One of the less prominent stories of the pandemic has been how neoliberal ideology has taken a heavy blow as governments have struggled to deal with the challenge of locking down their economies for months at a time. Last week, Reserve Bank governor Philip Lowe delivered another kick — aimed right at one of the central tenets of neoliberalism — when he argued that employers’ ability to draw on foreign workers “has contributed to wages being less sensitive to shifts in demand than was once the case”.
“Immigration adds to both the supply of, and demand for, labour: when immigrants work they supply labour and their consumption of goods and services adds to the demand for labour. The precise balance between this extra labour supply and extra labour demand is difficult to determine and depends upon the specific circumstances. The picture, though, is clearer when firms are hiring workers to overcome bottlenecks and fill specific gaps where workers are in short supply. This hiring dilutes the upward pressure on wages in these hotspots and it is possible that there are spillovers to the rest of the labour market.”
For neoliberals, borders should not be impediments to the free flow of both capital and labour, so that they can move to wherever they will be used most efficiently. In practice, this means migration should be allowed to push wages down in higher-wage countries. It also means that, peculiarly, neoliberals and left-wing supporters of immigration are aligned in their support for fewer impediments to migration.
The reaction to Lowe’s comments was febrile. The Financial Review editorialised about how terrible it would be if we didn’t quickly return to high immigration levels. Its economics editor John Kehoe lashed Lowe’s remarks. The government itself attacked Lowe and claimed there was no evidence migration pushed wages down. One of the last institutional holdouts of neoliberalism, the Committee for the Economic Development of Australia (promoter of those asinine “world competitiveness index” surveys), also attacked Lowe. But others joined in as well. Former Immigration deputy secretary Abul Rivzi — a serial critic of the government — challenged Lowe, as did Greg Jericho in the left-wing Guardian.
The feral reaction, including the Morrison government claiming the head of the Reserve Bank is wrong, reflects how deeply ingrained high immigration is in the policymaking mentality in Australia.
Lowe himself used to reflect this. In a speech in 2018, he put the standard case for high immigration — it reduces the impact of ageing population, it increases our stock of human capital, and it helps address labour market problems:
“Migration increased sharply at the height of the resources boom when demand for skilled labour was very strong, and then subsequently declined as the mining investment boom came to an end. In this way, migration has helped our economy adjust to large swings in the demand for labour. It has also helped address some particular skills shortages.”
Lowe made that statement when the RBA was still in deep denial about wage stagnation — indeed, in that very speech, he predicted that “the labour market is gradually tightening and it is reasonable to expect that this will lead to a lift in both wages growth and inflation”.
Now Lowe has changed his mind on the way migration helps the economy adjust to swings in labour demand. He still maintains a positive view of immigration and that “it is useful to distinguish the effects of this ability to draw on overseas labour markets from the impact of immigration more broadly”.
As Craig Emerson pointed out in a piece supporting Lowe, the governor was focused not on overall immigration and not even on permanent skilled migration, but on temporary migration. In fact, when he made that 2018 speech, Lowe pointed out “a marked increase in the number of overseas students studying in Australia and changes in the policies around student visas”. In 2019, foreign student visa holders in Australia rose still higher, from 430,000 to 480,000. To the end of 2019, total foreign student enrolments rose 86% since 2013.
Lowe also made the point that some specific sectors — food, hospitality, cleaning — relied on temporary workers far more heavily than other industries. We know from the work of the Fair Work Ombudsman that these are also the industries with greatest exploitation of workers — along with the horticulture industry, which aims much of its horrendous exploitation at working holidaymakers. And in some sectors, such as aged care, employers have actually been encouraged by the current government to rely on sourcing foreign workers rather than paying Australian workers more.
It’s important to remember that the benefits of high immigration can be overstated. In 2006, the Productivity Commission concluded, after extensive modelling, that “the overall economic effect of migration appears to be positive but small, consistent with previous Australian and overseas studies”. That was during a period of strong wages growth, at least compared to the last eight years, and when foreign student numbers were less than half their 2019 levels.
