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Economy

Feb 22, 2017

Dick Smith versus the migrants

Businessman Dick Smith attacking immigration as a threat to our economy is both wrong-headed and encourages anti-immigrant sentiment in the community.

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Dick Smith has long been a Little Australia man, steady in his opposition to immigration. If anything, he’s become more so in recent years, making videos, running a website, announcing a political party that had as its central tenet that immigration was a “giant Ponzi scheme” based on “perpetual growth”. There’s never been anything racial, discriminatory or bigoted about Smith’s hostility to immigration — it’s based on his economic and ecological views. But when the cancer of One Nation has returned to the Australian body politic, and anti-immigration populism is surging across the West and here, you’d hope Smith — who remains an iconic and influential figure for most Australians over 40 — would choose his arguments and facts with care.

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36 thoughts on “Dick Smith versus the migrants 

  1. Chris Dusseldorp

    But he’s the electronic Wizard!

  2. Hugh (Charlie) McColl

    Bernard, you concede that “a constant and exclusive focus on economic growth is unsustainable and needs reconsideration is certainly worthy of debate”, but choose only to discuss a narrow focus such as whether immigration “encourages economic growth”. For example, does immigration contribute to environmental degradation? Is the contribution out of proportion? In your last para you write that “Australia has always been an immigrant society — the world’s most successful one”, without any definition of what “successful” might mean. I don’t know about you but I don’t understand why it is that Australia should set out to increase its population in complete defiance of principles of sustainability. Governments of all stripes have paid ‘baby bonuses’ in one form or another at a time when we are flat out trying to find meaningful, let alone full time, employment for an older generation that is increasingly obviously unneeded. At the same time we are told that Japan is suffering (or its economy is) from a population slump but I see no evidence of a breakdown of the society there.

    So I wonder whether you would consider a slightly more nuanced argument, one where we might consider (say) halving the migrant intake for a number of years (leave the students, 457s etc as they are) and working on the infrastructure, employment, education and resources issues that are emerging while we also keep an eye on how Japan and several European countries deal with the, surely not insurmountable, issues that arise when population growth plateaus?

    1. Will

      A worthy comment for the most part, Charlie, but I’d take issue with your statement –
      “At the same time we are told that Japan is suffering (or its economy is) from a population slump but I see no evidence of a breakdown of the society there.”
      Having resided there and visited frequently I seriously doubt that there’s a more anomic society anywhere in the free world. And actually it does appear that’s largely the product of unending decades of economic torpor resulting from and feeding into the negative birth rate of a country that (for deeply ingrained racialist reasons) simply doesn’t do immigration. When I was last there for a couple of weeks a year ago the entire country just felt like one enormous floating old age home. I’d say Japan is the standout example of why in some circumstances immigration can be better than good.

      1. Hugh (Charlie) McColl

        Will, you introduced me to a word (anomic) that I had never heard of before. My dictionary tells me that anomy or anomie means: “lack of the usual social standards in group or person: hence anomic [from the Greek anomia (anomos lawless)”. I have only a couple of fleeting, but wonder filled experiences of Japan. There is nothing that would even tempt me to describe the country or the Japanese society as ‘lawless’. Nothing!

      2. Will

        Anomic societies aren’t lawless, Charlie. Rather, for individuals that comprise them, they are purposeless. (See https://en.wikipedia.org/wiki/Anomie)
        Japanese young adults today display almost no interest in the career, marriage, child-raising and community fixations that characterised the lives of their parents. It’s because the old social contract, a job for life in return for allegiance to a rigid but secure society, has disintegrated due to the complete disappearance of any trace of economic growth starting around three decades ago.
        Beneath the magical surface of neon lights, fresh seafood, historic temples and mountain vistas, life for the vast majority of Japanese locals is actually seriously grim and grueling. And increasingly, without any hope whatsoever of improvement for all but the most privileged few, widespread anomie is setting in. My own greatest worry is that without an altogether new political economy, this may be Australia’s future too.

