Australian immigration in the 21st century (Part 2)

This is the second in a two part series about Australian immigration in the 21st century. See Part 1 here

Unlike some European and American cities, Australian migrants have not historically lived in tight clusters. It is true many areas are known for their immigrant flavour but intergenerational locational and social mobility has been strong. Indeed, second generation kids do better at school than the average student. This is also reflected in strong English language skills. However there are signs this is slowly changing as diversity increases from recent levels of high immigration.

The Scanlon Foundation ‘Mapping Social Cohesion’ surveys, Australia’s pre-eminent research into immigration and diversity, aims to show emerging social cohesion trends. Over the last seven years, Australian’s have had a high and stable sense of belonging. This means we are proud of the Australian way of life and culture.

Table 4 Scanlon

(Source: Scanlon Foundation Mapping Social Cohesion surveys)

But there has been a sustained negative trend in the sense of rejection.  There is an increasing pessimism about the future and the experience of discrimination is rising. Author Andrew Markus says this is a real challenge for the future but one that is not uniformly bad news:

“If you look at non-English speaking background migrants, the large majority share the Australian dream – work hard and you get on. This makes Australia very different from a number of countries. When you get many people agreeing that you can work hard but you don’t get on, that’s a bad result for a society.”

What is of concern is the increasing attitudinal difference between new migrants and third generation Australians. In 2012, the survey picked up a heightened disenchantment from third generation Australians on whether the impact of immigration was positive or negative. Markus says increasing cultural diversity is partly driving these social trends:

“We are finding increasing segmentation of major cities; the Census provides evidence of a movement away from areas of immigrant concentration by third generation Australians. If you measure diversity by language use, which encapsulates second generation migrants, you find some areas of Sydney and Melbourne which are 90 per cent non-English speaking background. Each Census shows us more of this.”

It is no coincidence that these local areas – such as the outer west in Sydney and south-east in Melbourne – are also areas of high population growth. As Australia’s population has grown, the rate of diversity has increased from 21 per cent in 1996 to 27 per cent in 2011. The majority of new migrants don’t live in the CBD (except for the unique geography of international students) but in the suburbs.

Laurie Ferguson says this change contributes to a ‘nuanced difference’ of social attitudes to immigration between the inner city and the suburbs because “when your space is affected, you have a different attitude to when its not”. Ferguson, a parliamentarian since 1990 for two electorates in suburban Sydney, is most worried about the perceptions around safety and trust. He says he has a number of associates in the ALP who have moved to suburban Sydney from the inner city and now hold dramatically different views on these issues.

“The question of ‘my space’, ‘my neighbour’ doing certain things that give people the shits, is something which contributes. People raise the issue of not being able to buy pork in their butcher shop any more. I hear this pretty regularly. This isn’t a big issue but a small example of space in people’s lives.”

While some might cringe at these comments, sentiment such as this is critical to understand how social change is difficult. These factors play a strong role in how society understands immigration and diversity. Where we live will have a large and permanent impact on how one understands immigration in Australia. In a period of rising diversity and rising population, disparate social and economic groups of people are likely to think very differently about the impacts of immigration.

This understanding is also reinforced by where you work. Shadow Assistant Treasurer Andrew Leigh:

“If you are a worker in an industry which is seeing a big influx of migrants, we should expect you to have a different attitudes to migration than if you’re a worker in an industry that is seeing no influx.”

This is a difficult message to intuit.

There is an ongoing meme that says when different people come together, see and live amongst difference, bias is erased and compassion bred. Unfortunately the evidence for this appears to be mixed at best. Robert Putnam, the leading sociologist on the link between diversity and community, has found “immigration and ethnic diversity challenge social solidarity and inhibit social capital”. If you feel a migrant is replacing your job, how you feel about Australian society and a ‘fair go’ will inevitably change.

This is prevalent in the short term. Helpfully, and more encouraging, new identities for communities are forged over the long-term which encompass immigrants. Australia has ample evidence of this. “It’s not incomprehensible to me that Anglo-Australian’s in the 1950s got nervous when they saw Greeks and Italians”, says Leigh. Sometimes we forget these important historical lessons. Australia has a history of excellent integration over generations.

This explains, but does not excuse, political rhetoric in search of a short-term gain. Why were Prime Minister Gillard’s comments conflating foreigners and unemployment in 2013 so damaging? Instead of seeking to explain the complex, Gillard tapped into the discontent. A Prime Minister’s role should be to rise above it and help shape the long-term success that we know immigration can become. How we ensure this generation of migrants settle well into Australian society – something far from inevitable – is critical.

Unlike some European cities, race riots are a foreign concept in Australia, with Cronulla the major exception. Riots have come to represent to very worst of European society where migrant communities are increasingly geographically, socially and economically separated from their hosts. This is a mark of societies divided by skin colour and religion, occurring in places as unlikely as prosperous, social-democratic Sweden.

