Broadsheet

The Australian immigration system must exclude dickheads, bullshitters, and bludgers.

This post has been inspired by Joe Walker’s recent set of three exemplary interviews (Martin Parkinson (former Treasury, author of 2023 migration review), Mark Cully (historian), Mike Pezzullo (senior border official 2013-2023)) on the subject of immigration policy. This comes against a backdrop of growing scepticism within the West on current levels of immigration, concerns about integration, cultural compatibility, rising costs of living, straining public services and infrastructure, and the rapidly increasing popularity of hardline anti-immigration political parties who, in some cases, have already won defining majorities within the Western democratic system.

This post complements earlier posts of mine on Australian defense policy, excessive government interference in its economy, economic stagnation, and energy policy.

(As I publish this, protests are occurring in Ireland. I actually held off on publishing this for about a month in the hope I could drop it on an immigration slow news day, but it was not to be. This post is not about any specific recent event.)

My position, as an immigrant, is that I would like immigration systems to be successful and publicly supported at the highest possible sustainable rate. The question I’m here to ask is: what would a crazy awesome immigration policy in Australia look like that could enjoy majority support and work well for everyone?

Some people might argue that the existing system is perfect and ideal as it is and that the missing piece is either a misinformed or inadequately propagandised public. This sentiment is captured well in Bertolt Brecht’s poem:

“Would it not in that case
Be simpler for the government
To dissolve the people
And elect another?”

Certainly one evolving challenge is that the general population, now exposed to a wide and broadening variety of information through fragmented social media, has developed much stronger mimetic resistance to astroturfed ideas. The standard of rigour and transparency necessary to convince the general public that certain policy measures purportedly enacted in their own best interest are in fact in their best interest is much higher than it ever was.

In order to be successful, a reformed immigration system would need to counter the growing contradictions and challenges of the existing one. If immigration has increased our living standards, why is it that housing, health care, education, and childcare are more unaffordable than ever? If immigrants commit crimes at a lower rate than the general population, why is it that the criminal statistics of immigrants in Australia are classified – knowledge about public safety that is literally illegal to know or disseminate? If immigrants are generally hardworking, contributive members of society, why is it that hospitals are breaking beneath the strain of the dependents of immigrants who are brought here late in life with exceedingly complex medical problems?

To put the answer up front: Australia should adopt transparent market-based mechanisms for determining permanent residency, and it should be based on age-calibrated minimum income tax contributions. The market can expose the necessary information on sufficient levels of cultural and economic integration in a way that a bureaucratic judgment system never can.

This is not selling Australian citizenship to the highest bidder. Under this proposal, a 35-year-old single migrant would qualify for permanent residency on a salary below what three-quarters of Australians their age earn. Rather than being elitist, it requires only a clear net positive contribution. This proposal just happens to be one that, for the first time in Australian history, would be capable of mathematically demonstrating that every new migrant adds wealth to Australia from the moment they arrive. Not on average, not after twenty years, but today, individually, verifiably. That is the unique political property of the architecture I describe below.

The current system can’t be patched

In his interview with Joe Walker, Martin Parkinson describes in some depth the complexity of the points-based immigration system. This points system is designed to guide immigration officers in making decisions as to whether particular immigrants can be accepted. The system, however, has not evolved substantially in more than 25 years and it is clear that on the most important metrics the point system is either saturated or is not sufficiently discriminative. Immigrants, both good and bad, understand that it’s a game and the game must be played.

One thing that came through to me in more than two hours of interview is the steadfast refusal of Martin Parkinson to discuss the potential value of a market-based system for resolving this problem, which is an interesting oversight from an economist that ran Treasury for three years. Instead we have endless discussion of wrangling between dozens of stakeholders, including employer bodies who want to increase immigration to push down wages of Australians and increase their margins, versus employee bodies who want to restrict access to labour through licensing and guild agreements to increase the scarcity of their constituents’ skills and drive up their wages. The result is poorly managed chaos that fails Australian-born citizens, poorly filters aspirational immigrants, and betrays the hopes of the more than two million “temporary migrants” who lack certainty about their future status.

Over and over, we are told, Australia suffers from fundamental labour shortages in certain skilled and unskilled trades for jobs that Australians simply can’t or won’t do – and this is despite more than 30% of contemporary Australians being born overseas! I don’t know if I believe this. I think that there are some known difficult, dirty, and dangerous jobs that are seen as socially undesirable, but I grew up in a relatively rural part of the Central Coast in the 1990s when nearly everyone, very few of whom were immigrants, did jobs like that. None of them were rich but pretty much all of them were able to afford housing, a car, health care, and education, often with large families. Employing a socially uncapitalized temporary immigrant underclass to clean toilets, change nappies, and slaughter animals might result in lower prices for those particular services but the economic imbalance just translates into higher prices that compensate in other parts of the economy, along with the moral cost of exploiting people with fewer choices.

The key attribute of market capitalism is that sustained shortages are impossible because prices will adjust to meet supply and demand. Cutting off access to entry-level or low skill jobs for Australians in preference for cheaper foreigners merely accelerates Australia’s path to a plantation economy that exports exclusively low margin commodities and must import, at the seller’s discretion, any other necessity. Australia is currently enduring the folly of this policy in securing access to such necessities as refined petroleum, but the principle holds in general and is unlikely to magically correct itself.

Markets are not perfect and money is not a measure of someone’s worth. However money is the mechanism by which we allocate labor and capital within our economic system because its finite nature forces users to collapse their preferences towards what they actually need rather than their stated preferences. Simply put, money aligns incentives towards mutually acceptable outcomes. We would all like to live in a world where the wealth of Australia was able to bring a high quality of living and modern health care to the billions of people worldwide who would benefit from it, but this is not the reality that we currently live in. As a result we must make choices, and a financial filter is transparent, non-discriminatory, and fair.

