Big Australia vs Little Australia What does that mean to you

Australia What does it mean to you
- vs Little Australia

Whether Australia continues to increase immigration or decrease its current level of immigration can have a significant impact on your real estate investment strategies. So today I would like to talk about how to keep pace with rather than reverse the trend when putting your investment strategies together.

current debate

• Over the past few years, there has been an ongoing debate about whether we should have 'Little Australia' or 'Big Australia'. Proponents of Big Australia would like to increase our population to 36 million by 2050. This means that on average approximately 400,000 new immigrants come to Australia each year. While the Little Australia camp would like to see our population much lower than that.

• There are a lot of pros and cons being put forward by both sides: from what level of growth is sustainable to whether we're going to pay higher taxes, and even more extreme scenarios like cultural shift and racial domination. I wouldn't take any of these things, you can look them up on your own, take any side you want, or simply not pay any attention to any of them.

• The problem with such a debate is that people sometimes think that if one side offers a more reasonable and better rationale, then that side must win the argument. But in reality, our society's progress is not usually a contest for common sense or good reasoning. You can sit in a classroom and win the argument 10 times, but outside of the classroom, factors like "impact" and "emotion" are the norm.

• If you want a simple demo of this, just ask 10 of your friends, who are still in a marriage today, how many of them have examined the pros and cons and come up with the possibility of the marriage surviving, before entering into it. . If most people can't even apply logic and good reasoning to one of the most important decisions in their lives that they can control, how do you expect them to apply good reasoning and reasoning to an issue they have little control over - like should we become a big Australia or a small Australia?

• This is one of the reasons I have learned over the years to give more importance to facts and pay less attention to logic and good reasoning. You will benefit more in life by directing your attention to what happened (i.e. the facts) rather than what should have happened.

the facts

• Over the past few years, our immigration numbers have been hovering around 400,000 each year. Some years were a little higher and other years a little lower. 40 years ago our population was 12.6 million. Today it is more than 22.7 million. If we continue to grow at the same rate, we will reach 40.6 million in 2050, which is greater than the 36 million forecast by Australia. So it seems, whether people like it or not, Australia is well on its way to becoming "Greater Australia" anyway.

• Baby boomers are currently starting 'mass retirement' starting in 2012. Those who retire before 2020 are likely to rely on the state pension system as they will not have enough compulsory pensions. All these retirees will mean we will need more workers to pay enough taxes to support the state pension system. So I consider it almost necessary for the government to keep immigration at the current level, or even higher at least until 2020.

• Australia has invested more than $830* billion in the coming years. We need to deliver the goods according to those contracts, but we don't seem to have enough people to produce them all. Recently, the heads of several major mining companies have been highly critical of government red tape that prevents them from bringing workers to Australia for work. Some are suggesting that we solve this problem by allowing large numbers of temporary guest workers to come to Australia to work. (Most real estate investors can understand the angst of mining companies. It's similar to when a real estate developer sold a 100-unit development to buyers beforehand, and now realizes that there aren't enough workers available to build it!)

real competition

What might determine the outcome of Australia's population? In my opinion, there are two main factors: influence and emotion. Let's see that.

Effect

• We all know that the government decides whether to increase or decrease immigration on an annual basis. But what influences government decisions?

• There are two types of government in our world: authoritarian and democratic.

• In an authoritarian society, political influence dominates economic decisions. For example, politicians (such as a dictator) are more likely to dominate business decisions.

• In a democratic society, economic influence dominates political decisions. That is, the business community (like all pressure groups) is likely to dominate policy decisions.

• Australia is a democratic society. Here, after winning office, politicians tend to be spokesmen for their political campaign masters (ie donors) or pressure groups such as corporations, especially the largest. Hence, you tend to see governments in a democratic society bailing out "too big to fail" businesses (such as what happened in the US and Europe), and not necessarily working for small people who have less direct influence.

• This is not a statement by way of what is good or bad, it is just facts about the way different systems work for different people.

• So here's the key question: Do you think Australia's biggest companies want more immigrants or fewer immigrants?

Let's look at the needs of Australia's largest businesses and organizations:

Do you think mining companies want more workers to hand over their contracts?

• As you can see, politicians will always be under the influence of these powerful self-interest groups to keep increasing the population. Now, what do you think of the chance that there will be no more immigrants in Australia?

