MP : Why Cheer Immigration-Driven Increases in House Prices?

The MP who has made the statement in the title of this bulletin is  Australian Labor MP Kelvin Thomson.

Most Canadians would ask one important question :

Why have elected Canadian officials such as MP’s, MPP’s, MLA’s, Mayors, Councillors, and School Trustees, or other prominent citizens such as Union leaders not criticized obvious immigration-driven increases in housing prices in Canada?


MP : Why Cheer Immigration-Driven Increases in House Prices?—-“Very Generous Immigration Program” Pushing Out Would Be Home Buyers

By Kelvin Thomson,
Labor MP for Wills, Victoria, Australia

Australia used to be the country where everyone could afford to have a home of their own. But for far too many of today’s young Australians, that is no longer true. Housing affordability has declined.

Treasurer Joe Hockey confirmed yesterday in New York in an interview with CNBC that our large migration program is one of the key drivers of housing unaffordability for young people.

He told CNBC that “Australia is a long way from a housing bubble….The fact is we have a very generous immigration program and we have very slow supply coming in the market”.

Mr Hockey is correct that the high migration program is a driver of rising house prices in Australia. Where I differ from Mr Hockey is that I don’t believe rising house prices is a good thing. The fact is that housing is a necessity, like food, water, electricity and petrol. No-one cheers when the price of food, water, electricity and petrol goes up ­ why should we cheer when the price of a house goes up?

That cheering drowns out the quiet sad shrug of a generation being locked out of the opportunities which my generation and the one before me had the good fortune to have.


The following Wikipedia excerpt illustrates the depth of Kelvin Thomson’s thinking :

In 2012 Emeritus Professor Ian Lowe, president of the Australian Conservation Foundation,… discussed and commended the arguments in four separate papers by Thomson, noting that collectively these proved that “Thomson is not a ‘one-trick pony’ obsessed with population to the exclusion of other important issues, but a politician who is thinking deeply about our security and ways to ensure a better future”.

Since 2008 Thomson has emerged as a political theorist, whose speeches and articles question some of the Labor Party’s current directions, and call for reforms.

His analysis begins by noting the exceptional speed of Australia’s population growth since 2000. On this, he cites the demographer Graeme Hugo who has described it as more than three times the average annual increase of industrialised countries. In a series of papers and speeches collected on his website, Thomson argues that such rapid growth imposes high costs upon government budgets, upon natural and urban environments, and upon citizens’ finances and lifestyle. Thomson concedes that Labor will not quickly change its pro-growth stance or embrace “population reform”, but argues that there is no other solution because the rate of population growth is impoverishing State governments and leading to widespread discontent among voters.

Answering those who imagine Labor could solve this problem by better planning or by allocating more funds, Thomson suggests they do not understand the crippling effect of the infrastructure costs imposed by population growth. On this, he cites the work of US economist Lester Thurow and University of Queensland agricultural economist Jane N. O’Sullivan. O’Sullivan has argued that these costs, amounting to some A$200,000 of infrastructure per extra Australian, dwarf the supposed economic advantages. Thomson believes this largely explains why Anna Bligh’s seemingly competent Queensland State government suffered the worst defeat of a sitting government in Queensland history, when it was forced to alienate voters by selling off public assets even during an economic boom, and yet could not satisfy the population’s demand for infrastructure. He suggests that, “Instead of talking about population size, we should examine the economic impacts of … population growth rate.”

In a speech in Parliament in March 2012 he recommended to his colleagues a paper by O’Sullivan in Economic Affairs as crucial reading “for anyone who seriously wants to understand …why governments of all persuasions struggle to meet people’s needs and expectations.” Thomson argued that since about 2% of existing infrastructure comes up for renewal each year, and this is a cost governments struggle to pay, a mere 1% annual increase in population may impose an almost unpayable increase of up to 50% in infrastructure costs:

“A society with a stable population needs to replace two per cent of all infrastructure annually. But if a population is growing at one per cent per annum, for example …this increases the burden of infrastructure creation by some 50 per cent (to three per cent) …One per cent more GDP or tax cannot pay for 25 to 50 per cent more public infrastructure.”

Thomson had already generalized this analysis in his August 2011 paper ‘The Witches’ Hats Theory of Government: How increasing population is making the task of government harder.” Here Thomson suggested that one reason many politicians around the world imposed policies to promote population growth was that they did not realize how likely it was to shorten their own political longevity. He assembled evidence suggesting that worldwide there is an inverse statistical connection between population growth and how long a given government is likely to last.