There is also a deeper point about what such a filter selects for, which I should make plainly. Sustained high earning in a modern economy requires impulse control, executive function, conscientiousness, the ability to cooperate within institutions, the willingness to defer gratification, the time horizon to make decisions whose payoff is years away. These are the traits Australians most want in fellow residents anyway. They are also traits the electorate is unable to test for explicitly without producing legally indefensible discrimination. A fiscal filter measures the result rather than the trait, and so it guarantees fairness in a way that is blind to nation of origin, race, gender, religion, and other protected characteristics.

The first leg: a fiscal filter: No Bludgers

The first leg of this proposal is that we deftly sidestep the concern or accusation within Western societies that immigrants have a tendency or a perverse incentive to become freeloaders in a system they didn’t build, by simply insisting that all prospective immigrants meet certain minimum taxation thresholds in order to be eligible for permanent residency and the utilisation of public benefits. These thresholds must necessarily exist on a sliding scale, based on age and on the number of prospective dependents to be brought in.

The whole point of this exercise is to maximize opportunities for high-quality immigrants in the most fair and transparent way possible. We are ensuring that we maintain Australia as a destination of preference for extremely talented international migrants. So it follows that a highly qualified 20-something who has many years of high productivity and good health ahead of them to contribute to the Australian system should face a lower set of hurdles than a similarly qualified 60-year-old who has far fewer years of productivity ahead of them, and who also wants to bring in their retired 80-year-old parents, who both happen to need new hips and treatment for cancer.

Younger children should receive a different treatment than retiree dependents as younger children ideally will grow up to become highly productive and contribute to our society in a way that retirees simply cannot. Note that this also creates the correct incentives around immigrants who would then work hard to up-skill in the Australian labour environment to earn the right to bring various family members into Australia. It could become a point of pride to immigrate as a solo migrant to Australia in your 20s and to learn and work and be promoted fast enough to bring your extended family in in your 30s. This mechanism also delegates needs-based triage of access to Australia and its carefully created and curated environment to the migrant families who would understand best who most needs them, instead of requiring immigration department officials to “say no to Nana” forever.

Of course Australia should remain open to migration for non-working people but as they are not paying income taxes, their material contribution to the Australian system would have to be levied at the point of entry in the form of some analogue to the US Gold Card.

In general, if an immigrant meets these minimum viable fiscal contribution thresholds, then their immigration status need not be tied to a particular employer, deleting any possibility of the coercion or exploitation that has become rampant in the US H-1B program.

I’ve included a table here with some numbers calibrated to present Australian GDP, derived from a present-value calculation using Treasury’s own service cost estimates and a 3% real discount rate. These numbers would have to be indexed to inflation, and accumulate for sponsored dependents. The mandatory waiver of Age Pension entitlement by new entrants is built into them. Without that single change, all the thresholds roughly double after age 60, because the pension is a $28,000 per year ongoing entitlement that no working-life tax record can outrun. Ensuring sustainability of the pension for existing citizens and PR holders is a separate conversation largely subsumed by superannuation. New migrants self-fund their retirements. That is the single largest fiscal lever in this proposal and it is the one that makes everything else feasible.

Table 1.

Age at entry	Annual tax for net-positive contribution	Implied gross salary	Percentile of full-time Australians their age
25	$6,000	$47,000	30th
35	$10,200	$61,000	24th
45	$19,200	$89,000	47th
55	$38,800	$147,000	81st
65 (Gold Card upfront)	$200,000 once	—	—
75 (Gold Card upfront)	$360,000 once	—	—

These numbers do not place an arbitrarily high bar. They will enable a rock-solid defence of the proposition that every immigrant to Australia, individually, is a net contributor to the system from the moment they arrive.

There is a general challenge to these fiscal hurdle schemes, which is adverse selection. They exclude prospective migrants who cannot afford the price of entry, but they include people who would still end up extracting more value than they pay on entry. A pay-as-you-go system can avoid this, but I still think it’s relatively straightforward to tally up the net costs of the total pool of migrants in some age cohort and set the price of admission accordingly. This approach also aligns incentives, because in order to expand access to immigration for retirees, Australia would need to enable innovation in the provision of, in particular, healthcare services, in order to improve service and lower costs.

Note also that this system does away with all the problems Parkinson describes around skilled labour, certifications, and points-based systems derived from industry boards complaining about skill shortages. In particular we no longer need public servants to attempt to arbitrate the quality or validity of job qualifications obtained from overseas institutions, nor to worry about the perverse incentives of Australian-based diploma mills that purport to offer a pathway to citizenship. We can admit all the foreign students we want. If they are able to land a job that pays a sufficiently high salary and they meet the tax threshold upon graduation, then great. If they don’t, then they may return to their home country. Universities must be compelled to publish statistics regarding the job market success of their students and curate their admissions and courses to match – once again aligning incentives while promoting fairness and transparency.

Who actually administers this

The most important feature of this proposal is what it doesn’t require. No Department of Salary Fraud Detection needs to be staffed. No new agency administers it. The verification mechanism is the Australian Taxation Office, which has decades of experience cross-matching declared income against observed consumption, and already operates the data infrastructure required. Salary deposits are direct-deposit only, which AUSTRAC already monitors under existing anti-money-laundering thresholds. Consumption audits, which check that a migrant declaring $300,000 in income does not, in fact, live like one declaring $100,000, are something the ATO does routinely for domestic tax fraud cases at this income level.

The fraud surface area in this architecture is microscopic. A wealthy migrant takes the Gold Card because it eliminates the entire ongoing-compliance question. A productive migrant meets the tax threshold genuinely. The salary-inflation kickback scheme that occurs to everyone as a theoretical attack (employer nominally pays $300,000, requires $200,000 cash kickback) requires committing ongoing AUSTRAC-detectable tax fraud against the Commonwealth while the migrant, who owns their visa and can resign at any moment, declines to do so. It is a strictly dominant strategy. Any employer demanding cost claw-back from a migrant, such as visa fees, sponsorship costs, or training bonds, commits a strict-liability criminal offense with personal jail time for named officers, not corporate fines that are just a cost of doing business. The system polices itself by aligning incentives.

