Australia’s immigration policy is changing. Currently, targets sit at 150,000 a year, but there’s been talk of upping that to as many as 400,000 a year, which seems a lot. So why is that deemed good, or even necessary, for the economy?
It all comes down to debt. During recent times we’ve printed $1 trillion in debt as a nation. In 1996 we went into recession with debt of $96 billion and now we have more than 10 times that amount of debt printed in just the last two years.
And as interest rates rise, the government also has to pay more money to service that. So now it needs a way to pay down and minimise that debt.
Lesser of two evils?
The first of two ways to achieve the above is to hyperinflate the currency to make the debt seem less. This may involve charging people more money in tax. This would mean less money to spend on mortgages, cars, bills, food and so on. This would lead to recession because people are already struggling as it is.
The other way is to have more taxpayers in the economy to contribute to that system. That means new migrants come in and share the load of the extra government income required. This is the preferred option.
What are the flow-on effects?
The reason it’s a good thing to bring in new migrants is that we cannot reproduce and grow our population fast enough to take care of our bigger tax bill.
But what happens when they bring in those hundreds of thousands of extra people?
Say 200,000 come in. That is an influx about the size of Townsville. Say it’s 400,000 people. That would be about the size of the Gold Coast area. If we were to start bringing in another Gold Coast worth of people each year, imagine what that would look like. Think about the amount of infrastructure in the Gold Coast. The shops, the units, people, roads and so on. If we’re bringing that in to Australia every year, it will only take 3 years to reach the size of another Perth or Adelaide.
In a decade, it would be the size of Qld as a whole.
So, where are we going to house these people? Where will they work?
Builders are dropping like flies, people are buying blocks of land but can no longer afford to build on them and there is an existing undersupply of property. So an influx of migrants will create an even greater level of pent-up demand for property. And with that demand comes the potential for further value growth and rental income for property investors.
They will be like a living, breathing stimulus package for the economy and property markets.