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Gillard’s population policy will increase inflation and interest rates

A great article by Michael Pascoe in the Sydney Morning Herald explains how the fad to minimise Australia’s population growth immediately threatens to increase inflation and, therefore, interest rates. It’s worth reading the article by clicking here.

In it he says that with another 45,900 jobs created last month, resulting in 11.1 million Australians in work and the unemployment rate at 5.1 per cent seasonally adjusted, there’s already a shortage of skills in key areas and a looming shortage of labor in general that will have the Reserve Bank’s monetary policy finger itching before the year is out.

Cutting immigration would exacerbate the “two-speed economy” effect, damaging non-resources businesses. In the medium term, the tax implications become quite nasty and in the longer term one can wonder about a backwater that artificially restrained itself – potentially an economy like South Africa’s under apartheid.

Pascoe explains that the current political tragedy is that the Labor and Liberal parties are running away from the great success story of Australian migration. Instead of explaining and championing migration’s crucial contribution to the Australian economy’s long, golden summer of growth, Gillard and Abbott, West and Morrison, by sly deed and innuendo are portraying our raiding of other nations’ investment in people as something thoroughly undesirable; at best a necessary evil that must be as limited as much as possible.



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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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