        1. Hugh (Charlie) McColl

          Very interesting observation, Will, and I accept it on face value. Japan is not unique in its no-immigration stance but I wonder if it is possible to grow an economy without growing a population? I thought this was the ongoing ‘experiment’ in Japan.

    2. JMNO

      I agree we should cut the migration program down to the levels it has been in the past – 70-80,000 a year. This seems to be an absorbable number. And the idea that the 100,000 or so people that move into Melbourne each year (1 million over 10 years) does not put a strain on housing, schools and transport infrastructure can only be put forward by someone who doesn’t live in Sydney or Melbourne.

      Also read Peter Mares’ excellent book ‘Not Quite Australian’ about temporary migration to Australia. We need to cut that as well. Working Holidays need to go back to being just that – the chance for young people from other countries to come to Australia for a very long holiday and supplement their savings by working. It should stop being a de facto cheap labour program and substitute for recruiting and training locals in many industries such as hospitality. Rural labour needs could be met, partly through the WHM program but also with seasonal labour from the Pacific, as New Zealand does.
      There are also too many people on 457 visas not doing highly skilled work and the numbers here should be reduced and a time limit put on the time they stay here as temporary workers – max 4 years as a temporary entrant and then the employer should sponsor them for permanent residence if they are essential to the business. Otherwise they should go home. This used to be the policy. Too many on temporary visas still here after 8 years when really they should either become permanent or leave. One of the questions Mares asks is when does someone actually become an Australian and this is an issue that the Government has not faced up to – people here working, contributing, settling, but not entitled to the rights or responsibilities of residency.

  3. Robert Smith

    We can stop immigration easily – just kill the economy & nobody will want to come. Then Dick Smith will be happy.
    Someone who has a helicopter can’t preach about sustainability.

    1. Hugh (Charlie) McColl

      Apparently Robert, in Australia, nothing can or will stop immigration. In fact, it appears we are prepared to go to war, anybody’s war at any cost, in order to procure a new migrant/refugee stream.

  4. Nicholas

    There are ecological constraints that are already being exceeded. Infrastructure and services are already overwhelmed. It is reckless and mindless to advocate a continued large immigration intake. I propose that we cut the total migration intake to 100,000 per year, with 70,000 of those places going to refugee and other humanitarian visas, 15,000 skilled visas, and 15,000 family reunion visas. It is not ethical for Australia to grab large numbers of the highest skilled people from societies that desperately need to retain skilled people. We should be more generous to people in desperate need and less greedy about taking the highly skilled from other societies.
    Big businesses want large immigration because it is a lazy way to grow their profits. They don’t need to innovate better products or better ways of making things – they can just sit back and let population growth increase the size of the market they sell to.
    Politicians want large immigration because it is a great way to pretend that the economy is growing when in fact the real per capita performance of the economy is poor, the quality of the growth is poor, labour under-utilization is sky high, infrastructure and services are deteriorating, and the ecosystems are getting trashed.

    1. Decorum

      This appeal to the environment is regional NIMBYism, though, and about as convincing as appealing to drownings to rationalise Manus. Just as that argument founders on the question of what happens to the “saved” potential migrants, it has to be recognised that migrants don’t just materialise out of thin air – they come from other countries. If you’re concerned about the global environment you’ll want to look at the environmental footprint of a migrant in both source and destination countries. But nobody is interested in that calculation and I suspect most of these “concerned Australians” wrapping themselves in a green flag are not actually concerned with the global environment at all.

      Bernard is quite right that DS legitimises One Nation with this stuff and, while careful discussions about migration need to be had, they do need to be careful. It won’t be long until Reclaim Australia are crying crocodile tears about the environmental impact of migrants (alongside all the crime waves, of course.)

      1. Hugh (Charlie) McColl

        The Great Barrier Reef is not being destroyed by tourism or even the urbanisation, land clearing and political populism of coastal Queensland. The rapid, carbon-intensive, debt-ridden population expansion of the entire country is antithetical to sustainable development – anywhere in the world.

