Latest news with #MartinNorth
Daily Mail
14 hours ago
- Business
- Daily Mail
The big problem with rising immigration that hurts every Australian
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 make the economy look bigger, even though it means each person is actually 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.' Like a pyramid scheme, a Ponzi scheme benefits those at the top but leaves everyone else worse off. Mr North, a banking expert, said high immigration was like printing money during Covid - it makes things look better at first, but can cause bigger 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 the pandemic. 'That blows financial bubbles but it doesn't affect your traffic congestion, it doesn't force you to live in a shoe box apartment because you can't afford a house,' he said. 'There's too many people competing with you for a house. It doesn't turn your cities into high-rise, shoebox metropolises.' 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. In the year to April, 794,113 international students were enrolled in Australia. '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. '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.
Perth Now
18-07-2025
- Business
- Perth Now
The debt burden stalking Aussies in retirement
More and more Australians are delaying retirement as the dream of home ownership becomes a nightmare at the end of their working life. The number owning their home outright has halved in the past 20 years, census data shows, while the proportion of over-65 households with a mortgage has more than tripled. Home price increases have outstripped wage growth for decades, delaying the average age of home ownership and leaving some with mortgage debt greater than their superannuation nest egg at retirement. "We're going to see this continued pressure on people working for longer because the next generation, their mortgages are even bigger than the last generation," Digital Finance Analytics founder Martin North tells AAP. "There is an increasingly large cohort of people who are still sitting on very large mortgages in retirement and that has been building." Housing costs were by far the leading reason over-60s contacted the National Debt Helpline's chat service last financial year, with one in three users feeling the pain from mortgage payments, council rates, rent or strata costs. The number of households delaying retirement because of their mortgage liability tripled to 51,000 in the past five years, according to Mr North's data. Australians are also borrowing against their home to pay for renovations, trips or giving their children a boost into the housing market via the 'bank of mum and dad'. Debt restructuring, reverse mortgages and unplanned factors like sudden illness, death or divorce also leave retirees in tough positions. Some people are working later in life because as a whole they're fitter but the correlation between retirement delay and increased debt stress can't be ignored, Mr North says. "People are postponing retirement because they've still got this mortgage debt overhanging and they're concerned about how they're going to actually service it." Using superannuation to pay down debt and hang onto equity has become increasingly popular but this ultimately counteracts one of super's core intentions - to take pressure off the taxpayer-funded Age Pension. A co-ordinated, multi-level government approach would be required to reverse the trend, which, for now, is hamstrung by a circle of blame, Mr North says. "Federal government blames the states for lack of housing supply, everybody blames the Reserve Bank for putting interest rates up and interest rates are high because the inflation surged after the government handed out lots of money," he explains. "Nobody really wants to take responsibility and this is another classic example where there are unintended consequences of a generation or two of bad policy, which included negative gearing, which included extended low interest rates, first time buyer grants, Home Builder, all the other stuff that was thrown into the system. "None of this actually helps." Around one in five Australians are still paying off mortgages in retirement, National Seniors Australia estimates. The organisation's chief executive Chris Grice also notes the trend of tapping into superannuation to pay down debt, which often leaves retirees in a poorer position to fund services like private health insurance. "It's not unusual to have someone paying $4000 or $5000 a year for private health and as you get older you want to maintain that," he says. "Let alone insurance costs for home insurance and car insurance and the rest." Downsizing is a common goal but a lack of suitable housing stock and transaction costs like stamp duty mean many retirees are wary of selling. "If you're going to downsize, you're going to go into something that actually is fit for purpose to allow you to age in place," Mr Grice says. With 710,000 Australians expected to retire in the next four years, public policy settings which don't lock retirees in the big family home are essential, Retirement Living Council executive director Daniel Gannon says. "Retirement villages are part of the solution to accommodate this silver tsunami of ageing Australians," he tells AAP. "On average, the cost of a retirement village home is 41 per cent cheaper than the median house price in the same suburb - easing the financial burden and freeing up equity to support a secure retirement that older Australians deserve." The Council is calling for an increase to the Age Pension Assets threshold, an end to roadblocks for retirees who "rightsize" into retirement villages and for the housing type to be included in the Home Equity Access Scheme. According to Solace Financial principal and adviser Scott Quinlan, carrying mortgage debt into retirement puts pressure on retirees' ability to pay for essentials but also impacts quality of life, lifestyle flexibility and long-term financial security. "If they have superannuation, they could withdraw some of their superannuation to pay off the debt," he says. "The other way to go is keep your money in superannuation and then keep your debt, hoping the superannuation will earn a better rate of return than what your mortgage is but that is more of a risky strategy." Prioritising debt repayment is crucial to financial stability in retirement and while reverse mortgages could help provide income for living and healthcare costs, retirees have to consider risks such as high fees and potentially having less inheritance to leave behind.
