Australia’s high immigration has been likened to a Ponzi scheme as a new report reveals record international student numbers are worsening the housing crisis.
Digital Finance Analytics boss Martin North says governments rely too much on bringing more people into Australia to artificially grow the economy while leaving each person individually worse off.
‘When things are looking at bit shaky, what you try and do is pull the levers, the migration lever is an obvious lever at one level because you can do it relatively quickly and the number goes up even if the GDP per capita doesn’t go up,’ he said.
‘To my mind, though, migration is a Ponzi scheme and migration is part of the quantitative growth.’
A Ponzi or pyramid scheme can financially benefit those who organise it or get in early, but as more people join, the risk of catastrophic collapse multiplies.
Mr North, a banking expert, said high immigration was like printing money during Covid – a short-term fix that causes major problems, like inflation, later.
MacroBusiness economist Leith van Onselen said bringing in too many migrants was even worse than the financial bubbles created by the money-printing policies used during lockdowns, and before that during the GFC.
Australia’s record immigration has been likened to a Ponzi scheme as a new report reveals international students are worsening the housing crisis (pictured is Prime Minister Anthony Albanese in Parramatta in western Sydney)
Digital Finance Analytics principal Martin North said Australian governments were addicted to population growth to boost gross domestic product, only for economic output for every Australian to fall
‘(Money-printing) blows financial bubbles but it doesn’t affect your traffic congestion, it doesn’t force you to live in a shoebox apartment because you can’t afford a house,’ he said.
‘It doesn’t turn your cities into high-rise, shoebox metropolises.’
Despite repeated government promises to reduce record immigration levels, a new Reserve Bank report has noted international student numbers remain at record highs, and putting pressure on the housing market during a time of high construction costs.
In the year to April, 794,113 international students were enrolled in Australia, with many intending to stay once their study finishes.
‘The number of international students onshore is still near record highs, and student visa arrivals have exceeded departures in recent months, suggesting the number of students onshore is growing,’ it said.
‘In theory, in the face of a relatively fixed supply of housing in the short term, we would expect an increase in international students to put upward pressure on rental demand and rents (all else equal), in the same way that any kind of increase in the renting population would impact demand.
‘Capacity constraints, high costs in the construction sector and low levels of building approvals relative to the population may mean the housing supply response could be slower to materialise compared with in the past.’
The RBA report, by economists Madeleine McCowage, Harry Stinson and Matthew Fink, also noted international students were more likely to work in the black economy.
A new Reserve Bank report has noted international student numbers were still at record highs, and putting pressure on the housing market during a time of high construction costs (pictured are Sydney commuters at Central Station)
MacroBusiness chief economist Leith van Onselen replied high immigration was worse than a financial bubble
‘Temporary migrants are much more likely to be paid below-minimum wages, meaning cash-in-hand work may be prevalent,’ it said.
In the year to May, 447,620 migrants arrived in Australia on a net basis, which was higher than the 335,000 intake for 2024-25 forecast by Treasury in the pre-election March Budget but below the record-high intake of 548,800 in late 2023.
With the permanent intake capped at 185,000 for 2024-25, international students make up the majority of permanent and long-term arrivals in Australia.
‘International students were an important driver of net overseas migration during this period, accounting for around half of Australia’s total net overseas migration,’ the RBA report said.
AMP chief economist Shane Oliver said high immigration levels were causing Australia’s productivity crisis, with the economy suffering a per capita recession from early 2023 until the September quarter of 2024.
‘We have partly made up for poor productivity growth by faster population growth, but this does not address living standards per person,’ he said.
‘Likewise, the slump in productivity has been masked by strong national commodity earnings but we cannot rely on this indefinitely.
‘A surging population over the last 20 years with inadequate infrastructure and housing supply has led to urban congestion and poor housing affordability which contribute to poor productivity growth – notably via increased transport costs and speculative activity around housing diverting resources from more productive uses.’
Mr van Onselen said international students were coming to Australia hoping for a pathway to permanent residency or citizenship, with universities benefiting from having overseas students willing to pay fees upfront.
‘The whole idea is to encourage a bunch of students, primarily from south Asia, who tend to come to places like Australia and New Zealand, Canada etc for work rights and permanent residency instead of studying,’ he said.
‘That’s their primary goal. They want to attract those people.
‘So, they want to expand work rights for international students from 20 hours a week to 25 and effectively turn student visas into de facto low-skilled work visas and residency visas.’
International students on a visa can work 48 hours a fortnight if they are studying a Masters degree, with no more than 30 hours of work allowed in the second and third weeks of a month.