In Australia last year, a brief instance of street violence between indigenous and Pacific Islander communities in Logan, south-east Brisbane grabbed the attention of news headlines, only to be forgotten a week later. Perhaps it was the lack of Molotov cocktails or riot police but this small instance of social division points to a more uncertain future as two decades of economic growth slows and encapsulates Markus’ concerns about segmentation.

At the time, Andrew Laming found himself in the middle of this short national discussion after conflating indigenous disadvantage, migrant dependency and welfare in fewer than 140 characters. Twitter is many things, but the appropriate medium to discuss social divisions in suburban Australia it is not.

Away from the immediacy of those events, Laming says this is a serious issue:

“There is concern about islander migration through New Zealand, increasing social problems. In reality this represents a sub-population completely disengaged from society. No mutual obligation, excluded from welfare. This is a real problem and I think it will be looked at by this government.”

Laming’s concerns about the prevalence of Pacific islander’s entering Australia through our open door migration policy with New Zealand are shared by others in Canberra. Since 2001, New Zealand citizens can only become permanent residents and gain eligibility for welfare and social support through the standard visas. This is despite having the right to live and work in Australian permanently on temporary visas. This disconnet from the government safety net is dangerous. Living and working in Australia but technically set apart from everyone else. For some of these people, English may be a distant language and unemployment means a complete lack of basic income, as they are ineligible for NewStart.

Andrew Markus’ latest work shows these concerns are not baseless. In Logan, the Brisbane suburb where the violence occurred, 15 per cent of the population were born in New Zealand or the Pacific. A full 43.7 per cent of the population are born overseas, compared to 27 per cent of Australia as a whole. Social cohesion in Logan is gravely ill. Compared to the national average, every indicator for the Scanlon index is below average. For social justice and equity, there is a massive disparity of 38 percentage points between the national average of 97 and the Logan figure of 59. The sense of rejection is 16 percentage points lower than the national average. People living in Logan feel excluded, rejected and disenchanted compared to people who live elsewhere.

Markus says this is largely responsible for the lack of identification with Australia many New Zealanders have when living in here:

“The New Zealander’s are a huge issue. This is an issue that the government knows is becoming more concerning but who is working seriously on a fix?”

There are only a limited number of ways to improve this situation. The simple, cheap method would see the government limit the arrival of New Zealand citizens or radically alter the existing agreement between Australia and New Zealand on people movement. This would run counter to Australia’s recent history of immigration, an act of exclusion based largely on ethnicity, given the issue has been defined as one concerning Pacific islanders. The precedent would be extreme, unfortunate and retrograde.

Another option is to fundamentally revisit the need to support of those in the community who require it to participate in Australia, both economically and socially. Extending English classes to those who cannot speak English would be a start. Allowing New Zealand citizens to access university funding akin to Australians would be another welcome policy change. These people are Australian in everything but passport. Having lived here for years, the sense of exclusion they demonstrate is perhaps the most worrying ongoing concern for Australia’s sense of social cohesion.

Regardless of the migration and welfare policies, the figures also show the critical role of socio-economic factors play. With an unemployment rate of 13.2 per cent, Logan ranks in the top three percentile of all postcodes for soci0-economic disadvantage in 2011. These are the reasons why 58 per cent of those living in Logan believe immigration is too high, compared to 42 per cent nationally, despite 16.7 per cent of the Logan population arriving between 2000-11. Creating economic opportunity would see social cohesion improve on the back of higher incomes and reduced disadvantage. Feeding the beast with messages about foreigners should be a long way from the politician’s mind.

Fostering a sense of community for those who feel excluded is critical. Of course, this is only one example of a highly frustrated sub-set of people. There are many other, more positive examples of communities. Markus highlights those who most closely identify with Australia are those of Indian ethnicity. Yet by ignoring that which is difficult, we are risking a permanent division between those who have opportunity in Australia and those who do not.

Laming isn’t content simply to comment on the issue of New Zealand citizens however.  He parlays his concerns about social integration into much broader questions about the labour market and labour mobility and what this means in the 21st century:

“There is a real welfare question around mobility of labour. Certainly workers 16 to 21 should be expected to move for suitable work with appropriate relocation assistance and if they refuse two offers, I don’t see why they should continue receiving Newstart.”

He goes so far as to caveat support for further increases in skilled immigration on this type of welfare reform. This would be a radical rethinking of immigration and welfare, policy areas not typically fused together.

On the surface, these policy discussions may appear a long way from arguing about the amount of people who should come to Australia. Yet as the labour market drives immigration, population considerations weave in and out of various domestic policy agendas. Laming’s ideas are well outside the mainstream yet over time these thoughts may come to play a more dominant role.