• Before coming to Australia, I lived in a country where politicians often dictated to companies what to do. After living in Australia for 23 years, I am happy to see how many political outcomes are determined by bargaining between politicians and self-interest groups, and how much economic influence is at the fore in most government decisions. These powerful self-interest groups attempt to influence politicians directly or through the media indirectly.

• You might ask how does all this affect the average person who is worried about losing their job to immigrants or that our environment becomes unsustainable? From my observation, the influence of the average person is limited unless it is coordinated across larger groups, so even when their opinions are fully rationalized and justified, they, unfortunately, do not have the economic sway to pressure the government or have the financial resources to put their own opinions into practice. Politicians are in place.

• I know this may sound disappointing to those who believe in small Australia, but unfortunately, that is the way democratic societies work. If you go back in time further afield, only within Australia, I'm sure if you asked the aborigines a few hundred years ago if they would have liked 22 million people to come to their country, their answer would probably be a resounding no! but they simply didn't have enough leverage to stop them.

• I am not discussing the morals and ethics of these positions here. Like I said earlier, I'm just debating the facts of what happened. I believe everyone deserves what they believe in, and there are always two sides of the same coin in any issue we like or don't like in any way. All I am trying to do is to show you what the trend is so you can invest your money wisely.

• It's important to remember that we don't have to like everything going on there as an investor, but we can take advantage of the trend even if we don't like what's happening. This is similar to the situation that you may not like gravity when you want to fly, but working against it is not smart.

feelings

• Another major factor affecting governments and politicians is public sentiment, that is, human emotion. Politics today is a popularity contest. If you observe politics over the past 50 years in any industrialized nation, the old days of politicians who had a chance to win by holding on to their values ​​and beliefs seem to be long gone. It seems that the best values ​​to uphold to win office these days revolve more and more around "what the public wants to hear".

• It is therefore important to know whether the majority of Australians are anti-immigration or pro-immigration and how these sentiments may develop over the next few decades.

• There are quite a few countries in the world where the majority of their population is against immigration, and they make it clear in their legislation. In other words, those nations have a very exclusive attitude toward other races. Australia does not have such a set of legislation.

Some other interesting facts are:

Apart from the indigenous people of this country, we are all immigrants of one generation or another;

Today, half of our population still speaks a language other than English at home.

Most Australians have bloodlines that they can trace from many different races and cultures;

• I am a first-generation immigrant. In the past 23 years, I have lived in Australia, I can honestly say that I have never felt discriminated against. So, Australia is an open and multicultural country, and it is generally uncommon to be a racist here.

• If you are not a first-generation immigrant, you may not be aware of how much all first-generation immigrants want to help their friends and family who immigrated to the same country they live in now. They do this because immigrants miss their families and friends but also because they want to help them have a better life.

• Consider how that applies to the average 400,000 immigrants who come to the country each year. This migration flow started 5 years ago. Give it another 5 years, and 4 million new immigrants (a number equal to Melbourne's total population), will be added to the pro-immigration sentiment. These four million potential new voters will put a lot of pressure on any political parties that want to prevent their friends and family from coming here.

• And then I can see the trend of public sentiment on the side of 'Greater Australia', and you know how politics will play according to that trend

1) Australia has the means to become huge.

• We currently accept an average of 400,000 immigrants each year. This converts to a 1.8% increase in the current population. All you have to do is add another 0.2% and it comes to 2%, which is about 50,000 more people a year, whether they are guest workers or some other form of visa, it will take Australia to 50 million people by 2050.

• A population increase of 2% per year is not much different from the 1.8% we are doing now and is still well below the threshold of marked difference. This is similar to our inflation figure. It is difficult to notice a price increase if it is less than 3%. At this rate, you are unlikely to cause any financial chaos.

• So if Australia wants to get huge (ie to have 50 million people by 2050), we have the means to do it without the majority of the public noticing the difference.

• The real question is not whether Australia wants to become huge. In my opinion, perhaps the practical question should be whether Australia has the option not to become huge!

2) Australia may have to become huge.

• None of us would question the arrival of the four seasons one after the other, year after year. There is some kind of law behind this rotation that we can observe even if we can't fully explain it.