Federal policymakers also assume the downsides of immigration can be dealt with by better state government management. Congestion, housing unaffordability, poor access to services and pressure on infrastructure have all resulted from the inability of governments — especially but not only in NSW — to deal with strong population inflows. The push for a bigger Australia — a credible and worthy policy goal — has not been met by the vision and investment needed from state governments, until the last five years when the NSW and Victorian governments began making up for years of underinvestment.
A kneejerk insistence that Lowe is wrong and immigration is always a positive won’t do anything to convince people stuck in congested traffic and without good access to basic services, and who haven’t had a pay rise for the best part of a decade. The pandemic at least will give governments some breathing space to catch up. It might also enable us to test Lowe’s thesis that locking off our borders removes one of the key mechanisms by which employers have been able to evade paying their workers properly.
‘The push for a bigger Australia — a credible and worthy policy goal ‘
Is it really, BK? You haven’t made a case for it.
Precisely.
Nor have any of the other Kool-Aid imbiders.
Vague references to Australia’s “significance” or, my personal favourite, “world class cities” don’t cut it.
The left merely see mass immigration as a blunt tool for income redistribution and therefore are no better than neoliberals chasing a quick buck.
At least the neolibs are transparent.
Progressive types desperate to label we sceptics as racists are beneath contempt.
Until it’s proponents are prepared to explore mass immigration in its totality-and yes that includes the environment-they remain a bunch of snake oil salesmen doing the bidding of all the usual tiresome suspects.
i hope you’re not about to use the ‘we’re full’ argument are you?
And if Kimba is about to use the ‘we’re full’ argument, is that really a problem? It certainly wouldn’t be for me.
The left merely see mass immigration as a blunt tool for income redistribution […]
Uh, what ? How’s that supposed to work ?
Do some reading.
Not that difficult.
As for the we’re full stuff: my issue is with mass immigration. Emphasis on the term “mass” where we achieve a population growth of 1.6% per annum. Developing world stuff. Who benefits?
That doesn’t make me a racist.
The only direction mass immigration distributes wealth is upwards.
Not an outcome traditionally pursued by “the left”.
Your eagerness to deny an accusation not made suggests a guilty conscience.
Could be explained better and would be a first for anyone in Australian media e.g at minimum give existing small sectors more economies of scale to compete globally, but simply used to deflect from fossil fuels and neo liberal policies.
Many simply focus upon short term or direct skills and/or employment, more understand it’s related to our declining dependency ratios (working age/retirees & kids) in the permanent population, and need for permanent migration but assume the latter is high (not <0.5-7% population).
However, too many then conflate the latter with our more significant NOM net overseas migration of temporary ‘churn over’ of ‘net financial contributors’, dominated by international students, who will mostly not have access to permanent migration nor state benefits or services (visa requires compulsory OSHC private insurance), but subsidise Australian citizens and/or permanent residents.
Then…. within five years the ‘big die off’ starts with the baby boomer ‘bubble’ passing on (born ’45 onwards) which will probably stall permanent population growth to be followed by more less fertile, balanced, diverse and educated cohorts in the same; the latter replacing old WASPs and Irish seems to be the issue for many…. this is being replicated globally with expected population peak mid century followed by decline (according to Bricker & Ibbitson drawing on credible research and data, this could be precipitous).
Thanks for that post Woop. I somehow missed that statement when I first read Bernard’s piece. A major oversight. I totally agree with your post. I am not a supporter of a “bigger Australia” in any way, shape or form.
Youth unemployment was last reported to be around 10%, where it’s been stuck in the mid 20 s for a decade or two. The young pay for excessive immigration through lack of opportunity to work, and employers have forgotten that they used to be in charge of training up young people, now they just outsource that to foreign companies.
The argument to use immigration to help smooth out the baby boomer retirement bubble is nonsense mathematically on two counts, it’s just a Ponzi scheme, and it tries to rectify a problem that isn’t really a problem. These baby boomers are going to stay in the workforce till they’re dynamited out.
The argument that we gain tremendously from immigration is, as reported, overblown. There are two very fine reasons to back immigration, for skills and cultural enrichment. I remember when Australia was mostly white and a prawn cocktail was considered exotic dining. Thank god for immigration.