While I disagree with Laming’s policy solutions, there is an undeniable link between labour mobility and immigration. Jeff Borland, an economist at Melbourne University, has explored the decline of people movement between states. In the decade to 2013, inter-state migration dropped by the equivalent of 130,000 people.

Immigration is one of the reasons for this decrease. Borland finds a closer match between the number of migrants arriving in a state and job creation. This reflects the demand-driven nature of immigration in the 21st century yet few would have expected effects as substantial as reducing inter-state migration.

Labour mobility is critical in a workforce that ebbs and flows amongst its constituent parts. Retail might be slack in Brisbane but booming in Perth. As manufacturing declines, an increasing share of job opportunities might be found in more dense urban areas. Mobility of a workforce allows these opportunities to be explored, softening an otherwise hard landing for those without work.

Unnoticed, away from the front pages, these are the policy impacts stemming from the immigration policy revolution outlined in Part 1. Our space is the common denominator to this social context. Ethnic segmentation, divergent social attitudes and labour mobility are all being directly or indirectly influenced by Australia’s new immigration framework. Yet, on these topics of policy importance, the silence from government, the bureaucracy and those who benefit from immigration is deafening. Just as we are largely unaware about how immigration policy has transformed, we are yet to explore how these policy changes are shaping critical social constructs.

This clash between the economic fundamentals of immigration and the social impact on how people live and work is real. It is also unrelenting. The next question is how to mitigate the worst impacts and harness the most positive aspects of immigration and population. As Australia has shown successfully, and as Europe has failed at historically, the role for government is central in this task.

(See Part One here)

Where are Australia’s anti-migrant politicians?

You might’ve read the title and laughed. I’m aware the Australian government, with bipartisan support, offloads asylum seekers to third countries which happen to be poor and currently unable to process said asylum seekers.

However I’m talking about non-asylum migrants, which make up the vast majority of Australia’s immigrants. Since the demise of Pauline Hanson, we have yet to see federal politicians take a hardline stance against immigrants as a distinct group of people. This is all the more surprising given most politicians can’t stop talking about cost of living pressures. Just as Shane Warne did not inspire a new generation of Australian spinners, the acolytes of Pauline Hanson failed to materialise.

In Europe, an anti-migrant position is the dominant position. Establishment Tories, such as David Cameron, have been scared stiff by the far-right on immigration. Social democrats and Labourites have fared equally poorly on the same topic. At the coming European Parliamentary elections this May, it is widely expected nationalist, anti-migrant parties will claim a significant share of the vote, perhaps even leapfrogging the traditional political parties of Europe. France, the U.K., Sweden, the Netherlands, Austria… the list goes on.

In the U.S., there is a career to be made on opposing ‘illegals’. Yet scratch beneath the surface and the nature of entry is a poor disguise for a serious distaste for migrants. Tea Party rhetoric on borders, enforcement and the road to citizenship has made immigration reform impossible in the United States. States like Arizona and Georgia pass ever stricter laws appealing to those amongst the public most wary of immigrants. This lowest common denominator approach to social policy appears to be a highly successful political tactic in certain states. I’ll keep an open mind as the sheer diversity of opinion on migration policy in the U.S. is substantial but until someone like Jeb Bush can make it past Iowa, we can err to firmly believe that a strong anti-migrant position shapes the highest office in the land.

Even New Zealand has Winston Peters of New Zealand First, whose policy advisor I heard recently explain a policy designed explicitly to limit the entry of Chinese family visa holders.

In comparison, Australia lacks this type of political representation. The odious Cory Bernadi will fight his cultural war but rarely expresses explicit anti-immigrant sentiment in the form of radically scaling back the number of migrants. His crusade does not extend to immigration as a whole, just a very particular sub-set of migrants to Australia. Perhaps only Kelvin Thomson, an ALP backbencher from suburban Melbourne, can lay claim to being truly anti-migrant, in the form of advocating a radically reduced number of immigrants.

Some may point to Julia Gillard’s comments last year conflating foreigners, work and queues. While I found these comments rather disgusting, they did not reflect a sustained political strategy or policy reform to exploit anti-migrant sentiment. The comments were made once and not again. The specifics were excluded from future talking points and failed to gain any traction. The rhetoric was shallow and baseless.

So what gives? Was it simply politicians refraining from anti-migrant sentiment as they know its bad policy? Looking at other examples of poor policy, this is a hard argument to make. Perhaps nearly single one of Australia’s 226 federally elected representatives, baring Thomson, believe immigrants are a net positive to Australia. This again is hard to fathom. I’d like to think it’s not in “our nature” but I don’t believe this is an appropriate manner to evaluate questions of such importance.

I don’t know the answer to this question but I feel as if its extremely important for the coming decades. If anyone has seen research on this specific topic, I’m all ears. Feel free to post any opinions of your own in the comments also.

