Watch it all here!
Amid quips of whinging farmers, painful two-speed bicycle analogies and “slavery” at the IPA, the panel, consisting of James Paterson, W. Max Corden, George Megalogenis, Neville Norman, Stephen Koukoulas and moderator Stephen Long, gave the ESSA Q&A audience quite a few insights into the immigration and two-speed economy debates currently embroiling Australia.
“[Skilled] immigration is a free lunch for Australia” – Stephen Koukoulas
Long kicked off the immigration debate with the question of Australia’s ideal population size. The panel unanimously advocated for immigration, with Megalogensis predicting that our population would reach 30M by 2050. Norman, always quick to point out that whether something was considered “good” or not depended on the goals of the decision makers, flatly refused to posit a figure on expected population levels.
However, everyone agreed that in order to reap the benefits of immigration, adequate town planning (especially regarding infrastructure) must take precedence. Corden urged us to Google his paper “40 million Aussies? The Immigration debate revisited” which, he reassured us, was a comprehensive discussion of the key topics at hand, noting the importance of water pricing for agricultural use if Australia went for a larger population.
“Immigration is the best way to solve poverty… it’s better than foreign aid” – James Paterson
Although Paterson agreed with the benefits of immigration, he took a more practical approach. He observed that immigration of skilled labour was a difficult thing to “sell” to Australia since the Average Joe was a “sucker for the fixed pool argument”, in other words, the belief that immigrants take away from jobs rather than adding to them.
“There is a lot of resistance to the new wave” – George Megalogensis
The debate naturally turned to the other type of immigration, of labour that was less than fully formed and of the acceptance of refugees. Megalogensis stated that filling skill shortages would be top priority in the short term, but the quality of the citizen would be the question in the long term. He pointed out that the first generation children of immigrant parents tended to do better than “True Blue” Aussies because they have an extra drive to avoid the impoverished lifestyle of their parents. Illegal immigration, detention centers and international relations were also briefly touched upon before the debate turned to the two-speed economy.
“There is very little volume movement, it is largely a price boom” – Neville Norman
A question from our live twitter feed sparked the next debate, which prompted the panel to put a number on how many years the mining boom has yet to run. The mining boom is generally thought to be responsible for the high Australian dollar and high interest rates nation-wide. The general consensus was 5-10 years. However, Megalogensis didn’t think that a dip would hurt Australia even if a shift in the terms of trade against Australia were to occur, given the financial flows coming into Australia.
“We’re becoming a little bit of a Switzerland” – Max Corden
To understand why the Australia dollar was remaining relatively high while commodity prices were coming off, Corden cited the (albeit temporary) Switzerland effect currently affecting our currency. As a respectable currency with relatively good economic performance, there is demand for AAA Australian bonds, pushing the value of the dollar up. We could lower interest rates like Switzerland has done (all the way down to 1%) in order to bring the value of the dollar back to “acceptable levels”.
This lead to the most interesting question of the night, whether or not the government should interfere more directly with the exchange rate to reflect the terms of trade decline.
“If you could print them all, sell them” – Stephen Koukoulas.
The currency is squeezing the economy, Koukoulas explained, and the costs in inflationary pressure would be minimal should the government do something to correct Australia’s over-valued dollar. Megalogenis, however, emphasised that interference could undo all the painful economic price reforms (including floating the currency) that Australia went through since the 70’s.
“Markets aren’t perfect, governments aren’t perfect either” – James Paterson
The debate on prices continued with the carbon tax. There was no denying the fact that Australia could take advantage of its natural resources (the sun, wind and sea) in greener ways. Norman pointed out that a carbon price would naturally encourage greener alternatives, although the “right price” was somewhere in the region of $80 per tC02, rather than $23.
It is clear that the success of reform depends not only on the strength of the party in power, but also on the views of the opposition. The federal system, the importance of bi-partisan stances on reform and the minimum wage were also discussed briefly. For the full recording of the night’s discussion, visit: