Australia’s Housing Crisis

Australia has failed to use its income from resources exports to transition the economy to an advanced industrial and technological society. A poverty of strategic economic policy that denies the opportunity to invest human and financial capital in value-added products and services, innovation, and the development of economic sophistication and complexity.

From this position, Australian non-resources companies see business growth through sustained, and increasing immigration. Australian governments see electoral success from what is in reality unsustainable levels of immigration driven economic growth, which they pursue with complete disregard for the catastrophic impact on ordinary Australians.

Australian governments have acted as a proxy for resource extraction and other interests: stripping the country of its mineral resources, selling property, land, and water resources to foreign buyers. Both mineral and agricultural resources are extracted on a massive scale and shipped overseas with no value-added processing. The same short-sighted sellout to vested interests has allowed Australian property, water rights, agricultural land, innovation, and successful ventures to be bought wholesale by foreign buyers. Australian governments have presided over the wholesale predation of the country’s vast resources, and assets, with no compensating investment in its future.

As a result, Australia has the highest dependency on manufactured imports and the lowest level of manufacturing self-sufficiency of any OECD country. About 70% of products exported, on a net basis, are non-value-added minerals and energy.

In contrast to most advanced economies, Australian exports lack both diversification and sophistication, which denies the opportunity to invest human and financial capital in value-added products and services. Australia has failed to use its income from resources exports to transition the economy to an advanced industrial and technological society.

From 1995 to 2023, Australia’s economic complexity fell from 57 to 93, behind Uganda; a decline that is accelerating: in 2019, Australia ranked 79th for economic complexity, behind Kazakhstan. Australia is ranked 50 places below Canada.

From this assessment of the Australian economy, non-resource companies look at immigration to provide business growth. Population growth through immigration generates economic growth by creating additional demand in the economy for essential goods and services such as housing, appliances, groceries, transport, trade services, and more.

Business and asset owners benefit immensely from this as it creates more customers and sales, that is business growth but without the pressure to invest in capability development, developing enhanced value propositions, innovation, value-added manufactures, market development, or research and development. The Business Council of Australia has successfully lobbied government to pursue unsustainably high immigration which is treated as a vast resource for easy value extraction.

The government also benefits: since, deliberately pursuing economic growth through immigration, given the uncritical public reception of positive economic growth, translates into electoral success.

That is, Australian business is focussed upon short-term profits, including profiteering, easily reaped from increased immigration, while the Australian government is using mass immigration to create a mirage of economic growth, thereby deflecting attention from the wholesale export of Australia’s natural wealth and assets without any equivalent investment in the future.

Australian governments have no plan for the use of resources income to transition the economy to an advanced industrial and technological society because they are just a front for the benefit of a handful of companies at the expense of the future of the country. And for decades the ignorance and gullibility of the Australian electorate has allowed this to happen.

Australian government policy is adding the equivalent of Canberra to Australia’s population each year. This level of immigration is creating shortages in the absence of productivity growth as demand for housing, goods and services rises alongside the population, while there is no advance planning to increase productive capacity in anticipation of the rising demand, especially as many goods are imported. Surging immigration is also fuelling profiteering, especially in the highly concentrated supermarket (retail) sector.

Soaring consumer prices, and property prices, driven by massive immigration, are resulting in rising inflation and interest rates, contributing to a cost-of-living crisis, and catastrophic levels of homelessness, as thousands of Australians are forced out of property ownership and rental accommodation.

The economic growth narrative that justifies rising immigration is not delivering per capita growth in wealth; instead, it is causing greater concentration of wealth in favour of those who already own property, and a handful of large companies. This year, the four largest banks have extracted over $33 billion in profits underpinned by crushing mortgage debt.

In the twelve months to September 2023, 500,000 permanent and long-term migrants moved to Australia. This is in addition to the 2 million temporary visa holders already living in this country. The Australian government is deliberately pursuing mass immigration with complete disregard for its catastrophic impacts on access to housing — mass immigration without any planning for the necessary supporting social infrastructure. The demand from unsustainable immigration is driving increases in house prices, and rents beyond the affordability of even middle income Australians. As a result, there are 122,000 homeless people nationwide; but surveys indicate that the real level of homelessness is 270,000. Last year 300,000 people sought homeless support; this year the forecast is 500,000 — a significant percentage of Australia’s population of 25 million. Today, the housing shortfall is estimated to be 500,000 houses.

Incredibly, the government has no meaningful policy to deal the housing shortfall, refuses to accept the central role of immigration in the crisis, and treats it as a problem only for the most disadvantaged in society rather than the systemic crisis that it is.