WEBVTT - Why Inflation May Be Here to Stay, Hurting Poor Nations Most 0:00:06.040 --> 0:00:08.960 Hello, and welcome to Sephonomics, the podcast that brings the 0:00:08.960 --> 0:00:12.040 global economy to you. So we've spoken before on this 0:00:12.080 --> 0:00:17.120 podcast about global supply chain bottlenecks, ships lined up at ports, 0:00:17.120 --> 0:00:20.040 where to get in, the soaring price of putting anything 0:00:20.079 --> 0:00:22.759 on a container ship, and you maybe thought it wouldn't 0:00:22.800 --> 0:00:25.360 affect you. But things got a lot more serious in 0:00:25.400 --> 0:00:28.760 the past week, and we realized even the tomato source 0:00:28.880 --> 0:00:31.520 on your pastor could be hit by supply shortages in 0:00:31.520 --> 0:00:34.839 the coming months. We have that chilling story from the 0:00:34.840 --> 0:00:38.280 tomato fields of Italy. In a few moments. We'll also 0:00:38.360 --> 0:00:41.880 here how COVID nineteen has turned Australia's attitude to immigration 0:00:41.960 --> 0:00:45.640 upside down from our economy reporter down under Michael Heath. 0:00:46.200 --> 0:00:49.040 But first, a rare treat a conversation I just had 0:00:49.400 --> 0:00:51.600 with one of the most respected economists in the world, 0:00:51.720 --> 0:00:54.800 professor of the International Financial System at Harvard's Kennedy School 0:00:54.840 --> 0:00:57.480 of Government and now the Chief Economist of the World Bank, 0:00:57.880 --> 0:01:13.319 Dr Carmen Reinhardt. Carmen, welcome to this session and I'm 0:01:13.360 --> 0:01:18.880 delighted to see you again. It's an interesting time for 0:01:18.920 --> 0:01:22.280 the global economy because we have this quite a lot 0:01:22.360 --> 0:01:25.440 of what you might call upside surprises certainly in the 0:01:25.480 --> 0:01:28.480 developed world, not just on the pace of vaccination in 0:01:28.520 --> 0:01:31.959 many countries, but also the strength of the recovery. And 0:01:32.000 --> 0:01:35.000 I see even in your in your latest report, you 0:01:35.080 --> 0:01:38.960 see your forecasting global growth this year the highest we've 0:01:39.000 --> 0:01:43.160 had after a recession for eighty years. So there's also 0:01:43.200 --> 0:01:45.640 good news there. But we are also conscious that the 0:01:45.680 --> 0:01:47.920 picture is not so bright in the developing world. So 0:01:48.520 --> 0:01:50.840 how would you characterize the picture and maybe what are 0:01:50.840 --> 0:01:54.360 the surprises that you would say relative to what you 0:01:54.440 --> 0:01:57.360 might have thought at the start of the year. So 0:01:57.760 --> 0:02:01.520 I think Stephanie, you you hit on the key, the 0:02:01.600 --> 0:02:06.600 key point without sending sounding cliche. I think that the 0:02:06.760 --> 0:02:10.960 issue of a K shaped recovery is is very much 0:02:11.639 --> 0:02:17.440 on point. The surprises in the advanced economies have been 0:02:18.160 --> 0:02:27.600 mostly on the upside, and the substantive resources in terms 0:02:27.680 --> 0:02:34.200 of both fiscal stimulus, monetary policy, and more broadly than 0:02:34.240 --> 0:02:41.919 just monetary policy, financial uh support and stimulus made the 0:02:41.919 --> 0:02:48.799 the faster than expected, faster than standard recovery, and the 0:02:48.880 --> 0:02:52.880 advanced economies the emerging markets for starters, let alone the 0:02:52.880 --> 0:02:57.280 poorest countries. The developing countries don't have those kinds of resources. 0:02:57.320 --> 0:03:00.480 So in every check mark that I may about the 0:03:00.520 --> 0:03:04.200 advanced economies, pretty much you can take off the check 0:03:04.280 --> 0:03:07.480 mark for for for many of the developing countries, many 0:03:07.600 --> 0:03:12.400 have had very limited, very limited share of the population 0:03:12.520 --> 0:03:17.280 is yet to be vaccinated. Fiscal space, which was already 0:03:17.400 --> 0:03:23.200 strained in many developing an emerging market countries before COVID, 0:03:23.520 --> 0:03:26.640 isn't there to provide you know, the big push, the 0:03:26.720 --> 0:03:32.240 big stimulus, the big transfers to households. And I'll conclude 0:03:32.240 --> 0:03:37.440 by saying that it isn't just about fiscal stimulus, monetary stimulus. 