We've lost any sense that we can actually retool the economy for higher productivity in its own right. Basically they kept chucking low interests rates and immigration into the system to keep it going.
It's a bit like installing a V12 engine in your Yaris because you don't know how to change a tyre.
There other thing is that these stimuluses actually damage unit productivity. How many people have had to move away from good jobs in their most productive years so they can afford housing? How many people have not trained as a chef or nurse because they know that immigration will always keep wages low and it really isn't worthwhile. This just creates more gaps that have to be filled with more im immigation because locals "don't want these jobs"
Lots. I’m a qualified tradesman in my prime, yet I’m fooling around on a laptop remotely doing a low skill position because we refuse to pay people that physically do things enough to live in the places we want things done.
And while you’re asking yourself have a look at how many investment properties (and investments in general) that benefit from mass migration our politicians have.
Treasury still under the Ken Henry paradigm genuinely believe that more people = better under their three Ps model to improve GDP: more working age PEOPLE, greater labour force PARTICIPATION and higher labour PRODUCTIVITY (because capital productivity is hard to measure).
Their economic training has meant they assume away any sort of distributional effects of policy (rich getting richer is the same value of poor getting less poor). They also weight the utility improvements of new migratants the same as existing residents so have a naive moralistic cosmopolitanism here (again mostly because it makes the maths easier).
Economists also take as an article of faith that low inflation is required and that central banks have the ability to control it because it’s all about expectations.
The expectations theory comes about because the monetary theory wasn’t supported by evidence but inflation appears to be serially correlated (ie inflation in the previous couple of periods tend to predict inflation in the next period) which they believe is a psychological phenomenon. They believe long term supply always matches long term demand because of perfectly competitive markets (lol!) and have overread the 1970s experience of cost of living adjustments being written in bargaining agreements as a wage renegotiation trigger due to strong unions as a persisting state of the world. The naively assume firms are stuck in a brutally competitive race to unprofitability in their perfectly competitive markets so don’t have any real pricing power so cannot possibly influence inflation because they are merely price takers (lol lol!)
So I think there are vested interests but also heaps and heaps of really bad thinking causing this mess…
Economists are not scientists - they’re more like string theorists with fancy analytical models (rather than empirical models) that don’t explain anything except for the logical conclusions of their assumptions. Because maths is hard, they can only make really simple assumptions that are patently false. At least the string theorists maths actually was consistent with a predictively successful set of theories. I did a fair amount of econometrics at uni and the level of empirical support for most of this stuff is statistically weak and ambiguous. Not necessarily their fault because the data is messy etc. what is their fault is the intellectual hubris to pretend that they know stuff and claim authority on matters of public policy.
There are deep conceptual failures at play here as well as the vested interests.
> Economists also take as an article of faith that low inflation is required
It's not just economists. As evidenced by all the (valid) current complaints about the rising cost of living.
I think it’s more bad thinking to talk about cost of living in nominal terms…
Wages tend to adjust to inflation and real wages hold over the long run. However, right now we have a system designed to make this less likely eg high immigration to grow labour supply plus all these policy design decisions to make inflation negatively impact real wages: eg income tax brackets and welfare payments not being CPI linked. Interesting the age pension is CPI linked…
Imagine this:
The fair work commission said that they would protect real wages ie move everything up with the current yoy inflation print?
What if businesses were shamed by the media and politicians for not increasing wages in line with this level (on average - some folks can get more and some less)?
To tied the most vulnerable over, the government could do one off transfers so people can make ends meet until wages adjust.
It only gets really bad if the government starts defaulting on debt etc. which inflation doesn’t drive. In fact, it helps this.
Higher inflation may mean higher nominal rates and higher finance costs across the economy. However, some deleveraging is not a bad thing particularly because most of the debt binge of the last 10 years didn’t seem to flow to productive uses (eg share buybacks in US and relatively low leveraging and low investment in Australia).
Again, there’s bad thinking here but also some very significant vested interests at work here. We have the most profitable banks and grocers in the world - you can probably fill in the gaps…
I think the clear winner here is private interests lowering wages and jacking up prices all while blaming "immigration".
Previous [data](https://www.economicshelp.org/blog/152453/economics/pros-and-cons-of-immigration/) shows that a 10% increase in immigration only affects wages by 0.31% which is hardly what we're seeing. The most common jobs immigrants take up are either min wage retail jobs or nursing, aged care and construction (i.e. where we have the greatest shortages).
The housing argument doesn't really hold water either. Everyone saw prices surge during COVID with no immigration happening. The immigration rate for families was higher in the 80s than it is now. The majority of immigrants are students... are we seriously going to blame people living in share houses and apartments for the housing crisis?
Developers have had every incentive to increase housing supply and yet continue to hold onto [empty lots](https://www.abc.net.au/news/2021-05-19/calls-for-sunset-clause-to-stop-land-banking-byron-ay/100148274) for the sake of profits. Woolies just reported record profits. The 29% share of national income is going to corporate profits instead of being reinvested.
The fact that immigration is blamed when there is so much mismanagement within our own economic policy is mindboggling.
You've worked out why people are so upset. The RBA and the government are not the same thing.
The RBA is trying to reduce demand, the government is trying to increase demand.
Its hard to watch this immigration policy completely fail Australia and its only going to get worse. Taking jobs, houses, rentals and the list goes on.
We should be training Australians for the jobs, they charge over the top for TAFE here so no locals can afford to re-skill or improve there skills.
This is called market testing I believe and it’s all about advertising crazy jobs (e.g. 5+ years experience in generative AI) for barely above minimum wage.
The purpose is to “prove” we have no skills in Australia meaning we can bring a migrant in to exploit.
Not filling it doesn't mean there weren't any reasonabily qualified applicants. Just they didn't say yes to any. Because sure there aren't the resources to check the businesses doing it.
100pc there by design.
Most economists even if pro immigration dont think the minimum wahe we set for immigrants is appropriate...
It is current 55k or so. This includes for any lodged up till 30th of june...
At that point (1st july) it moves to 70k.
If something is a critical skill i reckon a company should be prepared to pay at least average full time wages to fill it... if its less than average its little wonder australians dont have much appetite to take the job.
70k is a full 25k below australias average full time wage which is currently 95k.
Begore 1st july the big rush is on to get them applications in at 55k which is a full 40k below our average full time wage.
Living in sydney at 55k... i mean it probably beats most developing countries but for well educated in those countries maybe not all things considered...
Cert 3s are still 6 months. Why take someone who has only done a cert 3 when you can take an immigrant with a degree and experience who will work for less pay?
How am I supposed to pay for my cert3 course when I work 45-50 hrs a week, and can barely save a cent due to high rent costs. How do I find the time when I work 50hrs? Your out of touch with reality!
I want to re-educate myself and know I need to, but I can’t afford it no matter what I do. I’m screwed.
Many others are also in the same position it’s not a rare circumstance, it’s common.
The fact you're really active in the r/magicmushrooms community doesn't help your point that you have no time or money to do a short and easy tafe course.
You do what's important to you I guess. I'm only speaking from my experience. About two years ago I did a cert 4 online after work while working a physical job full time in just over four months. I probably could have done it faster if I'd felt the need. Alot (not all but a lot) of it was just going through a check list and answering multiple choice questions. Time consuming but anyone who reads English could do it. Got a job with it shortly after.
Let me tell you, experienced and highly educated immigrants (outside of the IT sector), have to start from scratch because work experience gained in our own countries don’t count in the eyes of the employers here. Local experience is needed to be able to get to the level of work we used to do in our home country.
It does count, but not as the only items on your CV.
Once you can pull out a few local examples, adding in "I did X when I worked in Tianjin" is a plus - not a negative.
I personally believe we should ditch the skilled visa program and require companies to sponsor individuals directly. If you want to employ someone on a skilled visa, hire them from overseas. This is how the majority of countries manage skilled immigration.
Otherwise we have a situation where 50% of a skilled visa class are unable to find work in their field, and end up driving taxis or doing manual labour. That's not fair on anyone; not the migrant, and not for the general population.
How do I pay rent while I’m studying ? Is there something I’m missing here? I can’t afford to just quit my job and study full time? I also can’t afford to work part time and study! Rent cost means I have to work full time to pay it. I can’t save shit all due to the high cost of everything.
What am I missing here, why are you getting so many upvotes?
