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Less is more?
Alan Wood:
The Australian November 04, 2003
Reviewed by David Hughes-Jones
Alan wood believes that immigration is no longer the hot issue it was in the 1980s but the population debate is never far below the surface. So when one of Australia's most influential economistsMax Corden, decided to deliver a lecture with the deliberately provocative title of “Forty Million Aussies? The Immigration Debate Revisited”, he felt that we Aussies should sit up and take notice.
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Corden has an international reputation in trade and finance theory and provided much of the intellectual firepower behind tariff reform in Australia. For many years he has lived abroad, working at Oxford University in the UK and the International Monetary Fund and Johns Hopkins University in the US. He comes to the local debate with an international perspective.
The big question Corden asks with is whether it would be in Australia's interest to roughly double its existing 20 million population in the next 50 years or so, as it did in the 37 years from 1949 to 1986 and in the 43 years from 1958 to 2001. This is where the 40 million figure comes from. He was not setting a population target but indicating an order of magnitude.He asks whether a much larger population would bring net benefits or impose net costs on the resident population and their descendants. He reaches what he rightly calls the radical conclusion that there would be net benefits for Australians from a much larger population, although it is unlikely that these benefits can be quantified by any economic model.
He advances “ populate-or-perish” and the “economies of scale and increased choice” arguments. Both are basically arguments about the size of the economy.
He argues that the larger the population, and hence work force and gross domestic product, the more Australia will be able to spend on its defence and the greater its influence in the region and the world, including in economic and trade forums. The larger the economy, the larger the market and the greater the economies of scale for industries that don't trade internationally.. Corden concludes that our declining birthrate, the conservative approach of most Australians to large-scale immigration and the pragmatic response of our governments mean there is little chance of the population in 2050 going much beyond present projections of 25 million to 27 million. Corden may make a contribution to make to the policy debate nonetheless for example how to get a much higher proportion of migrants to settle outside Sydney and Melbourne - in other state capitals and regional Australia. Federal Labor has released a discussion paper proposing, among other things, that a minimum 45 per cent of new migrants should have to settle in rural and regional areas.
Corden doesn't address this directly but he is quite scathing about earlier policies aimed at "populating the empty spaces of our continent", which led to resources being wasted on various projects, particularly irrigation, for which we are paying a high price. He believes that ;-
"The future immigrants, like the existing population, will prefer to live on the coast and mostly in urban environments,the risk is that we will again waste scarce resources trying to entice migrants to settle where they, and Australian residents, don't want to go.”
While he supports the policy focus on skilled immigration he thinks we shouldn't define skills too narrowly. However, his lecture provides a powerful argument for being cautious in migrant selection.
He has noted that lengthy periods of unemployment for migrants have been common in Australia and contrasts this with the US, where migrants tend to have lower unemployment rates relative to the national average. Why? Because in the US migrants initially find jobs paying substantially lower wages than the national average. These jobs allow them to develop their skills and eventually their wages are the same as for comparable US workers.
Because of the minimum award wages imposed by the Industrial Relations Commission and the unions. This doesn't happen in Australia
Corden believes that there is a great need for change. but ".... at present it is a reason why our pragmatic short-term oriented governments find it desirable to try (to) tailor immigrant selection closely to current labour demand. It is a reason - additional to the general argument in favour of skilled migration (the economic benefits it brings) - for favouring skilled migrants who will readily find jobs at the high Australian regulated wage rates."
Corden doesn't see the environment as a constraint on a much larger population, but his argument is conditional on governments implementing proper resource pricing and other policies. If they don't, the environment will!
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