    2. Paddy Forsayeth

      Nicholas…spot on! Endless growth is not possible in any shape or form. I agree with you that we ought not to be taking their skilled and professional generation to enhance our material well being at the expense of the communities from where they come. Migration needs to be re-examined.

  5. drsmithy

    Almost everything we consume in this country is imported.

    How does doing each other’s nails and selling each other coffees pay for our cars, clothes, computers, appliances, entertainment, building materials,industrial machinery, food, etc ?

    Why do we need to import more workers when over a million people remain un- and underemployed ? Why are we worrying about a participation rate when half the jobs available are going to disappear in the next generation or two ?

    Manufacturing jobs don’t need to be about making cars or TVs. But they DO need to be about MAKING THINGS that we can sell to the rest of the world. Those things could be advanced robots. Those things could be high-end medical equipment. Those things could be software. Those are semantic details. The point is that swapping money with each other doesn’t, and never will, pay the bills.

    1. Decorum

      1. “Almost everything we consume in this country is imported” is an alt fact. That is, it is demonstrably and transparently false: check out any ABS or WB data on trade shares.
      2. Trade as a share of GDP in the US, for example, is less than 30%. So over 70% of US economic activity has nothing to do with selling stuff to foreigners to pay for stuff they import. Selling stuff – including services – to each other is the lion’s share of the US economy and they seem to be doing pretty well out of it. Trade is more important for us and does allow us to enjoy a higher standard of living than we otherwise would, but…
      3. We sell education to the rest of the world, for example, and lots of it. So no, exports do not need to be about MAKING THINGS. (And it’s not just a semantic point when you redefine intangibles like software to fit your worldview.)

      1. drsmithy

        Australia has run trade deficits for most of its existence.

        Nearly everything we consume – clothes, shoes, computers, phones, cars, fuel, furniture, building materials, appliances, garden tools, industrial machinery, food, is imported. Heck, even most of our intangibles like software and culture (music, movies, TV shows, etc) are imported.

        The US still makes a lot of things itself. Cars, appliances, clothes, etc, etc. So its internal trade of those things is meaningful and self sustaining.

        We do not. So all those people selling coffee to each other, are reliant on imports (coffee beans, espresso machines, etc) to survive. This is true for pretty much all our services. Heck, even the parasitic FIRE sector is reliant on imported capital.

        The US economy is doing OK ? Like ours, it is weighed down by a mountain of private debt. Real wages haven’t improved in decades and are being slowly consumed by interest payments. Un- and under-employment is enormous. Public infrastructure is insufficient and failing. Nearly all the economic benefit of the last generation or two of progress have flowed to the top fraction of a percent of society.

        The whole thing is held up only by a facade of easy credit, which will eventually crack.

        But like I said, the US at least has sufficient resources, expertise and will internally to rebuild itself. We’ve got a country full of people who think a balanced economy is bankers making a 110%LVR loans to contract FIFO mine workers so they can negatively gear investment properties to have the cashflow to buy a Hilux, a Jetski and a Harley, then take a holiday in Bali.

        Finally, we don’t sell education to the rest of the world anymore, we sell citizenship and property. Twenty years ago we had academic institutions with a level of respect – even if only second-tier – internationally. Now we have degree factories and shonky “education” providers running borderline slave labour scams.

        1. Matt Willis

          “Almost everything we consume in this country is imported.”

          Seems like your arguing against yourself. Apparently we “import everything” and provide nothing back to the rest of the world in terms of exports. Sounds like a sweet deal.

          But alas, those service jobs, like education (if you wish to count it as an export) are wealth-creating and do help pay for our imports.

          As to the broader point, why is manufacturing a nail-buffer in a factory considered a “real job” while doing someone’s nails “not a real job”?

  6. Nicholas

    “Who’ll work in IT companies, or cook in our massive cafe and restaurant sector? Who’ll work in our hospitals and aged care facilities, looking after elderly and ill Australians?”

    There are currently two million* Australians whose desires for paid work are not being met. Let’s start with them. We can and should recruit and train the people we need locally.