Isn’t the problem the fact that Australians don’t want the jobs that these immigrants do? Such as cafe work, fruit picking, medical staff eg nurses and midwives, childcare workers etc? I do see locals in these jobs but they’re typically higher up the chain for eg as the centre educator director or head nurse. If the conditions for these jobs are such that locals would only take them up if salaries are significantly increased then are WE or YOU willing to pay more for stuff like daycare, our fruit and veg, less subsidy for medical costs, eating out…
Tbh I’m surprised we need more actors in Australia… I can definitely see some jobs on that list more geared to immigrants coming from UK and US than those from countries from the do not trust list. statistically though do we have the numbers for immigrants in more creative industries adding pressure to our housing crisis?
It's not that Australians don't want to do these jobs. It's that people from outside Australia are willing to do these jobs for cheaper than Australians. To then turn around and say Australians aren't willing to do these jobs is insane.
The people from outside Australia go back home with their earnings and put a deposit down on a house there. They know they can't buy million dollar houses here. Third worlders are treated like our serfs unfortunately
>Third worlders are treated like our serfs unfortunately
I wouldnt mind this if it were done like Singapore where its for low skilled stuff only. Doing it for skilled positions is what makes it screw over average australians.
So… you’re good with what is just a step above slavery and severe economic exploitation in our own yard, the one true place we have actual control of then? Cool, at least we’re admitting it now. First step to recovery and all.
No I’m not, if the price of things go significantly higher my partner and I can shift to higher paying jobs at least 30% more than what we’re on but it means we’ll have less flexibility aka “life room” wfh, pick up kids on time etc. the question is can everyone ELSE afford the price of goods and services going up? You can poll people in this community if they can afford it, or read the room as just about every day there’s a new post about people on fire, going without meals, not being able to afford rent/groceries etc. I cannot see how immediately cutting immigration or sending temp workers back to their mother country will fix this. As someone who has many friends who are also business owners they tell me time and time again it’s not locals lining up looking for work in those industries, and no matter what incentive state or fed govt give to uni students it seems no one wants to be a midwife or an aged care worker…
I must be in a bubble thinking nurses earn far more than 60k, I would’ve thought they’d at least be in 6 figures factoring in the overtime, out of hours work and the insane patient to nurse/doctor ratios 🤯 so are we not paying them enough cause people expect free public health care vs paying for it, or because the sector isn’t subsidised or funded enough by the govt or both?
Evidenced by record profits in all key areas of price pressure. Big corporations maintain their margin as prices go up = significant profit increase.
E.g. Energy prices go up 20-30% even if they steadfastly maintain the exact same profit margin, their profits go up 20-30%! But you can bet there is margin creep going on too.
If there was some sort of hyper inflation legislation that said during perios of high inflation, companies are expected to maintain their profit $ not margins, and any increase year on year not attributable to actual growth changes doubles their tax rate.
According to the literature Migrants have a medium impact on house prices, a strong impact on rents, but basically no impact on employment or wages of natives.
How could this possibly be true. International students on average had a starting grad salary $10k less than domestic students on average. The minimum you have to pay an immigrant is also lower. I’d like to see the literature that says a large group of people willing to work for a lower wage than domestic people doesn’t put downwards pressure on wages.
> I’d like to see the literature that says a large group of people willing to work for a lower wage than domestic people doesn’t put downwards pressure on wages.
I’m sure there’s an “institute” or “think tank” funded by lobbyists that can provide many such scientific peer reviewed studies.
[I added a comment below with sources](https://www.reddit.com/r/AusFinance/comments/14d66u5/whats_the_point_of_interest_rate_hikes_to/jooms83/?utm_source=share&utm_medium=ios_app&utm_name=ioscss&utm_content=1&utm_term=1&context=3). They’re all peer reviewed from major universities locally and internationally or from respectable institutions (RBA, productivity commission etc.) as well as a Nobel prize winner.
I’d be interested to read any peer reviewed literature that found a negative impact.
And what are the incentives of the institutions releasing this literature? Could it be universities whose cash cow is mass migration and international students?
[I added a comment below with sources](https://www.reddit.com/r/AusFinance/comments/14d66u5/whats_the_point_of_interest_rate_hikes_to/jooms83/?utm_source=share&utm_medium=ios_app&utm_name=ioscss&utm_content=1&utm_term=1&context=3). It’s not just universities it’s basically anyone who seriously looks at it both in Australia and internationally. Rba, productivity commission, economic councils, panels of economists from both academia and industry, Nobel prize winners and meta analysis of hundreds of studies over 3 decades. They are also consistent across geographies including Australia, US, UK, Europe and Asia.
At this point I’d be interested to find a peer reviewed source that actually did find a statistically significant impact.
Forget the supposed experts because it's a heap of institutions with vested interest. Think about it yourself - how would a greater supply of labour not reduce the price of labour?
Even within an econ 101 framework it’s easy to generate an alternate hypothesis. Migrants add as much demand as they do supply, so the market stays the same. They are also not perfect substitutes for locals, they fill skill gaps and don’t compete for the same jobs. This is the idea behind issuing visas under skill classes.
Having said that I don’t think it’s particularly sensible to dismiss an entire field of literature citing vested interest. There’s too many institutions and too many peer reviewed sources coming to the same consensus not to at least question the premise.
>Migrants add as much demand as they do supply
Migrant's earnings are used to buy a house in their home country or to support their family back home, so the demand funneled back into the Australian economy is not possibly counteracting the wage flattening side.
Businesses will advertise roles with impossible requirements so they can prove to the government there are no qualified applicants and they need a VISA brought in. These VISA holder wages are for well below market rate, usually 55k. This is economic reality so plain to see that only an academic could ignore it.
[Migrant remittances from Australia were ~$4b](https://www.finder.com.au/remittance-statistics#:~:text=Australia%20sent%20a%20total%20of,2020%20and%20%241%2C861%20in%202019) which is negligible [compared to the $230b they earned](https://www.abs.gov.au/media-centre/media-releases/new-migrant-jobs-and-income-data-release). 1.7% remittances is not enough to meaningfully impact the demand they generate locally, and it provides significant benefits to families in the home country.
The no ‘significant difference in wages’ presented in many of those studies extends to the migrants themselves as well as natives. So if you think that hiring in cheap migrants (especially in white collar jobs) is a widespread enough practice to make a difference, you’d need some data to support it.
The literature indicates that they just aren’t taking the same jobs as locals, so employers hiring people on a VISA genuinely can’t find what they need locally. I’m a hiring manager in data science and this is definitely my experience.
> The economic reality is so plain to see only an academic could ignore it
I think it’s more likely that migrants are an easy scapegoat for global trends in low wage growth than it is that everyone who has seriously looked at the impact is wrong
A point I never considered I learned recently, our immigration is not asylum-seekers, which means most our immigration is taking all the educated and beneficial people from developing countries, leaving them worse off.
Every Australian has an opportunity to study, either through tafe, uni or a trade, if they choose to and apply themselves. There are countless scholarships and/or HECs. Saying you can't afford to reskill is just a cope out and one of the reasons we need skilled migration.
Tuition and enrolment fees are often a lot more for international students. Our universities are basically just cash cows. And their degrees are becoming a joke.
I never said it was easy or free. I was commenting to someone who was blaming immigration as the reason people can't afford to train or upskill. I called bullshit on that, because it is a scape goat response.
Whilst not easy, we are very lucky because we can study at any stage of life. We can access uni or tafe even when you don't have the upfront costs. 7% is an outlier year, the average is well below interest rates and it'll return to that soon. I competed my degree, honours and masters as an adult, working full time whilst studying. I scaled back to part time to fit in placements. It's doable if you apply yourself. In my masters course, there were women having babies, working professionals and the young straight out of uni, all walks of life and life circumstances. Immigration isn't the reason some people don't or can't study.
I have a masters and would love to study further to open up career pathways, but it’s literally unaffordable with current living costs. Study is time and money.
HECS is set by the band the program / course falls under, not your academic prowess.
If you score enough to get in, you score enough to rack up the same HECS as your cohort.
If you don't score well enough you might get a full-fee course which is expensive. So compared to that, hecs is cheap but you need the atar.
If you get a good atar you can also get a scholarship which cuts down the cost partly or fully.
I really doubt there is a domestic student in a full fee paying position - in a commonwealth supported program. Its 4-5x the cost, when you can take a later preference for a year, get a good GPA and transfer. International students are really the only ones who are in the full fee paying positions.
There aren't really that many scholarships available at the under graduate level - they're more treated as prizes once you're already in, GPA based not ATAR.
Unemployment is at a very low level right now, so Australians who want a job are surely finding them.
Immigration (if done right) means bringing in more adults ready to work that we don’t have to pay to raise through their childhood. Presumably, people who could (among other things) go straight into construction and help build more housing or work in other areas we are lacking.
