As we’ve seen – especially over the past decade or so – population growth isn’t inevitable.
While the global population has grown every year for the past seven decades, some countries have seen their numbers shrink. And increasingly, those with falling birth rates (including Australia) have relied on immigration to keep their populations growing.
We’re often told countries such as Japan give us a glimpse into our future: a shrinking population with an increasing share of older people – many of whom require health and aged care. These services, of course, require workers. But when the population is shrinking (and becoming older), it becomes harder to find the people able to fill the roles we need.
When there are fewer workers, total economic growth, or gross domestic product, also tends to slow. Why? Because there are fewer people tinkering away and producing goods or services, and fewer people spending. (But as we’ll come to, total economic growth actually isn’t the most important metric).
What’s the solution? One is to continue topping up our population, either through encouraging people to pump out more babies or by welcoming more immigrants. The latter is usually easier.
Not only is it very hard (and often expensive) to get people to change their minds about having children, but “importing” workers means you don’t have to spend decades getting them toilet-trained and ready for the workforce – as you would have to with an influx of babies.
When there’s an urgent need for workers – to care for our growing pool of grandparents, for example – or to make our GDP numbers look good (we can partly blame the media for its obsession with these figures), it’s easy for decision-makers to just bring in more people. Although as we’ve seen, it comes with political risk.
But relying on population growth alone as a Band-Aid fix for our workforce shortages and to fuel our economic growth is a problem.
While having more people increases the amount we can produce as a country, it’s not total economic growth we should care about so much as economic growth per person. There’s little point in having a bigger pie when each slice is unchanged – or smaller.
That’s not to say immigration is a bad thing. Immigrants and the new ideas and processes they bring can make us better at our jobs (and therefore help us increase our economic growth per person). And they can play a crucial role in providing many of the services we rely on, from hospitality to healthcare. The economic benefits of skilled immigration are well established.
The problem is that governments over the years have relied too heavily on population growth, failing to put enough thought, weight or money behind what is needed to support that growth – much of which would also help us to improve living standards for Australians across the board.
By failing to invest enough in housing, for example, we have ended up with a housing market that is weighing down our productivity (and for which opportunists disproportionately blame immigrants).
People having to live further away from their workplace are getting drained by long commutes and have to spend large chunks of the income they earn on simply keeping a roof over their heads, leaving them with less energy to dedicate to work and less money to spend on other goods and services, dampening business growth.
While the Albanese government is spending billions of dollars on improving housing supply, it’s simply not enough to make up for the many decades of shortfalls.
If we want to fix one of the biggest barriers to economic growth, we have to pay up through our tax system. Right now, though, we rely far too heavily on taxing workers: the people who are generating the ideas, making the products and developing the technology we need to boost our living standards.
Compared to other OECD countries, Australia raises a relatively small share of its government revenue from taxes on property. That’s because we only really tax property when it changes hands, and there is a capital gains tax exemption on the family home, as well as other concessions such as the capital gains tax discount.
Moving to a land tax and reducing some of these concessions, while gradually cutting back income taxes – especially for lower- and middle-income earners – would be a more efficient and fair way of structuring our tax system, and probably generate more tax revenue in the long term.
Taxes, while necessary, often dampen economic activity. But we also know taxes on land have the least negative effect on GDP per person, compared to taxing workers, for example.
While lifting income taxes can discourage people from working and investing, taxes on land can’t reduce the supply of land. Why? Because land can’t just grow legs and move around – it can’t be hidden away and it can’t be shrunk.
We also know most property wealth in Australia is concentrated in the hands of older generations. It makes sense for those older Australians who own property and have done well out of it (generally just by holding on to it), to contribute their fair share, especially as they start needing more health and aged care services.
Meanwhile, by reducing income tax, we can encourage younger working Australians to push to their potential, work in the places we’ll be needing them in (such as hospitals and aged care homes) and invest in doing things better – all of which are harder to do if we continue to squeeze them by taxing them too heavily and keeping housing out of their reach.
Without making these changes, and especially if we don’t want to rely on more immigrants, we end up with a situation like Japan, where there is intense pressure on healthcare systems, labour shortages and a struggle to fund essential services, all while younger workers shoulder the burden of paying for these things and keeping the economy going.
That doesn’t mean the Australian government should just rely on population growth. Without investment in the infrastructure and housing needed to support a larger population, and without shifting some of the tax burden back onto older, wealthier Australians, we risk everyone ending up with a smaller slice of the economic pie.