    * labour under-utilization in Australia is currently two million people, which comprises 1.1 million under-employed people, 700,000 unemployed, and 200,000 hidden unemployed. These are people who are expressing a desire for paid work but are not getting what they want.

    1. Woopwoop

      Exactly. Aren’t 457 visas meant for skills that locals don’t have? No cooks, aged care workers or IT workers here already?

  7. Damien

    Bernard criticises Smith’s knee-jerk binary arguments and then responds with a few of his own.

    “Who’ll work in IT companies”…er, our IT graduates would if they could compete with the 457 Visa workers brought in specifically to undercut their pay. If you’re wondering why IT enrolments are falling, look no further…
    http://www.smh.com.au/business/workplace-relations/proportion-of-indian-it-workers-on-457-visas-rock-bottom-pay-triples-20161202-gt2nso.html

    As for the services “industry”, the argument isn’t about whether it’s “real” work. The argument is whether it is “value adding”, ie: an industry that creates the much vaunted “economic growth” it claims.

    Manufacturing, by its nature, adds value to raw materials.
    Services, by their nature, shuffle money around between providers and consumers.
    Financial services, by their nature, create consumer debt that gives the illusion that shuffling money around is “growing” the economy.

    The ugly tendency to exclusively blame immigration is the inevitable knee-jerk binary response to the knee-jerk binary economic arguments of the sort that Bernard presents.

    And until one side is willing to give some ground it is just going to get worse. I’m not holding my breath.

    1. CML

      You are certainly correct about the IT situation, Damien.
      Indian 457 visa entrants have killed the profession for young Australian citizens…all that is left is the public service…and that is only because you must be an Oz citizen to be accepted!
      I heard today that the doctors are now complaining that there are no positions for newly graduated doctors from our universities here, so they want all medical 457 visas and migration to cease…except where highly specialised skills are needed. No doubt, they will get their way, but most professions with lesser bargaining power, will not. Nursing is a good example of the latter…we don’t need any more nurses because we don’t have fulltime jobs for our own graduates.
      This nonsense has to stop…as has been said by others, we should drastically reduce out immigration intake for the next few years until our current well educated young people have jobs!!

  8. @pfh007

    Dick Smith versus the migrants?

    It does not sound like it. Mr Smith sounds like he is opposed to a rate of immigration that is excessive.

    The problem for Mr Keane is that it is very hard to argue against that proposition. While migration does increase GDP (just about everything does) the GDP per capita has been falling or flat lining as the Australian population has swelled since Howard gave a Big Australia the greenlight. Considering we don’t do much beyond financial services and digging up minerals the butter is only going to be spread more thinly.

    Arguing that we should have done better in building lots of expensive infrastructure to support very high rates of immigration does not change the fact that we did not. Plus I don’t recall ANY of the major parties taking policies to an election arguing that taxpayers should pay more tax to build new infrastructure to support a high population growth rate. Perhaps, they don’t take those kinds of policies to elections because they know what the reaction will be.

    As for house prices it is fair to say that an excessively high rate of immigration does not provide a full explanation (the massive unproductive capital inflows that Mr Keane supports enthusiastically as a “free market man” are much more responsible for that) but it is a significant part of the mix as low residential vacancy rates help justify property speculation and those vacancy rates have remained very tight despite massive levels of construction in Melbourne and Sydney.

    It is disappointing that Mr Keane could not resist the temptation to associate, however gently, concerns about an excessively high rate of immigration with ‘racism’ and ‘xenophobia’ but then that is what we have come to expect from the neoliberal Big Australia spruikers

  9. AR

    BK is a prime example of an apparently intelligent person who is subject to irrational monomanias – in his case neolib phantasies, fear of public health nanny and who knows, maybe fluffy bunnies too.
    When the Rodent was stealing PHON’s clothes in 1996 he campaigned on reducing immigration but of course that was just a non core promise.
    In the 20 years since then, @ 200K pa that is a quarter of our current population and does NOT include family reunion who come on a different visa class (110-115 since you ask) and as for those 400K ‘jerb’ stealers on 457s, how could they possibly be responsible for overcrowding and housing crises.
    Other commenters above detail the environmental constraints which we have been exceeding since 1960.
    Never mind, BK, sooner or later the mudorc will notice your desperate job applications and then you’ll really be able to indulge your darkest deleriums.

