John Hewson’s mea culpa: Immigration crushes wage growth

It is hilarious watching economists and politicians finally acknowledge that Australia’s mass immigration program has crushed Australian wage growth – something that MB has argued for nearly a decade.

The latest to have a mea culpa is economist and former Liberal leader John Hewson, who posted the below today via Twitter:

Staggering that it has taken this long for RBA to recognise that migrant and visa workers have been a cause of low wage growth. It’s been an easy get for farmers and other employers

— John Hewson (@JohnRHewson) July 8, 2021

Curiously, John Hewson attacked Bill Shorten in 2016 for daring to curb 457 visas on the grounds that they were taking away job opportunities for Australians and lowering wages:

The rhetoric of Shorten’s attack this week on 457 visas, essentially claiming that these immigrants are taking our jobs when we have some 700,000 unemployed and as many as 1 million underemployed, was most divisive and irresponsible, especially with the echoes of Trump.

Hewson also freely labelled opponents of mass immigration racists:

Hewson said race was often discussed under the veneer of policy discussion about immigration policy, “a sort of ‘nudge nudge-wink-wink-’, I say ‘immigration’ but you know I’m really talking about ‘race’”.

Hewson said Australia’s multicultural, multi-ethnic, multi-religious polity was its “greatest asset” and must be carefully preserved, rather than divided for political gain.

“It’s divisive, it eats away at the basic social fabric of our community, which is something that must be carefully managed.”

As I noted in my response to John Hewson in 2018:

Australia’s mass immigration ‘Big Australia’ program is having a corrosive effect upon the public. It has clearly outstripped the ability of the labour market to absorb so many immigrants, as evidenced by the slight uptick in the labour underutilisation rate during the one million “jobs boom”. Two-thirds of all new jobs have gone to migrants (see next chart). Wage theft is at epidemic proportions.

Infrastructure is at breaking point, evidenced by rising traffic congestion and overloaded public transportation, hospitals and schools. The outcome is a spiralling infrastructure deficit that will never be dealt with so long as 4,000 migrants a week continue to pile into Australia, concentrating in Sydney and Melbourne.

Then there is the concurrent housing crisis with no end in sight, adversely impacting low-income households the most, especially in our major migrant hotspots of Sydney and Melbourne.

The economic elites love mass immigration because it helps drive down wages growth, boosts profits from expanding markets, and increases real estate demand. Yet bizarrely, those on the Left also support mass immigration, despite its deleterious impacts on the working classes and the natural environment that they purport to represent.

The Left’s usual response is to scream “racism” or “xenophobia” any time that reducing immigration is brought up, along with fabrications about the “need” for supporting the ageing population. This comes despite the five most recent opinion polls all showing overwhelming voter support for lower levels of immigration…

Without representation from the left, the door has been left wide open for extremist elements to gain ascendancy by scapegoating migrants, rather than targeting the real problem of excessive levels of immigration.

Maintaining turbo-charged immigration levels will necessarily make housing affordability worse, dilute workers’ bargaining power, enrich the capital owners and wreck overall liveability.

Delivering those outcomes will jeopardise the multicultural consensus.

The only difference between today and 2018 is that RBA governor Phil Lowe has finally admitted that immigration lowers wages.

And now that an authority figure like Phil Lowe has stated the truth, economists like John Hewson have come out of the wood work to admit what was obvious all along.

Australian economists are a herd of sheep.

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs. Latest posts by Unconventional Economist (see all)