What gets deleted is the entire scaffolding of the current architecture. Occupation lists go. The points test goes. Labour Market Testing goes. The Business Innovation and Investment Program (which Treasury’s own modeling shows costs $80,000 per migrant in lifetime fiscal impact) goes. State nomination quotas, Designated Area Migration Agreements, and Labour Agreements go. The Migration Agents Registration Authority and the ~7,000-strong, $1B-plus migration agent industry go. Skills assessments by industry bodies for migration purposes go. Approximately 60-70% of the Department of Home Affairs selection branch goes. Seven hundred pages of migration regulation collapse to one page of thresholds. The only parts that remain are key stakeholders with skin in the game.

The waiver tier

There is one mechanism worth allowing precisely because of the second-order consequences it produces.

Any migrant whose tax record falls below the threshold may elect to remain in Australia by permanently waiving access to Medicare, the Pharmaceutical Benefits Scheme, Age Pension, NDIS, and means-tested welfare. In exchange, they hold mandatory catastrophic private insurance and pay cash at point of sale for any health and aged-care services they consume. They continue paying income tax, GST, and indirect taxes the same as everyone else. This is voluntary on both ends, as the alternative is exit.

The first purpose of this tier is to let migrants whose tax contribution is below threshold continue contributing to the economy without consuming public services. It also allows foreigners to access the Australian health care system on fair terms without resorting to impersonation of a resident friend or relative.

The second purpose, more important in the long run, is that a cohort of 50,000 to 200,000 cash-paying Australian residents creates a genuine price-discovery layer in dental, GP visits, elective surgery, aged care, and pharmaceuticals. None of these services currently trade at market prices in Australia, because Medicare and PBS set prices for around 70% of the volume. The waiver cohort produces the first genuine cash-pay healthcare market this country will have had in two generations. Once cash-pay infrastructure exists serving the waiver cohort, the question of whether existing Australian citizens should also be allowed to opt into faster, market-priced care becomes a live political question rather than a hypothetical one. This is how you actually deregulate healthcare in a country with a constitutional commitment to healthcare socialism. It takes 15-25 years and it is the only path that enables a graceful transition to a competitive, innovative healthcare model that has a hope of meeting Australia’s future needs without bankrupting the entire country.

The third purpose of the waiver tier is to encourage less productive migrants to self-deport. The system does not need to forcibly remove anyone. A migrant who cannot meet the tax threshold and does not want to pay cash for services chooses to leave. The architecture is voluntary, self-policing, and produces the right outcome at every margin without enforcement bureaucracy. The difference is that Australia is no longer spending vast quantities of treasure bribing non-contributive migrants to live here and consume services, wealth and opportunities that could be made available to team players. Does this make Australian migration relatively more hostile to prospective migrants who want to sit on their arse and get free money? Yes.

The medical, aged-care, and pharmacy lobbies may choose to fight the waiver tier harder than any other element of the proposal. That intensity is the signal that it’s the right idea – one receives the most flak when one is over the target.

Replace professional gatekeeping with insurance markets: No Bullshitters

Parkinson cites the figure of approximately 250,000 permanent residents admitted as skilled migrants who apparently cannot work in their assessed profession. His framing is that this is pure productivity loss. People we said were qualified who can’t get licensed by the relevant state board. The implied diagnosis is that the licensing bodies are creating bureaucratic obstacles that should be streamlined to bring these desperately needed skills into the workforce.

The true reading is harder. Stage 1 skills assessment is gameable: Engineers Australia’s Competency Demonstration Report for engineers from non-Washington-Accord countries is a self-written essay for which a thriving ghostwriting industry exists in Hyderabad and Lahore, among other places. AMC pass rates for international medical graduates run around 21-28%, compared to 67% for the UK’s equivalent PLAB exam and 68% for Canada’s NAC. AHPRA itself tiers source countries into “comparable” (UK, Ireland, US, Canada, Singapore, NZ) and “non-comparable,” which is an explicit admission that the visa-stage equivalence claim is false. A meaningful fraction of the 250,000 are people whose original credentials were lower-quality than the visa system pretended, and Stage 2 licensing is doing real work catching them.

The problem here is that on one hand, Australian licensing boards are running a protectionist, racist racket excluding genuinely qualified foreign professionals, and on the other hand, Australian licensing boards are protecting consumers from the potentially catastrophic consequences of insufficiently competent foreign practitioners who, if they can’t navigate the bureaucracy of Australian occupational licensing, sure as hell shouldn’t be building bridges, wiring houses, and performing heart transplants. As with many things, the truth lies somewhere in the middle, but how can we expect a political or bureaucratic process to adjudicate this correctly or fairly without real world information?

The right market-based solution is not some kind of bridging program funded by a levy on universities – yet another tax on productive parts of the economy. The right solution is to augment the bureaucratic licensing monopoly with an insurance market. Any foreign-trained doctor, engineer, accountant, or other regulated professional should be permitted to practice in Australia if they can obtain professional indemnity or malpractice insurance from an Australian carrier at a rate equivalent to that paid by an Australian-trained practitioner, then the licensing body must explicitly justify why they should not be allowed to practice. If they cannot obtain insurance without a large risk premium, then the matter speaks for itself.

This is elegant for several reasons. Insurers are in the business of pricing risk and making money. The insurance company has actual money on the line. They pay out when professionals harm their clients. They have actuarial data on outcomes. They have no protectionist incentive, unlike the AMA or the engineering institutions. They will assess each applicant individually, may require an examination or a period of supervised practice, may decline applicants whose credentials don’t actually translate. Most importantly, they have skin in the game in a way that AHPRA, Engineers Australia, and the specialist medical colleges manifestly do not. The market does the safety assessment, with real consequences for getting it wrong, and the protectionist guilds lose their gatekeeping monopoly overnight.

Applied to the 250,000: those whose qualifications and skills genuinely meet Australian standards will pass the insurance market test and begin practicing. Those who cannot, either because their credentials were inflated, because their training was inadequate, or because they are not actually competent at the work, will not be insured and will not practice. If they fail to meet the tax threshold in due course, they will either accept the waiver tier or leave. The system handles this without a single new bureaucratic process and without subsidising people who were never going to deliver the productivity their visa promised.