0:03:37.480 --> 0:03:40.920 For the first time in history, emerging markets during the 0:03:41.000 --> 0:03:48.040 crisis were able to do significant countercyclical monetary policy. However, 0:03:48.720 --> 0:03:54.840 that experience has already been cut short by very pronounced 0:03:54.840 --> 0:04:01.360 pickup and inflation. That divergence is critical to the outlook. 0:04:02.760 --> 0:04:07.080 So the question you post is is a very relevant one. Uh, 0:04:07.280 --> 0:04:12.840 you know, given the concerns that we're seeing about, you know, 0:04:13.080 --> 0:04:18.400 overheating in the US, the possibility the big question mark 0:04:18.600 --> 0:04:24.200 is the popping inflation, temporary or more lasting. And you know, 0:04:25.360 --> 0:04:31.800 for the emerging markets and developing world, they're very impacted 0:04:31.800 --> 0:04:36.560 by global conditions. The inflation we're seeing um certainly in 0:04:36.560 --> 0:04:39.800 the US, but we got we are seeing it globally. 0:04:39.839 --> 0:04:42.440 I think the core CPI globally is rising at its 0:04:42.440 --> 0:04:46.640 fastest place in in more than twenty five years. So 0:04:47.400 --> 0:04:49.359 how do you how do you view that? Do you 0:04:49.400 --> 0:04:53.120 think it's calls for fear or celebration given how much 0:04:53.120 --> 0:04:56.279 we struggle to get inflation rates up in many developed countries, 0:04:57.279 --> 0:05:03.400 So you know, I think for the celebration side, you 0:05:03.480 --> 0:05:05.840 immediately have to think of Japan, right, I mean, they 0:05:06.000 --> 0:05:13.080 they they've had decades first deflation and then undershooting. But 0:05:13.120 --> 0:05:16.400 before we celebrate too much, I think the question that 0:05:16.480 --> 0:05:19.080 remains to be sorted out is how much of this 0:05:20.320 --> 0:05:24.280 is a temporary blip and how much of it sticks. 0:05:24.920 --> 0:05:27.599 I think the concerns about sticking I would I would 0:05:27.680 --> 0:05:34.200 characterize as threefold. The first one is we don't know 0:05:34.320 --> 0:05:39.080 what the supply shocks, the lasting supply shocks. COVID has 0:05:39.120 --> 0:05:44.120 done and continues to create a lot of variation from 0:05:44.200 --> 0:05:49.800 the normal trade patterns and supply chains. Transport costs have 0:05:50.000 --> 0:05:54.920 been doing strange things. The second part, of course, is 0:05:55.640 --> 0:06:00.120 the monetary stimulus at the global level on the scale, 0:06:00.400 --> 0:06:06.120 and so those two factors supply side, the multiplier effects 0:06:06.160 --> 0:06:09.040 of the of the monetary easing, and the fact that 0:06:09.080 --> 0:06:12.800 it's a global shock. Two thousand two tho nine was 0:06:12.880 --> 0:06:16.000 not two thou two thousand nine was a crisis and 0:06:16.040 --> 0:06:19.360 about a dozen advanced economies, but not global. I think 0:06:19.400 --> 0:06:24.840 those three factors raised concerns that the the I'm not 0:06:24.880 --> 0:06:27.360 saying we're off to the races or anything like that, 0:06:27.400 --> 0:06:31.040 but that I think that the there are there is 0:06:31.600 --> 0:06:36.880 cause to be concerned that a it's more the inflation 0:06:37.000 --> 0:06:43.920 pickup has more of a lasting component than just transitory 0:06:44.040 --> 0:06:48.960 rebound slash overheating. But it's interesting you say concerned. I mean, 0:06:49.040 --> 0:06:51.360 as you said at the start, that's not just in Japan. 0:06:52.040 --> 0:06:54.800 Many central banks around the world have struggled to get 0:06:54.960 --> 0:06:57.480 to meet their inflation targets, actually to get up to 0:06:57.520 --> 0:07:00.279 their inflation targets, not least the European central by in 0:07:00.279 --> 0:07:03.320 the last few years. If we if we're moving from 0:07:03.320 --> 0:07:05.919 a world that we've had for ten or fifteen years, 0:07:05.960 --> 0:07:08.560 where the average inflation in the developed world has been 0:07:08.640 --> 0:07:11.960 saying one and we're moving to a world where it's 0:07:12.000 --> 0:07:16.240 more like two, two and a half even three um, 0:07:16.520 --> 0:07:20.000 is that is that really cause for concern, I mean, 0:07:20.120 --> 0:07:22.160 is your concern from the fact that you you think 0:07:22.160 --> 0:07:24.560 that we would struggle to control that because it would 0:07:24.560 --> 0:07:26.960 certainly give policy makers a bit more room for maneuver 0:07:27.000 --> 0:07:32.320 than they've had. Stephanie, if if what you describe is 0:07:32.320 --> 0:07:37.040 is the issue at hard, then indeed it wouldn't be 0:07:37.080 --> 0:07:41.160 a concern. But I think let's not flatter ourselves in 0:07:41.800 --> 0:07:46.720 terms of the what's how how precise lead can can 0:07:46.840 --> 0:07:51.240 central banks really hit the nail as as we highlighted, 0:07:51.320 --> 0:07:55.480 it's been undershooting for a decade and if it's nice, 0:07:55.600 --> 0:08:01.720 well behaved, very moderate, you know, drift upward, what's the 0:08:01.800 --> 0:08:07.400 what's the big deal? The bigger deal is that the 0:08:07.400 --> 0:08:14.960 the sufficiently big spike that lasts for sufficiently long would 0:08:15.000 --> 0:08:19.440 I think impact inflationary expectations in a in a way 0:08:19.480 --> 0:08:23.640 that you know, inflation expectations have been really anchored UH 0:08:23.720 --> 0:08:30.600 for very many many years now, and then you you 0:08:30.600 --> 0:08:36.439 you know, then you get into uh, perhaps inflation rates 0:08:36.440 --> 0:08:41.360 that are beyond those that are desired UH in the 0:08:41.440 --> 0:08:44.880 advanced economies. One of the things we're seeing with the 0:08:45.080 --> 0:08:48.880 pop and inflation, especially in many emerging markets but not exclusively, 0:08:48.880 --> 0:08:53.080 are big increases in food prices. Food prices account for 0:08:53.120 --> 0:08:56.920 the largest share of the CPI basket in the poorer 0:08:56.960 --> 0:09:00.640 countries and even much more so in the poorer households. 0:09:01.240 --> 0:09:04.199 That is a factor. The fact that it is regressive 0:09:04.360 --> 0:09:08.719 on top of a regressive shark like covid um is 0:09:09.320 --> 0:09:16.679 in and of its self a source of concern. I 0:09:16.720 --> 0:09:20.000 guess the other big change in the last couple of years, 0:09:20.040 --> 0:09:24.240 particularly associated with COVID, which maybe we can't quite decide 0:09:24.320 --> 0:09:25.920 is a good thing or a bad thing, or maybe 0:09:26.000 --> 0:09:28.000 is a good thing and a bad thing, is this 0:09:28.559 --> 0:09:35.520 very different attitude towards very large deficits and public borrowing 0:09:35.640 --> 0:09:38.800 in the developed world. We had seen obviously large deficits 0:09:38.800 --> 0:09:40.760 in the past, but there's been a there's been an 0:09:40.800 --> 0:09:46.280 embrace of very high deficit spending by developed economies that 0:09:46.320 --> 0:09:49.240 we've not seen in quite this way before. You know, 0:09:49.360 --> 0:09:53.360 would you say that is overall something we should applaud 0:09:53.679 --> 0:09:58.400 or be also concerned about? Well, it has elements of both. 0:09:58.480 --> 0:10:02.360 I mean, I am no fair of debt, but I 0:10:02.480 --> 0:10:05.680 was and have been more than a hundred percent on 0:10:05.760 --> 0:10:10.120 board on the need to during the COVID pandemic to 0:10:10.280 --> 0:10:13.679 go in there big. I mean, you know, the point 0:10:13.760 --> 0:10:16.400 that this was a kid to a war, and therefore 0:10:16.400 --> 0:10:20.839 you react with that kind of of of stimulus is important. 0:10:21.160 --> 0:10:24.680 Now does that mean that I think everything is very 0:10:24.760 --> 0:10:29.120 benign and we no longer need to worry about debt 0:10:29.360 --> 0:10:34.040 or or any uh possible delatarious effects. No, I don't 0:10:34.040 --> 0:10:40.400 think so. But the previous question you had on inflation also, uh, 0:10:40.760 --> 0:10:46.080 even though inflation is one way eroding debt, if it 0:10:46.200 --> 0:10:54.800 also is associated with rising interest rates, then the calculus 0:10:54.840 --> 0:10:58.200 that people have been accustomed to in this low for 0:10:58.280 --> 0:11:02.680 a very long environment changes. So so I I would not, 0:11:03.360 --> 0:11:08.160 you know, declare victory on the issue. And I had 0:11:08.160 --> 0:11:10.160 one I had one final question, which is, we obviously 0:11:10.160 --> 0:11:12.920 have had a lot of focus on the G seven. 