Australian immigration in the 21st century (Part 1)

This is the first in a two part series about Australian immigration in the 21st century

Two symbols of Australian suburban life – the Hills-Hoist and the lawnmower –were broadcast to the world at the Sydney Olympics. Both command attention in backyards across the country, most of which are more than big enough to play cricket in. At the dawn of the 21st century, a bemused global audience caught a glimpse of how we see ourselves. Above all, our space – an entire continent to ourselves – embodied an idyllic Australian lifestyle.

This is the heart of the our population debate. More people means less space. This sentiment fused with electoral politics makes for uncomfortable public policy and strange bedfellows.

The most recent iteration of this potent mix was seen in 2010. A new Prime Minister ran from her predecessor’s policy agenda and a future Prime Minister surveyed the political landscape and made the easy call. Divisive public opinion provided the foundation for ‘a great big new tax’ and ‘stop the boats’. Yet even in this period of heightened political division, bipartisanship in Canberra was far from extinct.

A ‘sustainable Australia’ was born.

Julia Gillard and Tony Abbott campaigned almost in tandem. Abbott called immigration ‘out of control’, Gillard created a Minister for Population and Sustainability and we were promised a Productivity and Sustainability Commission from a Coalition government, which was inevitably scrapped very quietly.

In the four years since, sustainability has been incorporated as a buzzword into the political lexicon, littered within endless talking points and speeches.

This bipartisanship shades the truth. A big Australia is here to stay. Whatever the word sustainable once meant, it must incorporate at least 36 million people by 2050. Sam Dastyari uses his own word to describe the 2010 debate: rhetoric.

“When Gillard redefined the issue from a big Australia to a sustainable Australia, it was actually more rhetoric than policy. It was rhetoric. Rather than embrace it and debate, we’ll redefine it into a less scary concept. There was obviously politics in that. Rhetoric not being matched by policy change was actually disingenuous but everyone is in on it. The Conservatives have got in and nothing at this point indicates anything serious in terms of the broader immigration framework but again, it’s almost as if there is this secret that everyone is in on.”

In his short time in Parliament, Dastyari has become the poster boy for a big Australia.

“It’s become this huge taboo in politics, talking about immigration, talking about population. This is the most significant challenge that is going to be facing us in the next 20-30 years”

This taboo doesn’t apply to Dastyari. A pivotal figure in the much-storied NSW Right faction of the ALP, his position in the Senate allows him a wide berth to explore the controversial. The fact he is Iranian-born is nearly lost in the whirlwind that trails him down the corridors of Parliament House. As his colleagues focus on the deterioration of manufacturing across the eastern seaboard or defend the union movement from another conservative advance, it is easy to dismiss his claims as hyperbolic.

Yet hyperbole it is not. Current rates of net migration are trending above historical levels, something demographic forecasters have had trouble with, making future projections almost impossible. In 2001, the Treasury in the first intergenerational report based its long-term net migration rate at 90,000 per year. A decade later in the third intergenerational report, this number had doubled to 180,000 per year, creating the magic 36m figure where public debate floundered on. As we await the next iteration of the intergenerational report, current net migration trends are hovering at about 240,000 per year. 36m is likely to become 38-40m.

Dastyari is right there is a secret about immigration policy. You’ll find very few politicians who will seriously discuss the issue. Unlike other economic reforms of the 1980s and 1990s, no politician has been able to explain to a sceptical public how and why a bipartisan consensus exists on the wholesale reform immigration policy has undertaken in the past two decades. This starts with a simple yet somewhat uncomfortable truth: with economic growth, comes immigration growth.

Historically, the federal government picked the number of immigrants to enter Australia every year. This was loosely based on the unemployment rate and strength of the economy. These migrants were provided permanent visas, as the vast majority settled in Australia, a concept in direct contrast to many European countries, where temporary migration was the norm.

Two major policy changes in the 1990s transformed Australia’s immigration framework.

These were the introduction and expansion of temporary visa programs such as 457, student and working holiday visas and the shift away from family reunion towards skilled migration. Bipartisan in nature, there has not been a set of policy changes in the past two decades designed specifically to limit migration in any way whatsoever.

Taken together, these reforms lay the foundation of a ‘demand-driven’ immigration system where demand from the labour market and universities largely determines the number of people who immigrate to Australia. Like interest and exchange rates, immigration has changed from a policy wholly determined by government to one where the market plays the dominant role.

This has not removed government agency from immigration policy. Governments establish boundaries through various program settings but cannot determine the exact number of immigrants who come to Australia each year. Economic growth, such as the much touted 23 years without a recession, will bring more people. This is why the past decade has seen such large increases in population projections.

I ask Bob Carr how he would see a lower rate of population growth. He calls for the government to lower the level of permanent visas in the annual budget process. But he doesn’t touch on the policy settings behind student, 457 or working holiday visas, all of which are increasingly doing the legwork on population growth. These are complex programs now interwoven in our labour market, higher education sector and foreign relationships, arising in the last two decades without the accompanying percolating public discussion akin to how we discuss home loans.

