Migrants in The Age

In today’s Age, I have a piece responding to Ross Gittins’ article yesterday. [Reproduced over the fold]

Blame babies, not migrants, for Australia’s economic and environmental woes

Joshua Gans, The Age, 5th March, 2008

IN BusinessDay yesterday, Ross Gittins wrote that immigration was contributing to our economic and environmental woes. He argued that “the case against immigration is stronger than the rest of us realise” and called on the Government to reconsider our high immigration rates. I contend that the case made by Gittins cannot be sustained.

Consider first, the “economic” argument that “migrant families add to demand, but only the individuals who work add to supply”. The contention is that this will fuel shortages in housing, infrastructure needs and even aggregate demand (causing inflation). However, the question is not whether immigration fuels these things but what the best way to resolve these problems is.

Let’s compare reducing immigration to another policy: promoting childbirth. The other half of our population growth is from babies and we are having more of them. But babies contribute to demand and not to supply (that is, don’t work) even more than migrant families. By any measure, they are worse for the economy right now.

Yet governments are promoting childbirth. At the moment, we have the extraordinary situation where, unless there is a change in the May budget, the Government intends to increase the baby bonus on July 1, adding more than $200 million a year to fiscal expenditures — at the same time as it intends to shed public-sector jobs. It is this type of thing rather than immigration that should be the target of an economists’ ire.

But Gittins goes further and argues that immigration is also exacerbating environmental problems. It is true that if people move here, Australia will have more greenhouse gas emissions. But the emission problem is global. Far from it being obvious that “one of the quickest and easiest ways to reduce the growth in our emissions … would be to reduce to immigration”, it won’t do any such thing. Moving from one country to another does not change global emissions.

In fact, the reverse could be the case. If Australia, being a rich country, works out how to get less emissions per person, then moving people from countries that are having trouble doing this is environmentally friendly.

If our goal is to control emissions, then babies rather than migrants should be our target; something China, for all the flack they take on these issues, has realised and done something about.

There is no real argument to single out our migrant intake as out of line with our economic and environmental goals. The Government has enough to do without worrying about a policy that stands out as contributing to world economic life.

Joshua Gans is an economics professor at Melbourne Business School. He maintains a blog on these issues at economics.com.au

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