Skyrocketing immigration is fuelling inflation and leading to Australia having higher interest rates, ABC finance guru Alan Kohler says.
More than 400,000 migrants moved to Australia in the year to August, with close to 1.5 million expected to arrive in the next five years – setting new annual records.
The rapid population growth has caused house prices in Sydney, Brisbane and Perth to soar by double-digits since January despite a series of rate rises, with capital city rents surging 16 per cent in the past year on average.
Despite the concerns from a chorus of experts, Anthony Albanese‘s government has no plans to cut immigration.
More than 600,000 migrants moved to Australia in the year to March, before departures were factored in.
‘How can the Reserve Bank be expected to slow demand when there are half a million more mouths to feed?’ he asked in the New Daily.
Despite the concerns from a chorus of experts, Anthony Albanese’s government has no plans to curtail immigration. Mr Albanese is pictured
Australia’s population grew by 2.2 per cent in the year to March – one of the highest in the developed world with only the likes of Canada and Singapore growing faster.
The net overseas migration level of 454,400 made up more than 80 per cent of the 563,200 population increase, when births were factored in.
The 413,530 annual tally for August is well above Treasury’s net overseas arrivals forecast of 315,000 for 2023-24.
There have only been four years when the country’s population growth rose above 2.5 per cent per annum in the last 113 years – 1910, 1920, 1950 and 1970.
The level of inward migration in 2023 ‘is causing a massive shock, and changing everything about the economy producing a rebound in house prices, despite the huge increase in interest rates,’ Kohler wrote.
The population increase is leading to stronger than expected economic growth, he said.
Kohler pointed out that gross domestic product and aggregate demand would be falling if it wasn’t for the strong population growth, meaning interest rates would be on hold or even getting cut, not increased.
Previous Labor governments in the 1970s, 1980s and 1990s slashed immigration during cost of living crises, which helped contain house price rises and rents.
But on Tuesday, the Reserve Bank raised the cash rate for the 13th time in 18 months, putting it at a 12-year high of 4.35 per cent, after inflation in the year to September grew by 5.4 per cent.
ABC finance guru Alan Kohler (pictured) has joined the growing number of experts who have pointed out the fatal flaw in Anthony Albanese ‘s efforts to bring inflation and interest rates down – Australia’s huge levels of immigration
New Governor Michele Bullock is now expecting inflation to take longer to moderate, forecasting a return to the two to three per cent target in late 2025, instead of mid-2025 as forecast as recently as August.
Monthly mortgage repayments in November will be 68 per cent higher than they were in May 2022, when the RBA cash rate was still at a record low of 0.1 per cent.
Yet house prices have this year been surging, locking young people out of real estate, as new migrants with money compete to either buy or rent a home.
Treasurer Jim Chalmers has repeatedly suggested the government doesn’t control or set a target on long-term and permanent arrivals, which includes skilled migrants and international students.
‘That isn’t a government policy or a government target,’ he told the ABC’s Q+A program in May.
‘It’s not a floor or ceiling, it’s not something the government determines.’
This is despite a record 400,000 migrants flooding into Australia in just a year, far above Treasury’s forecast of 315,000 arrivals in 2023-24.
Dr Chalmers and his department are expecting 1.5million migrants to move to Australia in the five years to June 2027.
An incredible 152,200 people moved to Australia in the three months to March, leading to capital city rents surging by 16 per cent in the past year
The Treasurer in 2004 wrote a PhD thesis on former Labor prime minister Paul Keating – titled Brawler Statesman – and regards him as a hero.
But the Keating government was the last administration outside of a world war, depression or a pandemic to halve immigration numbers, which saw net overseas arrivals fall from 81,669 in 1991 to 51,358 in 1992 and 34,822 in 1993.
A Labor government, led by a vocal advocate of multiculturalism and family reunions, three decades ago halved immigration levels in just two years during an era of double-digit unemployment.
This helped inflation to fall from 6.9 per cent in December 1990 to just 0.3 per cent in December 1992.