We just don’t need to do it in record numbers that clearly inhibits quality of life and environment.
Thanks again Bernard for another insightful article. (It was your piece on Witness K and Bernard Collaery that prompted me to take out a subscription to Crikey a few weeks ago.)
It seems that we both also share a complete loathing and contempt for the insane neo-liberal economic dogma.
I am glad that you also include the ‘left-wing’ supporters of immigration in your analysis. Sometimes these people get too carried away with their own variety of well-intentioned zealotry.
The fact that immigration is used to provide a source of cheap, dispensable labor is nowhere better illustrated than in the fruit-picking area. The New Daily has run a series of articles on the way, backpackers especially, are exploited in this job.
I flinch every time I hear about the ‘education industry’ suffering because we cannot let in overseas students who have become ‘cash-cows’ for our grossly underfunded tertiary sector. A few weeks ago I nearly vomited when a guest on the ABC’s Q and A program referred to the ‘High School Industry’. To me education is a fundamental human right (as health care should also be) and ought to be available free to all anywhere in the world. It should not be a commodity that is bought and sold.
You will probably disagree with me on my next point but for me that is not a problem.
There is also the issue of the suitability of some of the migrants who have arrived on our shores. Quite a number of arrivals in recent years, indeed decades, have brought with them religious beliefs and cultural practices that are incompatible with those of a progressive modern society (with all the failings and shortcomings that such a society has).
If there is any silver lining on this pandemic cloud, it is the fact that our immigration Ponzi scheme has been brought to a screaming halt.
The last paragraph in your essay sums it all up. Well said, Bernard.
I wonder how many would have had those beliefs and practices reinforced by people making statements like this rather than diluted through enjoyment of a progressive modern society.
Probably hard to say Audioio. Much would depend on just how strongly those religious beliefs and cultural practices have been ingrained.
Well said, Audiolo. I was quite happy with Robert until he came up with that gem. I am not all religious but possess a high degree of tolerance for other peoples beliefs. But the main problem was to call Australia “A progressive, modern Society” is a definite misrepresentation of what we are. With 3 million of us living in poverty including a million children, we could only be described as a quasi feudal society.
The difficulty that’s always there is the conflation of economic reasons to oppose migration with cultural reasons. There are some of the left that are quick to yell “racism!” at the first sign of anti-immigration sentiment, irrespective of the multifaceted nature of the opposition. There are certain economic winners to high migration, and the net effect may well be a more prosperous nation, but one needs to acknowledge that it might not be true for everyone.
Let’s face it, our governments are pretty hopeless at managing infrastructure, and our companies use the lax rules to keep wages down, bring in foreign workers at the expense of local jobs, and exploit people wherever they can. As it stands, it doesn’t seem we have the body politic for responsible migration policies, and plenty pay the price for that now.
The best argument for migration is rarely spoken of – people from different backgrounds and cultures enrich the country through cultural exchange. The more people that come from more walks of life, the better off our society is.
Agree, apart from indigenous we are all immigrants, but in monocultural Australian media we are still subjected to -ve agitprop but it’s nothing new. It’s an old world WASP trope from generations ago applied to not just immigrants but Jews, Irish Catholics etc. based on eugenics then linked through to ‘population growth’ (via fossil fuel supported ZPG that also inspires APRI)
Disturbingly, one see multiple business/political journalists and/or reporters being picked off one by one in using dodgy population and NOM data to support the precluding of SCG super contribution guarantee or wage rises claiming pension system will be sufficient in future (it’s about business avoiding ‘costs’ or ‘taxes’ in the short medium term).
“…apart from indigenous we are all immigrants…”
What *woke drivel. Even the Aborigines are “immigrants”. No branch of modern mankind originated in Australia
Three generations or so make you a native. If you wish to speak of “ethnicity” you are correct but Australia abjures following the “ethnicity” path.
*I’m giving myself points for using “woke” in its correct sense. 😉
Aboriginals have the highest number of Denisovan genes of any existing population.
Given sea level changes prior to and post the last Ice Age, don’t discount the possibility of finding evidence of ‘marsupial’ humans having originated here when it was lush & green before emigrating to Asia.
