The world’s media seem mighty surprised that China’s population shrank in 2022. It’s as if nobody saw it coming…as if demographic change crept up on journalists over the past few decades and then shouted ‘boo!’ on Tuesday…
At the same time, the commentariat is also focusing on Australia’s anticipated surge in immigration. And they’re not being very nice about it, what with inflation, housing shortages, and environmental concerns plaguing us already. The sorts of things South-East Queenslanders have been whining about since the border with New South Wales was opened, in other words…
Anyway, it’s a good week for a newsletter writer. You can pick your doom — immigration or demographic decline.
But, ever the contrarian, I have for once come to praise Caesar, not to bury him. The Caesar specified, for once, is the relationship between immigration and demographic disaster. Not to forget my favourite topic, we’ll also weave in some sovereign debt crisis into the picture too.
You see, I believe that Australia is going to be one of the few developed nations in the world to escape a major sovereign debt crisis caused by declining demographics. And we’ll pull off the latest lucky escape thanks to the immigration we like to complain about — whinging poms and all that…or do I have that example confused?
Anyway, having reached my conclusion, let’s go looking for factoids to support it…
Firstly, yes, immigration to Australia is surging. And it’s partly my fault, having had daughters in the UK and Japan. But in 2023, the government seems to be trying to make up for lost time during the pandemic, when it closed borders.
As with all government policies, that one eventually backfired too. A lockout has turned into an immigration free-for all. From The Guardian: ‘Australia on track for 2023 migration boom as arrivals dwarf Treasury forecasts, ex-official says’.
I was recently shocked to find out how easy it is to get an Australian working holiday visa. In the UK, Japanese people have to enter a bizarre sort of lottery on a particular day of the year…
Despite the openness, Australians should consider themselves privileged when it comes to their immigration system. At least we know how many people are migrating to Australia. In the UK, they haven’t got a clue how many people are in the country, don’t bother counting migrants, and try to use surveys to make up for the lack of data…the result of the gap between statistics and experienced reality is known as Brexit.
Despite our privileged status in Australia, ‘Immigration is not the answer to our troubles’, explains the Australian newspaper. And that’s the polite version of the argument, if you check the other headlines making the rounds.
I’m not so sure it’s true, though. In fact, I suspect whopping immigration is what’ll save Australia from the greatest challenges the world faces over the next decade. Those presented by the combination of demographics and debt.
You see, we face something that has never happened before in human history. The absolute number of taxpayers is going to begin declining in a long list of developed nations. The amount of debt per taxpayer is going to begin to rise.
Historically, governments have been able to borrow money under the presumption that there’ll be an ever-growing body of taxpayers to pay it off. In fact, the growth of the population would, over time, make the past debt look tiny on a per person basis.
Today, politicians are continuing to borrow money under that presumption. But the future taxpayers just aren’t going to be there.
Unless, of course, you import them…in a manner of speaking.
Now, it’s pretty tough to force people to move to your country. Which divides the developed world dealing with declining demographics and too much debt into two categories. Those nations that will be able to use immigration to deal with their government debt burden, and those that won’t, because people don’t want to move there.
Those that won’t be able to resort to importing taxpayers will have to default or inflate away their government debt eventually. Which means a major financial, economic, and social crisis. One that will infect Australia’s economy and financial system, wherever it happens, so be ready for it.
But Australia is probably at the very top of the list of desirable places to become a taxpayer. Which is ironic given the state of our taxation system. A law school lecturer, and my own Australian citizenship application character reference provider, once told me that Australian taxation legislation is the largest piece of law in the world.
Anyway, would you rather have a government that goes bust or the problems associated with lots of immigration of willing taxpayers?
Personally, I’d like both, but I’m not much of an interest group given my voting behaviour. I just pick up the ballot to get my name ticked off, walk past the curtains, and put it in the appropriately named ‘bin’, which collects other people’s politically correct preferences.
Which is better than what many more creative Australians do, I learned when forced to scrutineer at a state election. Sadly, ‘Warwick Cappa’ was never elected…
The real point is that the rest of Australia can answer the question about having to choose between a sovereign debt crisis and immigration in the manner it so chooses. And, given it’ll actually be politicians making a choice, I don’t think they’ll choose a sovereign debt crisis.
‘We’ will choose some balance of the two, of course, it’s not a binary choice of one or the other. It’s a question of degrees. How much immigration does an overindebted koala need to bear?
What sort of changes am I expecting?
Well, right now, a lot of people in Australia are waiting to become taxpayers. And they want to become taxpayers. And they would be taxpayers. But their visas prohibit them from working.
For example, those who enter Australia on a tourist visa, and then apply to stay, remain on the terms of their tourist visa until the visa they’re applying for is approved or rejected. And, because the immigration authorities are a bit slow, they remain in this limbo for between one and two years, last time I checked.
I know of one case where such a person went to work in the UK for two years while waiting for Australian visa approval. The tax that person paid could’ve been paid here, but the rules are the rules. Unless you’re a politician and can change them.
The overall message today is that nations will soon clamour for immigrants because the alternative will be downright dangerous. Australia’s latest immigration figures suggest that’s beginning already. We had better get used to it.
Until next time,
Editor, The Daily Reckoning Australia Weekend