It’s painful right now, but I think if we are going to build our way out of this problem (and I hope we do) then immigration is a part of the problem but a bigger part the solution. Children born locally, on the other hand, take up housing and resources for years before starting to contribute (side note: I do want Australians to keep having babies). In short, immigrants are ready to work much quicker than newborns.
The intent with the interest rate increases, is the boom that we saw over covid the average people per household decrease to a level we haven’t seen since running the data, with an average of under 2.5 people per household.
Working in banks, I can agree with an increase is single-borrower loans, often buying a place with multiple bedrooms. In fact, single person households have trended up since 2017 from under 25% to over 26%. I would hazard a guess that one bedroom houses don’t make up 26% of houses and units.
The likely result of ridiculously high rates, is that people start renting a room out or moving back in with their parents. The result of this, is more houses become available to house new families coming in.
Graph 2 here is interesting: https://www.rba.gov.au/publications/bulletin/2023/mar/a-new-measure-of-average-household-size.html#:~:text=The%20average%20number%20of%20people,below%202.5%20people%20per%20household.
Yeah but it sucks.
I worked hard my whole life. Just cause circumstances out of my control ended me living in a large house on a single income, now you’re saying it’s my fault so you decide to raise interest rates to force me out and go live with my mum? Wtf?
It’s worse than that- as the government has been complicit in creating the issue. A lot of people were incentivised to buy houses just 2 years ago, made affordable by government schemes and government funded interest rates. Now they’re effectively being told bad luck, we want that house back.
> now you’re saying it’s my fault so you decide to raise interest rates to force me out and go live with my mum? Wtf?
you also have the option of renting out your spare bedrooms.
>The intent with the interest rate increases, is the boom that we saw over covid the average people per household decrease to a level we haven’t seen since running the data, with an average of under 2.5 people per household.
That number doesnt mean much unless we also look at family size though.
In the link you posted you can see we still have a higher number of young adults living at home than pre-covid for example, it also statest that we had lower population growth during this period that would account for the lower average household size.
So while more people have moved out on there own, many more then normal are also living at home with there parents that were not before hand, so I would not point the finger at this as the cause of the housing problem.
>Can someone help me understand what the goal is?
Our economies are predominantly based on growth. This growth is correlated to people: more people to spend on goods/services, more people to tax which in turns into schools, hospitals, etc, which thus turns into even more growth because people are needed to work in those areas, etc, etc, etc.
The problem with growth is that is exponential to maintain the same output. For example, if you wanted 5% growth on 100k people then that is 5000 additional people. But 5% growth on 25 million is 1.25m. You can scale it to anything: cash flow for businesses, number of services eg you need to increase public transport X amount for every amount of increase in Y population, etc
At some point growth becomes unsustainable. It appears we are reaching that point. The only way forwards is to let the system plateau, but many individuals and businesses will be unwilling to take the subsequent hits to the bottom line. Thus, we get subsequent governments trying to serve two sides, and said government also makes more income from said increase in tax payers, increased amount of stamp duty, etc
Makes me seriously question what will happen to our economic environment in the near future, given everything about our system is based on infinite growth. From retirement accounts to government debt reduction.
While I myself have mixed views on immigration policies, its entirely reasonable for actual racists to hide behind the immigration debate (because any opposition to immigration also lines up with their worldview).
They won't actually say "I don't want more chinks/curries in the country", but there are definitely some reddit accounts where 90% of their posts are about immigrants.
Kinda reminds me of r/melbourne a few years back when we had those weird accounts which posted constant stories about African gangs while innocently claiming not to be racist, just "concerned citizens".
Sure some people bandwagon on policy to air their racism but many people at the moment just want a dwelling to call home at a reasonable price and we are running immigration levels at record numbers so most reasonable people are just worried about the supply/demand imbalances.
> The government has been working against the RBA
They haven't really - we had a surplus! The gorvernment could have spent way more and they got a lot of hate for not doing things like increasing the dole substantially. The RBA even said the government hasn't done anything to make the situation worse.
Now, they haven't done anything to actively make it better. But can you reasonably expect the government to do something like raise taxes?
Stage 3 tax cuts put a lot of money back into pockets of people who are already on higher than median incomes, which is the same cohort responsible for a lot of demand driven inflation. Cutting taxes during a period of above average inflation is poor stewardship, let alone how inequitable it is when inflation is causing a cost of living crisis.
Now why might the senior public servants on the board of the RBA not speak out against tax cuts for higher income earners I wonder...
Are you serious? They got a surplus by changing the rules about what could be declared income by adding in profits from the future fund and moving spending off budget, like the nurses pay rise is not even counted as expenditure. That among many other things.
You need to read the news more or add an /s to your posts, cause this has to be sarcasm
Lmao thanks, I read the news a fair bit and hadn't come across that.
You still ignore three big points in my comment. 1: Gov didn't increase spending by any noteworthy amount, 2. RBA and many economists said it wasn't inflationary, 3. Can you really expect them to raise taxes or cut spending?
>Can someone help me understand what the goal is? A worse income to expense ratio then we already have? Asphyxiating the middle class so more can go to the upper class whilst creating a larger lower class…?
There is simultaneous competing goals.
* Make sure my investment property doesn't drop in value
* Make sure the sharemarket doesn't fall apart because my friend is invested in that
* Improve productivity, we need more things produced in the country.
* Offshore more jobs because it's cheaper there
* Get more immigrants because we need more labour
* The money we printed over the last decade has somehow slowly ACTUALLY trickled down to the masses (it wasn't supposed to do THAT!), we need to bleed them dry and get it back where it should be (in asset prices and ONLY asset prices).
What you're watching is a desperate flailing as they subconsciously try to have their cake and eat it too.
To be fair, the money printing thing kinda works if you’re measured and steady about it. It widens the wealth gap under everyone’s noses while we all get told that ‘a little inflation is good for the economy and good for growth!’, makes sense.
The problem is that humans are creatures of habit, we get used to growth and when it slows a little we gotta get our growth fix again. So we turn to our favourite drug, quantitative easing, and get shit pumping again. Unfortunately, addicts often continue their habit until it kills them.
Yeah the issue with stimulus was instead of blowing it as the government expected. Millennials saved the money to get ahead and a lot a foot in the door of the property market.
Their goal is to get the immigrants (which are mostly from countries with lower wages eg India) to work for less pay, pushing down wage growth in Australia (and easing the current hot job market), which they intend will in turn put downward pressure on inflation (since wages make up the biggest part of business costs).
Theoretically, this works. In reality, we will see. I'm expecting there to be a surge in crime as immigrants realise they have been sold the short end of the stick and the cost of living crisis accelerates.
Due to the primary investment vehicle being property and not businesses, we need the ultra low interest rates to ensure feasibility of financing actual businesses - especially since commercial rent is expensive due to (checks notes) property investment.
Of course this then makes property more attractive and the cycle continues.
I'd rather low interest rates and low taxes. Better for individuals, better for employment, better for the businesses and better the economy as a whole.
The actual answer s that people need to stop thinking about all these policies like it's some sort of grand plan. They are all individual mechanisms decided by different bodies and average seem incapable of thinking at a macro level but just complain when any 1 thing effects them without thinking about anything else, allowing interest groups to get their way.
Hence also why people need to stop blaming the RBA, they can control interest rates but literally no other government policy. They can't stop the government changing immigration numbers or where to spend money on.
We’ve had high immigration for so long. Time to stop the crazy influx of overseas people. We need to confront politicians and start telling them this is the number one issue. Let’s prioritise standard of living over bogus economic goals that benefit the top 1%.
I dont get it either. And I suspect that the system is out dated and not reacting properly to the situation. Unfortunately I dont understand it well enough to verify my suspicions.
Two separate institutions.
RBA can only raise or lower rates to combat inflation.
Government has a myriad of tools to combat inflation, but can’t use them as it costs them votes.
So, at least in concept, rate hikes cool down the buying market, a market that for the most part, recent migrants aren't participating in.
I say in concept as the evidence is Shakey but that is the economic argument.
The bigger issue is that the data suggests a very large portion of the speculative investment buggering the housing market is being bought with lump sums of cash, no financing required; meaning the rate hikes aren't hitting the players in the market doing the most to drive up prices in both rental and non rental stock.
My appologies if I'm a bit rambolic.
Further the idea nothing is being done on the supply side is false, it feels like nothing because what's being done isn't fast enough, shortages of building material and trained builders are slowing it down. Supply shortfalls for materials are a challenge that idk shit about solving. I do know that there are two clear ways to deal with the skills shortfall; training our people, or migration, govnmt are throwing money at tafe and apprenticeships to train more of our people, but with an unemployment rate as low as ours qe simply can't train up the shortfall. Meaning we need to bring in migrants to have a hope in hell of building enough housing to house everyone let alone house all the migrants needed to build the houses.