We do not understand immigration as a market driven institution but this is exactly what it is. By constantly relying on politicians to set a limit without acknowledging the policy transformation, we are poorer in our understanding.

Elsewhere in Parliament, particularly with the loss of Bob Carr, you find the very same support for immigration and a larger population. Andrew Laming, a Harvard-educated, beer-swilling, Liberal MP represents the electorate of Bowman, a suburban seat in Brisbane’s east.

“On population growth I regard myself of supporter of what we are currently doing. I’m very comfortable with the current growth and wouldn’t dream of any slower.”

From different sides of the political divide, Dastyari and Laming represent the dominant view in Canberra on population.  This bipartisanship emerged as Australia’s period of economic sunshine began in the 1990s. Dastyari calls this “a secret political consensus” on immigration and population, a journey where the public have been left behind.

Those outside this consensus who advocate for a lower rate of immigration, such as former Premier and Foreign Minister Bob Carr, agree with Dastyari’s central point – how difficult it is to talk about Australia’s population. Says Carr:

“Governments in Canberra have traditionally assumed they can ramp up immigration without any accountability and whenever it surfaces as an issue, I’m struck by the fact that Australian’s have made it pretty clear they don’t accept the simple arguments for a bigger Australia”.

I ask Dastyari if this is simply because no one talks about population or if there is something deeper, a wariness of what this conversation might unearth.

“No-one likes change. People are comfortable and change is an unknown. Historically there has been this sense of the Australian psyche which is wrong, that we are this lucky country with this amazing land of prosperity and peace and someone is going to come and take it away from us.”

Bob Carr on the other hand sees the delineation of federal and state jurisdictions as an important factor. He mentions the oft-cited call by federal governments for an infrastructure response to immigration as not being borne out historically.

“I’ve never seen a federal government – Liberal or Labor – make a serious commitment to the nations cities since the era of Whitlam. No subsequent prime minister has shown any commitment to the quality of urban life”.

These are sharp words for his own side, as the ALP oversaw six years of strong population growth from 2007-2013.

Peter Lewis is a director with Essential Media Communication and has tracked public opinion on population.

“Our leaders don’t want a debate about population, they know they can’t win on a ‘big Australia’. Instead they allow immigration to quietly increase while creating panics around specific groups. The slogan trumps the big issue.”

Lewis’ comments about an inability to win a ‘big Australia’ debate are concerning given Bob Carr is hardly inventing what is a genuine public concern about population.

Following the 2010 election campaign, 47 per cent thought there were too many migrants arriving. This tapered off to 42 per cent last year but remains in the top handful of issues raised by voters after the traditional staples of the economy, health and education.

This entrenched gulf between the public and the political class is dangerous. The result is tokenistic urban planning frameworks across capital cities, devoid of vision and detached from reality.

Exhibit A is Infrastructure Australia’s National Priority List. The largest ‘transforming our cities’ project – the Melbourne Metro – is classified as “only not ready to proceed due to a small number of outstanding issues” despite the fact Premier Napthine has likened the Metro plan for Swanston St akin to the Berlin Wall. There is a lack of transformative infrastructure projects simply awaiting approval.

This even extends to where we live. The Grattan Institute has found Australians have strongly divergent preferences about the housing we live in now as opposed to the housing we want to live in. Something is not quite right.

This is where the politics of population crashes up against a brutal reality about sustainability. Policy and discussion are kept in the backroom instead of the front page. Peter Lewis believes politicians have convinced themselves this debate is ‘unwinnable’ because of a reliance on focus groups.

“It’s not impossible. When people think this is simply a choice between development and no development they opt for the status quo. But when you tell them the population will grow, regardless of who is in power, they accept this and are prepared to engage in a debate about what sort of development we should have.”

We now have a sustainable in name, market driven by nature immigration policy that will push Australia’s population past 36m by 2050.

The 20th century lifestyle celebrated in the Olympics by our love for traditional quarter acre is already in the rear view mirror.

The question is not how many people but what does this mean for Australia? The social and economic impacts on Australia are lost in the debate over the headline figure.

(See Part Two here)

The emerging population* debate (read immigration): a response to Nicholas Stuart

Nicholas Stuart had an op-ed in the Canberra Times this week arguing against a bigger Australia.

His argument is with Michael Fullilove, Director of the Lowy Institute, for his speech on ‘A Larger Australia’. I disagree with bits and pieces of Fullilove’s means, but on population, come down at the same end. However it is pleasing to see an emerging debate on this issue outside the confines of a federal election.

In familiar op-ed style, Stuart situates his argument within either/or:

Now this is one of those fundamental ideological positions you either hold, or you don’t. Intellectual arguments don’t seem to make much impression on those in favour or those against the idea that we can be “bigger”, and this is really a debate about population size.