Holding the universities accountable

Australia is a rule-of-law country and migrants who came in good faith should not be the targets of accountability measures. But universities and their executives are not entitled to derive infinite income by arbitraging the Australian migration process. The international education sector has, for more than 25 years, operated as a migration laundromat with full institutional knowledge of what it was doing. Vice-Chancellor remuneration is explicitly tied to international enrolment growth. Marketing materials feature “pathway to PR” messaging the institutions know is misleading at the rates they are enrolling. The Senate’s 2023 interim report on the international education sector documented the migration-laundromat pattern, as did the Parkinson Review the same year, after a decade of sector lobbying had successfully suppressed similar findings in earlier reviews.

The first priority is to fix the system going forward. The following are some market-based proposals to align incentives between educational institutions and foreign students, who are otherwise ripe for exploitation.

Bonds posted by universities for each new international student, calibrated to the institution’s historical PR conversion rate. High-performing programs post negligible bonds; the diploma-mill segment posts bonds that make its current business model financially nonviable. Refundable to the student if they fail to qualify under the new system within four years of graduation.
Fixing incentives will induce the correct behaviour in university leadership, but in particularly egregious cases, we could explore personal clawback of executive remuneration tied to international enrolment growth metrics over the past decade where institution-level outcomes fell below documented standards. Royal Commission precedent.
Class actions under the Australian Consumer Law for material misrepresentation. Marketing materials of many institutions over the past decade meet the legal definition of material misrepresentation regarding likelihood of PR outcomes. This is purely prospective enforcement of existing law against actors who escaped enforcement through sector lobbying. The damages should flow to the affected students, not to the institutions.

There is no rule-of-law principle that requires the Australian taxpayer to continue indemnifying the universities and executives that built the laundromat.

The data Treasury refuses to publish

Denmark publishes, annually, the per-person net fiscal contribution of immigrants to Denmark broken down by country of origin. The publication is called Indvandreres nettobidrag til de offentlige finanser. It is read carefully by the Danish public, debated openly in parliament, and forms the empirical basis for a Danish migration policy that has shifted decisively over the past decade without producing the collapse in public consent that Australia has experienced.

Australia produces the equivalent data. The Multi-Agency Data Integration Project (MADIP) cross-links ATO records, Centrelink records, Medicare records, and visa records. Treasury’s FIONA model publishes fiscal-impact figures by visa category: Skilled Employer Sponsored at +$291k lifetime, Skilled Independent at +$205k, BIIP (business indication and investment program) at -$80k. Treasury does not publish the equivalent data by country of birth. The 2016 Productivity Commission report did not. The 2021 Treasury FIONA paper did not. The 2023 Parkinson Review did not.

This omission cannot be accidental. Treasury’s stated reason, when pressed, is “social cohesion concerns.” Translation: we believe the public would not handle the data well, and we have decided to protect them from it. This is paternalism dressed as prudence, and it is the proximate cause of the collapse in public trust in Australian migration policy. Voters can tell when they’re being bullshitted, and respond by withdrawing consent entirely.

Publish the data. The single most useful sentence to insert into Australian political discourse is: What does the data say? Followed by: Why isn’t it published?

The second leg: Housing-indexed migration limits

The second leg of the proposed system comes down to ensuring that immigration flows are calibrated to real-world Australian cost-of-living issues. We do this by aligning incentives between policymakers on issues pertaining to supply-side challenges in Australia and policymakers on issues pertaining to the demand side. To keep this conversation of a sensible length, we will constrain our discussion here to housing alone although a discussion around education, healthcare, and childcare is also worthy of consideration.

In any case, it is clear that the above-inflation increase in costs of service and care industries is driven largely by massive relative inflation of costs in housing, which in turn is driven by an imbalance between supply and demand. If all the houses cost more than a million dollars then no nurses, firefighters, police, or teachers can afford to live in a city.

It is no secret that housing prices in Australia have enjoyed, if that’s the right word, an unprecedented period of speculative expansion. The consequence is that younger Australians who are setting out are denied the possibility of home ownership. This in turn affects family formation rates and artificially depresses the birth rate in a way that endangers the long-term viability of Australian culture. Houses are not intrinsically productive and the material costs of houses are not that high. Yet the current Australian economy seems to expect that Australians should be willing to pour the vast bulk of their lifetime GDP into servicing enormous loans on structures that they cannot live without, instead of investing it in children and businesses.

Rough back-of-the-envelope math suggests that returning housing prices to a level that would sustain the ongoing social reproduction of Australian culture would require a doubling of current supply, a radical prescription that underlines the short-sightedness and near-hopelessness of the hole we’ve managed to dig for ourselves. Of course a sufficiently large correction to housing prices would be a severe economic blow to all current holders of equity tied up in the Australian housing market but this is probably the lesser of two evils, if the alternative is the extinction of children born in Australia.

In any case it is insane to admit half a million or a million migrants every year in a country that cannot build enough houses to contain them all. Therefore it is reasonably straightforward to ramp the threshold of admission based on taxation or a large visa fee to cap the total number of migrants per year to a level that is proportional to, and algorithmically determined by, the rate of expansion of housing supply, such that housing prices are on a trajectory to normalisation in an acceptably short time frame.

I suggest that total immigrant numbers be kept below 100,000 in any year in which housing prices increase faster than inflation and expand to a maximum of 500,000 a year in cases where housing prices are actually decreasing.

Table 2.

Year-on-year housing price change	Maximum permanent admissions
Rising > inflation	100,000
Rising at inflation	200,000
Stable in real terms	300,000
Falling 0-3% real	400,000
Falling > 3% real	500,000

This makes immigration policy counter-cyclical rather than the current pro-cyclical pattern, in which we admit the most people exactly when the country is least able to house them. It also creates a direct incentive for state and federal governments to attack housing supply constraints, because doing so unlocks higher migration numbers, which are popular with the business community and the universities. The alignment is in the right direction for the first time in 30 years.