Thanks for your reply Kel.
I certainly concur with you comment that, “There are some of the left that are quick to yell “racism!” at the first sign of anti-immigration sentiment, irrespective of the multifaceted nature of the opposition.” Those sort of self-righteous and sanctimonious folk find “racists” hiding in every cupboard and behind every door in much the same way that the Liberal Party used to find communists hiding under every bed some 60 or more years ago.
I find your last paragraph interesting. I read Douglas Murray’s excellent book, The Strange Death of Europe – Immigration, Identity, Islam, 3 years or so ago and as a result formed a totally different view. I would strongly recommend this powerful and frightening book.
Interesting discussion. I gained my first employment in a factory of over 1000 workers from all around the globe. Fond memories of what they taught me and how they embraced me as a young lad. The Serbs were a little different but they kept to themselves in the paint shop.
Muslims seem to be a bone of contention to some. I was born in the first town in NSW to have a Mosque. Didn’t take too much notice of them although it is believed that my grandmother was victim of activities of the first so called terrorist attack by Muslims in Australia. Funny we all thought it was a few nutters associated with WW1. Only in recent times have the LNP types called it a terrorist attack. How the World changes its interpretation as an excuse for $$$$ and support for a larger and glorified so called War Museum.
When all this started about 20 years ago a few friends and business acquaintances outed themselves as Muslims. Good people and hard working and I would never have known unless told. I didn’t care as I take people on face value, Strangely I also have lifelong Jewish friends. For most people religion is the colour of the veneer. Would you believe that my sister is a Minister of Religion and I find the most unlikable and hypocritical people are prosperity Christians. The ones that just happen to be running the country at the moment.
Thanks for your reply Maroochy. Your post contains some interesting reflections and observations. It sounds like you have had many rich experiences in your life.
I am however, a little perplexed by your reference to “so called terrorist attacks by Muslims in Australia”. I can assure you that there have been such attacks (and planned attacks) in the past. For a list of attacks and planned attacks in Australia see:
https://en.wikipedia.org/wiki/List_of_terrorist_incidents_in_Australia
Fortunately terrorist attacks by Muslims here in Australia are few in number especially when compared with countries like France.
Like you Maroochy, I have had Muslim friends (very loyal and decent people). I grew up as a child and adolescent in a very Jewish area and as a consequence of that I had many very good Jewish friends.
I am not quite sure what you mean by “For most people religion is the colour of the veneer.”
For me, I simply regard all religious beliefs/convictions as a manifestation of a mental health problem.
Until recently most Australians would have shared your antipathy, especially if that person were seeking or now held high office.
Of all his many unappealing attributes the religiosity of the PM and many of his colleagues is sufficiently troubling alone.
The way it bleeds into more basic policy manifestations, from deserving poor to laying on of hands, is something that affects how they govern.
I shudder even to mention the glossolalia.
In the early 60s, despite half a century of White Australia Policy, Lebanese Maronites were allowed immigrate to settle because of communal conflict in the Middle East.
With the renewed civil war in the 70s this now well integrated community tried to warn the Fraser government that allowing more refugees from the other community to come here would be a mistake.
In the 80s the Hilaly (al Hilali) controversy exposed the Labor government’s reliance on the weakest link in its chain on crucial electorates in Sydney, eg then Treasurer Keating’s Blaxland.
“…our governments are pretty hopeless at managing infrastructure…”
Australia’s recent history has shown that your post should read “…our Coalition governments are pretty hopeless at managing infrastructure…”
Think you fell for it because those who promote purported negative links between ‘immigration’ and issues of infrastructure, property prices, employment etc. are neo liberals or more specifically ‘radical right libertarians’ deflecting from bad policies for all, including younger and working age Australians.
Using proxies of ‘immigration’ and ‘population’ without any or compelling data analysis to support, in avoiding state investment in infrastructure and services while demanding lower taxes and smaller government aka IPA; sounds neo-liberal to me and what’s known as the ‘libertarian trap’ aka Brexit, Trump etc..
