Ross Gittins is the economics editor of the Sydney Morning Herald. His opinion piece today (in the Melbourne Age) is well worth reading. He begins by noting that for many years the political elite has deliberately ignored popular opinion on the issue:
Something significant has happened in this hollow, populist election campaign: the long-standing bipartisan support for strong population growth - Big Australia - has collapsed. Though both sides imagine they're merely conning the punters, it's hard to see how they'll put Humpty Dumpty together again. Which will be no bad thing.
The original bipartisanship was a kind of conspiracy. The nation's business, economic and political elite has always believed in economic growth and, with it, population growth, meaning it has always believed in high immigration.
Trouble is, stretching back to the origins of the White Australia policy, the public has had its reservations about immigration. Hence the tacit decision of the parties to pursue continuing immigration, but not debate it in front of the children.
But immigration has now become an election issue and Gittins thinks this is a good thing:
Gillard and Abbott have attracted criticism from commentators wedded to the old way of doing things, but the end of the conspiracy of silence is a good thing. Whatever the public's reasons for frowning on immigration, it does have disadvantages as well as advantages and the two ought to be weighed and debated openly.
Gittins is sceptical about the benefits of mass immigration because of its effects on the environment. But he also believes that for the native born that there is an economic cost as well:
Even when you ignore the environmental consequences, the proposition that population growth makes us better off materially isn't as self-evident as most business people, economists and politicians want us to accept. Business people like high immigration because it gives them an ever-growing market to sell to and profit from. But what's convenient for business is not necessarily good for the economy.
Since self-interest is no crime in conventional economics, the advocates of immigration need to answer the question: what's in it for us? A bigger population undoubtedly leads to a bigger economy (as measured by the nation's production of goods and services, which is also the nation's income), but it leaves people better off in narrow material terms only if it leads to higher national income per person.
So does it? The most recent study by the Productivity Commission found an increase in skilled migration led to only a minor increase in income per person, far less than could be gained from measures to increase the productivity of the workforce.
What's more, it found the gains actually went to the immigrants, leaving the original inhabitants a fraction worse off. So among business people, economists and politicians there is much blind faith in population growth, a belief in growth for its own sake, not because it makes you and me better off.
Gittins doesn't believe mass immigration has improved the standard of living:
Why doesn't immigration lead to higher living standards? To shortcut the explanation, because each extra immigrant family requires more capital investment to put them at the same standard as the rest of us: homes to live in, machines to work with, hospitals and schools, public transport and so forth.
Little of that extra physical capital and infrastructure is paid for by the immigrants themselves. The rest is paid for by businesses and, particularly, governments. When the infrastructure is provided, taxes and public debt levels rise. When it isn't provided, the result is declining standards, rising house prices, overcrowding and congestion.
So the option is either to raise taxes and/or national debt, or to allow the quality of infrastructure to decline. In Australia it seems to have been the latter option.
How much influence will the opening up of public debate on this issue have? It's difficult to say. The business lobbies do still have a great deal of influence, so I'm not expecting any immediate policy breakthroughs.
But it's nonetheless significant that papers like The Age are carrying such articles. It's possible that there has been a shift of sorts within the political class on the issue and hopefully this will lead to a less one-sided debate in the years to come.
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