Slowing down our population growth comes with costs, but so does keeping it going. Whether we want more, less or the same amount of population growth, fixing our tax system – and making sure we all pay a fairer share – is key to giving ourselves the best chance of keeping our living standards up.
hazy_pale_ale on
GDP per capita should be the measure of choice, as it reflects the true value for each Australian to the economy, and is a true reflection of output and productivity.
However, using that would show that we’re actually in a recession, and have been for some time. Much easier to just brush that under the table and import more people to pump the nominal GDP value for Labor and the Coalition.
theballsdick on
The government can afford whatever it *can* do. While we have out of control government spending (and extremely high household debt) our system needs immigration as it’s lifeblood.
Cutoff that lifeblood and watch a major wage price spiral take off and the “wealth” of the asset class rich in this country become redistributed. Pumping house prices some 50-100% in 5 years and minting new millionaires everywhere through zero productive work of their own creates EXTREME excess demand in the economy, the only possible way to meet all that extra demand is via extra labour. Sure we might all be “millionaires” but it won’t feel like it if the working/productive class suddenly need to be fairly compensated.
HighligherAuthority on
Do you think they used the word panacea to sound smart?
No regular ass person believes immigration solves issues, it definitely going to make the bandaid rip softer.
The only pro-immigration people/institutions are those with assets and services which benefit more bottom feeding.
Landlords, retailers, fast food, tertiary education providers.
Be wary of those who have vested intrests, they will sit on the ring side while you fight for scraps against people who will work themselves to the bone.
Weissritters on
It is a political fix though, since without such numbers we will likely fall into recession. If we do then even the 90+ seat majority won’t be safe at the next election.
InPrinciple63 on
Australia receives negligible royalties for its natural resources compared to other countries, which is partly why the economy is in such bad shape: we are effectively gifting our natural resources for others to profit. We don’t need to tax the public more, just resource companies.
Machines are more productive than people, but we have locked the economy into human labour and distorted remuneration for such labour (given it’s based on talent which is genetic and thus easy for those who have it) instead of using another form of natural wealth distribution to the public that is more equitable.
Using population increase to fund society is a ponzi-type scheme that relies on infinite expansion to continue to operate, as soon as it stops it collapses, yet people get sucked in to profit for a short time and then get out, leaving the future scheme to collapse because nothing can be infinite and it ignores the parallel collateral effects. Fossil fuels were another ponzi-type scheme with collateral effects of climate change.
SheepherderLow1753 on
Its time to put a pause on immigration. People are struggling and homelessness has been increasing yearly.
TappingOnTheWall on
Higher immigration is **NOT** an economic fix – it’s a symptom of a broken economy, a broken Australia. Saying it’s a fix is like saying your pain pills are “fixing” your broken spine.
If the problem is “not enough workers” that’s because the pay isn’t high enough, work life balance isn’t good enough, and the population doesn’t feel a sense of identity with the community and people their job helps.
Part of the problem is that Neoliberalism is a failed philosophy, and its economists, and journalists (such as the author of this article) will ALWAYS claim society’s structural, social, and ideological issues are solvable within and by the current model of Neoliberal economics. This is the prevailing lie propping up Neoliberalism. From the article:
> Meanwhile, by reducing income tax, *we can encourage younger working Australians to push to their potential, work in the places we’ll be needing them in (such as hospitals and aged care homes) and invest in doing things better* – all of which are harder to do if we continue to squeeze them by taxing them too heavily and keeping housing out of their reach.
Sneaky wording that bit I’ve Italicized, isn’t it? Let’s break it down:
> we can encourage younger working Australians **to push** to their potential
Younger workers should be pushed to grind harder, by us – we don’t give a shit about work life balance.
> work in the places we’ll be needing them in (such as hospitals and aged care homes)
They’ll operate however we get the economic system to manipulate them to, obedience will manifest as if through magic by lowering income taxes. We won’t discuss socialist ideas like pay raises for hospital and aged care workers (we’ll actually lower their wages using immigration, calling that “part of the fix”). We certainly won’t talk about work life balance, or community identity.
> and [they’ll] invest in doing things better
Young people should be *”doing things better”* – it’s *their fault*, but that’s okay we can use the economy to **make them** do better. Again, it’s this idea that your life isn’t your own, that you don’t deserve autonomy – we can **push** and wrangle and convince you, using magical neoliberal powers. The young can be controlled! Through neoliberalism all things are possible.