There remains an unskilled labour question that the fiscal mechanism does not directly handle. The seasonal agriculture sector, parts of construction, and aged care all currently rely on migrant labour that would not clear the tax threshold. These sectors are currently exploiting desperate migrant labour as a shadow subsidy to keep prices artificially low. Letting prices rise to market clearing is the right answer. The Productivity Commission has said this for 30 years and been politely ignored every time. For the residual cases that are genuinely temporary, a PALM-equivalent guest-worker program (3-year maximum, no PR pathway, employer bonds against exploitation, mandatory return-home period) handles them transparently without pretending they’re on the path to permanent settlement.

The third leg: integrity and rule of law: No Dickheads

The third leg of the system is around social cohesion, integrity, and rule of law. The Australian immigration process requires every migrant to pledge the Australian Values Statement.

I confirm that I have read, or had explained to me, information provided by the Australian Government on Australian society and values.

I understand that Australian society values:

respect for the freedom and dignity of the individual;
freedom of religion (including the freedom not to follow a particular religion), freedom of speech, and freedom of association;
commitment to the rule of law, which means that all people are subject to the law and should obey it;
parliamentary democracy whereby our laws are determined by parliaments elected by the people, those laws being paramount and overriding any other inconsistent religious or secular “laws”;
equality of opportunity for all people, regardless of their gender, sexual orientation, age, disability, race, or national or ethnic origin;
a ‘fair go’ for all that embraces:
- mutual respect;
- tolerance;
- compassion for those in need;
- equality of opportunity for all;
the English language as the national language, and as an important unifying element of Australian society.
I undertake to conduct myself in accordance with these values of Australian society during my stay in Australia and to obey the laws of Australia.
I undertake to make reasonable efforts to learn the English language, if it is not my native language.
I understand that, if in the future I meet the legal qualifications for becoming an Australian citizen and my application is approved, I will need to pledge my loyalty to Australia and its people.

It is not very complicated, but it’s also equally clear that a minority of migrants to Australia are falsely pledging alignment with these classical liberal values and then aggressively importing ideologies of hate, violence, and extremism from distant lands already cursed by these terrible ideas.

How can it be that every prospective migrant to Australia is screened for adherence to fundamental liberal values, and yet survey work consistently finds a non-trivial minority of certain immigrant communities who, in private, do not in fact share those values? In his interview with Joe Walker, Mike Pezzullo observed that in relative terms the genuinely problematic cohort is very small but in absolute terms it has been large enough to produce repeated “incidents” on Australian soil. Where “incident” is a strange euphemism for repeated outrageous terrorist plots and attacks.

I don’t want to create an Australia that polices thought crime. At the same time we need to be mindful that the system is obviously being gamed and adherence to fundamental Australian values is currently not enforced.

Lying to an immigration officer is fraud. Residency obtained by false representation is voidable when the fraud is discovered. There is no provisional period after which a successful lie becomes safe. A university can rescind a PhD if it later discovers the data was fabricated, even decades later, because the degree was never validly earned in the first place. The same principle applies to permanent residency obtained by misrepresentation. If evidence emerges five, ten, or twenty-five years after admission that an applicant lied about their identity, qualifications, beliefs, history, or intentions, their residency is revoked and they are deported. There is no statute of limitations on fraud against the immigration system. This is not retrospective punishment. It is the recognition that the original grant was conditional on truthful representation and if the condition was never met, the grant is void. Even if they live in a marginal electorate.

Similarly, if an immigrant is admitted to Australia on a refugee visa claiming asylum from a foreign country and is subsequently found to have visited that country, that calls into question the validity of the initial claim. Residency revoked, deportation follows, and capacity is created for people with genuine need.

Criminal conduct fits the same frame. Temporary migrants and permanent residents who serve prison sentences in Australia must be deported on completion of their sentence. The threshold is a single sentence of meaningful length — Section 501 currently uses 12 months as the cutoff but that seems absurdly lenient to me, since it costs $160,000/year to house a prisoner. Migrants should respect and fear the Australian justice system. 95% of current migrants and millions of prospective migrants have no difficulty obeying basic laws. If you cannot stay out of prison in Australia, you are not entitled to permanent residency in Australia. There is no productive discussion to be had about whether prisons in a criminal migrant’s country of origin are worse than Australian prisons. It is not Australia’s responsibility to provide a more luxurious incarceration experience to people who have demonstrated they cannot live as law-abiding members of the community here. Why should we underfund schools and hospitals to house, feed and clothe criminals who came here illegally or under false pretenses and whose behaviour reveals no respect for their new home? We are not going to re-instantiate penal colonies!

To protect the ongoing political health and sustainability of the immigration program, we must hold all immigrants to high standards of personal integrity and contribution to Australian society. The mechanism is the existing Section 501 character test (preserved), the existing Australian Values Statement (strengthened from rhetorical declaration to substantive condition revocable on breach), the existing ASIO referral process for high-risk profiles, and a narrow extreme-position screen modelled on the equivalent US INA §212(a)(3) provisions — designated terrorist organisation membership, public advocacy of violent overthrow of democratic government, documented sectarian violence history. None of this requires racial or religious tests, all of which I would reject as both unjust and unnecessary.

The reason I treat this as a third leg rather than a first one is that the fiscal mechanism is doing most of the work the electorate cares about already. The traits the system selects for via the tax threshold are precisely those that are correlated with civic compatibility, and in a way that is far harder to fake than any declared-belief test. Once the architecture is right, the cohesion issues become a small residual rather than the dominant policy challenge.

What about the 2.3 million?

Approximately 2.3 million people are currently in Australia on temporary visas. The instinctive response of any policy proposal is to grandfather their existing pathway expectations under the old rules. I am not going to do that here. Grandfathering retroactively-failed visa policies onto the people currently caught in the resulting limbo is its own injustice, and running two parallel migration systems for 10-15 years is administratively absurd.