  10. james ross

    “…a mum trying to supplement the family’s income by pulling a few shifts if she can afford the childcare…” Come on Bernard, we need to get passed the idea that the burden of childcare cost should fall on the mother if we seriously want to improve workforce participation and address the wage gap.

  11. zut alors

    I admire much about Dick Smith but he appears off piste regarding the value of service industries.

    In the next decades cleaners, nail-workers & hairdressers/barbers will be amongst the fortunate ones who are guaranteed jobs & not replaced by automation or robots. A good example comes via Foxconn who make Apple products in China – they announced 70% of their assembly line will be robotic before 2020. So much for workers who ‘make things’.

    The service industries where work is personalised (commercial/house cleaning, nails, grooming) will be amongst the most immune in our economy.

  12. Scott Grant

    Most of my criticisms have been made. I will concentrate on one phrase: “economists would be intrigued to learn that migration is entirely to blame for poor affordability”. The problem as I see it is that economists, as a rule, do not EVER mention the contribution that excessive population growth makes to housing affordability.

    Well done, Bernard, for mentioning the unmentionable, even if only to rail against it for reasons that escape me.

    For so many, in fact almost all commentators, population growth, like economic growth, is taken as a given – an immutable law of nature that we must simply accept and deal with. It is a bit like arguing that we should simply adapt to climate change and not attempt to limit it. I think it is there somewhere in those lists of the stages of climate denialism.

    I would hope that anyone who thinks seriously about the problem would agree that the historically high cost of housing in Australia has many causes. What really gets me riled is when apparently serious people neglect to mention one or more of the several causes. And if Dick Smith neglects to mention other factors such as tax policy, foreign investment, interest rates, planning regulations and infrastructure planning (I don’t know if he does, I am hypothesizing), then I would forgive him on the basis that population growth is too often neglected.

  13. jdotpierce@bigpond.com

    I’m telling you you’re dreaming, Bernard. Bulk marginal electorates in the suburbs and outer ‘burbs are populated by people who can’t leave the house from four to six thirty in the afternoon on penalty of third world traffic snarls. Sooner or later they are going to jerry that while Howard was beating up asylum seekers at the front door he was shoehorning migrants in the back door by the planeload. Try visiting a national park, river, beach , boat ramp etc. Either Labor or the Libs blink and we have a debate around population growth (with the view to cutting it) and sustainability or Hanson sits back and becomes the beneficiary of the disaffection and the debate deteriorates to one of race

  14. Dog's Breakfast

    Others have poked holes in this argument, including the arbitrary binary nature of it. Of course high immigration is a significant factor in house prices BK. All immigration, not just the 200K but the students, the 457’s etc.

    The students do earn us real income, fine, the 457’s just add to demand but can be excused if they are doing work that cannot be done by the existing population, and for IT and so many industries that are big users of 457’s, that is NOT the case. It’s a complex problem, but there cannot be any doubt that high immigration increases demand for existing housing stock which pushes up prices. It’s actually that simple, and it’s the only part of it that is.

    There are many other reasons, but the need for high immigration rates has never been explained, has never been set as policy and in fact was brought in by the guy who was railing against foreigners, mainly those who came by boat.

    Where is the argument FOR high immigration. Apart from the one issue of demographic change, which is only for this one period of boomers retiring, what benefit does it bring this wide, brown land? I don’t see the great benefits, other than denying a lot of people aready here some steady or well paid employment.

    And get off the services versus ‘making things’ furphy. It’s real work, but that isn’t at the crux of the matter. We need more jobs, not more people.