That’s neoliberal dehumanisation. The higher immigration they pose as a “fix”, lowers local wages and makes the problems worse. The [“hidden curriculum”](https://en.wikipedia.org/wiki/Hidden_curriculum) for neoliberal thinkers is always to extend the necessity of neoliberalism its self. To claim it’s the only reasonable solution, when it’s in fact extending the suffering creating by Capitalism and the privatisation of profits. They don’t offer solutions, they just deepen the problems.
Let’s check the actual solutions again:
**If the problem is “not enough workers” that’s because the pay isn’t high enough, work life balance isn’t good enough, and the population doesn’t feel a sense of identity with the community and people their job helps.**
Not only is it not a panacea, I think it’s a slow poison.
Agreeable_Night5836 on
Higher immigration at present is a economic Band-Aid to keep GDP positive and hide the fact that individually we are all going backwards, and that productivity has stalled, and the only way to produce more is more workers. The effects are that housing issues can never be resolved while population growth outstrips our ability to build new housing, and successive governments lack of planning for infrastructure means that we lack services to cope with the expanding population.
RtotheJH on
Immigration is like the catastrophic hemorrhage after a stab wound, sure it’s not the cause of the problem but it’s the main issue we need to stop completely right now.
Evil politicians are the stabbing though.
Bright-Marsupial-265 on
If you want to pause immigration, then Anglo Aussies have to step up and study, learn trades and skills.
Every year when ATAR results are revealed, there aren’t many white kids on the top bands. We still need doctors and specialist surgeons.
The problem with the West is people live long lives so that means as a society we have to cover pensions and healthcare for the elderly long into their lives. We need taxpayers to pay for all of that.
Another problem is the West aren’t having kids as much. We’re also an ageing population so we’re not replenishing the retirees with new generation of tax payers/workers to keep the country going.
It’s a very complicated conundrum that many OECD countries are having for e.g. Japan.
Immigration sort of plugs that problem but racists don’t like it and government isn’t competent enough to manage the infrastructure required.
There are no simple solutions and anyone who believes the Trump style rhetoric of ‘I’ll fix it all on Day One and it’ll be so beautiful’ is a gullible fool.
TopRoad4988 on
If you don’t support entirely open borders, you acknowledge there is a finite upper bound to sustainable immigration.
What specific metrics (e.g., housing completions, rental growth, infrastructure capacity, or wage growth) are you using to determine that we haven’t already exceeded that limit?
13 Comments
As we’ve seen – especially over the past decade or so – population growth isn’t inevitable.
While the global population has grown every year for the past seven decades, some countries have seen their numbers shrink. And increasingly, those with falling birth rates (including Australia) have relied on immigration to keep their populations growing.
We’re often told countries such as Japan give us a glimpse into our future: a shrinking population with an increasing share of older people – many of whom require health and aged care. These services, of course, require workers. But when the population is shrinking (and becoming older), it becomes harder to find the people able to fill the roles we need.
When there are fewer workers, total economic growth, or gross domestic product, also tends to slow. Why? Because there are fewer people tinkering away and producing goods or services, and fewer people spending. (But as we’ll come to, total economic growth actually isn’t the most important metric).
What’s the solution? One is to continue topping up our population, either through encouraging people to pump out more babies or by welcoming more immigrants. The latter is usually easier.
Not only is it very hard (and often expensive) to get people to change their minds about having children, but “importing” workers means you don’t have to spend decades getting them toilet-trained and ready for the workforce – as you would have to with an influx of babies.
When there’s an urgent need for workers – to care for our growing pool of grandparents, for example – or to make our GDP numbers look good (we can partly blame the media for its obsession with these figures), it’s easy for decision-makers to just bring in more people. Although as we’ve seen, it comes with political risk.
But relying on population growth alone as a Band-Aid fix for our workforce shortages and to fuel our economic growth is a problem.
While having more people increases the amount we can produce as a country, it’s not total economic growth we should care about so much as economic growth per person. There’s little point in having a bigger pie when each slice is unchanged – or smaller.
That’s not to say immigration is a bad thing. Immigrants and the new ideas and processes they bring can make us better at our jobs (and therefore help us increase our economic growth per person). And they can play a crucial role in providing many of the services we rely on, from hospitality to healthcare. The economic benefits of skilled immigration are well established.
The problem is that governments over the years have relied too heavily on population growth, failing to put enough thought, weight or money behind what is needed to support that growth – much of which would also help us to improve living standards for Australians across the board.
By failing to invest enough in housing, for example, we have ended up with a housing market that is weighing down our productivity (and for which opportunists disproportionately blame immigrants).