I don’t believe this to be true and wonder if Stuart actually holds this belief, what is the purpose of his op-ed in the first place?

Stuart has three main arguments against a bigger Australia.

The first is to focus on infrastructure and the public cost of this provision. It’s an important point. More people require more stuff. Yet this only focuses on the demand migrants place on government and ignores the contribution from migrants. Most economic work on most developed economies shows the effect of immigration hovers around neutral. In Australia, we err on the side of positive because of the high-skilled nature of our immigration framework. Benign but limited as termed by the Productivity Commission in 2006. Therefore for Stuart to ignore the contribution of migrants to governments in the provision of public infrastructure is poor form. Yes, more schools and roads cost money. Thankfully migrants pay taxes too. His lament that “in the long run only a few benefit” is akin to claiming the only winners in the AFL last season were Hawthorn. While Melbourne may not have had a great year on the field, hundreds of people have good jobs because of the club and thousands more supporters gain enjoyment from participating. There is a good argument to be had about infrastructure in Australia, but blame state and federal governments as opposed to migrants.

Perhaps the most egregious part of his argument is his second point. Stuart co-opts Gina Rinehart as his main antagonist. This is despite the fact he goes to great lengths to explain one is not racist or anti-development to believe in a stable, low-growth population. In the same vein, one does not need to believe Gina Rinehart’s $2/day nonsense to believe in a larger Australia. Stuart is incorrect to state a big Australia means lower living standards. There is little proof to his claim. Australia today is the most populous and near to the richest we’ve ever been. This does not prove migrants are the individual equivalent of economic stimulus packages, but it does mean you require some evidence when you categorically state having more Aussies “simply means lower standards of living”. Stuart is dishonest by conflating Rinehart’s push for outlandish policy with the bigger Australia argument and the spectre of lower living standards. Even the most pessimistic takes on the impact on immigration see only very minimal impact on living standards (Borjas etc) while in Australia, the effects are generally small and positive (See Productivity Commission 2006).

Stuart’s last argument is the environment. “It’s fragile. Despite last week’s deluge, the rain isn’t coming when or where we want it. The soil is thin and old. There are limits”. All of this is true, but none of it precludes more people.

Finally, Stuart says:

There is another model. This week I’m in Sweden. In the 1600s this was a mighty power. Today it’s just a pleasant country; but I don’t think it’s lost anything in the transition.

Here is what Sweden has lost: the opportunity to take as many people possible on its journey to massive wealth. A nation is mostly a collection of the people within it. While Stuart laments our slide down the happiness and wellbeing measures (of course, Australia sits 2nd while Sweden sits 8th on the Human Development Index), since 1946 Australia has been busy integrating many people into high paying jobs, world class education and cultural exchange opportunities. Further, Sweden itself has run a pretty large immigration program over the past decade (just not for the past 400 years), something he would find if he ventured into the Stockholm suburbs in the south.

I think I understand the fear about more people from an environmental and economic point of view. There is a risk standards of living will fall with more people. Personally, I see this risk as much smaller than the risk of population stability in terms of wellbeing. In relation to the environment, unlike climate change, the issues of population are second order and based on tradition (i.e., water policy in Australia) rather than best practice*.

Stuart’s piece is more thoughtful (and pleasant) than the standard stable population writing that is spewed onto the internet by a small handful of excitable activists. However it contains many more questions than answers. I should note, I generally enjoy Stuart’s column in the Canberra Times as he explores matters at the margins as opposed to the general op-ed industrial complex which has arisen.

Other takes: Andrew Leigh has a more “factual” take on the population debate here, where he comes down on the side of more people (but only just it seems). Richard Tsukamasa Green has a different take to Fullilove here but supports a bigger population.

* Of course acknowledging people coming from low carbon economics to Australia increase Australia’s net carbon emissions. This is not an argument against immigration but for rigorous climate change policies.

Rapid migration change in Europe

Via Marginal Revolution, this paper from David Brady and Ryan Finnigan explores the link between immigration and support for welfare and social policy. Generally they find there is very little to link higher immigration to reduced support for social policy, “Ultimately, this study demonstrates that factors other than immigration are far more important for public support of social policy.”

At the end of the paper, there is an important reminder about how European migration has transformed in less than a generation. The following graphs show the percentage of overseas born for 1995 and 2005 and the percentage of net overseas migration for 1995 and 2005:

Screen Shot 2014-02-27 at 2.31.02 pm

Screen Shot 2014-02-27 at 2.22.01 pm

Graph A: In the decade between 1995 and 2005, Spain went from about 3 per cent foreign born to over 10 per cent. Ireland from 7 per cent to over 15 per cent. Portugal, Denmark, Sweden, Norway, Finland and the UK all show significant increases.

