloomberg News colleagues Jason Scott and Michael Heath. Lowe told the Crawford Australian Leadership Forum that “strong” population growth “flattered our headline growth figures.” GDP growth per capita certainly looks less awesome; it was almost zero at the end of last year. Other developed economies, take heed!

So what’s the problem? Let’s divide it into two buckets. The first is legitimate concern about strains on the environment. Australia is huge, but large tracts are barely populated. Most people live in a corner hugging the Eastern and Southern shores. So that sliver of the country is increasingly strained in terms of infrastructure. Housing prices are seen as out of reach for many, though that’s not a uniquely Australian phenomenon. You can make this argument and still be broadly supportive of a diverse and globally integrated national fabric. The second bucket is thorny: a motley few radio shock jocks and single-issue politicians who gamble that trashing immigration will win them votes in outer suburbs or rural areas. Compulsory voting ensures that because everyone has to show up, the most extreme candidates tend to be offset or buried by the more traditional parties. They can still siphon votes, win the odd seat, rattle around and make trouble.

It’s the latter point that is the danger today, both fuelled and compounded by the fact that Prime Minister Malcolm Turnbull’s conservative coalition has a mere one-seat majority in the parliament’s lower house. The opposition Labor Party smells blood, but its leadership is preoccupied with tactics rather than strategy.

Immigration is an easy, but risky, issue on which to make hay. Without immigration, Australia’s economic story would not have been such a happy one. For the sake of extending that 26-year run, politicians should resist the nativist temptation.

— Bloomberg

Daniel Moss writes and edits articles on economics for Bloomberg View. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.

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