Australian media fall for this ‘trap’ constantly because they do not scrutinise, nor understand data and rely upon third parties to provide ‘analysis’; that’s how media are gamed and why even far or alt right groups also present similar arguments because they agree with similar sentiments.
Thank you for your reply Drew.
May I suggest that you re-read Bernard’s article, in particular the paragraph beginning:
“For neoliberals, borders should not be impediments to the free flow of both capital and labour, so that they can move to wherever they will be used most efficiently.”
Anyway Drew, it seems that you, me and Bernard all would agree that libertarianism neo-liberalism are anathema to the functioning of any decent and fair society.
Of course. However, if we look at a manifestation of neo-liberalism and promoting ‘immigration’ it could well be on the IPA (Koch -AtlasNetwork) policy wish list but, they do not seem to support permanent migration (to avoid them as future voters on electoral rolls) but more temporary immigration with fewer rights e.g. no union membership, no potential PR etc.; maybe swings and roundabouts.
One needs to get beyond headline data because neoliberals or radical right libertarians are managing ‘perceptions’ of immigration on ‘both sides’, i.e. from both the left via e.g. environmental degradation or unemployment proxies (inc. astroturfing), and the right also through conservation i.e. environmental degradation, then house prices and changing of Australia’s WASP or Anglo Irish character (while Australia tries to cling onto fossil fuels…).
It’s simply too easy for media having Australians vent about (undefined) immigration as a cause for whatever symptom, but averting their gaze from real policy issues of the day. Like Brexit (and then Trump), it was a radical right libertarian coup (IPA’s sister UK org IEA of course supported) predicated eventually on immigration by both ageing left/right, to get over the line on the EU referendum (avoiding environmental etc. constraints).
One would agree with the naive and foolish PM Cameron who complained about everyone ‘banging on about (undefined) immigration’, but only after he had dog whistled refugees, immigrants etc. then to fail with EU referendum.
<i>Think you fell for it because those who promote purported negative links between ‘immigration’ and issues of infrastructure, property prices, employment etc. are neo liberals or more specifically ‘radical right libertarians’ deflecting from bad policies for all, including younger and working age Australians.</i>
No they’re not.
Good grief, neoliberals have been the driving force between high levels of immigration. It’s just another manifestation of supply-side dogma. They care nought for the negative impacts.
The left’s tolerance of bigoted foreign cultures is appalling.
Thanks for you reply Camille, but I found your post to be a little cryptic for me. I am not too sure just what you are getting at.
“A few weeks ago I nearly vomited when a guest on the ABC’s Q and A program referred to the ‘High School Industry’. ”
That wouldn’t be “our mate” Gigi Foster, would it? 😉
Great to see Crikey serving up diverse views for discussion. This stuff is worth subscribing too.
I agree Curious. That is what good, healthy discussion and debate is all about.
In my industry the typical average casual hourly wage is around $25.50. Foreigners will work for as little as $12. While increased population may improve demand in my industry (more customers) I remain suspicious of the dogma that it’s all fine and dandy.
I also resent that when I complain I am told these people are victims. If you chose to live in a country where you cannot find a legal paying job, when your home is fine to return to (not refugees) then you apparently have no culpability in this. I know plenty of overseas workers who deliberately chose fake courses, knew they couldn’t get a ‘real’ job and undercut wages. Yet they are victims, despite their deliberate choices and outright visa fraud (show money).
And before anyone says anything about racist, many of these people are white and from Westernised countries as well as the usual countries you may think of. Mother Britain sends its fair share of wage cheats in my industry. The left has abandoned low wage workers in favour of embracing scab labour. And the people wonder why low education poor workers increasingly vote LNP. Not that I ever would do that. It is even to the point that unions, legal aid and Fair Work all favour helping foreign wage theft cases over locals, even though many local wage theft cases are highly disadvantaged people.
It just doesn’t add up that having someone come here and earn $12 an hour for the same job as me is somehow worth it to me in increased demand.
I haven’t heard that revered old term ‘scab labour‘ for many a long year.
I think that these days it is pronounced ‘gig economy‘ – apparently without any shame or self awareness.
At least with England it’s tit for tat. Thousands of young aussies find work there every year.