0:11:13.120 --> 0:11:16.120 In the last week. There was much talk, including from 0:11:16.160 --> 0:11:18.520 the World Bank and the International Monetary Fund, about pushing 0:11:18.640 --> 0:11:23.160 for commitment from the international community to make sure that 0:11:23.200 --> 0:11:25.640 you had as many people vaccinated as possible in the 0:11:25.679 --> 0:11:29.880 developing world in everyone's interests. What we got instead of 0:11:29.920 --> 0:11:33.439 the fifty billion that the methics would be needed, we 0:11:33.559 --> 0:11:36.720 got somewhat less than a billion and committed, and we're 0:11:36.720 --> 0:11:39.360 potentially looking at a very low vaccination rate in the 0:11:39.400 --> 0:11:41.200 developing well by the end of the year. Was that 0:11:41.240 --> 0:11:46.280 a failure of leadership the G seven? Were you disappointed? Absolutely? 0:11:46.960 --> 0:11:53.640 It's disappointment not just in terms of the scale, but 0:11:54.480 --> 0:11:59.520 also speed is an issue here. We really are, you know, 0:11:59.679 --> 0:12:05.560 running a race against variants and virus variants and so on. 0:12:05.760 --> 0:12:10.839 That that the delay. For example, we were the World 0:12:10.880 --> 0:12:16.080 Bank supports very much the if advanced economies were to 0:12:16.920 --> 0:12:22.680 send surplus vaccine sooner rather than later. Again the issue 0:12:22.679 --> 0:12:26.880 of timing. So it's a step in the right direction, 0:12:27.000 --> 0:12:32.640 but I think given the scale of the problem, I 0:12:32.679 --> 0:12:38.520 think more and more rapidly, you know, needs to be done. 0:12:39.960 --> 0:12:42.480 Come and Ryan Hort, Vice President Chief Economists at the 0:12:42.480 --> 0:12:45.080 World Banck, thank you very much for joining us. Thank 0:12:45.120 --> 0:12:54.839 you for having me. Now, so the list of casualties 0:12:54.840 --> 0:12:57.680 in the great global supply chain snow that we can 0:12:57.720 --> 0:13:01.920 now add Italian tomatoes which are rotting in the fields, 0:13:02.000 --> 0:13:04.720 were told instead of making their way into tins of 0:13:04.760 --> 0:13:10.160 pasta source. Well, Italy economy reporter Alessandra Miliaccio is here 0:13:10.160 --> 0:13:12.160 to fill you in on this, let's face a deeply 0:13:12.240 --> 0:13:16.840 troubling story. Alessandra, how all these tomato who's rotting? Where 0:13:16.880 --> 0:13:20.160 are the tins right, that's exactly the issue. There are 0:13:20.200 --> 0:13:23.480 plenty of the tomatoes, their basic product, but you don't 0:13:23.480 --> 0:13:26.760 have the tins because the Chinese economy is absolutely booming, 0:13:27.000 --> 0:13:29.880 and what they need to make the tins um is 0:13:30.040 --> 0:13:34.920 these particular sheets of metal that are missing basically um there. 0:13:35.040 --> 0:13:38.160 The Italian producers are telling us that they're asking when 0:13:38.280 --> 0:13:40.600 the deliveries will come, and the deliries are not coming 0:13:40.840 --> 0:13:42.840 and there's no end in sight apparently to the problem. 0:13:42.880 --> 0:13:46.160 The companies, both Italian companies and foreign companies in India 0:13:46.160 --> 0:13:49.120 have said that they can't guarantee anything. And the issue 0:13:49.280 --> 0:13:53.040 is that this type of product needs to be can 0:13:53.120 --> 0:13:56.079 within thirty six hours after picking. So once you've lost 0:13:56.120 --> 0:13:58.400 the time, then you just have to leave them. And 0:13:58.440 --> 0:14:00.640 it's not like I was hoping, oh maybe I'll have 0:14:00.720 --> 0:14:03.640 cheap tomatoes in the market, but no, they will leave 0:14:03.679 --> 0:14:06.040 them in the fields because it's not economically convenient to 0:14:06.240 --> 0:14:09.120 you know, to actually send them to market. So that's 0:14:09.440 --> 0:14:12.280 the unfortunate problem and that, I mean, that's the heartbreaking bit. 0:14:12.320 --> 0:14:15.800 And it's it's five million tons of process tomatoes. I mean, 0:14:15.800 --> 0:14:18.120 it really is one of the biggest producers, right, that's right. 