Category: Economics

“You can check out any time you want, but you can never leave“.

One wonders what the likelihood is of this idea being successfully implemented and being successful in its outcomes;

A Government proposal to mandate immigrants live in regional areas.

For some mysterious reason, known only to a select few people with massive intellects, new immigrants to Australia almost exclusively favour the largest cities as their first choice when selecting an area to move to.

To be more specific, the they favour the two largest cities; Melbourne and Sydney.

This causes significant headaches for politicians as they are required to ensure infrastructure and essential services are in place and planned commensurate to the likely population levels in each area.

There are other headaches to be had for those poor hard-working politicians too. Specifically, the problem that the economies of their regional constituencies are being “hollowed out” as young people increasingly vote with their feet as soon as they are able and leave their rural hometown for life in the busy metropolitan areas (no, we’re not talking about you Adelaide, sit down).

There’s a critical mass problem in regional Australia where there needs to be farmers and farm workers to grow the produce the city slickers want to eat but providing quality infrastructure services, ensuring there’s good medical and dental care, maintaining a public school system, etc. becomes increasingly expensive relative to the economies of scale that can be achieved in higher density areas.

To a certain extent, t’was always thus the world over. Australia has an additional nuance to this due to her physical size and lower density of population distributed outside the main conurbations.

Over the very long term, one can imagine the solution to Kim Stanley-Robinson’s Malthusian Fallacy will be found using technology and scientific breakthroughs to automate agricultural production reduce the reliance on humans performing traditional roles on farms.

Perhaps the problem is only a 10 to 20 year one then, after which everyone can live in in the megacity with hot and cold running soy decaf and kale smoothies on demand.

Nonetheless, there’s a bit of a problem to be solved here; the politicians don’t want to hamstring economic growth. One way to ensure the GDP figures keep rising is to increase the number of productive workers contributing to it. Put bluntly, they have to persuade the existing population to either throw away their birth control pills or accept a constant flow of immigration.

Note, the politicians aren’t offering a third or fourth option to have flat/contracting GDP growth, or economic growth built on a technological solution to productivity. The parameters of the debate are constrained within an Overton Window to “rising GDP is good, immigration is the solution to achieve this“.

Which is, of course, the the reason why the debate has turned to methods to encourage immigrants to live in places the existing population, especially the politicians, don’t want to. Our old friend expressed versus revealed preferences is at work again.

Back to our original question then, what’s the chances it’ll work?

Some categories of Australian immigration visas already mandate and enforce an element of rural living. There is a “working holiday visa” which rewards the holder to a longer duration of stay if they spend a period of their time performing seasonal work on remote farms. So there is precedent.

There’s some not insignificant differences between what is currently in place and what might be proposed however, not least of which is the demographics involved. The seasonal workers tend to be young people, often single and with no dependents. They are here for a good time not a long time.

The new immigrants who will be mandated to live in the regional areas are likely to be older, married and parents of dependent children. According to Maslow’s Hierarchy of Needs, their prime concern is to going to be less focused on earning enough to spend the weekend partying on MDMA and browsing what’s on offer on Tinder but more about improving the quality of their housing, the education of their children and affording the airfare back to their country of origin every couple of years.

If the employment options, housing, schools, medical care and ability to save money are sub-optimal in Buttfucksville, Queen’sland, they are going to pack up their belongings and move to the city.

How might the government prevent this, do we think? Checkpoints on all the major roads? Random visa checks? Further requirements on employers to perform the role of Immigration Officer?

Perhaps there’s a clue in the incentives for the working holiday visa workers? Perhaps the initial visa granted is temporary and it can only be converted to permanent residence status after a defined and proven period living in the regional area? What might go wrong with that idea?

Bill’s Opinion

Mandating where immigrants live when they have made the huge personal decision to relocate countries feels like a reasonable idea but it relies on so many factors to be aligned to ensure success;

What if there are no job vacancies in the area, what if the available jobs aren’t suitable for the immigrants’ skills or don’t pay enough to make life sustainable to support their families?

What if the education options available can’t cope with the additional demands of children living in households where English isn’t spoken?

These people will, quite reasonably, claim special status and exemptions due to the government not holding up their end of the bargain.

Here’s a prediction worth noting; the Australian government’s proposals, whatever they are, will not result in a significant shift in the location immigrants live and work, ether due to gaming of the system or failure of an arm of government to plan effectively and exemptions being granted as a consequence.

But the most interesting aspect about this debate is what we are not talking about; what is the full range of solutions to the problem of falling productivity and why aren’t we being shown these, if only for the opportunity to agree that immigration is the only solution?

Open the Overton Window!

Mission Australia are running a “Chugger” (“charity mugger”) funding campaign on the streets of Australia.

Young backpackers in purple T-shirts are pestering passers by with statistics about child poverty.

Where is the child poverty they are trying to reduce? Africa? Asia? South America?

Nope. Australia.

No really, according to Mission Australia, one in six Australian children are living in poverty.

Does that pass the sniff test? If you live in or have ever visited Australia, have you ever seen extreme poverty to that level?

No? Perhaps you didn’t visit the right locations. After all, poor people don’t tend to live in the apartments overlooking the Opera House, one supposes.

But one in six is still a lot of kids, where might they all be living if they aren’t immediately obvious to people in the main population centres?

Ah, perhaps the statistic is due to terrible poverty and deprivation in the Aboriginal townships?

Well, maybe but given that only 3.3% of the population is Aboriginal, that doesn’t make sense either.

Where are all these Aussie kids who are living in poverty then? There’s got to be a small city’s worth hiding in plain sight.

This is just a working hypothesis, but maybe there’s a clue to be found in the definition of the word “poverty”.

About halfway down their webpage, Mission Australia repeat the claim and point to this study as the source.

How is “poverty” defined in the Acoss study?

Ah;

So, poverty is defined as relative to other people, and before receipt of public housing, tax credits, unemployment benefits, Medicare and free schooling.

Of course, when your definition of poverty is based on what everyone else is earning, it’s hardly surprising that statements such as the one above, “Internationally, Australia’s poverty rate remains above the OECD average, despite our relative prosperity” can be written without a hint of irony.

Bill’s Opinion

Relative poverty isn’t poverty, it’s envy.

Anyone who has visited Africa, Asia or South America can tell you what child poverty looks like and it certainly isn’t what Mission Australia claims it is.

I find it highly unlikely that Acoss or Mission Australia were unaware of the statistical obfuscation they had to commit to print T-shirts claiming one in six Australian children live in poverty.

What might their motivation be for such mendacity, do we think?