People having to live further away from their workplace are getting drained by long commutes and have to spend large chunks of the income they earn on simply keeping a roof over their heads, leaving them with less energy to dedicate to work and less money to spend on other goods and services, dampening business growth.
While the Albanese government is spending billions of dollars on improving housing supply, it’s simply not enough to make up for the many decades of shortfalls.
If we want to fix one of the biggest barriers to economic growth, we have to pay up through our tax system. Right now, though, we rely far too heavily on taxing workers: the people who are generating the ideas, making the products and developing the technology we need to boost our living standards.
Compared to other OECD countries, Australia raises a relatively small share of its government revenue from taxes on property. That’s because we only really tax property when it changes hands, and there is a capital gains tax exemption on the family home, as well as other concessions such as the capital gains tax discount.
Moving to a land tax and reducing some of these concessions, while gradually cutting back income taxes – especially for lower- and middle-income earners – would be a more efficient and fair way of structuring our tax system, and probably generate more tax revenue in the long term.
Taxes, while necessary, often dampen economic activity. But we also know taxes on land have the least negative effect on GDP per person, compared to taxing workers, for example.
While lifting income taxes can discourage people from working and investing, taxes on land can’t reduce the supply of land. Why? Because land can’t just grow legs and move around – it can’t be hidden away and it can’t be shrunk.
We also know most property wealth in Australia is concentrated in the hands of older generations. It makes sense for those older Australians who own property and have done well out of it (generally just by holding on to it), to contribute their fair share, especially as they start needing more health and aged care services.
Meanwhile, by reducing income tax, we can encourage younger working Australians to push to their potential, work in the places we’ll be needing them in (such as hospitals and aged care homes) and invest in doing things better – all of which are harder to do if we continue to squeeze them by taxing them too heavily and keeping housing out of their reach.
Without making these changes, and especially if we don’t want to rely on more immigrants, we end up with a situation like Japan, where there is intense pressure on healthcare systems, labour shortages and a struggle to fund essential services, all while younger workers shoulder the burden of paying for these things and keeping the economy going.
That doesn’t mean the Australian government should just rely on population growth. Without investment in the infrastructure and housing needed to support a larger population, and without shifting some of the tax burden back onto older, wealthier Australians, we risk everyone ending up with a smaller slice of the economic pie.
Slowing down our population growth comes with costs, but so does keeping it going. Whether we want more, less or the same amount of population growth, fixing our tax system – and making sure we all pay a fairer share – is key to giving ourselves the best chance of keeping our living standards up.
GDP per capita should be the measure of choice, as it reflects the true value for each Australian to the economy, and is a true reflection of output and productivity.
However, using that would show that we’re actually in a recession, and have been for some time. Much easier to just brush that under the table and import more people to pump the nominal GDP value for Labor and the Coalition.
The government can afford whatever it *can* do. While we have out of control government spending (and extremely high household debt) our system needs immigration as it’s lifeblood.
Cutoff that lifeblood and watch a major wage price spiral take off and the “wealth” of the asset class rich in this country become redistributed. Pumping house prices some 50-100% in 5 years and minting new millionaires everywhere through zero productive work of their own creates EXTREME excess demand in the economy, the only possible way to meet all that extra demand is via extra labour. Sure we might all be “millionaires” but it won’t feel like it if the working/productive class suddenly need to be fairly compensated.
Do you think they used the word panacea to sound smart?
No regular ass person believes immigration solves issues, it definitely going to make the bandaid rip softer.
The only pro-immigration people/institutions are those with assets and services which benefit more bottom feeding.
Landlords, retailers, fast food, tertiary education providers.
Be wary of those who have vested intrests, they will sit on the ring side while you fight for scraps against people who will work themselves to the bone.
It is a political fix though, since without such numbers we will likely fall into recession. If we do then even the 90+ seat majority won’t be safe at the next election.
Australia receives negligible royalties for its natural resources compared to other countries, which is partly why the economy is in such bad shape: we are effectively gifting our natural resources for others to profit. We don’t need to tax the public more, just resource companies.
Machines are more productive than people, but we have locked the economy into human labour and distorted remuneration for such labour (given it’s based on talent which is genetic and thus easy for those who have it) instead of using another form of natural wealth distribution to the public that is more equitable.
Using population increase to fund society is a ponzi-type scheme that relies on infinite expansion to continue to operate, as soon as it stops it collapses, yet people get sucked in to profit for a short time and then get out, leaving the future scheme to collapse because nothing can be infinite and it ignores the parallel collateral effects. Fossil fuels were another ponzi-type scheme with collateral effects of climate change.