0:14:18.160 --> 0:14:20.880 Italy is the number two sometimes number three producer along 0:14:20.920 --> 0:14:24.440 with China, and the biggest producer is California with a 0:14:24.520 --> 0:14:28.160 ten million. But the thing is that California can also 0:14:28.200 --> 0:14:31.000 put them in Carton's. California can put them in tubes 0:14:31.040 --> 0:14:35.160 because California is not obsessive like US Italians about their tomatoes, 0:14:35.200 --> 0:14:37.520 and therefore they're all right with paste that they are 0:14:37.600 --> 0:14:40.160 right with other kinds of products that are not as fresh, 0:14:40.200 --> 0:14:42.920 that are differently made. Basically, see the things that you 0:14:43.000 --> 0:14:46.920 learn on Stephanomics, the key key national differences in how 0:14:46.960 --> 0:14:50.160 we like to package our our tomatoes. But obviously, and 0:14:50.240 --> 0:14:52.400 people who listen to this podcast, now this is part 0:14:52.440 --> 0:14:56.040 of a broader problem that we've seeing these um I 0:14:56.120 --> 0:14:58.480 call them supply chain snarl ups, but we're seeing the 0:14:58.520 --> 0:15:03.040 price of things as boring in key areas, components and 0:15:03.080 --> 0:15:05.440 also just an inability to get things. I noticed, and 0:15:05.560 --> 0:15:08.080 it's not just fast to source guys. I noticed the 0:15:08.120 --> 0:15:11.200 owner of Burger King and Popeye's had an intern that's 0:15:11.200 --> 0:15:15.000 Restaurant Brand International. We had a report based on an 0:15:15.040 --> 0:15:19.000 internal study that they've done, talking about the soaring price 0:15:19.040 --> 0:15:23.560 of beef mayonnaise bacon. In fact, it said price inflation 0:15:23.640 --> 0:15:28.360 across the protein market complex has far exceeded even our 0:15:28.360 --> 0:15:31.560 greatest forecast. So this is this is a global issue, 0:15:31.600 --> 0:15:36.160 isn't it. Alexander Definitely. Supply constraints are really really bad everywhere. 0:15:36.320 --> 0:15:38.880 One of the issues I was saying is China because 0:15:39.320 --> 0:15:43.200 they are, for example, the steel is all going to China. 0:15:43.280 --> 0:15:45.160 So they're just issues about packaging. But as you as 0:15:45.200 --> 0:15:47.360 you just said, there are issues about other things as well. 0:15:47.440 --> 0:15:49.840 We know that, um there are no boxes right now 0:15:49.920 --> 0:15:52.280 because of all the Amazon orders. So there's just a 0:15:52.280 --> 0:15:54.760 series of very strange things that are happening. You will 0:15:54.800 --> 0:15:58.160 have trouble finding boxes because they've been using too many. Um. 0:15:58.200 --> 0:16:00.560 You know, last year the issue was people. It was 0:16:00.640 --> 0:16:03.440 workers that couldn't get to places, so we were having issues. 0:16:03.520 --> 0:16:05.880 The tomatoes were riding in the field because you couldn't 0:16:05.880 --> 0:16:10.000 get the people. But now it's actually the materials and 0:16:10.120 --> 0:16:14.040 the things themselves, and you know, there's container shortages, there's 0:16:14.040 --> 0:16:17.160 hoarding mentality still. I mean, there's a lot of products that, 0:16:17.440 --> 0:16:19.720 especially things like tomatoes, not to go back to that, 0:16:19.800 --> 0:16:22.960 but that people were hoarding because they keep for a 0:16:22.960 --> 0:16:26.040 long time, and that just made everything much worse. So 0:16:26.080 --> 0:16:28.360 it's a global phenomenon. It will take a while, yes, 0:16:29.040 --> 0:16:30.520 And I mean I noticed that we had we had 0:16:30.520 --> 0:16:32.360 a big piece on this actually a few weeks ago, 0:16:32.440 --> 0:16:34.160 and I like the way that they captured it because 0:16:34.160 --> 0:16:36.560 it was talking about how, you know, last year it 0:16:36.680 --> 0:16:40.080 was consumers that were holding their toilet roll and their 0:16:40.160 --> 0:16:43.680 tomato saws and whatever else, and now it's companies worldwide 0:16:43.880 --> 0:16:47.240 that are effectively hoardering materials and making things worse because 0:16:47.280 --> 0:16:51.200 they're worried about these supply chains. As you as you've 0:16:51.240 --> 0:16:53.160 been saying, this is obviously one of the factors that's 0:16:53.200 --> 0:16:56.280 pushing up inflation. But we are hopefully going to see 0:16:56.320 --> 0:17:00.000 a shift over the next few months as things open up. 0:17:00.040 --> 0:17:02.200 People won't be buying quite so much on Amazon so 0:17:02.360 --> 0:17:05.480 much stuff, They'll be buying more services, they'll be going 0:17:05.520 --> 0:17:09.400 out more. Right. It's it's almost like water being released, 0:17:09.400 --> 0:17:11.960 you know, after there's a dam that's been breaking, and 0:17:12.040 --> 0:17:16.199 so eventually things will calm down and we'll go backward someone. So, 0:17:16.240 --> 0:17:18.360 I mean that's the theory, at least, I know there 0:17:18.359 --> 0:17:21.080 are other theories about the same, but the theory is 0:17:21.119 --> 0:17:22.960 that there will be an uptick and then things will 0:17:23.240 --> 0:17:25.560 go a little bit more back to normal in the 0:17:25.640 --> 0:17:27.960 In the meantime we shall probably we have to hold 0:17:27.960 --> 0:17:31.480 onto our pastor source Alessandra Miniatria, thank you very much, 0:17:31.680 --> 0:17:40.560 thank you. For some years now, Australia has been conducting 0:17:40.960 --> 0:17:44.800 an extreme experiment with high immigration, welcoming in flows of 0:17:44.840 --> 0:17:48.320 people for a prolonged period that dwarf anything attempted elsewhere. 0:17:49.000 --> 0:17:52.200 Now that flow helped a fuel economic growth to such 0:17:52.240 --> 0:17:54.520 an extent the country didn't have a recession for thirty 0:17:54.600 --> 0:17:58.040 years until COVID nineteen finally did it in. But now, 0:17:58.080 --> 0:18:01.760 after twelve months of closed borders, politicians and the public 0:18:02.000 --> 0:18:05.560 seem to be rethinking the so called Big Australian approach. 0:18:06.200 --> 0:18:09.000 We thought there might be some lessons in Australia's experience 0:18:09.040 --> 0:18:12.840 for other countries grappling with the difficult politics and economics 0:18:12.840 --> 0:18:16.920 of immigration. So we asked Australia Economy reporter Michael Heath 0:18:17.240 --> 0:18:22.119 to give us his take. If you're a visitor in 0:18:22.119 --> 0:18:25.080 this country, it is time as it has been now 0:18:25.160 --> 0:18:27.560 for some while, and I know many visitors had to 0:18:27.640 --> 0:18:30.880 make your way home and to ensure that you can 0:18:30.920 --> 0:18:33.680 receive the supports. That was Prime Minister Scott Morrison last 0:18:33.760 --> 0:18:38.280 year as COVID scale became clear. It sounded innocuous, but 0:18:38.359 --> 0:18:41.680 too many temporary visa holders hoping to become Australian it 0:18:41.800 --> 0:18:47.959 felt like betrayal. Australia has long been a laboratory for immigration, 0:18:48.240 --> 0:18:51.439 managing the politics of a highly sensitive issue that raises 0:18:51.560 --> 0:18:55.640 questions over identity and culture, but in recent times its 0:18:55.640 --> 0:18:58.520 system has started to go astray as the country loaded 0:18:58.600 --> 0:19:03.240 up on temporary migrants. We're offering limited places for permanent residents. 0:19:03.440 --> 0:19:06.080 Those migrating down Under have typically done so in two 0:19:06.160 --> 0:19:09.679 steps in Toronto temporary visa and then applied for a 0:19:09.720 --> 0:19:12.680 permanent one under a points system that ranked people's skills, 0:19:12.960 --> 0:19:17.240 age and so forth. Those points can rise or fall 0:19:17.440 --> 0:19:21.280 depending on labor demand, but lately they've been rising as 0:19:21.280 --> 0:19:26.040 permanent visas are directed towards entrepreneurs and high flying professionals. 0:19:26.080 --> 0:19:29.800 That's left lots of would be Australians disenchanted. Actually, we 0:19:29.800 --> 0:19:35.320 were still in school and the discourse started rising, so 0:19:35.560 --> 0:19:37.919 we were like, you know, we were we knew that 0:19:38.080 --> 0:19:40.520 we have to stay in school for two years with 0:19:40.600 --> 0:19:43.320 my class man that was our cos Percy, who with 0:19:43.400 --> 0:19:47.119 wife Marina, arrived in Melbourne from Budapest in two thousand 0:19:47.119 --> 0:19:50.639 and seventeen. He a former chief financial officer at the 0:19:50.720 --> 0:19:55.160 Hungarian State Opera. She a communication specialist. They're the sort 0:19:55.160 --> 0:19:58.480 of people Australia once courted, but they've been in limbo 0:19:58.520 --> 0:20:00.520 since our cost paid to do a mark his degree 0:20:00.520 --> 0:20:04.000 in accounting, a profession he was told was in demand. 