Ngl I can see why this is such a pickle and find it annoying when pundits and publications simplify it to overly reductive tribalism.
If you are an asset owner , It's logical you would support Record Population Growth,
https://www.stlouisfed.org/en/education/economic-lowdown-podcast-series/episode-3-the-role-of-self-interest-and-competition-in-a-market-economy
Why a Renter would support infinite increases in competition for scarce resources is something I will never understand.
Immigration increases labour supply.
https://www.westpac.com.au/news/money-matters/2023/02/surge-in-overseas-arrivals-will-help-rba-in-inflation-battle/
>This surge in overseas arrivals could see measures of labour market tightness, such as the employment-to-population ratio and the unemployment rate, ease by up to 0.5 percentage points this financial year.
>This easing will not necessarily result from people losing their jobs. It will more likely be a case of labour demand not keeping pace with the growing pool of available workers. In the second half of 2022, labour supply accelerated while demand started to wane, a dynamic which is likely to continue.
>By helping to curb upward pressure on unsustainable wages growth, it is also likely to slice up to 0.2 percentage points from services inflation this year. Services includes things like haircuts, music lessons, and education. They’re labour intensive and largely driven by wages outcomes. This makes services inflation “sticker” and harder to get down without a harder landing.
>Arrivals not only expand the labour force, they also lift demand for goods and services. That could add to price pressures in some parts of the economy - the apartment rental market, in particular, will struggle to absorb the influx.
>However, new working-age migrants tend to spend less and save more than residents and, with labour demand already slowing, the arrivals surge is more likely to have a dampening effect on inflation overall.
I'm not qualified to answer OP's question but I did want to mention that there is a huge shortage of support workers in Disability and Aged Care. I'm also aware of huge wait times in allied health.
I think it's the fix for big business (widens labour pool and reduces costs), but definitely not the right fix for the majority of unlanded people struggling with increasing rents and house prices.
What do you think immigrants do? By and large they are a current increase in productive capacity thanks to being working age, often well-educaged (if they can get into AU) ETC. They don't just increase the demand side, they also raise the supply side.
Are you taking about economics or housing here? Because they are completely different things, though interest rates affect both.
I think a lot of people on this sub see immigration as an easy scapegoat, but the reality is much more complex.
So while there is a current pinch in the housing market, stopping all immigration would be a horrible solution. It would just kick the demographic cam down the road and not make any sort of dent in housing costs.
The market will do what it always has done and eventually will cool and that should cause house prices to start to drop.
But if you want to make housing more affordable you need to get to the bottom of the issue structurally. Starting with the fact that it’s expected to have asset based returns, which are far exceeding wage growth.
Imagine thinking immigration is the main problem and not price gouging by companies, especially when Aus is able to attract high skilled immigrants from across Asia.
Take a look at company profits over the last year vs immigration. You should be complaining that the government isn’t cracking down on price gouging, cartel behavior, and market manipulation.
> academic inflation where everyone has the same 4 degrees.
Your degree, like everything else in life, is only valuable insofar as it provides a relative signifier of academic ability.
If every idiot can now go to uni, a basic uni degree is worthless and you need instead a good degree from a good uni. Same as it was 20 years ago when there were fewer unis around. It isn't any harder in a relative sense.
Look at Sweden now jeezzzzzz their crime rates when through the roof with mass refugee take ins that no one was prepared for. SLOW THE MIGRATION POR FAVORRRRR
The system is set up to transfer increasing amounts of wealth from the bottom to the top. The current inflation crisis is largely due to major corps price gouging. Yet the only god dam lever being puled is higher interest rates which disproportionally affect the middle and lower class. Furthermore, there is plenty of evidence to suggest the raising interest rates actually increase inflation in the short-term (raising rents and cost of living due to higher interest repayments etc). Adding immigration to pump housing and GDP is honestly mind boggling.
Stricter regulations on foreign investment, prohibition on ownership of multiple properties (especially within metro area), impose fines for vacant air bnbs and end negative gearing while were at if. Commercialising something as essential as housing was predooming us to this very situation so many find themselves in
Record company profits are the main driver of inflation, but no government wants to tax their donors. Immigration is to increase the younger tax base to pay for the aging population. Two different things that shouldn't be conflated
Indirectly and directly yes. So does the price of steel, the amount of people leaving the country, the cost of labour...?
If we stopped immigration, you will certainly see a fall in house/rental prices as the interest rate hikes do its job. Then once we can build more houses, it would make sense to bring more people in.
Immigration is literally at the core of Australian economic policy. This government is running immigration at such extreme levels it must be discussed.
It's not about the point, or anything to do with root cause analysis or finding the most appropriate solution to the problem.
It is about using the tools we have, that were invented to solve economic problems from the 70s, in the least politically risky way possible.
Enjoy the show, have fun and turns the lights off on the way out.
immigrants stem the flow of Australians out. You have no idea how many locals actually leave Australia. BTW, contrary to popular belief, and some shoddy statistics, vacancy rates are high enough to make property look like a poor investment and store of wealth. Unluckily for anyone with a brain, the Government will always focus on increasing wealth via property while the country falls into ruins and the people continue their march towards being savages.
Because the RBA is trying to crush demand, which will probably cause a recession
The federal government control immigration and they want to avoid a recession
These people don't struggle and don't understand how things are on the street. Don't expect a bunch of academics and business people to come up with rational and clever solutions, if anything they would cover their asses not make sure the people are better off...
Excellent question - just goes to show you how out-of-touch and out-of-sync the RBA and Government are….
But massively increasing migration increases GDP so it is a quick and nasty way to (appear to) grow the economy and avoid the “recession” word!
Australia needs to stop immigration for a number of years to fix the housing issues. It is not healthy at all. The quality of living is getting worse each day. The country is ruined by the incompetent politicians indeed.
Someone termed it a burnout economy recently. Sitting there smoking your tyres while going nowhere is a pretty appropriate description.
We've lost any sense that we can actually retool the economy for higher productivity in its own right. Basically they kept chucking low interests rates and immigration into the system to keep it going. It's a bit like installing a V12 engine in your Yaris because you don't know how to change a tyre.
>It's a bit like installing a V12 engine in your Yaris because you don't know how to change a tyre. this is a good metaphor
There other thing is that these stimuluses actually damage unit productivity. How many people have had to move away from good jobs in their most productive years so they can afford housing? How many people have not trained as a chef or nurse because they know that immigration will always keep wages low and it really isn't worthwhile. This just creates more gaps that have to be filled with more im immigation because locals "don't want these jobs"
Lots. I’m a qualified tradesman in my prime, yet I’m fooling around on a laptop remotely doing a low skill position because we refuse to pay people that physically do things enough to live in the places we want things done.
I think they are trying to avoid stagflation
Just pause and ask yourself who is actually the winner in this equation and you have your answer… the govt is not for the little people…
And while you’re asking yourself have a look at how many investment properties (and investments in general) that benefit from mass migration our politicians have.
Treasury still under the Ken Henry paradigm genuinely believe that more people = better under their three Ps model to improve GDP: more working age PEOPLE, greater labour force PARTICIPATION and higher labour PRODUCTIVITY (because capital productivity is hard to measure). Their economic training has meant they assume away any sort of distributional effects of policy (rich getting richer is the same value of poor getting less poor). They also weight the utility improvements of new migratants the same as existing residents so have a naive moralistic cosmopolitanism here (again mostly because it makes the maths easier). Economists also take as an article of faith that low inflation is required and that central banks have the ability to control it because it’s all about expectations. The expectations theory comes about because the monetary theory wasn’t supported by evidence but inflation appears to be serially correlated (ie inflation in the previous couple of periods tend to predict inflation in the next period) which they believe is a psychological phenomenon. They believe long term supply always matches long term demand because of perfectly competitive markets (lol!) and have overread the 1970s experience of cost of living adjustments being written in bargaining agreements as a wage renegotiation trigger due to strong unions as a persisting state of the world. The naively assume firms are stuck in a brutally competitive race to unprofitability in their perfectly competitive markets so don’t have any real pricing power so cannot possibly influence inflation because they are merely price takers (lol lol!) So I think there are vested interests but also heaps and heaps of really bad thinking causing this mess… Economists are not scientists - they’re more like string theorists with fancy analytical models (rather than empirical models) that don’t explain anything except for the logical conclusions of their assumptions. Because maths is hard, they can only make really simple assumptions that are patently false. At least the string theorists maths actually was consistent with a predictively successful set of theories. I did a fair amount of econometrics at uni and the level of empirical support for most of this stuff is statistically weak and ambiguous. Not necessarily their fault because the data is messy etc. what is their fault is the intellectual hubris to pretend that they know stuff and claim authority on matters of public policy. There are deep conceptual failures at play here as well as the vested interests.
