How record-breaking immigration surges of 350,000 new arrivals in one year are making the average Australian poorer but big banks richer – and masking the fact that we’re already in a recession

A record-breaking surge in immigration is making the average Australian poorer – and big banks richer – by masking the fact the economy is already in an official recession, economists say.

New data from the Australian Bureau of Statistics released on Wednesday showed that the economy per capita contracted 0.3 percent in the June quarter, followed by a 0.3 percent contraction in the March quarter.

This meant that Australia is officially in a per capita recession, with gross domestic product, or output for each individual, declining.

On an annualized basis, Australia’s GDP per capita shrank by 0.3 percent after the central bank made 12 interest rate hikes since May 2022.

AMP chief economist Shane Oliver said that without high immigration, Australia would be mired in a technical recession, with the economy contracting for two straight quarters.

“The rise in immigration and population obscures…” “Which could otherwise have resulted in a far more severe economic slowdown, if not recession,” he told Daily Mail Australia.

“We’re pumping more people in, but we’re not making more stuff per person.”

“It could be issues like traffic congestion, poor housing affordability, or people who have to live far away from their jobs.”

A record-breaking surge in immigration is making the average Australian poorer – and big banks richer – by masking the fact that the economy is already in an official recession, economists say (pictured is Wynyard railway station in Sydney at rush hour).

While the overall economy is still growing, weaker production per capita, or GDP per capita, means the average Australian is unlikely to feel richer.

READ MORE: Millennials are moving to small towns to avoid congestion

Millennials are increasingly moving to small towns to escape unaffordable housing and congestion in Australia’s big cities.

An analysis of the 2021 census data by the Regional Australia Institute found that 57,000 millennials have moved to the country compared to the previous census in 2016

“Opening the immigration tap has helped in many ways – it has helped with some bottlenecks in the labor market – but it also comes with costs,” said Dr. Olivier.

“An average Australian would say, ‘The economy may be bigger, but I’m no better off.’

“It’s GDP growth per capita that really matters for people’s standard of living.”

The measurement of GDP per capita differs from a technical recession, which is defined as two consecutive quarters of decline in gross domestic product and has not occurred since the summer 2020 bushfires and Covid lockdowns.

A record-breaking 353,670 permanent and long-term migrants moved to Australia in 2022–23, the highest number ever recorded in a financial year.

That was slightly below the Treasury Department’s May budget forecast of 400,000 but showed the government is banking on strong population growth to boost economic activity and tax collection.

David Llewellyn-Smith, the chief strategist of MB Super and Nucleus Wealthsaid the Treasury wanted high immigration to generate revenue, while the big banks and project developers would like more potential customers.

“It comes at the expense of the vast majority of Australians,” he told Daily Mail Australia.

“The winners of this immigration model – even in a per capita recession – are the banks, retailers and developers, and when you put those three together you get the so-called growth lobby urging the model to continue because it’s good.” for her.’

The Business Council of Australia has been campaigning for high immigration on behalf of large companies, including the big banks.

Mr Llewellyn-Smith said high immigration means the federal government is running a budget surplus as Victoria and New South Wales, the states with the most immigrants, have to pay for new transport infrastructure.

Both the coalition and Labor in government have advocated high immigration, while the Greens, who have a support base in inner cities, are reluctant to criticize high population growth, despite their role as a green party.

“Unfortunately, the growth lobby has all Canberra parties in its grip at the same time,” Llewellyn-Smith said.

“There just wasn’t enough grassroots movement to change that.”

dr Oliver said the fact that Australia is currently in a per capita recession highlights how high immigration is causing living standards to fall as skilled migrants and international students flow in.

“We inflate our economy by pumping more people into the country, but that doesn’t give us an increase in living standards per person – we’re actually declining and productivity is declining too,” he said.

New data from the Australian Bureau of Statistics released on Wednesday showed that the economy per capita contracted 0.3 percent in the June quarter, followed by a 0.3 percent contraction in the March quarter. That meant Australia is officially in a per capita recession, with gross domestic product, or output for each individual, declining (pictured are commuters from Sydney).

GDP itself continued to grow, rising 0.4 percent in the June quarter and 0.4 percent in the March quarter.

But the annual increase of 2.1 percent in the year to June, compared with 2.3 percent annually in March, was well below the long-term average of 3 percent, with the Reserve Bank policy rate at 4.1, an 11-year high achieved percent.

The ABS national accounts data also showed a 2 percent decline in productivity based on GDP per hour worked in the June quarter, after a 0.4 percent decline in the March quarter and a 1.3 percent decline in the December quarter .

Productivity fell by 3.6 percent annually.

dr Oliver estimated that forthcoming ABS data would show Australia’s population would grow 2.4 percent in the year to June, which would be among the highest in the developed world, with only Canada opting for even higher immigration-driven growth .