IS IMMIGRATION NECESSARY FOR ECONOMIC GROWTH?
Figures on Australia’s economy show an impressive spurt of growth since the last financial year. More specifically, growth was 3.5% in the September 2020 quarter, 3.2% in the December quarter and 1.8% in the March 2021 quarter. That’s about 8.5% in nine months. (1)
Meanwhile our current account, a figure which includes balance of payments on trade, interest payments on debt and shareholder dividends on foreign investment, is positive and expected to be $149 billion in the 2020-21 financial year. (2) Australia’s current account had been in deficit from the early 1970s until the latter part of 2019. This is good news for the economy and the country.
Not surprisingly our foreign debt has started to shrink. (3) And the unemployment rate is only 5.1% despite the removal of the jobkeeper allowance. (4)
What has gone down is immigration and population growth. The population grew by 136,300 to 25,694,393 in 2020. This was a rate of 0.5%. Only 2.4% of this growth was due to net overseas migration and 97.6% due to natural increase. (5) This was despite a slight drop in the birth rate.
In other words despite a huge drop in immigration our economy is performing. This gives a lie to the claim that we need mass immigration for economic growth.
In fact in the three years before Covid hit our economy was performing poorly despite pretty high levels of immigration and population growth as shown by the following figures:
Year: 2017 2018 2019
Population growth: 1.57% 1.61% 1.54%
Economic growth: 2.30% 2.95% 2.16% (6)
One thing that tends not to be mentioned when discussing immigration is the amount migrants remit back to their home countries. With the Covid 19 epidemic remittances in most countries tended to slow down. This is good as, according to America’s Pew Research Center, remittances from Australia reached $20 billion in 2018 – and that was in U.S. dollars. (7)
Meanwhile house prices have continued to go up and in the six months to 31 March rose by 8.7%. This was the fourth highest growth in house prices in the world. (8) Soaring house prices and household debt are driving inequality and damaging productivity according to the University of NSW’s Sydney’s City Futures Research Centre. National household debt has more than doubled over the last three decades, from 70% of GDP in 1990 to almost 185% in 2020. House prices could rise by 14% in the coming year meaning that even more families will not be able to own their own home. (9)
Flooding the country with more migrants will add to these problems and will likely reverse the gains we have made with foreign debt and our current account. We seem to be doing better without mass immigration.
One more point: Japan has had a shrinking population for about a decade but, until Covid struck, its economy grew each year. In 2017 for instance it population went down by 0.2% but its economy expanded by 2.17%. (10) More evidence that a country does not need immigration to grow the economy.
(2) Michael Janda, “Current Account Surplus Gives Economy Breathing Room, Says Bank of America”, www.abc.net.au/news/ 1 July 2021
(6) Australian Bureau of Statistics, 3101.00, Estimated Residential Population; www.macrotrends.net/countries
(8) MacKenzie Scott, “House Price Growth among Fastest in World”, The Australian, 10 June 2021
(9) “House Prices, Debt ‘Time Bomb’ Threat”, Daily Telegraph, 16 June 2021