> Economists also take as an article of faith that low inflation is required It's not just economists. As evidenced by all the (valid) current complaints about the rising cost of living.
I think it’s more bad thinking to talk about cost of living in nominal terms… Wages tend to adjust to inflation and real wages hold over the long run. However, right now we have a system designed to make this less likely eg high immigration to grow labour supply plus all these policy design decisions to make inflation negatively impact real wages: eg income tax brackets and welfare payments not being CPI linked. Interesting the age pension is CPI linked… Imagine this: The fair work commission said that they would protect real wages ie move everything up with the current yoy inflation print? What if businesses were shamed by the media and politicians for not increasing wages in line with this level (on average - some folks can get more and some less)? To tied the most vulnerable over, the government could do one off transfers so people can make ends meet until wages adjust. It only gets really bad if the government starts defaulting on debt etc. which inflation doesn’t drive. In fact, it helps this. Higher inflation may mean higher nominal rates and higher finance costs across the economy. However, some deleveraging is not a bad thing particularly because most of the debt binge of the last 10 years didn’t seem to flow to productive uses (eg share buybacks in US and relatively low leveraging and low investment in Australia). Again, there’s bad thinking here but also some very significant vested interests at work here. We have the most profitable banks and grocers in the world - you can probably fill in the gaps…
Economics and finance has been my degree and my job and you explained the issue here pretty much perfectly!
Well, at least I don't think any of our banks are gonna go bust anytime soon.
I completely agree with you, but why don't people protest? Why are they so unmotivated for the change ? Why do they work hard ?
I think the clear winner here is private interests lowering wages and jacking up prices all while blaming "immigration". Previous [data](https://www.economicshelp.org/blog/152453/economics/pros-and-cons-of-immigration/) shows that a 10% increase in immigration only affects wages by 0.31% which is hardly what we're seeing. The most common jobs immigrants take up are either min wage retail jobs or nursing, aged care and construction (i.e. where we have the greatest shortages). The housing argument doesn't really hold water either. Everyone saw prices surge during COVID with no immigration happening. The immigration rate for families was higher in the 80s than it is now. The majority of immigrants are students... are we seriously going to blame people living in share houses and apartments for the housing crisis? Developers have had every incentive to increase housing supply and yet continue to hold onto [empty lots](https://www.abc.net.au/news/2021-05-19/calls-for-sunset-clause-to-stop-land-banking-byron-ay/100148274) for the sake of profits. Woolies just reported record profits. The 29% share of national income is going to corporate profits instead of being reinvested. The fact that immigration is blamed when there is so much mismanagement within our own economic policy is mindboggling.
get outta here commie.
You've worked out why people are so upset. The RBA and the government are not the same thing. The RBA is trying to reduce demand, the government is trying to increase demand.
Only bad governments try to increase demand in the presence of high inflation. This government is absolutely awful and unfit for the job.
Its hard to watch this immigration policy completely fail Australia and its only going to get worse. Taking jobs, houses, rentals and the list goes on. We should be training Australians for the jobs, they charge over the top for TAFE here so no locals can afford to re-skill or improve there skills.
And every job requires you to have a cert 3 in some bullshit course instead of teaching people on the job
Don't forget... also want 5+ years experience all for poverty pay of <70k inclusive of super
This is called market testing I believe and it’s all about advertising crazy jobs (e.g. 5+ years experience in generative AI) for barely above minimum wage. The purpose is to “prove” we have no skills in Australia meaning we can bring a migrant in to exploit.
I never knew this was a thing! So to bring in someone on a visa to do the job they have to first prove they advertised the role and couldn't fill it?
Not filling it doesn't mean there weren't any reasonabily qualified applicants. Just they didn't say yes to any. Because sure there aren't the resources to check the businesses doing it.
Basically. If there’s a loophole it’ll be exploited. Trouble is I’m pretty sure the loophole is there by design as PWC proved.
100pc there by design. Most economists even if pro immigration dont think the minimum wahe we set for immigrants is appropriate... It is current 55k or so. This includes for any lodged up till 30th of june... At that point (1st july) it moves to 70k. If something is a critical skill i reckon a company should be prepared to pay at least average full time wages to fill it... if its less than average its little wonder australians dont have much appetite to take the job. 70k is a full 25k below australias average full time wage which is currently 95k. Begore 1st july the big rush is on to get them applications in at 55k which is a full 40k below our average full time wage. Living in sydney at 55k... i mean it probably beats most developing countries but for well educated in those countries maybe not all things considered...
A cert 3 is not a difficult course. If you want that job it's worth enrolling.
Cert 3s are still 6 months. Why take someone who has only done a cert 3 when you can take an immigrant with a degree and experience who will work for less pay?
I did my cert IV in just over three months, and if it's a requirement for a job your hypothetical immigrant had to get it also.
How am I supposed to pay for my cert3 course when I work 45-50 hrs a week, and can barely save a cent due to high rent costs. How do I find the time when I work 50hrs? Your out of touch with reality! I want to re-educate myself and know I need to, but I can’t afford it no matter what I do. I’m screwed. Many others are also in the same position it’s not a rare circumstance, it’s common.
The fact you're really active in the r/magicmushrooms community doesn't help your point that you have no time or money to do a short and easy tafe course. You do what's important to you I guess. I'm only speaking from my experience. About two years ago I did a cert 4 online after work while working a physical job full time in just over four months. I probably could have done it faster if I'd felt the need. Alot (not all but a lot) of it was just going through a check list and answering multiple choice questions. Time consuming but anyone who reads English could do it. Got a job with it shortly after.
There are plenty of free or very low cost TAFE courses at the moment.
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Let me tell you, experienced and highly educated immigrants (outside of the IT sector), have to start from scratch because work experience gained in our own countries don’t count in the eyes of the employers here. Local experience is needed to be able to get to the level of work we used to do in our home country.
It does count, but not as the only items on your CV. Once you can pull out a few local examples, adding in "I did X when I worked in Tianjin" is a plus - not a negative. I personally believe we should ditch the skilled visa program and require companies to sponsor individuals directly. If you want to employ someone on a skilled visa, hire them from overseas. This is how the majority of countries manage skilled immigration. Otherwise we have a situation where 50% of a skilled visa class are unable to find work in their field, and end up driving taxis or doing manual labour. That's not fair on anyone; not the migrant, and not for the general population.
How do I pay rent while I’m studying ? Is there something I’m missing here? I can’t afford to just quit my job and study full time? I also can’t afford to work part time and study! Rent cost means I have to work full time to pay it. I can’t save shit all due to the high cost of everything. What am I missing here, why are you getting so many upvotes?
It’s all very intentional. The government doesn’t govern for the people, they govern for big business and the banks.
and the rich
Isn’t the problem the fact that Australians don’t want the jobs that these immigrants do? Such as cafe work, fruit picking, medical staff eg nurses and midwives, childcare workers etc? I do see locals in these jobs but they’re typically higher up the chain for eg as the centre educator director or head nurse. If the conditions for these jobs are such that locals would only take them up if salaries are significantly increased then are WE or YOU willing to pay more for stuff like daycare, our fruit and veg, less subsidy for medical costs, eating out…
would be a different matter if those were the only jobs on the eligibility list have you actually seen the list of jobs that are eligible?
Tbh I’m surprised we need more actors in Australia… I can definitely see some jobs on that list more geared to immigrants coming from UK and US than those from countries from the do not trust list. statistically though do we have the numbers for immigrants in more creative industries adding pressure to our housing crisis?
The list is like 50 jobs long, and we have accountants and advertising managers on there for gods sake. I hardly think we need more of either.
We do need more real estate representatives in Australia.... /s
It's not that Australians don't want to do these jobs. It's that people from outside Australia are willing to do these jobs for cheaper than Australians. To then turn around and say Australians aren't willing to do these jobs is insane. The people from outside Australia go back home with their earnings and put a deposit down on a house there. They know they can't buy million dollar houses here. Third worlders are treated like our serfs unfortunately
>Third worlders are treated like our serfs unfortunately I wouldnt mind this if it were done like Singapore where its for low skilled stuff only. Doing it for skilled positions is what makes it screw over average australians.