• The changing of the seasons is like the way nations rise to become economic powers and then fall again. If you look over the past 500 years, there have been 9 countries that rose to the level of power that enabled them to dominate the global economy in their era. They are Portugal, Spain, Holland, England, France, Germany, Japan, Russia, and America. As the old saying goes, what goes up must go down. None of these countries escaped their decline and each made way for another country to assume the role of world leadership.

• We are now in the “Asian Century,” as our Prime Minister recently said. I would probably call it the "Australian Century", as there has never been a time in history when Australia has been propelled to the center of the world stage in terms of economic and political power.

• Australia is uniquely positioned as a bridge between Asia and the rest of the world. It is the only country (excluding New Zealand) that has a Western civilization and lifestyle in the same time zone as Asia.

• Today, the distance barrier is being removed by technologies such as the Internet, video conferencing, etc., and there remains only one barrier to effective communication - the time zone barrier!

• You can communicate with most Asian countries during business hours by living in Australia. Instead, you'll need to work a night shift or afternoon shift if you're based in Europe or America. This is one of the main reasons why many multinational companies are strategically setting up their Asia Pacific headquarters and design capabilities in Australia.

• Australia's biggest problem has always been that it was considered "isolated" due to its distance from other continents. But its location now means that it is ideally positioned as a western gateway to Asia. With Asia booming, you can see why Australia has been getting such unprecedented attention lately. Have you noticed lately that there is a struggle for attention in Australia from the two largest economies in the world representing East and West?

• Being as "relaxed" as Australian culture was in the past, I think Australia will increasingly have to take on some sort of leadership role quickly, as the West desperately needs to find growth opportunities from the East. At the same time, the East desperately wants to improve its standards of living, and Australia finds itself ideally positioned as a conduit for these two goals. In the end, this means that we have no alternative but to get bigger and richer.

• After all, those nine other countries, some of which are significantly smaller than Australia, have all had their turn for the past 500 years. With America and Europe in decline, it should be someone else's turn this time. If it wasn't Australia, could you choose another country in the West that is ideally placed and ready to thrive right now than us? I do not print.

3) It may be in Australia's interest to become huge.

• Have you noticed that Australia has been busy shipping all the resources our 22 million people currently don't need? In other words, we are selling our most valuable resources to build other countries instead of our own.

• If you think this makes sense, put on your thinking hat as a real estate investor. Imagine that you are a farmer sitting on a large plot of land. Which is smarter: just sell your land now for today's price or let more people work with you on the land forever? This is one of the reasons why you often see that most large land development projects are joint ventures between the farmer and the land developer so that the farmer gets a much better return on his land.

• The Australian government is like a farmer sitting on a large plot of land with a lot of potentials. Why not allow more people to come and work on your land, instead of selling it to overseas buyers just because there isn't enough local demand?

• This is one of the reasons why I believe it is in Australia's interest to attract the best talent from around the world to develop our most internationally competitive industries while selling our resources. Selling our resources is only a temporary cash flow strategy; It is not an investment strategy for long-term survival.

Huge opportunity for real estate investors

Simply put, there has never been a better time to be a real estate investor in this country. When you have between 14 million and 28 million new immigrants coming to Australia, you're talking about adding 3-7 million people to a major city like Melbourne or Sydney over the next 40 years, or 100,000-200,000 annually. You can begin to visualize the extent to which each of these cities must become wider and higher.

The following are the main characteristics that will support future real estate investment trends:

• Most immigrants are between 26 and 45 years old. They tend to be in the age group where they have young children, so a large proportion of new housing in Australia must cater to these young families.

• A large proportion of this generation of immigrants is already skilled or qualified to earn incomes above the average local population.

• Most immigrants will have to start in Australia as renters for the first two years because mortgage insurance companies will not insure banks simply to lend money to someone who has not yet established a reasonable business or credit history in Australia.

• Most new immigrants tend to live around other former immigrants from the same ethnic community for support.

• Most immigrants give high priority to the education of their children, because that is how they end up qualifying to come to Australia, so good schools are essential to them.

• First-generation immigrants are less concerned about the prestige of the suburb initially because they do not have local knowledge of their local situation. Convenience, access to inexpensive shopping, and value for money are far more important than status for them in the first few years.

• First-generation immigrants are usually good savers, and with the good income they earn, you would expect the areas they choose to live in will perform better than average.

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