0:20:04.280 --> 0:20:06.159 Now he's not sure he will have enough points to 0:20:06.160 --> 0:20:09.680 stay permanently. As I mentioned, was sixty times. When we 0:20:09.800 --> 0:20:12.240 arrived it was seven d n. It went on seven 0:20:13.640 --> 0:20:17.400 and we just carculated that no way we can get there. 0:20:17.440 --> 0:20:20.399 So it was like if this, if this trend continued, 0:20:21.760 --> 0:20:24.520 then we won't have a chance. And all of my 0:20:24.720 --> 0:20:30.639 class me actually got the residences. After four years, he 0:20:30.720 --> 0:20:33.000 and Marina have given up and I headed to Canada, 0:20:33.400 --> 0:20:37.560 which offered them permanent residency. Australia's system today seemed less 0:20:37.560 --> 0:20:41.919 fair than its original seventy five years ago at Bonnagalan 0:20:41.920 --> 0:20:45.080 and you had Albrey. They're making new Australians. Eight hundred 0:20:45.040 --> 0:20:47.000 and forty people from the Baltic States are going to 0:20:47.040 --> 0:20:50.640 school here for Australia's migration policy has determined that never 0:20:50.680 --> 0:20:53.760 again shall our new citizens be falsd to fend for themselves. 0:20:54.000 --> 0:20:56.919 We who had driven from our homes at overjoyed to 0:20:57.000 --> 0:21:01.200 be welcomed as new Australian citizens. Those horrible years now 0:21:01.280 --> 0:21:04.080 seemed like a night now many of us, how a 0:21:04.200 --> 0:21:07.440 lot all their relatives. Until the end of World War Two, 0:21:07.760 --> 0:21:11.880 Australia's population was drawn almost exclusively from Britain. But after 0:21:12.000 --> 0:21:16.879 narrowly escaping invasion by Japan, Australia broadened its horizons. In 0:21:16.920 --> 0:21:20.359 the post war period, it initiated mass migration under its 0:21:20.440 --> 0:21:23.960 rubric of populate or parish, Australia opened its doors to 0:21:24.000 --> 0:21:27.720 European refugees. Jock Collins is a professor at UTS in 0:21:27.800 --> 0:21:30.960 Sydney and has studied immigration for almost half a century. 0:21:31.240 --> 0:21:36.280 Australia is one of the great immigration nations of the world. 0:21:37.200 --> 0:21:41.560 In the post forty five period after the Second World War, 0:21:42.160 --> 0:21:48.119 there are only four countries that became settler immigration countries Australia, US, 0:21:48.240 --> 0:21:52.800 Canada and New Zealand, and as a proportion of the population, 0:21:53.600 --> 0:21:56.760 we have had a much bigger migration program than any 0:21:56.800 --> 0:22:00.320 of the other countries. Australia was, however, determined to preserve 0:22:00.400 --> 0:22:04.000 its British character. It's set up the ten pound pomp program, 0:22:04.000 --> 0:22:06.480 whereby the government paid most of the fair for Brits 0:22:06.480 --> 0:22:15.000 to come to Australia, but that white Anglo saxon Australia 0:22:15.280 --> 0:22:19.160 is now a distant memory. Today half of Australia's million 0:22:19.240 --> 0:22:22.720 people are either born overseas with Asia now dominant, or 0:22:22.760 --> 0:22:25.479 have a parent who was almost one in three year 0:22:25.520 --> 0:22:31.760 first generation. Here at Sydney's Fish Market, many stores set 0:22:31.800 --> 0:22:34.480 up by Greek and Italian families in the nineteen sixties 0:22:34.840 --> 0:22:37.680 have now been brought out by Chinese families. Like each 0:22:37.680 --> 0:22:40.600 wave of migrants, they bring a new style and touch. 0:22:40.840 --> 0:22:44.159 These days, an awesome variety of sushi is available and 0:22:44.200 --> 0:22:47.200 products are packed with immense care. Just as they're heavily 0:22:47.200 --> 0:22:55.080 Asian clients like it. It's okay. The last vestiges of 0:22:55.119 --> 0:22:59.760 the racist White Australia policy were finally abolished by the 0:23:00.040 --> 0:23:03.080 the Labor government in nineteen seventy three, but it took 0:23:03.080 --> 0:23:07.040 a bit longer to mean something. If it was up 0:23:07.040 --> 0:23:10.399 to you, now, which country would you head for? I 0:23:10.440 --> 0:23:12.239 think all of the person in the world now I 0:23:12.240 --> 0:23:17.399 want to go to Austolia. Well, the dominant feeling was 0:23:17.440 --> 0:23:20.880 that we had to give