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Dick Smith Is Living In A Bubble If He Thinks Immigration Is To Blame For The Property Boom

Plus other common misconceptions about the pros and cons of migration to Australia.

19/10/2017 12:17 PM AEDT | Updated 19/10/2017 12:17 PM AEDT
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Dick Smith announcing the launch of his $1 million campaign to reduce immigration at the Hilton Hotel on August 15, 2017 in Sydney, Australia.

Across the globe, there are 250 million migrants. If they all lived in the same nation, it would be the fifth-largest country in the world. International tourism visits now exceed 1 billion people annually. The rate at which humans are travelling internationally is increasing every year.

In Australia, concerns about migration grew from the mid-1960s to the early 1990s, with the share of people who thought that immigration was 'too high' rising from 20 to 70 percent.

Since the early 1990s, Australians' views of our migrant intake has warmed. In early 2017, Lowy Institute polling found that 35 percent thought that immigration levels were 'about right' and 18 percent thought they were 'too low'.

The share of people who think that immigration is 'too high', which was around 70 percent in the early 1990s, is now at 40 percent.

Compared with most other advanced nations, Australians are less likely to agree that being a Christian is 'very important' for national identity. Asked whether ethnic diversity makes their nation a 'better place to live', Australians are more positive than the citizens of any other country surveyed.

Together, these data suggest that Australians' attitudes towards immigrants are warmer than in most advanced nations, and have become warmer over time.

The biggest economic benefits of moving accrue to migrants themselves. One study found that Tongans who moved to New Zealand quadrupled their earnings. Another analysis reported that Indians who moved to the United States increased their earnings sixfold.

But how does migration affect people in developed countries? In 2016, the Organisation for Economic Co-operation and Development (OECD) summarised dozens of academic studies that looked at the relationship between immigration and wages.

Of the OECD's 28 studies on immigration and wages, 13 reported no effect, seven a small positive effect, and eight a small negative effect. Turning to the research on immigration and employment, a similar pattern emerged: most of the research failed to back up the claim that 'migrants rob jobs'.

In any case, to see migrants as merely affecting the jobs of local workers is to miss the fact that migration is not just about mouths and muscles, it is also about minds. Compared with the native-born population, immigrants have higher patenting rates, are more likely to author highly cited scientific research, and are more likely to win a Nobel Prize.

On the anti-immigration side, we need to bust a few myths. In the early 1990s, the typical home cost 2.5 times the disposable income of the average Australian household. Now, that figure is at a record high of 5.1.

According to businessman Dick Smith, '95 percent' of this increase can be blamed on an immigration-fuelled surge in population. Most experts disagree.

An OECD survey of the relevant studies concludes that migrants have a minimal impact on housing prices. Seven out of 10 new migrants to Australia either live with friends or rent -- and the increase in rental prices has been much more modest than the rise in purchase prices.

As they settle down, some migrants buy, but they tend to purchase smaller dwellings (such as apartments or townhouses). Even migrants who have been in Australia for a decade have a lower home ownership rate than the Australian-born population.

For much of the past decade, Australian housing construction has lagged demand by 50,000 to 100,000 dwellings per year. But migration is not the only driver of that new demand. We are living longer and having more children than in the late 1990s, which adds to housing demand.

Moreover, the impact of more demand on housing prices depends on housing supply. It is hardly fair to blame migrants for Australia's collective failure to build the homes the market needs.

Another problem that is often blamed on immigration is traffic congestion. It is true that commuting times are growing longer, particularly in large cities. But as with houses, migrants have a lower car ownership rate than the Australian-born population.

Similarly, the answer to gridlock is not banning immigration; it is better public transport, appropriate pricing of street parking, and economically sensible congestion policies.

Over the coming decades, the most significant change in travel will come with driverless cars. Even accounting for the additional travel that autonomous vehicles would induce, one economic study estimates that a road network dominated by driverless cars would have half the traffic congestion. Making smart choices here matters far more than how many migrants are admitted.

Another spurious criticism of migration is that the environment cannot sustain a growing population. In 1798, with the world population at one billion, Thomas Malthus warned of an impending catastrophe. But since then, world food output per person has risen, thanks to the green revolution, hydroponic farming, and genetic engineering. In advanced countries, cities are bigger than ever, yet the air is steadily getting cleaner.

There are more people alive today than ever before, yet it is helpful to remember that if the entire population of the world were housed in four-person homes on quarter-acre blocks, they would easily fit into an area the size of Western Australia.

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This is an edited extract from 'Choosing Openness', published this month by the Lowy Institute and Penguin Random House Australia.

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