Decentralisation is only a pipe dream whilst we are running an economic model and strategy that has centralisation baked in.
Bernard Salt and George Megalogenous continually ignore what is driving the population concentration, beyond noting that immigrants seem to be voting with their feet.
Their lack of curiosity is remarkable considering the traditional,driver of concentration – labour intensive manufacturing has been on decline for decades and we have been retreating to an economic model based on minerals / agriculture with loads of real and financial asset sales. Not much of that particularly requires population concentrations in Sydney and Melbourne.
What has been driving population concentration in Sydney and Melbourne (particularly by immigrants) is crystal clear and it is the same thing that has been bending our economy out of shape since the 1970s.
Driving the economy with taxpayer guaranteed private bank credit creation that is directed towards unproductive speculation in asset prices and secured by those rising asset prices.
When that is the fundamental driver of economic activity it is no surprise that the largest cities will be the centres of that activity for the simple reason that rising asset prices secure more leverage which drives asset prices higher which then secure more leverage. The cycle continues especially when the taxpayer is effectively the guarantor of the credit creators – aka the private banks.
While tax policy incentivised asset price speculation with debt has driven up house prices right across Australia the model works best where there is also population growth demand pressures. When there is a bit of population demand pressure the house price Debt Machine really roars. In Sydney and Melbourne it has nitro injection.
Keeping the model operating requires a high rate of immigration as maintaining real demand pressure for real estate is critical. Unproductive private bank credit creation only gets you so far – without demand pressure eventually the debt soufflé will weaken and eventually collapse. The circa 2% vacancy rates in Sydney and Melbourne are vital ingredients in keeping the Debt Machine purring.
Immigrants are attracted to Sydney and Melbourne for 2 key reasons.
1. To find work in any of the industries feeding off the model – real estate, finance, construction etc.
Crumbs from the table of parasitical speculation may be crumbs but they will feed a family.
2. To join in the game by taking on leverage and placing a bet themselves.
Could we support the current levels of immigration if we were not running the current private bank unproductive credit creation asset price pumping model?
Maybe but getting from here to there is not straight forward as first you need to address the current model so that economic activity is redirected towards productive activity rather than unproductive debt based speculation.
And let’s face it we are not even having that conversation…yet.
Ross Gittins and most of his colleagues in the major debt bubble spruiker publications still applaud indiscriminately capital inflows and credit creation as being wonderful. Until we start assessing private bank credit creation and capital inflows by reference to whether they add to the productive capacity of the economy we are still in the starting blocks.
Even on macrobusiness such talk is often dismissed as ‘money crankery’.
When we fix our banking and monetary model it is much more likely that we could support high population growth rates and the result would be an expansion of productive economic activity right across Australia. As that growth would not be parasitical but actually involve growing the pie, individual slices are more likely to be growing as well.
Whether environment pressures and issues might still warrant slower population growth rates is another question but in principle we could apply more of the bigger pie to better protecting our natural heritage. However, our track record in that regard is nothing to boast about.
Until we start talking about WHY our higher rates of immigration are being concentrated into the centres of Ponzi economic activity we will continue to be puzzled by the experience and find ourselves listening to the pipe dreams of Salty Bernard and Uncurious George.
We also make it as difficult as possible to build in the regions. An ex builder mate of mine who used to employ 6 to 8 people was unable to finance his dream build in the country, unless he had a registered builder sign off on the job.He still has his registration by the way. Lets not get into restrictive sub division regulations or restrictive size constraints, caht have people making a place big enough for a B and B. In lots of areas we have quite expensive fire prevention rules too. It all adds up to a more expensive house and this is what the banksters want. If it ws possible to build a place 30 minutes from the edge of the city cheaplly lots of people would be doing it.The fact they aren’t is because they have been prevented from doing so by banks, councils and governments
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Yep – and it makes even less sense now that people can get very close to being off grid if they want to without difficulty.
Good stuff as usual pfh. RBA Treasury Universities Banks Harry Hardly et al do NOT want a conversation around this. To do so they would all have to admit that they have all been WRONG, perhaps deliberately so, about the whole economic model of the past 60 or 70 years.
Further, now, with more than 50% of the population now centred in Sydney Melbourne and Brisbane we can expect the rest of Australia to CONTINUE to be destroyed economically and socially in order to feed these monsters.
The current Queensland election is particularly illuminative in this regard. Labor is throwing the rest of Queensland under the bus just to ensure they are safe in Brisbane.
I don’t think any of this can be revered until it is forced on us and by then we will have sold everything in any way productive to foreigners to finance this schmozzle and we will have destroyed our democracy – well that is almost pretty well done!!!
Until Australia decides grow up and living in Nowra, Bathurst or Newcastle is just as cool as Syd/Mel then its always be expensive cramming everyone into 15-30mins of the CBD.
Australia needs to grow up and ruralize today !!
Think u meant conversation, not conservation but I have no qualifications as a grammar nazi. There is no way of addressing the valid points u raise, democracy is broken and education will only work when people are hurt. Good reading, thanks.
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Cheers for the note and the support. Conservation almost worked!
Democracy is certainly not operating at its best at the moment with the political class apparently determined to do everything they can to destroy their credibility.
However, I am finding more people are starting to ask questions and the prevailing orthodoxy is showing some signs of confusion, anxiety and panic. That gives me some hope.
Unfortunately, the grand distraction of war appears one again to be rising in the “to do” lists of the rulers so cross all appendages.