these people a home, especially 0:23:20.920 --> 0:23:24.720 people have been associated with over the Australian Embassy or 0:23:25.240 --> 0:23:28.600 That last voice was Conservative Prime Minister Malcolm Fraser who 0:23:28.600 --> 0:23:31.120 opened the door to tens of thousands of refugees from 0:23:31.119 --> 0:23:34.480 Indo China after the Vietnam War. We were leading the 0:23:34.520 --> 0:23:37.520 world in the eighties and nineties when we were sort 0:23:37.520 --> 0:23:42.800 of introducing multiculturalism and that sort of settlement policy. Jock Collins. Again, 0:23:43.040 --> 0:23:45.320 there was a time in which Australia was a model 0:23:45.760 --> 0:23:48.560 that other world countries looked at, particularly as other countries 0:23:48.560 --> 0:23:52.120 in Europe and not discovered immigration was an important thing. 0:23:53.000 --> 0:23:55.879 In two thousand and one, facing a title election and 0:23:55.920 --> 0:23:59.600 with rising numbers of people arriving illegally by boat from Indonesia, 0:24:00.119 --> 0:24:03.919 Conservative Prime Minister John Howard deployed the navy to stop them. 0:24:03.960 --> 0:24:09.000 He politicized border control and then wrote it to victory. Ironically, 0:24:09.160 --> 0:24:11.840 that tough border stance allowed his government to ratchet up 0:24:11.920 --> 0:24:15.800 legal immigration. It was needed as Australia's economy boomed in 0:24:15.880 --> 0:24:19.560 response to China's demand for minerals. Between the second half 0:24:19.600 --> 0:24:22.959 of and the end of two thousand and nineteen. As 0:24:23.000 --> 0:24:26.040 Australia's economies that had developed world record for a stretch 0:24:26.080 --> 0:24:31.680 without recession its population increased by forty The new arrivals 0:24:31.760 --> 0:24:34.960 and their demand for housing and goods helped the economy surge. 0:24:36.640 --> 0:24:39.359 The nation had found a sweet spot. The points system 0:24:39.359 --> 0:24:43.920 attracted smart, educated, younger people from across the globe. Meanwhile, 0:24:44.040 --> 0:24:48.119 it's education industry, the country's fourth largest export, also offered 0:24:48.119 --> 0:24:52.000 a path to permanent residency for talented students that appealed 0:24:52.000 --> 0:24:55.000 to Prime Minister Boris Johnson, who argued for something similar 0:24:55.040 --> 0:24:59.000 once the UK left Europe. Australia's draconian response to illegal 0:24:59.160 --> 0:25:01.960 entrance by boat seemed to appeal to President Donald Trump. 0:25:02.720 --> 0:25:06.800 In fact, Australia is too faced on immigration, exceptionally severe 0:25:06.840 --> 0:25:10.680 toward a legal entrance, while generally welcoming toward legal arrivals. 0:25:11.680 --> 0:25:14.120 The Grant And Institute is critical of the government's approach 0:25:14.200 --> 0:25:17.240 in a new report, Gone is the time tested policy 0:25:17.280 --> 0:25:21.800 of courting young skilled migrants best place to succeed down under. Instead, 0:25:22.119 --> 0:25:25.199 two fits of permanent visas now go to entrepreneurs who 0:25:25.240 --> 0:25:29.680 have brought negligible investment and an untested high flyers program. 0:25:29.760 --> 0:25:33.440 When this whole crisis started, you know, the whole government 0:25:33.840 --> 0:25:38.199 and everyone pretend that they have nothing to do with 0:25:38.320 --> 0:25:41.920 the immigrants. That was our cost percy again, and everyone 0:25:42.040 --> 0:25:45.639 is here just because they have nothing else to do. 0:25:45.840 --> 0:25:49.680 So it's like they have no no responsibility over this. 0:25:49.920 --> 0:25:52.720 I don't know, two million temporary vies, the holders who 0:25:53.680 --> 0:25:58.640 live here and who have a life here. As Australia 0:25:58.720 --> 0:26:01.679 moves on from the pandemic, it's reputation as a melting 0:26:01.720 --> 0:26:04.440 pot for the world is changing and the landdown Under 0:26:04.560 --> 0:26:07.320 is grappling with the same immigration challenges as the rest 0:26:07.320 --> 0:26:22.520 of the world. For Bloomberg News, I'm Michael Heath. Well 0:26:22.560 --> 0:26:24.840 that's it for this episode of Stephonomics. I'll be back 0:26:24.880 --> 0:26:26.760 next week with a lot more from around the world. 0:26:26.880 --> 0:26:28.480