A record wave of immigration is making the average Australian poorer – and big banks richer – by obscuring the fact that the economy is already in an official recession, economists say.
New data from the Australian Bureau of Statistics released Wednesday shows the economy contracted by 0.3 percent, per capita, in the June quarter, followed by a 0.3 percent decline in the quarter from March.
That meant Australia is officially in a per capita recession, where gross domestic product, or output, is declining for every individual.
On an annual basis, Australia’s GDP per capita contracted by 0.3 percent, following 12 Reserve Bank rate hikes since May 2022.
Shane Oliver, AMP’s chief economist, said without high immigration Australia would be in a technical recession, with the economy contracting for two quarters in a row.
“The increase in immigration and population is masking… which could otherwise have been a much more serious slowdown in the economy, if not a recession,” he told Daily Mail Australia.
“We’re pumping more people into it, but we’re not producing more stuff per person.
‘These can be problems such as traffic congestion, poor housing affordability, or people who have to live far away from their workplace.’
A record wave of immigration is making the average Australian poorer – and big banks richer – by obscuring the fact that the economy is already in an official recession, economists say (pictured is Sydney’s Wynyard train station at rush hour)
While the economy as a whole is still growing, weaker output per person, or GDP per capita, means the average Australian is unlikely to feel richer.
“Opening the immigration tap has helped in many ways – it has helped with some labor market shortages – but there is a cost to it,” said Dr Oliver.
An average Australian would say, “The economy may be bigger, but I don’t feel any better off”.
“It’s GDP per capita growth that really counts when it comes to people’s living standards.”
The measure of GDP per capita differs from a technical recession, defined as a contraction in gross domestic product for two consecutive quarters, not seen since the summer 2020 wildfires and Covid lockdowns.
A record 353,670 permanent and long-term migrants moved to Australia in 2022-2023, the highest ever figure for a financial year.
This was slightly less than the Treasury Department’s May forecast of 400,000, but it showed that the government is relying on strong population growth to boost economic activity and tax collection.
David Llewellyn-Smith, the chief strategist of MB Super and Nucleus WealthAccording to the ministry, the Treasury Department wanted high immigration for revenue, while the big banks and developers were eager to have more potential customers.
“It is at the expense of the vast majority of Australians,” he told Daily Mail Australia.
“The winners of that immigration model – even in a per capita recession – are the banks, retailers and developers and when you add those three together you get what is known as the growth lobby and they push for the model to continue. because it’s good. for them.’
The Business Council of Australia has been lobbying for high levels of immigration on behalf of major corporations, including the major banks.
Mr Llewellyn-Smith said high immigration meant the federal government was running a budget surplus as Victoria and New South Wales, the states hosting the most immigrants, had to pay for new transport infrastructure.
Both the Coalition and the Workers’ Party in government favored high immigration, while the Greens, with an inner-city support base, are reluctant to criticize high population growth, despite being the party of the environment.
“Unfortunately, the growth lobby has taken hold of all Canberra parties at once,” said Llewellyn-Smith.
“There just hasn’t been enough grassroots agitation to change that.”
Dr. Oliver said the fact that Australia was now in a per capita recession highlighted how high immigration caused a drop in living standards as skilled migrants and international students poured in.
“We blow up our economy by pumping more people into it, but it doesn’t give us growth in the standard of living per person. We are actually going backwards and productivity is also going down,” he said.
New data from the Australian Bureau of Statistics released Wednesday shows the economy contracted by 0.3 percent, per capita, in the June quarter, followed by a 0.3 percent decline in the quarter from March. That meant Australia is officially in a per capita recession, where gross domestic product, or output, is declining for each individual (pictured is Sydney commuters)
GDP itself continued to grow, rising 0.4 percent in the June quarter and 0.4 percent in the March quarter.
But the annual increase of 2.1 percent was well below the long-term average of 3 percent.
National accounts ABS data also showed that productivity fell by 2 percent in the June quarter, on a GDP per hour worked basis, after a fall of 0.4 percent in the March quarter and a drop of 1.3 percent in the December quarter.
Annual productivity fell by 3.6 percent.
Dr. Oliver estimated that upcoming ABS data would show Australia’s population to grow at 2.4 percent in the year to June, which would be among the highest in the developed world, with only Canada opting for even higher immigration-driven growth .