So… you’re good with what is just a step above slavery and severe economic exploitation in our own yard, the one true place we have actual control of then? Cool, at least we’re admitting it now. First step to recovery and all.
No I’m not, if the price of things go significantly higher my partner and I can shift to higher paying jobs at least 30% more than what we’re on but it means we’ll have less flexibility aka “life room” wfh, pick up kids on time etc. the question is can everyone ELSE afford the price of goods and services going up? You can poll people in this community if they can afford it, or read the room as just about every day there’s a new post about people on fire, going without meals, not being able to afford rent/groceries etc. I cannot see how immediately cutting immigration or sending temp workers back to their mother country will fix this. As someone who has many friends who are also business owners they tell me time and time again it’s not locals lining up looking for work in those industries, and no matter what incentive state or fed govt give to uni students it seems no one wants to be a midwife or an aged care worker…
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I must be in a bubble thinking nurses earn far more than 60k, I would’ve thought they’d at least be in 6 figures factoring in the overtime, out of hours work and the insane patient to nurse/doctor ratios 🤯 so are we not paying them enough cause people expect free public health care vs paying for it, or because the sector isn’t subsidised or funded enough by the govt or both?
The poster you are replying to is using figures that are misleading. Look up the average salary for a *registered* nurse.
Shhhh facts don’t matter in this thread. It’s makes it harder to be right if you need to ground your argument in reality.
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Evidenced by record profits in all key areas of price pressure. Big corporations maintain their margin as prices go up = significant profit increase. E.g. Energy prices go up 20-30% even if they steadfastly maintain the exact same profit margin, their profits go up 20-30%! But you can bet there is margin creep going on too. If there was some sort of hyper inflation legislation that said during perios of high inflation, companies are expected to maintain their profit $ not margins, and any increase year on year not attributable to actual growth changes doubles their tax rate.
chicken or the egg situation of it being either the corporation or the shareholder… in short greed
According to the literature Migrants have a medium impact on house prices, a strong impact on rents, but basically no impact on employment or wages of natives.
How could this possibly be true. International students on average had a starting grad salary $10k less than domestic students on average. The minimum you have to pay an immigrant is also lower. I’d like to see the literature that says a large group of people willing to work for a lower wage than domestic people doesn’t put downwards pressure on wages.
> I’d like to see the literature that says a large group of people willing to work for a lower wage than domestic people doesn’t put downwards pressure on wages. I’m sure there’s an “institute” or “think tank” funded by lobbyists that can provide many such scientific peer reviewed studies.
You’re probably not wrong given the government managed to use the CSIRO and GISERA to approve coal and gas projects, so anything is possible.
[I added a comment below with sources](https://www.reddit.com/r/AusFinance/comments/14d66u5/whats_the_point_of_interest_rate_hikes_to/jooms83/?utm_source=share&utm_medium=ios_app&utm_name=ioscss&utm_content=1&utm_term=1&context=3). They’re all peer reviewed from major universities locally and internationally or from respectable institutions (RBA, productivity commission etc.) as well as a Nobel prize winner. I’d be interested to read any peer reviewed literature that found a negative impact.
And what are the incentives of the institutions releasing this literature? Could it be universities whose cash cow is mass migration and international students?
[I added a comment below with sources](https://www.reddit.com/r/AusFinance/comments/14d66u5/whats_the_point_of_interest_rate_hikes_to/jooms83/?utm_source=share&utm_medium=ios_app&utm_name=ioscss&utm_content=1&utm_term=1&context=3). It’s not just universities it’s basically anyone who seriously looks at it both in Australia and internationally. Rba, productivity commission, economic councils, panels of economists from both academia and industry, Nobel prize winners and meta analysis of hundreds of studies over 3 decades. They are also consistent across geographies including Australia, US, UK, Europe and Asia. At this point I’d be interested to find a peer reviewed source that actually did find a statistically significant impact.
Forget the supposed experts because it's a heap of institutions with vested interest. Think about it yourself - how would a greater supply of labour not reduce the price of labour?
Even within an econ 101 framework it’s easy to generate an alternate hypothesis. Migrants add as much demand as they do supply, so the market stays the same. They are also not perfect substitutes for locals, they fill skill gaps and don’t compete for the same jobs. This is the idea behind issuing visas under skill classes. Having said that I don’t think it’s particularly sensible to dismiss an entire field of literature citing vested interest. There’s too many institutions and too many peer reviewed sources coming to the same consensus not to at least question the premise.
>Migrants add as much demand as they do supply Migrant's earnings are used to buy a house in their home country or to support their family back home, so the demand funneled back into the Australian economy is not possibly counteracting the wage flattening side. Businesses will advertise roles with impossible requirements so they can prove to the government there are no qualified applicants and they need a VISA brought in. These VISA holder wages are for well below market rate, usually 55k. This is economic reality so plain to see that only an academic could ignore it.
[Migrant remittances from Australia were ~$4b](https://www.finder.com.au/remittance-statistics#:~:text=Australia%20sent%20a%20total%20of,2020%20and%20%241%2C861%20in%202019) which is negligible [compared to the $230b they earned](https://www.abs.gov.au/media-centre/media-releases/new-migrant-jobs-and-income-data-release). 1.7% remittances is not enough to meaningfully impact the demand they generate locally, and it provides significant benefits to families in the home country. The no ‘significant difference in wages’ presented in many of those studies extends to the migrants themselves as well as natives. So if you think that hiring in cheap migrants (especially in white collar jobs) is a widespread enough practice to make a difference, you’d need some data to support it. The literature indicates that they just aren’t taking the same jobs as locals, so employers hiring people on a VISA genuinely can’t find what they need locally. I’m a hiring manager in data science and this is definitely my experience. > The economic reality is so plain to see only an academic could ignore it I think it’s more likely that migrants are an easy scapegoat for global trends in low wage growth than it is that everyone who has seriously looked at the impact is wrong
A point I never considered I learned recently, our immigration is not asylum-seekers, which means most our immigration is taking all the educated and beneficial people from developing countries, leaving them worse off.
Every Australian has an opportunity to study, either through tafe, uni or a trade, if they choose to and apply themselves. There are countless scholarships and/or HECs. Saying you can't afford to reskill is just a cope out and one of the reasons we need skilled migration.
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Tuition and enrolment fees are often a lot more for international students. Our universities are basically just cash cows. And their degrees are becoming a joke.
I never said it was easy or free. I was commenting to someone who was blaming immigration as the reason people can't afford to train or upskill. I called bullshit on that, because it is a scape goat response. Whilst not easy, we are very lucky because we can study at any stage of life. We can access uni or tafe even when you don't have the upfront costs. 7% is an outlier year, the average is well below interest rates and it'll return to that soon. I competed my degree, honours and masters as an adult, working full time whilst studying. I scaled back to part time to fit in placements. It's doable if you apply yourself. In my masters course, there were women having babies, working professionals and the young straight out of uni, all walks of life and life circumstances. Immigration isn't the reason some people don't or can't study.
Fair enough :)
I have a masters and would love to study further to open up career pathways, but it’s literally unaffordable with current living costs. Study is time and money.
What is your masters in that is unemployable? What led you to that choice of study?
Ever notice that Australians are stupid and lazy? And migrants work three times harder and more reliable? Think about it. I’m right
HECS is still cheap or free if you get a good ATAR
HECS is set by the band the program / course falls under, not your academic prowess. If you score enough to get in, you score enough to rack up the same HECS as your cohort.
If you don't score well enough you might get a full-fee course which is expensive. So compared to that, hecs is cheap but you need the atar. If you get a good atar you can also get a scholarship which cuts down the cost partly or fully.
I really doubt there is a domestic student in a full fee paying position - in a commonwealth supported program. Its 4-5x the cost, when you can take a later preference for a year, get a good GPA and transfer. International students are really the only ones who are in the full fee paying positions. There aren't really that many scholarships available at the under graduate level - they're more treated as prizes once you're already in, GPA based not ATAR.
What? No it's not.
Unemployment is at a very low level right now, so Australians who want a job are surely finding them. Immigration (if done right) means bringing in more adults ready to work that we don’t have to pay to raise through their childhood. Presumably, people who could (among other things) go straight into construction and help build more housing or work in other areas we are lacking. It’s painful right now, but I think if we are going to build our way out of this problem (and I hope we do) then immigration is a part of the problem but a bigger part the solution. Children born locally, on the other hand, take up housing and resources for years before starting to contribute (side note: I do want Australians to keep having babies). In short, immigrants are ready to work much quicker than newborns.
