I wonder if anyone at the roundtable last week asked Treasury secretary Jenny Wilkinson, or her predecessor Martin Parkinson, who was also there, about the Treasury’s poor record of net migration forecasting?
The forecasts in the budget papers are the only attempt to put a figure on future immigration — there’s usually a target for permanent and skilled migration, but not for the overall number, which includes students and working holiday-makers, and permanent and skilled migrants are only a small part of the total.
Government to freeze construction code until 2029
For the year ended June 2022, Treasury’s forecast was 41,000; it turned out to be 203,590.
For both 2022-23 and 2023-24, the forecast was 235,000; it turned out to be 535,520 and 445,640.
For 2024-25, the forecast was originally 260,000, and it then increased halfway through the year to 340,000.
Net permanent and long-term (NPLT) arrivals for the year to June totalled 457,560, although as the ABS has pointed out in a rare memo to the media, that’s a different data set to net overseas migration (NOM). We’re still waiting for 2024-25 figures.
But it’s usually about 10 per cent less than NPLT.
So maybe about 400,000 NOM, although migration expert Abul Rizvi says other data suggests it will be 350,000 to 380,000.
That means at least 800,000 more people came to live in Australia over the past four years than Treasury anticipated. That’s more than three extra Hobarts.
So, there are that many more cars on the road than expected, that many more people looking for health care, and hundreds of thousands more kids in schools than expected.
Loading…What about improving living standards?
As for housing, if you add natural population growth to the total net migration of 1.6 million over those four years, there are about 2 million extra people looking for a place to live.
Divide that by the average number of people per house (2.4) and you get a housing demand of about 850,000 dwellings.
The number of dwellings actually built in those four years was 705,442.
That’s a shortfall of 150,000. No wonder house prices started rising again in 2022 despite rapid-fire rate hikes.
Would the extra houses, hospitals and schools have been built if the Treasury had correctly forecast immigration four years ago?
Probably not, but there might have been a bit more urgency about the Housing Accord of 2022, and there might have been an Infrastructure Accord as well.
But the fact remains that when the pandemic ended, the Australian government had no idea that net migration would total 1.6 million over the next four years and apparently had no way of controlling it.Â
Last week’s roundtable was about economic growth, productivity and tax reform, but it should have explicitly focused on improving living standards, which is — or should be — the aim of economic policy.
Loading…The three Ps only go so far
Treasury thinks about economic growth in terms of three Ps — population, productivity and participation — but none of those things, on its own, improves any individual’s life.
That outsized growth in the first “P” (population) produced positive GDP growth, but GDP per capita was in a long recession.
More importantly, the failure to match population with housing and infrastructure has led to a more serious decline in living standards than evident from GDP per capita statistics, and it’s the key reason for the generational inequality that was the source of furious agreement around the roundtable that Something Needs To Be Done about it.
Yesterday, Housing Minister Clare O’Neil announced a four-year pause to changes to the National Construction Code. A pause.
As for the second P — productivity — economist Paul Krugman has a lot to answer for with his famous saying: “productivity isn’t everything, but in the long run it’s almost everything”.
Since he wrote that in 1994, American productivity has been fabulous — growing 60 per cent, three times as much as Europe, Japan and Australia. But are Americans happy? Apparently not.
They felt the need to elect Donald Trump (twice) to shake the place up, because, while the top 1 per cent have been doing great, the rest have been flatlining or going backwards, and they wanted things to change.
Higher productivity only turns into national happiness if everyone shares equally in the benefits of it, but since around 1980, neoliberal policies have meant that hasn’t happened, especially in the United States.
Jim Chalmers went into the productivity day of the roundtable with a Treasury prediction that productivity was fine. (ABC News: Simon Beardsell)
What crisis?
In Australia, productivity has flatlined for eight years and, according to the ABS, actually fell by 1 per cent in the year to March 2025. Yet, in the federal budget in March, the Treasury forecast that it would snap back to 1.2 per cent growth — the level before 2017.
So, Treasurer Jim Chalmers went into the productivity day of the roundtable with an official Treasury prediction that productivity was fine. Crisis? What crisis?
Participation is at a record high because female workforce participation has increased from less than 40 per cent in 1970 to 63.2 per cent now, while male participation has declined.
That’s partly the result of feminism and educational equality, but it’s also a consequence of housing costs that require both partners to work full time and leave the kids in child care, whether they like it or not — another source of generational inequality.
A day of the roundtable was spent on tax reform, which means increasing tax revenue, which won’t improve living standards and won’t make much difference to productivity either.
The Productivity Commission has modelled the impact of proposed tax reforms on productivity and found that they would lift it by 0.4 per cent, which wouldn’t be an increase in the growth rate every year, so would hardly be worth the political pain.
The purpose of tax reform is to both raise more money and shift the burden from (younger) wage earners to (older) owners of capital, which is definitely worthwhile.
That means a wealth tax, more superannuation tax, or, preferably, a carbon tax on fossil fuels, including exports.Â
Chalmers could have a 103-day roundtable, and no-one would be happy with any of that; he just has to announce it and hope he scrapes back into government, like John Howard did after introducing the GST.
Loading…Rewarding good ideas
Finally, my invitation to the roundtable seems to have got lost in my junk folder, but if I had been among the chosen few, I would have banged the table about immigration and the need to at least know what is going to be, and then told them all about a little start-up business in Brisbane.
Productivity summit looks to speed up housing
A data scientist named Erin Rolandsen has started a business called Angel Assist to find people to act as live-in helpers for mainly elderly people who want to keep living at home but need a bit of help.
The deal is that the “helpful housemate” agrees to do 14 hours of active helping per week — shopping, cleaning, gardening — in return for free board and food. It’s also expected that they would sleep there at night in case something happens. The person can work full time as well as do the 14 hours of helping.
The idea has a number of benefits: it relieves the government from paying for a home care package, which can run to thousands of dollars; it keeps people out of nursing homes; it uses a spare bedroom in a house that is too big; and it takes someone out of the rental market.
The live-in helpers are often women aged over 50 who are “housing insecure”, sometimes homeless.
Erin asked the government to pay the one-off $2,999 fee to help find the “helpful housemate” as part of the home care package system, but was turned down flat, even though it would be much cheaper.
Chalmers can have that idea for nothing, without having to pay my airfare to Canberra.
Loading
Alan Kohler is a finance presenter and columnist on ABC News and he also writes for Intelligent Investor.