Its time to put a pause on immigration. People are struggling and homelessness has been increasing yearly.
Higher immigration is **NOT** an economic fix – it’s a symptom of a broken economy, a broken Australia. Saying it’s a fix is like saying your pain pills are “fixing” your broken spine.
If the problem is “not enough workers” that’s because the pay isn’t high enough, work life balance isn’t good enough, and the population doesn’t feel a sense of identity with the community and people their job helps.
Part of the problem is that Neoliberalism is a failed philosophy, and its economists, and journalists (such as the author of this article) will ALWAYS claim society’s structural, social, and ideological issues are solvable within and by the current model of Neoliberal economics. This is the prevailing lie propping up Neoliberalism. From the article:
> Meanwhile, by reducing income tax, *we can encourage younger working Australians to push to their potential, work in the places we’ll be needing them in (such as hospitals and aged care homes) and invest in doing things better* – all of which are harder to do if we continue to squeeze them by taxing them too heavily and keeping housing out of their reach.
Sneaky wording that bit I’ve Italicized, isn’t it? Let’s break it down:
> we can encourage younger working Australians **to push** to their potential
Younger workers should be pushed to grind harder, by us – we don’t give a shit about work life balance.
> work in the places we’ll be needing them in (such as hospitals and aged care homes)
They’ll operate however we get the economic system to manipulate them to, obedience will manifest as if through magic by lowering income taxes. We won’t discuss socialist ideas like pay raises for hospital and aged care workers (we’ll actually lower their wages using immigration, calling that “part of the fix”). We certainly won’t talk about work life balance, or community identity.
> and [they’ll] invest in doing things better
Young people should be *”doing things better”* – it’s *their fault*, but that’s okay we can use the economy to **make them** do better. Again, it’s this idea that your life isn’t your own, that you don’t deserve autonomy – we can **push** and wrangle and convince you, using magical neoliberal powers. The young can be controlled! Through neoliberalism all things are possible.
That’s neoliberal dehumanisation. The higher immigration they pose as a “fix”, lowers local wages and makes the problems worse. The [“hidden curriculum”](https://en.wikipedia.org/wiki/Hidden_curriculum) for neoliberal thinkers is always to extend the necessity of neoliberalism its self. To claim it’s the only reasonable solution, when it’s in fact extending the suffering creating by Capitalism and the privatisation of profits. They don’t offer solutions, they just deepen the problems.
Let’s check the actual solutions again:
**If the problem is “not enough workers” that’s because the pay isn’t high enough, work life balance isn’t good enough, and the population doesn’t feel a sense of identity with the community and people their job helps.**
Progressive Humanist Socialism, the kind Labor [abandoned in the 1980s,](https://en.wikipedia.org/wiki/Third_Way#Australia) is quite a different outlook isn’t it?
Not only is it not a panacea, I think it’s a slow poison.
Higher immigration at present is a economic Band-Aid to keep GDP positive and hide the fact that individually we are all going backwards, and that productivity has stalled, and the only way to produce more is more workers. The effects are that housing issues can never be resolved while population growth outstrips our ability to build new housing, and successive governments lack of planning for infrastructure means that we lack services to cope with the expanding population.
Immigration is like the catastrophic hemorrhage after a stab wound, sure it’s not the cause of the problem but it’s the main issue we need to stop completely right now.
Evil politicians are the stabbing though.
If you want to pause immigration, then Anglo Aussies have to step up and study, learn trades and skills.
Every year when ATAR results are revealed, there aren’t many white kids on the top bands. We still need doctors and specialist surgeons.
The problem with the West is people live long lives so that means as a society we have to cover pensions and healthcare for the elderly long into their lives. We need taxpayers to pay for all of that.
Another problem is the West aren’t having kids as much. We’re also an ageing population so we’re not replenishing the retirees with new generation of tax payers/workers to keep the country going.
It’s a very complicated conundrum that many OECD countries are having for e.g. Japan.
Immigration sort of plugs that problem but racists don’t like it and government isn’t competent enough to manage the infrastructure required.
There are no simple solutions and anyone who believes the Trump style rhetoric of ‘I’ll fix it all on Day One and it’ll be so beautiful’ is a gullible fool.
If you don’t support entirely open borders, you acknowledge there is a finite upper bound to sustainable immigration.
What specific metrics (e.g., housing completions, rental growth, infrastructure capacity, or wage growth) are you using to determine that we haven’t already exceeded that limit?