This stems from large inflows of migrants, as seen in graph B. The inflow of people for Spain and Ireland are mind-boggling large for countries with no history of immigration. France and Portugal also show these large inflows.

While other countries, like Australia and Canada, also had large inflows of migrants in this decade, this did not rapidly increase the percentage of overseas born because of the established populations of migrants already living in these countries.

This is critical context when looking at the anti-migration movement which has emerged in the wake of the global financial crisis. Many of these countries are historically emigration nations. Only recently have they experienced mass immigration, as economic growth generated massive demand for labour.

The economic and social institutions that support immigration in Canada, Australia and New Zealand simply don’t exist in many of these countries. Political and social division has been the result to date.

Wages and Immigration featuring @GrogsGamut and AI Group

Greg Jericho (@GrogsGamut) has a piece today about skills shortages. He takes AI Group to task for a policy submission which calls for an increase in the number of permanent migrants to 220,000, an increase of 30,000 for 2014-15 specifically to ease skills shortages.

Jericho shows wages growth and labour demand more generally has been pretty slack for mining and construction, two of the industries AI Group claim are contributing towards the skills shortage. His argument is also supported by growing apprenticeship numbers. Hopefully I am not slandering him by saying his argument boils down to lower labour demand in key industries that have recently experienced stronger labour demand. I agree with this completely.

(He could have also noted that temporary migration is uncapped via the 457 program and seek to ease skill shortages, perhaps limiting the need for more permanent migrants. I disagree with this approach as eventually temporary migrants become permanent migrants but it is effective in meeting skills shortages in the short term)

Unfortunately, instead of sticking to skills shortages, the article frames additional immigration as an either/or. The heading (which he may not have written) reads ‘is the skills shortage real or is industry trying to push down wages?’. The final paragraph:

Australia’s skills crisis is an ongoing challenge, but submissions such as this from Aig do little to suggest business groups are less concerned about the increasing labour costs and workers pay from possible skills shortages in the future, than they are about further reducing workers pay right now.”

It is intuitive to assume more labour will reduce wages in aggregate. But in the case of Australia, probably wrong. There is little evidence to support this claim in relation to well-run immigration programs. In fact, it is likely Australia’s immigration program actively encourages wages growth, especially for those in lower skilled jobs.

Most research in this field of labour economics is based in the U.S. where research has shown the wage effect of immigration is very small. There is a majority view immigration is either a net neutral or very slightly beneficial for wages. Even the most pessimistic claims see a 1-2 per cent reduction in wages over long time periods (sidenote: this NYTimes article on the wage effects of immigration is a fascinating read).

However immigration to the U.S. is mostly family based, together with a large irregular migration population. These groups tend to be relatively lower skilled than employer-sponsored or other skilled migrants. This means they have a greater impact on similarly skilled domestic workers. In Australia, highly skilled migrants dominate immigration policy, at least for the last two decades. By changing the composition of immigrant characteristics, the effect on wages can be substantial. This is because immigrants can be complements, not substitutes, within a labour market. The extent of complementary and supplementary migration determines the impact on domestic wages.

This table outlines one estimate of the effect of immigration on wages across the OECD between 1990-2000:

Wage effect of immigration: 1990-2000

The net effect on wages of all immigration and emigration to and from Australia was +1.5 per cent over the ten year period. This is admittedly pretty small over such a long period of time, but it is not negative. Further, if we only take the effect of immigration on lower skilled workers, this rises to +4.5 per cent. Given the decade 2000-10 saw large increase in skilled migrant combined with improvements to the human capital characteristics, it is likely (but not certain), these gains have accelerated recently.

The problem with any of this stuff comes back to economic fundamentals. The elasticity of both labour demand and supply, prices, the tax system, the role of government and the restrictions place on migration pathways. The statistics above would look radically different if Australia ran a low skilled migration program, however this would be much better for economic development in poorer nations due to remittances. Further, there is a counter argument to these statistics, opponents of whom claim the effects of terms of trade are not properly accounted for.

I really enjoy Jericho’s writing. It is typically informative and easy to get. In addition, it is a pretty safe bet to assume industry seeks to minimise wages growth through various means. However on this one, I think he has missed the mark and played into a common mistake. Immigration in Australia does not automatically limit wages growth. In fact, it may be helping grow wages through a variety of ways, such as complementarity, agglomeration and innovation. We would be well served in Australia with more research into this area but at the moment, I see claims about wage reduction from immigration as largely false.

A ‘sustainable’ population

Disclosure: I am heavily pro-migration and in favour of a significantly larger Australian population.

In 2010, just in time for the Federal election, the Treasury released the third Intergenerational Report. What proceeded was a population ‘debate. With the forecast (not estimates) of approximately 180,000 more people arriving in Australia than leaving every year to 2050, Australia was on track for a population of 36 million. This number seemed to evoke a national hysteria. Two things stand out from this episode.