The new system must apply equally to everyone. Every current temporary visa holder is re-evaluated against the new criteria within a defined window, ending at the end of the first full financial year since enactment. If they meet the tax threshold for their age cohort, they receive permanent residency immediately and the bridging-visa machinery that currently traps them dissolves. If they don’t, they can purchase the Gold Card at the applicable price, accept the waiver tier, or leave. Most of the people currently in limbo would welcome the certainty, even those who don’t qualify outright. The existing system already deports people slowly and miserably through bridging-visa expiry; the new system does it quickly with clear, fair, transparent rules and a defined timeline.

A one-time regularisation window is offered to the estimated 60-100,000 undocumented residents on the same terms: meet the new threshold within the financial year and receive permanent residency, or exit.

The 250,000 stuck professionals discussed above are a subset of this population and handled by the same rule. Insurance-based licensing gives them a fair shot at practicing their nominal profession. If they can qualify under that and earn enough to meet the tax threshold, they get permanent residency. If they can’t, they don’t. Some significant fraction of this cohort were never going to be productive at their assessed skill level and the system that admitted them was lying about what their credentials meant. We are not going to spend Australian taxpayer money on trying to back fill an educational credential they purport to have already achieved and which is not available to regular Australian students. They go home, new immigrants get a shot.

This is harder than the grandfathering approach but cleaner, faster, and fairer. The people currently in limbo are paying the cost of the existing policy failure; they should be the first beneficiaries of the new policy clarity, not the last.

Conclusion

I don’t imagine for a second that this proposal will meet with thunderous applause and universal acclaim. Much of what it states is quite radical, if rigorously consequentialist. But opponents who scream the loudest may be found to be the greatest beneficiaries of the current system, which is unfair, unaffordable, and rapidly losing legitimacy.

This is not a system that promises to admit fewer migrants. It is a system that promises to admit better-matched migrants, transparently, on terms that the Australian electorate will recognise as fair, and at quantities calibrated to what the country can actually absorb. It captures for existing Australians the surplus value of access to one of the most desirable countries in the world, rather than leaving that surplus on the table for migration agents, diploma-mill universities, and exploitative employers to extract. It replaces credential-laundering bureaucracies with insurance markets that have actual skin in the game. It applies a single, clean set of rules to new applicants and the existing population alike, so that everyone knows where they stand. It doesn’t ask the taxpayers who have already paid for it once to pay yet again to clean up the mess.

Above all, it produces, for the first time in Australian history, a migration program that can mathematically defend the proposition that every new resident adds wealth to Australia from the moment they arrive. Not on average. Not after twenty years. Today, one by one, verifiably.

Australia is one of the best countries in the world to live in. We have built that, and we maintain it, at considerable cost. We are not obliged to be a sucker about it.

No dickheads. No bullshitters. No bludgers.

A fair go for everyone else.

Photo by B. Sutherton via Wikimedia Commons

Howdy, folks! Today’s roundup is mostly a bunch of follow-ups to posts I wrote before. It’s very hard to decide when to post about a particular topic, and it often happens that some relevant news story or piece of data comes out a little bit later. These roundups are a good way of cleaning up those loose ends.

Today we start with a truly wacky policy proposal by the esteemed Thomas Piketty…

1. What on Earth is Thomas Piketty talking about?

Unlike many people, I never pretended to have read Thomas Piketty’s book, Capital in the Twenty-First Century. I simply didn’t read it. I did read a number of the papers that the book was based on, which is often a better and quicker way of getting the key points of a book like that. I thought those papers were a good and important addition to the economics literature, even if the messy reality of inequality didn’t always fit the simple story Piketty told, and the data he relied on was less reliable than we might want.

Despite the limitations of Piketty’s work, it sparked a long-overdue and generally healthy debate about inequality. And Piketty’s basic policy solution — tax rich people more — was pretty reasonable, even if his proposed numbers were too extreme. I did roll my eyes when Piketty stood on a stage at an academic convention and accused Greg Mankiw of being in the pocket of rich people.1 But overall his work seemed pretty serious and often reasonable.

However, after years of relative silence, Piketty has burst back onto the scene with some work that seems very unreasonable. He and his team at the World Inequality Lab — which includes his longtime co-authors Emmanuel Saez and Gabriel Zucman — have come out with a grand plan for fixing the world. And for the most part, it’s total nonsense.

Piketty described the new plan in a thread on X. Its main focus, perhaps surprisingly, is not inequality — it’s climate change!

First of all, Piketty’s baseline climate change scenarios appear based on a very outdated model — the RCP8.5 scenario, an extreme projection that essentially all serious climate scientists have now rejected. This choice of baseline suggests that Piketty et al. were trying to find ways to justify maximal policy intervention, instead of starting from the science.

Piketty’s preferred solution to climate change is degrowth. He envisions detailed central planning to achieve deliberate impoverishment of large portions of the world’s population — mandated reductions in the consumption of various specific goods, including food.

In addition to the dubious morality of deliberately impoverishing untold millions of human beings based on scientific models that have already been rejected, this kind of scheme is just utterly unworkable. Back in 2021, when I wrote about why degrowth is a political nonstarter, I declared that “implementing the kind of reallocation schemes that degrowthers throw around with abandon would require global economic planning that would put Gosplan to shame.” Piketty knows this, and thinks it’s a good thing.

Even more ridiculously, Piketty envisions a global fiscal authority to carry out this insane plan via global taxation:

Let’s set aside the obvious fact that countries are just not going to agree to give up their spending and taxation power — even the EU refuses to have a fiscal union, and it’s rather insane to imagine Indians and Chinese people agreeing to let themselves be taxed by Tanzania and Nigeria — and just point out how this proposal ignores the basic economics of climate change.

Climate change is a global negative externality — the reason countries don’t all just impose their own local carbon taxes and solve the problem is that there’s an incentive to free ride and let other countries handle it. That exact same free rider problem applies to the global fiscal authority that Piketty envisions. There’s a clear incentive for any country to simply drop out of the fund and let other countries fix climate change for them.

It’s obvious that Piketty et al. are just looking for a reason to levy high taxes on the global rich. This is the “World Inequality Lab” we’re talking about here. And it probably made sense to try to ally with other factions of the progressive movement — degrowthers, “decolonial” leftists, and so on — in order to get support for their desired policies.

