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No wages growth, but we keep pushing population growth

By Eric Claus - posted Thursday, 1 August 2019

The HILDA report, released this week, showed that median disposable income in Australia dropped by $542 from 2009 to 2017, despite the fact that Australia has had the highest population growth rate in the developed world, other than tiny Luxembourg.

The Business Council of Australia (BCA) released a report in April entitled "A plan for a stronger Australia," that included statements such as:

The intake of permanent migrants should not be dramatically cut, rather it should be set to support population growth around the long-term average. The Business Council supports sustainable population growth in our cities and regions. (page 87/164)

In fact, immigration doesn't just deliver growth in an absolute sense, it also adds to growth per person. (page 86/164)


High population growth certainly hasn't delivered growth in disposable income per person, even as growth in profits has been substantial. The BCA tries to avoid the drop in disposable income, by always talking about increases in Gross Domestic Product (GDP)

They think they can fool us into thinking that if GDP goes up, we are all going to get richer. We're not.

In the past 20 years GDP has increased about 5.9% per year, but wages have increased only 1.6% per year during that time and recently not at all. Recently we've caught on that a big factor in GDP growth, was population growth. Now population growth spruikers have been using GDP/capita, which has been about 4.4% per year in the past 20 years. That still falls far short of your wages increase of 1.6% ($900 per year).

Even when their arguments are pathetically weak, the Business Council of Australia pushes GDP/capita like we are all getting rich. Their recent call for higher population says if we don't have high migration, our GDP/capita will be 7% less by 2060 ($5000), but we know that GDP/capita isn't wages. Wages are not going up.

The second reason is that inconveniences and erosions of our standard of living such as water restrictions, sitting in traffic, not finding a parking place close to the beach and waiting for service aren't included in the GDP. That is just your tough luck. Paying higher prices for housing, energy, food and metals (so most manufactured goods) actually makes the GDP higher, giving the impression that we are getting richer, when we are getting poorer. The path we are headed down is "work harder to buy less stuff," but the GDP goes up, so they think we will believe we will be better off. We won't.

The media has commented on the HILDA report in somewhat startled tones, but the Productivity Commission predicted this result in 2006. The study, Economic Impacts of Migration and Population Growth, concluded that:


Economic gains are mostly accrued to the skilled migrants and capital owners. The incomes of the existing resident workers grow more slowly than would otherwise be the case. (page 151)

The Productivity Commission also clearly explains why the BCA (read: the capital owners) are so keen to increase immigration and population.

The HILDA report highlights the state of Australian incomes and economic well-being, but doesn't cover some of the other impacts that population growth has on our standard of living. Water restrictions went into effect in Sydney on June 1st. Make no mistake the reason is because Sydney's population has increased dramatically in the past 20 years. If Sydney's population was at its 1999 level, there would be no water restrictions.

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About the Author

Eric Claus has worked in civil and environmental engineering for over 20 years.

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