1.5 million Aussies out of work and the immigration solution

With 1.5m Aussies out of work, the Morrison Government may attempt to stimulate the economy by opening the immigration floodgates, writes Tarric Brooker.

AS THE AUSTRALIAN ECONOMY continues in its first tentative steps towards a recovery into an uncertain future, the Morrison Government’s lacklustre and largely unsupportive 2020 Budget has left many wondering what is actually going to propel the nation toward a prosperous future.

With the Budget largely focusing on tax cuts, tax concessions for businesses and a wage subsidy that favors young workers over others, the support for struggling households and small businesses just isn’t really there.

But after years of the economy going more or less nowhere in per capita terms under the Morrison Government’s leadership, it’s not really all that surprising that the relative status quo will be continued, despite the dire circumstances we find ourselves in.

For years, real household disposable incomes stagnating have been masked by high levels of immigration, juicing the headline GDP figure and giving Treasurer Josh Frydenberg something to crow about.

But as you can see from the graph above, when contrasted with the prime ministerships of John Howard and Julia Gillard, Morrison’s economic management performance is extremely poor by comparison. Currently there are approximately 1.5 million Australians still collecting Centrelink unemployment benefits, up 98 per cent from this time last year. However, these numbers likely understate the number of Australians struggling due to the Morrison government tightening eligibility for JobSeeker and Youth Allowance payments.

But despite the dire straits millions of Australians currently find themselves in, there is speculation that the Government could effectively open the immigration flood gates, despite over a million people out of work.

In the wake of the last recession in the 1990s, the Hawke/Keating governments allowed immigration levels to drop by almost 80 per cent, as the nation’s labour market recovered from high levels of unemployment.

Realistically, with so many people out of work and years of wage growth going nowhere, the Morrison Government should be ensuring that Australians get back to work and that the recovery is concrete, before even considering resuming high levels of immigration.

After the recent announcement that the Coalition Government would be scrapping responsible lending laws, it’s clear it may have other priorities in mind. Despite the fact that maintaining these responsible lending laws was quite literally the number one item on Banking Royal Commission’s list of recommendations, Treasurer Josh Frydenberg is set on axing them.

But why would the Government scrap responsible lending laws, in the middle of what the IMF are calling the worst economic crisis in almost a century?

If you ask many financial and economic commentators, the answer they will give is practically universal, providing further support for the nation's extremely high and currently vulnerable housing prices.

This is where opening the immigration floodgates may come in.

With the number of temporary visa holders such as international students, reduced by hundreds of thousands and net overseas migration actually in reverse, this key driver of housing demand and housing price support has all but evaporated.

This has led some analysts such as SQM's Louis Christopher, to speculate that the Government may ramp up immigration as soon as it is practically possible.

Kiwis coming by November.

I'm still thinking there is a big chance Govt will ramp up migration to get the dollars in. https://t.co/HQ0c0FP0SQ
— Louis Christopher (@LouiChristopher) September 28, 2020

Given the Government’s lack of a plan B, if the tax cut and “gas fired recovery" fails to deliver the promised economic growth, it may fall back into old habits and attempt to use high immigration to fix these ills.

The electorate knows this would be a mistake and high immigration even before the recession was increasingly unpopular with a large majority of the public. But with the Prime Minister currently enjoying extremely high approval ratings and the electorate in high spirits due to stimulus measures, the Government may be sufficiently emboldened to give it a try anyway.

As it stands, without significant economic reform it’s possible, perhaps even likely that the best we may achieve is a return of the pre-Covid status quo — which really wasn’t working for most Australians, even at the best of times.

This lack of vision may drive the Morrison Government to go back to the one thing it knows drives headline GDP growth: more immigration, lots more immigration.

In such an uncertain world, we can only speculate on what the Coalition Government may do with the nation’s immigration policy in the coming years.

Ultimately, the Morrison Government may do whatever it can to be seen and remembered as a government of “superior economic managers” as it claims to be. It may continue to support high housing prices fueled by immigration, even if this may have a terrible cost for the Australian people.