But the result here is not going to be a good one for Piketty, Saez, Zucman, and their team. No country is actually going to embrace the idea of a global fiscal authority to fight climate change. In calling for this sort of thing, Piketty et al. simply make themselves look less like serious economists and more like opportunistic activists on the fringe of a “green” movement that’s already in steep decline.

2. Tokenmaxxing, cont.

In a post this week, I noted that “tokenmaxxing” — simply using as much AI coding output as you can and hoping that it pops out something valuable — is hitting its limits:

Well, here’s a follow-up. John Burn-Murdoch of the Financial Times recently made this nice chart, using data from the Demirer et al. (2026) paper that I discussed in my post:

The number of apps with significant usage is actually going down in the age of AI, even as people are releasing floods of new apps into the world. Meanwhile, Bob Elliott notes that since generative AI was created, there has been a rapid acceleration in many measures of text output, even though the economy hasn’t accelerated much:

And Sam Altman is now warning of a significant pullback on AI spending — the first such pullback since generative AI appeared.

This doesn’t look like a simple story of “bottlenecks” and “weak links” — if it were that, we wouldn’t see so many new apps and e-books hitting the market. The deeper story here may be that demand for many of the things that generative AI produces might be a lot more inelastic than we thought. The things we really want a lot more of may not actually be the things that generative AI is yet equipped to provide. As the AI industry advances, of course, that will probably change.

3. Western militaries are obsolete, and Trump is making it worse

A couple of weeks ago, I wrote a post about how all militaries not based around large masses of cheap drones are now functionally obsolete:

This includes America’s military, which is based around a few big expensive “platforms” like fighter jets, aircraft carriers, and tanks. I’m not saying those weapons will all be useless in future wars, but if that’s all you have, and you don’t have masses of cheap drones, you will lose wars to countries that do have masses of cheap drones — such as China, if they ever get serious about turning their mighty industrial base toward making billions of weaponized drones.

The Lowy Institute has a good report explaining why Western militaries seem incapable of learning to use the essential weapons of modern warfare. They write:

Western military institutions…are failing to energetically learn from modern wars. Despite four years of unprecedented visibility into Ukrainian battlefield innovations, and the recent war in Iran, Western forces have not institutionalised key lessons into doctrine, force structure, or procurement priorities…The recent war in Iran has confirmed and amplified many of Ukraine’s lessons, particularly on the centrality of drone warfare, the inadequacy of Western counter-drone capabilities, [and] the effectiveness of cheaper long-range strike systems…And yet the response of Western institutions…has been characterised by rigidity, inertia, and what can be called a humility deficit: an unwillingness to genuinely confront the implications of what is being demonstrated in real time on real battlefields.

The U.S. military could, of course, learn from Ukraine — currently the #1 best country in the world in drone warfare. But the unrelenting hostility and disdain toward Ukraine from Donald Trump and the MAGA movement has prevented America from taking advantage of Ukraine’s expertise:

The Trump administration’s hesitancy in signing a major drone deal with Ukraine is slowing the U.S. military down in an area where it’s already trying to play catch-up…[T]he U.S. has so far refused to embrace Kyiv as a partner in its drone development…
[E]ven with senior Pentagon officials — including Defense Secretary Pete Hegseth and Army Secretary Dan Driscoll — lauding Kyiv’s drone abilities, the Trump administration is still biding its time on taking full advantage of the Ukrainian capabilities, a delay that experts say is potentially kneecapping the U.S. military…
“I don’t know what the hang-up would be in denying ourselves the ability to take advantage of that. I don’t think there’s any good reason,” Rebeccah Heinrichs, a senior fellow at the Hudson Institute think tank, said of Ukraine’s drone capabilities…One former official [called] the hold-up “lethargy” on the part of the Trump administration and “a certain amount of hostility towards Ukraine coming from the very top.”

MAGA basically created a fantasy world where Russia is a defender of Western values, Ukraine is somehow an arm of global wokeism, Ukraine is part of Russia’s legitimate “sphere of influence”, and Russia is a mighty superpower with a manly martial culture that would eventually be able to grind the Ukrainians down and inevitably triumph.

The problem with this fantasy was that it was fantasy, and if you believe in fantasy too long, reality tends to intercede. By allowing themselves to believe their own anti-Ukraine mythology, Trump and his followers are cutting themselves — and the U.S. Military — off from access to crucial modern military technology.

4. Tariffs on China are helping poor countries grow

In my last post, I argued that Europe should put tariffs and other trade barriers on Chinese imports, in order to protect its own strategic defense-related industries. But this is actually a lot harder than it sounds. Even if Europe blocks final goods from China, China can still export intermediate goods to “third countries” that assemble those goods for final export to Europe. In fact, China has done this in response to American tariffs, reducing (though not eliminating) the decoupling effect.

But if that happens, it’ll be very good for the “third countries”! Assembly work isn’t the most valuable part of the supply chain, but it does create value, and it does create lots of jobs, and it does create local companies that then have the potential to climb up the value chain someday and start making their own components. In fact, this is exactly what China did! Back in the 2000s, China did a lot of the low-value assembly work for components made in Japan, Korea, and Taiwan; now, most of that has been onshored, but it was still important for China to go through that initial phase of learning to slap together iPhones and computers and cars.

So if putting tariffs and other trade barriers on Chinese-made goods just ends up shifting assembly to poor countries…well, that’s not the worst outcome in the world. It’ll help counteract Chinese companies’ home bias — their natural tendency to want to build factories in China instead of overseas.