    And as for ‘who is going to cook in our restaurants and cafes’? For crying out loud BK, don’t you watch TV, every second hipster is a budding chef these days.

  15. Woopwoop

    Bernard, Bernard, time to drop the neo-liberal ideas you learned at uni. read Thomas Kuhn’s “Structure of Scientific Revolutions”.
    You yourself mention that migrants are in the very age bracket likely to want to buy a house, for one.

  16. Peter Hamish

    Follow the money. Any commercially vested industry group is a candidate to profit from immigration at any level. You can throw the church and other religious groups in with that one, too.
    ” What we need is a great big melting pot, big enough to fill the world and all it’s got.”
    Sounds fine to me, but…….

  17. Mark Allen

    Is Dick Smith really blaming migrants or is he blaming a population policy that is aimed at boosting GDP? Any discussion on the impact of population should never be about blaming immigrants (considering that we are a nation of immigrants living on stolen land, it would mean that we are pretty much all to blame anyway). It should only be about determining what the best policies should be as we move into the future. We have a very fast rate of population growth in Australia and it is focussed on a relatively small part of the country so the conversation about how fast our population should grow in relation to climate change policy, biodiversity, infrastructure targets and sustainable planning targets should be an ongoing one. Sure, Dick Smith doesn’t focus on the whole picture but to cast him off as someone who blames migrants for our woes I think is problematic. It is possible to embrace multiculturalism, celebrate the fact that we are a nation of migrants and also have a rational discussion about how we should frame population policy in a rapidly changing world.

    1. AssemblyLineHuman

      He is blaming immigration policy. There is nothing “xenophobic” about attacking bad government policy.

      Our rate of GDP growth is in decline, so the GDP argument doesn’t stand well. Also, one has to ask what benefit is there from artificially inflated GDP numbers, if you personally can’t afford a home, or have all your income locked into a 30 year mortgage for a place 1hour+ away from work.

      The point of GDP growth is to enable us to have more. If this results in us being deprived of property ownership and financial security, its not really a victory, is it?

  18. Matt Willis

    The services sector figures near the end are way way off…

  19. AssemblyLineHuman

    Dick Smiths analysis of the housing crisis, and it is a crisis, most closely matches what we observe. It isn’t just housing where immigration has an impact, it is on infrastructure, on our transport system and schools, and we can observe here rapid increased utilisation.

    Australia currently has an elevated net yearly intake of immigrants, a trend started by Howard at the beginning of the last decade, thereabouts. This seems to coincide with a rise in house prices, which has continued,more or less, unabated since that time. The immigration levels have also remained high.

    In Melbourne, the number of dwellings constructed is quite high. The CBD’s skyline is filled with cranes, and apartment towers are popping up everywhere. There is nary a suburban block, aside from the urban fringes, where there isn’t some subdivision, townhouses or units going up. The rate of construction is observably higher than it has been.

    Yet the prices are high? In order for this construction not to result in a glut, and therefore a fall in prices, there must be demand. Where is this demand coming from?

    Here we can see the it must be immigration. The recent rise in the birthrate is too recent to account for this demand. Our supply can barely keep up, but even if it did keep up, it would still lead to elevated prices.

    Subdivision, and increasing supply by putting more dwellings on top of what were free standing homes doesn’t reduce prices, but instead, increases it. By allowing subdivision, and loosening the restrictions on what can be built on former 1/4 acre blocks, the potential profit to be gained through this subdivision increases, and therefore, the price the investor is willing to pay increases. If we increase supply by allowing say 6 units on a suburban block instead of a maximum of two, then the potential profit from the purchase of the block increases dramatically, as does the price which the investor can pay and still turn a profit overall. The land price increases, which increases the cost of housing overall.

    Increasing supply isn’t working, and unless we decentralise, it won’t work. The solution must be on the demand side of the equation, and it here where Dick Smith is correctly highlighting the problems in our policy.

  20. Bill Shaw

    I stopped listening to Dick Smith long ago. The man who vigorously promoted “Buy Australian” yet made his fortune importing goods.

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