Giving Away Our Soverignty

by on 12 December, 2014

Terje Petersen argues that immigrants to Australia shouldn’t be let in for free but should instead pay an immigration tariff of $25,147 each:

There are many reasoned arguments as to why immigration is good for the economy and good for the country. Some estimate that global GDP could be increased by 50 to 150% if completely open immigration was implemented globally. Without wishing to dismiss such arguments there is however a sense in which letting foreigners into the country is akin to giving away our sovereignty. Let me explain.

Australia is a vast nation with lots of land. For the purposes of this discussion I’m going to assume that large tracts of it are currently worth next to nothing. For example if a million illegal immigrants secretly arrived tomorrow, secretly set up camp in the Simpson desert and then secretly did their own thing there for the next 50 years or so, it is not as if we would feel deprived of the land they occupied. The reality is that we are not using lots of our land.

Some of our land however is extremely valuable and this tends to be land in cities where there is a high amount of established public infrastructure. Libertarians will at times argue that some of this public infrastructure should be privatised or even given away to Australian citizens. However they would not generally argue that ownership of this infrastructure should be given as a gift to foreigners. Given that public infrastructure is essentially owned by the Australia people, via our sovereign government, any admission of additional new Australians represents a dilution of our equity in this stock of public infrastructure. Of course in such a vast land we have the capacity to build new cities with additional public infrastructure but none the less any admission of new Australians represents a dilution of our equity in the current stock.

The stock of public infrastructure in Australia is worth in the order of $600 billion. With a population of 23.7 million this equates to a per capita value for public infrastructure of $25,147. At the margin this is the amount by which our equity in public infrastructure is diluted each time an immigrant is admitted into the country.

This dilution of equity does not occur with private infrastructure , such as housing, because private infrastructure is not owned collectively by all Australians. It is owned individually and privately. An immigrant that moves to Australia may get to use the same footpath you use but they don’t get to use part of your house. The footpath will become more crowded but your house won’t.

This dilution of equity situation is akin to a company that gives away shares for free. The new shareholders get a stake in the collective assets of the company and the existing shareholders find their stake diluted. For this reason companies don’t generally issue new shares for free. They expect new shareholders to contribute new equity so that existing shareholders do not see the value of their holding diluted.

Following on from the above analogy an argument can be made that immigrants should be blocked from coming to Australia unless they either move to the Simpson desert and live quietly with no expectation of public infrastructure, or else they live among us but pay an upfront contribution towards expanding the stock of public infrastructure. In essence this argument says immigrants to Australia shouldn’t be let in for free but should instead pay an immigration tariff of $25,147 each. The revenue raised would go towards expanding the stock of public infrastructure or otherwise compensating the natives.

Assuming immigrants pay this fee there really is no problem with any realistically conceivably rate of immigration. At least not from a public infrastructure perspective. A very high rate of immigration would mean a high availability of new funds to build the infrastructure for the new cities required. An immigration tariff would be much fairer to existing Australians.

The idea of an immigration tariff is not new. Nobel Prize winning economist Gary Becker has suggested such an approach to immigration as an alternative to quota based immigration schemes. An immigration tariff is long standing policy position of the Liberal Democrats.

Should Australia stop giving away our sovereign wealth for free?

Terje Petersen is a former member of the Liberal Democratic Party National Executive and a former member of the Australian Libertarian Society Executive Committee


One thought on “Giving Away Our Soverignty

  1. This is an excellent article which focusses on a very important matter. It should however go further. Once a person becomes an Australian Citizen they are eligible for Medibank, unemployment benefits, the aged pension, free school for their children etc. etc. All these things cost money. It is likely that the total average cost to Australia of a new immigrant would be in the order of $500,000. Many immigrants make a contribution, often a very large contribution. One imagines that Frank Lowy would have made a large contribution even after his tax lawyers took their bit. The question becomes whether on average the contribution is positive or negative. Clearly the government has sufficient information to explain this to us, but up to now have not. I think it is time they did.

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