Thursday, September 02, 2004

GenX, housing affordability and immigration

With housing non-affordability for GenX getting some welcome blog air-time elsewhere, I thought that it’s a good time to broach the rather fraught topic of housing affordability (and so inevitably, GenX) and immigration.

"Immigration and . . ." is, of course, about as fraught a topic as you can get in contemporary Oz cultural discourse. As well as “race”/ethnicity, immigration-and-anything involves generous dollops of class, environmental concerns, and last-but-not-least, the festering hole found in the middle of that doughnut called Australian national identity.

At least one of these can be fairly easily dealt with, though. My gut feeling on the environmental arguments against immigration is that they are naïve at best, and almost-transparently racist at worst. I fully accept that our large cities have load limits – “desirable” ones in the case of cities-of-the-sweeping-plains such as Melbourne, and rather firmer ones in the case of cities with absolute geographical boundaries like Sydney – but this is simply a case for changing the current (mildly) disproportionate migration flow into large-urban areas (especially Sydney) towards rural/regional areas. I say “simply” well aware that my suggestion (i) is hardly novel, and (ii) has already been the subject of “enforcement”-type proposals. All I can say here is that if “carrot” efforts towards encouraging rural/regional migration don’t work, then “stick” methods are ludicrous and demeaning – it would be far better to rethink Australian immigration policy from the ground up, with a focus not, of course, on absolute numbers but on net environmental sustainability.

Accepting this – and also bearing in mind our legions of dying country towns and international crises like Darfur – I believe that our current immigration intake can, and should, be considerably increased. The “more the merrier (more or less)” attitude to immigration has incalculably enriched the make-up of the USA – although I stress that environmental costs must always be born in mind (on which facet the US is hardly a model country).

From another direction, though, my strongly, if conditionally pro-immigration stance clashes head-on with what I might term the PM Howard-lovin’ Self-Congratulation brigade – a sample of whose thoughts can be seen over at John Quiggin’s blog, where a debate has been raging over, inter alia, the point that "Only Howard could have restored Asian immigration to high levels".

Personally, I’m baffled as to why this (accepting it at face value) might be considered an achievement – surely successfully running a “colour-blind” immigration program (and the implication is that John Howard has NOT) is/would be a much worthier accolade/goal. But perhaps I’m over-analysing here – more straightforwardly, PM Howard probably does deserve some kudos to the extent that he has banished (for now) crass, One Nation-style anti-Asian/Chinese immigration politics from the mainstream agenda.

As to how PM Howard so successfully defeated the late 90s One Nation clamour on Asian immigration is not dwelt upon by the above-mentioned Howard-lovers. If pressed, I suspect that they would say something about the strong economy. More specifically, I’d suggest, is that house price inflation has hugely eased the 50+ white “battler” (i.e. the core One Nation constituency) anger of the late 90s. What may not be fully understood here is that the house price inflation of recent years has also, via “white flight” extended strongly into the sunbelt regions (One Nation’s heartland) – although not, of course, into otherwise-dying country towns wholesale (a few lucky, mainly coastal ones aside).

Fact: even One Nation voters are not completely stupid. They know that the house price inflation windfall of recent years has to come from someone’s pockets – and they see, with some justification, recent immigrants as the Cargo Cult Captains on this one. The Housing Industry Association – aggressive lobbyists for higher immigration but, unlike me, with a strongly pro-large city preference, AFAICT) – have repeatedly drawn such a connection. In other words, PM Howard has effectively bought the mass of One Nation voters off – and moreover, they understand this to perfection.

Which is still capable of being a Good Thing, I hasten to add, except for the elephant in the room that no one thinks it polite to talk about. House price inflation is not just an everyone’s-a-winner, never-ending dance between Aussie-battlers and cashed-up immigrants – there are, in fact some capital-L Losers; to whit, GenX.

Because One Nation voters are quite stupid, it’s no surprise that they aren’t currently kicking up a fuss about their destined-to-be-renters-for-life GenX offspring. What is a surprise, though, is that the otherwise-intelligent also take so much comfort in John Howard’s crude bribe.

Joining the dots, then – high immigration into Australia’s large cities has been an economic disaster for GenX, who have become silent, inadvertent victims largely because of the lack of strong lobbies* on their behalf. Although the case for Australian immigration policy to be reconceived as an emphatically de-urban one is a strong (and in Sydney’s case, compelling) one environmentally, there appears to be zero political will for such a move. Hampering it most particularly is the powerful influence of the Housing Industry Association. More subtly, previously One Nation-aligned battlers have been conscripted to the HIA line, through having seen-the-value (quite literally) of high urban immigration policies.

Also stymieing GenX – and here the Housing Industry Association’s consummate lobbying skills can most readily be seen – is the HIA’s having publicly positioned itself as a Friend of GenX, by making frequent, hand-wringing comments about the housing affordability crisis. The HIA’s stock “answer” here is for a reduction in property taxes. A real answer, though, lies in fundamentally reconceiving Australian immigration policy.

In the mean time, an appropriate short-term measure, I suggest, would be to ease the current acutely-inflationary shortage in the building trades by immediately opening up the immigration gates much wider (I assume that, again due to HIA pressure, building tradespeople and labourers do not score high immigration points despite the manifest skills-shortage in this respect). With the HIA guild then engaged – for a change – in just defending its home turf, real and wider policy reform may then be able to occur. An incidental bonus here would be, at least for Australia’s white-collar workers, to see their blue-collar cousins in the building industry struggle against the wage-deflationary pressures that globalisation brings –forces that the HIA has so far artificially protected Australia’s building industry from, by insisting that “skills”, in the immigration context, mean white-collar ones only.

Update 3 September 2004

A couple more thoughts on the correlation link between high urban immigration and housing affordability – could the Housing Industry Association (for whatever reason) be blowing the wrong trumpet here? Robert Corr attributes housing non-affordability to the $7,000/$14 000 (for new homes, for a while) first home-buyers' grant and the capital gains tax discount for property investors. While I'm sure the former had some impact (in retrospect, its application to established homes, given its policy basis as compensation for the GST on new homes, was a disaster waiting to happen), I doubt that it would be nearly as significant as the raw supply/demand imbalance wrought by high urban immigration.

Similarly, while the CGT discount provisions undoubtedly brought forth/forward many baby boomer property investors, such investors were reacting to and riding on, rather than conspiring to cause, the GenX "renter for life" syndrome – i.e. immigration-caused inflated property prices nicely facilitated the Nice Lazy Earner for boomer retirement phenomenon, while at the same time this investor activity added some secondary fuel to the inflationary fire.

* Letter from Nigel Fitzpatrick

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