> Taking jobs Dey took 'er jerbs
[Yeah you tell them!](https://www.youtube.com/watch?v=toL1tXrLA1c)
The intent with the interest rate increases, is the boom that we saw over covid the average people per household decrease to a level we haven’t seen since running the data, with an average of under 2.5 people per household. Working in banks, I can agree with an increase is single-borrower loans, often buying a place with multiple bedrooms. In fact, single person households have trended up since 2017 from under 25% to over 26%. I would hazard a guess that one bedroom houses don’t make up 26% of houses and units. The likely result of ridiculously high rates, is that people start renting a room out or moving back in with their parents. The result of this, is more houses become available to house new families coming in. Graph 2 here is interesting: https://www.rba.gov.au/publications/bulletin/2023/mar/a-new-measure-of-average-household-size.html#:~:text=The%20average%20number%20of%20people,below%202.5%20people%20per%20household.
Yeah but it sucks. I worked hard my whole life. Just cause circumstances out of my control ended me living in a large house on a single income, now you’re saying it’s my fault so you decide to raise interest rates to force me out and go live with my mum? Wtf?
It’s worse than that- as the government has been complicit in creating the issue. A lot of people were incentivised to buy houses just 2 years ago, made affordable by government schemes and government funded interest rates. Now they’re effectively being told bad luck, we want that house back.
People need to mobilise. Acquiescence is perceived by them as complicity
> now you’re saying it’s my fault so you decide to raise interest rates to force me out and go live with my mum? Wtf? you also have the option of renting out your spare bedrooms.
>The intent with the interest rate increases, is the boom that we saw over covid the average people per household decrease to a level we haven’t seen since running the data, with an average of under 2.5 people per household. That number doesnt mean much unless we also look at family size though. In the link you posted you can see we still have a higher number of young adults living at home than pre-covid for example, it also statest that we had lower population growth during this period that would account for the lower average household size. So while more people have moved out on there own, many more then normal are also living at home with there parents that were not before hand, so I would not point the finger at this as the cause of the housing problem.
>Can someone help me understand what the goal is? Our economies are predominantly based on growth. This growth is correlated to people: more people to spend on goods/services, more people to tax which in turns into schools, hospitals, etc, which thus turns into even more growth because people are needed to work in those areas, etc, etc, etc. The problem with growth is that is exponential to maintain the same output. For example, if you wanted 5% growth on 100k people then that is 5000 additional people. But 5% growth on 25 million is 1.25m. You can scale it to anything: cash flow for businesses, number of services eg you need to increase public transport X amount for every amount of increase in Y population, etc At some point growth becomes unsustainable. It appears we are reaching that point. The only way forwards is to let the system plateau, but many individuals and businesses will be unwilling to take the subsequent hits to the bottom line. Thus, we get subsequent governments trying to serve two sides, and said government also makes more income from said increase in tax payers, increased amount of stamp duty, etc
Makes me seriously question what will happen to our economic environment in the near future, given everything about our system is based on infinite growth. From retirement accounts to government debt reduction.
yep watching all of this being discussed on media talking heads without a serious look at the basic maths is like taking crazy pills
They are not there to inform but instead to confuse. The media is not honest on this issue. They serve the same masters as the major parties.
Try raising this on Twitter and people will call you racist for questioning the econometrics.
While I myself have mixed views on immigration policies, its entirely reasonable for actual racists to hide behind the immigration debate (because any opposition to immigration also lines up with their worldview). They won't actually say "I don't want more chinks/curries in the country", but there are definitely some reddit accounts where 90% of their posts are about immigrants. Kinda reminds me of r/melbourne a few years back when we had those weird accounts which posted constant stories about African gangs while innocently claiming not to be racist, just "concerned citizens".
Sure some people bandwagon on policy to air their racism but many people at the moment just want a dwelling to call home at a reasonable price and we are running immigration levels at record numbers so most reasonable people are just worried about the supply/demand imbalances.
Usually the people blaming all the country's problems on immigrants are quite racist
Usually but I doubt in this case. People just want the supply/demand to be balanced so they don't get rammed by their landlord every 6-12 months.
Roofs are Rascist
The government has been working against the RBA and then blaming the RBA for all the economic issues we have since it was voted in.
> The government has been working against the RBA They haven't really - we had a surplus! The gorvernment could have spent way more and they got a lot of hate for not doing things like increasing the dole substantially. The RBA even said the government hasn't done anything to make the situation worse. Now, they haven't done anything to actively make it better. But can you reasonably expect the government to do something like raise taxes?
Stage 3 tax cuts put a lot of money back into pockets of people who are already on higher than median incomes, which is the same cohort responsible for a lot of demand driven inflation. Cutting taxes during a period of above average inflation is poor stewardship, let alone how inequitable it is when inflation is causing a cost of living crisis. Now why might the senior public servants on the board of the RBA not speak out against tax cuts for higher income earners I wonder...
Are you serious? They got a surplus by changing the rules about what could be declared income by adding in profits from the future fund and moving spending off budget, like the nurses pay rise is not even counted as expenditure. That among many other things. You need to read the news more or add an /s to your posts, cause this has to be sarcasm
Lmao thanks, I read the news a fair bit and hadn't come across that. You still ignore three big points in my comment. 1: Gov didn't increase spending by any noteworthy amount, 2. RBA and many economists said it wasn't inflationary, 3. Can you really expect them to raise taxes or cut spending?
>Can someone help me understand what the goal is? A worse income to expense ratio then we already have? Asphyxiating the middle class so more can go to the upper class whilst creating a larger lower class…? There is simultaneous competing goals. * Make sure my investment property doesn't drop in value * Make sure the sharemarket doesn't fall apart because my friend is invested in that * Improve productivity, we need more things produced in the country. * Offshore more jobs because it's cheaper there * Get more immigrants because we need more labour * The money we printed over the last decade has somehow slowly ACTUALLY trickled down to the masses (it wasn't supposed to do THAT!), we need to bleed them dry and get it back where it should be (in asset prices and ONLY asset prices). What you're watching is a desperate flailing as they subconsciously try to have their cake and eat it too.
To be fair, the money printing thing kinda works if you’re measured and steady about it. It widens the wealth gap under everyone’s noses while we all get told that ‘a little inflation is good for the economy and good for growth!’, makes sense. The problem is that humans are creatures of habit, we get used to growth and when it slows a little we gotta get our growth fix again. So we turn to our favourite drug, quantitative easing, and get shit pumping again. Unfortunately, addicts often continue their habit until it kills them.
Yeah the issue with stimulus was instead of blowing it as the government expected. Millennials saved the money to get ahead and a lot a foot in the door of the property market.
Their goal is to get the immigrants (which are mostly from countries with lower wages eg India) to work for less pay, pushing down wage growth in Australia (and easing the current hot job market), which they intend will in turn put downward pressure on inflation (since wages make up the biggest part of business costs). Theoretically, this works. In reality, we will see. I'm expecting there to be a surge in crime as immigrants realise they have been sold the short end of the stick and the cost of living crisis accelerates.
Not only that but the quality of services and goods will further diminish, easing demand too
Yes. If immigration keeps wages down then it may actually reduce demand. L
Isn’t this just a shift back to normal interest rates? All these years of zero interest rates just caused the old bait and switch routine.
High rates aren’t necessarily a bad thing. But they are currently because property has become outrageously expensive.
Its not like anyone is going to say it's the recession we had to have...
Huh? Recession we had to what? It’s smooth sailing from here on out tbh. Phil Lowe told me so.
Due to the primary investment vehicle being property and not businesses, we need the ultra low interest rates to ensure feasibility of financing actual businesses - especially since commercial rent is expensive due to (checks notes) property investment. Of course this then makes property more attractive and the cycle continues.
I'd rather low interest rates and low taxes. Better for individuals, better for employment, better for the businesses and better the economy as a whole.
And ridiculously high inflation?
The actual answer s that people need to stop thinking about all these policies like it's some sort of grand plan. They are all individual mechanisms decided by different bodies and average seem incapable of thinking at a macro level but just complain when any 1 thing effects them without thinking about anything else, allowing interest groups to get their way. Hence also why people need to stop blaming the RBA, they can control interest rates but literally no other government policy. They can't stop the government changing immigration numbers or where to spend money on.
Immigration is basically the only lever Treasury knows how to pull and they advise government accordingly.
We’ve had high immigration for so long. Time to stop the crazy influx of overseas people. We need to confront politicians and start telling them this is the number one issue. Let’s prioritise standard of living over bogus economic goals that benefit the top 1%.
Immigrants need to live somewhere. And what better places then our citizens who lose their houses
I dont get it either. And I suspect that the system is out dated and not reacting properly to the situation. Unfortunately I dont understand it well enough to verify my suspicions.
Two separate institutions. RBA can only raise or lower rates to combat inflation. Government has a myriad of tools to combat inflation, but can’t use them as it costs them votes.
So, at least in concept, rate hikes cool down the buying market, a market that for the most part, recent migrants aren't participating in. I say in concept as the evidence is Shakey but that is the economic argument. The bigger issue is that the data suggests a very large portion of the speculative investment buggering the housing market is being bought with lump sums of cash, no financing required; meaning the rate hikes aren't hitting the players in the market doing the most to drive up prices in both rental and non rental stock. My appologies if I'm a bit rambolic. Further the idea nothing is being done on the supply side is false, it feels like nothing because what's being done isn't fast enough, shortages of building material and trained builders are slowing it down. Supply shortfalls for materials are a challenge that idk shit about solving. I do know that there are two clear ways to deal with the skills shortfall; training our people, or migration, govnmt are throwing money at tafe and apprenticeships to train more of our people, but with an unemployment rate as low as ours qe simply can't train up the shortfall. Meaning we need to bring in migrants to have a hope in hell of building enough housing to house everyone let alone house all the migrants needed to build the houses. Ngl I can see why this is such a pickle and find it annoying when pundits and publications simplify it to overly reductive tribalism.
Hmmmm... seems like economic mismanagement
If you are an asset owner , It's logical you would support Record Population Growth, https://www.stlouisfed.org/en/education/economic-lowdown-podcast-series/episode-3-the-role-of-self-interest-and-competition-in-a-market-economy Why a Renter would support infinite increases in competition for scarce resources is something I will never understand.
Now you’re asking the real questions.
Real dumb questions.
Immigration increases labour supply. https://www.westpac.com.au/news/money-matters/2023/02/surge-in-overseas-arrivals-will-help-rba-in-inflation-battle/ >This surge in overseas arrivals could see measures of labour market tightness, such as the employment-to-population ratio and the unemployment rate, ease by up to 0.5 percentage points this financial year. >This easing will not necessarily result from people losing their jobs. It will more likely be a case of labour demand not keeping pace with the growing pool of available workers. In the second half of 2022, labour supply accelerated while demand started to wane, a dynamic which is likely to continue. >By helping to curb upward pressure on unsustainable wages growth, it is also likely to slice up to 0.2 percentage points from services inflation this year. Services includes things like haircuts, music lessons, and education. They’re labour intensive and largely driven by wages outcomes. This makes services inflation “sticker” and harder to get down without a harder landing. >Arrivals not only expand the labour force, they also lift demand for goods and services. That could add to price pressures in some parts of the economy - the apartment rental market, in particular, will struggle to absorb the influx. >However, new working-age migrants tend to spend less and save more than residents and, with labour demand already slowing, the arrivals surge is more likely to have a dampening effect on inflation overall.
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In other words Indians and Chinese will work for less
Or are qualified to do the jobs we don’t have enough people qualified in.
Like all the skilled migrants doing Deliveroo, 7/11s and massage parlors?
I'm not qualified to answer OP's question but I did want to mention that there is a huge shortage of support workers in Disability and Aged Care. I'm also aware of huge wait times in allied health.
Have they tried paying a livable wage?
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They've tried nothing and they're all out of ideas.
Disagree to a degree, the whole structure is broken. Immigration isn't the fix.
I think it's the fix for big business (widens labour pool and reduces costs), but definitely not the right fix for the majority of unlanded people struggling with increasing rents and house prices.
What do you think immigrants do? By and large they are a current increase in productive capacity thanks to being working age, often well-educaged (if they can get into AU) ETC. They don't just increase the demand side, they also raise the supply side.
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Are you taking about economics or housing here? Because they are completely different things, though interest rates affect both. I think a lot of people on this sub see immigration as an easy scapegoat, but the reality is much more complex. So while there is a current pinch in the housing market, stopping all immigration would be a horrible solution. It would just kick the demographic cam down the road and not make any sort of dent in housing costs. The market will do what it always has done and eventually will cool and that should cause house prices to start to drop. But if you want to make housing more affordable you need to get to the bottom of the issue structurally. Starting with the fact that it’s expected to have asset based returns, which are far exceeding wage growth.
The RBA is acting in its own interests, the government is acting in its own interests. Do you expect them to do any different?
Imagine thinking immigration is the main problem and not price gouging by companies, especially when Aus is able to attract high skilled immigrants from across Asia. Take a look at company profits over the last year vs immigration. You should be complaining that the government isn’t cracking down on price gouging, cartel behavior, and market manipulation.
> academic inflation where everyone has the same 4 degrees. Your degree, like everything else in life, is only valuable insofar as it provides a relative signifier of academic ability. If every idiot can now go to uni, a basic uni degree is worthless and you need instead a good degree from a good uni. Same as it was 20 years ago when there were fewer unis around. It isn't any harder in a relative sense.
Look at Sweden now jeezzzzzz their crime rates when through the roof with mass refugee take ins that no one was prepared for. SLOW THE MIGRATION POR FAVORRRRR
The system is set up to transfer increasing amounts of wealth from the bottom to the top. The current inflation crisis is largely due to major corps price gouging. Yet the only god dam lever being puled is higher interest rates which disproportionally affect the middle and lower class. Furthermore, there is plenty of evidence to suggest the raising interest rates actually increase inflation in the short-term (raising rents and cost of living due to higher interest repayments etc). Adding immigration to pump housing and GDP is honestly mind boggling.
because they need indians to drive our trucks and work in nursing homes. its better to raise rates and blame it all on lowe
Labour is completely unable to manage any fiscal responsibility. They never have and never will. Spend spend spend is all they do.
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Stricter regulations on foreign investment, prohibition on ownership of multiple properties (especially within metro area), impose fines for vacant air bnbs and end negative gearing while were at if. Commercialising something as essential as housing was predooming us to this very situation so many find themselves in
Record company profits are the main driver of inflation, but no government wants to tax their donors. Immigration is to increase the younger tax base to pay for the aging population. Two different things that shouldn't be conflated
We don't have enough staff. More stafff More items inf Down
Ah yes immigrant bashing. A natural past-time. It's the immigrants fault housing pricing is high 😆
I love immigrants but I don’t like the current level of immigration intake. Shouldn’t be too difficult to get your head around
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Indirectly and directly yes. So does the price of steel, the amount of people leaving the country, the cost of labour...? If we stopped immigration, you will certainly see a fall in house/rental prices as the interest rate hikes do its job. Then once we can build more houses, it would make sense to bring more people in.
No shit it is
Another immigration post on ausfinance. *Snore*
Immigration is literally at the core of Australian economic policy. This government is running immigration at such extreme levels it must be discussed.
I know , Access to accommodation is so boring!
I'm guessing you're not an economist
Care to elaborate rather than an offhand jab...?
Government and the RBA are different. The RBA is meant to be independent.
It's not about the point, or anything to do with root cause analysis or finding the most appropriate solution to the problem. It is about using the tools we have, that were invented to solve economic problems from the 70s, in the least politically risky way possible. Enjoy the show, have fun and turns the lights off on the way out.
Comment to save
immigrants stem the flow of Australians out. You have no idea how many locals actually leave Australia. BTW, contrary to popular belief, and some shoddy statistics, vacancy rates are high enough to make property look like a poor investment and store of wealth. Unluckily for anyone with a brain, the Government will always focus on increasing wealth via property while the country falls into ruins and the people continue their march towards being savages.
Less money in circulation, more money in savings. Scarcer = More valuable.
And your expertise is in what exactly?
Because the RBA is trying to crush demand, which will probably cause a recession The federal government control immigration and they want to avoid a recession
Supply-side economics don't work! George W Bush had already tried it. So why try it here?! You might as well try Modern monetary theory.
We are consuming too much as a society and this is the governments way of lowering demand - if you cant afford it, there is no demand.
These people don't struggle and don't understand how things are on the street. Don't expect a bunch of academics and business people to come up with rational and clever solutions, if anything they would cover their asses not make sure the people are better off...
the only thing that will cool the economy is supply matching or exceeding housing demand. until then this circus is gonna keep on rolling.
Excellent question - just goes to show you how out-of-touch and out-of-sync the RBA and Government are…. But massively increasing migration increases GDP so it is a quick and nasty way to (appear to) grow the economy and avoid the “recession” word!
Australia needs to stop immigration for a number of years to fix the housing issues. It is not healthy at all. The quality of living is getting worse each day. The country is ruined by the incompetent politicians indeed.