The first is the appointment of a new Population Minister did very little to change government policy about population over the proceeding three year period. The document ‘Sustainable Communities: A sustainable population strategy for Australia‘ is a blithe attempt to to satisfy a pre-election promise. Within are little gems such as this one;

Seriously this is the best we can do?

‘Foundations of wellbeing’… what does that mean?

This document is less a policy statement, more a motherhood statement about poorly defined terms such as sustainability and prosperity. This stuff is borderline deceitful given the unknowns in the debate. Can 20 million people live in Sydney? Technically possible but desirable? The six principles outlined on page 8 of the overview seem like glib attempts to satisfy everyone. I know this stuff is not easy but population was perhaps the most debated issue at the 2010 election and the official government response was not pretty reading.

If you want to read an actual policy document, the Committee for Economic Development Australia report released in 2012, ‘A Greater Australia‘, is a much better place to engage. I do not agree with everything in it yet the authors and editors are experts, informed and communicate in real words as opposed to bumbling rubbish. Graeme Hugo’s multiple contributions demonstrate the best of Australian academia. Topics covered include multiple chapters on the environment, the economy and infrastructure. Social attitudes and public opinion deservedly get included.

The second point is on reflection, the 2010 debate was just the beginning. The Treasury forecasts of 180,000 additional immigrants per year were based, like all forecasts, on past history and assumptions of future policy (note: these are not projections but ‘best guesses’).

Less than three years later we can see how difficult this concept is. The current Department of Immigration and Citizenship forecasts of net overseas migration currently average about 240,000 per year over the next four years. If this holds constant, 36 million will arrive well before 2050. Tables 1 and 2 in the above link are the crux of the issue. Immigration numbers came down to 180,000 in 2011 as predicted but they are now increasing again. I haven’t read a single well sourced story about this trend in the papers recently and I’m worried this is going to be some major surprise when it should be nothing of the sort. We get a million words of bluster after every RBA board meeting but somehow net overseas migration figures are less sexy. This is a shame.

Global economic forces and Australia’s position in the world are driving these migration trends. While Australian governments can and do tinker with immigration regulations, no government can institute an immigration framework that doesn’t account for the centrality of economics to the movement of people. To have this debate seriously, this needs to be acknowledged. A perfect example is Mexican immigration to the United States. During the late 1990s and early 2000s, the estimated number Mexican citizens living illegally in the US increased to about 11 million. Yet since 2006, the number has stopped rising and now in decline. This is due both to Mexican economic growth and the economic slow down in the US.

Exploring the figures in Table 3 shows where this growth is expected. International students to double. Other temporary migration will hold constant (at historically high levels) while the increase in the refugee intake to 20,000 has also been factored. Regardless of your feelings on these distinct immigration programs, they are now central pillars in much more than just immigration. International students subsidise Australian higher education, in the process becoming a top three export industry. Skilled migrants increase Australia’s labour market participation. Working holiday makers prop up the agricultural industry with their labour. These are not good or bad, they just are and any discussion on reducing or increasing immigration must account for these complexities.

Table 3 of the DIAC document also shows just how difficult these assumptions are. What is going to happen to Australian citizens, both living here who travel and expats returning from overseas? What will happen with New Zealand citizens? The Department of Immigration expects that more Australians will leave while less New Zealanders will arrive than current figures show. Like all forecasts, these are only as good as their assumptions and in this case, I’d be wary anyone claiming a very specific number.

Population and immigration policy have an uneasy relationship with the Australian public. I have no idea what the answer is to this apparently conflict. At worst, we could have a proper debate instead of what Bernard Keane so aptly described as “I’m Spartacus” debate in July 2010 when the we last hit peak stupid. Yet how likely is a rational debate when 36 million by 2050 becomes 40 million+ in less than three years? Given our fascination with numbers – 36 million, 40 million, 50 million (!) – the emotion is soon captured by endless pictures of traffic jams and house prices.

The questions remain numerous. What is a big Australia? Is there a carrying capacity? How do different levels of government work together effectively on an issue as diverse as immigration and population? I don’t agree much with Peter Brent but his quip about high immigration levels being a ‘technocratic, not democratic, consensus’ seem accurate. Again, this isn’t simply a good thing or a bad thing. Many policies are not well supported by the public yet remain entrenched in our society (see deregulation particularly privatisation).

With the seeming emergence of increased populism in public debate, this is an area where leadership is perhaps required heavily than what we see currently. Perhaps Tony Burke is that man. While the aforementioned sustainable population stuff was highly disappointing, he seems technically smart and able to communicate well. After nearly 30 years of public education in economic concepts such as interest and exchange rates, the time has come for a complementary public conversation – immigration and population and what it means for 21st century Australia. I wish him all the best for the coming election campaign.