In fact, as the WSJ reports, this is already happening:

“Made in China” is becoming “made by China”—all over the world…Faced with higher Western tariffs and weak demand at home, many Chinese factories are moving abroad, making everything from appliances to automobiles everywhere from North and South America to Eastern Europe…In Mexico, Chinese investment in industries such as the automobile sector generated more than 100,000 jobs from 2020 to 2023, according to one analysis…In 2024, Chery Automobile, China’s top car exporter, helped to rescue a small factory in Barcelona that struggling Japanese automaker Nissan no longer wanted…
Jeep maker Stellantis this month said it planned to build EVs with two separate Chinese companies in Spain and France. Ford and Geely are in discussions about a potentially similar deal in Spain, and have also discussed whether the collaboration might extend to the U.S…Midea, the home appliance maker…opened a roughly $100 million factory in Brazil making refrigerators and washing machines in 2024. Its subsidiary, Welling Auto Parts, opened its first overseas manufacturing facility in Mexico last year.

In order to get around EU tariffs, Chinese companies are fueling a Moroccan manufacturing boom:

This has helped accelerate Morocco’s growth to 5%. That’s in the range where growth starts meaningfully transforming a country.

So even in the worst-case scenario where trade barriers don’t reduce dependence on Chinese supply chains, they can help spread the blessings and bounty of industrialization to a bunch of poor countries who need the factories more than China does. The flying geese must fly!

5. Is India’s growth under Modi impressive, or disappointing?

I recently came across this chart, showing various aspects of India’s infrastructure boom:

This is all pretty incredible. India’s poor infrastructure has long been regarded as a bottleneck to urbanization, manufacturing, and economic growth in general. Whatever else you think of the government of Narendra Modi, it has built a lot of infrastructure.

But over that same period, overall growth has been slower than we’d like to see. Anand, Felman, and Subramanian have a recent paper in which they argue that India’s GDP growth rate from 2011 to 2023 was overstated by somewhere between a quarter and a third:

India’s annual economic growth during the boom years between 2005 and 2011 may have been underestimated by about 1–1½ percentage points on average, and subsequent growth between 2012 and 2023 may have been overestimated by about 1½-2 percentage points…The first methodological issue leading to the misestimation is that the economy’s formal sector has been used as a proxy for the vast informal sector, even though the latter was disproportionately hit after 2015 by demonetization, the introduction of the goods and services tax, and the COVID-19 pandemic…The second methodological issue…is that the deflators for many sectors have been based on commodity prices, which have moved sharply relative to others. [emphasis mine]

If Anand et al.’s estimates are right — and they marshal a huge amount of supporting evidence — then it suggests that Modi’s tenure in office has been mixed. A couple of big policy missteps — demonetization and a botched tax rollout — hurt the informal sector of the Indian economy, while massive infrastructure investments have helped.

The implication here is that Modi and his successors should lean into what works. They should focus more on marshaling national resources and applying those resources toward rapid growth — two things that China did very well in the 1990s and 2000s.

6. Friends don’t let friends cite George Borjas

I’ve been writing over the years about how the right’s favorite immigration economist does shoddy, subpar work. Despite having a job at Harvard, George Borjas — whose analyses miraculously always seem to find that immigration is much worse than all the other economists think it is — consistently uses both poor data and flawed methodology. In another roundup back in February, I pointed out how Jianxin He and Adam Ozimek had found yet another example of Borjas doing subpar economics:

Borjas’s February 2026 working paper attempted to answer whether H-1B workers earn less than comparable native-born workers…[His] findings result from substantial data errors.…The most significant mistake is a…mismatch between his H-1B and native-born samples: the H-1B applications span 2020-2023, while the ACS data covers just 2023…[Accounting for this discrepancy cuts] the wage gap roughly in half…
The second error stems from controlling for geographic wage drivers using each worker’s PUMA (public use microdata area)…The problem is that Dr. Borjas uses the PUMA where visa holders work alongside the PUMA where native workers live. Consider a native-born software developer working at Google in Mountain View who resides in a cheaper area like Fremont. If residential areas have lower average wages than business districts, this mismatch systematically inflates the apparent native wage and negatively biases the H-1B wage gap.

Again and again and again, economists catch Borjas at it. It seems pretty obvious that Borjas simply wants to conclude that immigration is bad, and doesn’t much care about methodological errors as long as they reach his desired conclusion.

In order to fight back against this accusation, Borjas decided to accuse his critics of ideologically-driven research instead. In a paper with Nate Breznau, he wrote:

Our study exploits an opportunity to observe 158 researchers working…during an experiment. After being asked their position on immigration policy, they used the same data to answer the same empirical question: Does immigration affect public support for social welfare programs? The researchers estimated 1253 alternative regression models, and the estimated impacts ranged from strongly negative to strongly positive. We find that teams composed of pro-immigration researchers estimated more positive impacts of immigration on public support for social programs, while anti-immigration teams estimated more negative impacts. The differences arise because different teams adopted different model specifications. The underlying research design decisions are the mechanism through which ideology enters the process of producing parameter estimates.

The idea here seems to be to turn one researcher’s clear pattern of errors into a he-said/she-said sort of situation. If all researchers just engineer results based on their ideology, then why should we selectively get mad at Borjas for doing what everyone else does too?

But — surprise! — it turned out that this Borjas paper also contained critical errors that invalidated the whole result! Katrin Auspurg and Josef Brüderl pointed out in a comment paper that if you fix one simple coding error in Borjas’s analysis, his entire result about ideologically-driven research just vanishes into thin air:

Borjas and Breznau…recently reported that researchers’ ideology influences their empirical findings. Although we were able to reproduce B&B’s numerical results, our reanalysis shows that the reported association is not robust. Specifically, the association hinges on a coding error. Data from four teams that contradict the ideology hypothesis were excluded from the analysis due to idiosyncratic variable coding. Correcting this error renders the ideology effect no longer statistically significant. Also, B&B employed a different outcome variable and weighting scheme to that used in a previous paper based on the same data. These two analytical decisions further contribute to the observed ideology effect. Correcting the coding error or using the same specification as in the previous paper renders the ideology effect indistinguishable from zero. Therefore, we conclude that B&B do not provide robust evidence of ideological bias in this context. Instead, the reported association appears to be a statistical artefact resulting from questionable modelling decisions. [emphasis mine]

How does this just keep happening again and again, and why is it always Borjas?

In any case, I think the implication here is pretty clear: Friends don’t let friends cite George Borjas.

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