Tim Harcourt

I’ve been thinking about my post last week about immigration.

Now it has been in quite a lot of newspapers: Liberal MP Theresa Gamboro’s claim that immigrants don’t know how to queue and don’t use deodorant. However this ignores the evidence that that the modern Australian economy was built on immigration.

I just have to think of my own family and their experience in Australia. My great-grandparents were immigrants from Transylvania (good bloodlines for an economist!) and Poland. My grandfather who was as an orthodox Jew called Kopel Harkowitz, tried to join the Bondi surf club but when knocked back, changed his name to Ken Harcourt (or in own words “I went from the Goldbergs to the Icebergs!”) and ended up being a successful small businessman providing employment and trade links with his family’s ties to Europe. He ended up making a pretty good life saver too!

What does this story show? A few things.

Firstly, immigrants make good exporters. If you look at the Sensis data on small businesses, you find that 50 per cent of all small and medium sized enterprises that export are run by an overseas proprietor. You just have to take a roll call of great Australian business leaders who have were born overseas. The names Abeles, Lowy and Parbo come to mind. Many of these business leaders came to Australia from war torn Europe with no assets (and often with no English) but with a range of business contacts in their home market. Much of Australia’s success as an exporting nation in the late twentieth century was due to the efforts of the post-war immigrant business leaders. It is always important to replenish your stock of entrepreneurial human capital and immigration is part of that process. The influx of migrants also changes consumer tastes in the new country (like new Thai restaurants replacing ‘meat and two veg’ places) and ultimately increases demand for both exports and imports.

Immigration has been good for Australia’s trade ties overall. There are clear links between immigration and trade. New migrants are likely to have strong links to business communities back home, in terms of friends, family and business contacts. There are no language barriers, nor any cultural adjustments to make. And as more ‘home’ countries embrace the market economy (such as former communist countries like China, Vietnam and Eastern Europe) there will be many more opportunities.

There is also economic evidence about the links between cultural diversity and exports. Overall growth in trading partners may be exploited faster as a result of the rapid growth of ethnic groups in Australia. The main effect of cultural diversity is to reduce transaction costs in trade – because of the tacit knowledge held by migrant workers. The attitude to exporting of Australian businesses could be enhanced by the presence of cultural diversity in senior management.

Secondly, immigrants make good employers. According to UNSW research, immigrants typically start exporting businesses and exporters pay 60% higher wages than non-exporters, on average, and provide better occupational health and safety standards, job security. In short, immigration is good for jobs, good for exports and good for the economy; immigrants make great exporters and employers. One in two Australian exporting companies are run by people born overseas. And exporters pay 60% higher wages. It’s win-win.

Thirdly, immigrants make good workers. Immigration numbers from the Bureau of Statistics shows that while immigrants account for less than 30% of the labour force, they have claimed more than half the jobs created since the start of 2010. Immigrants are both employable and self-employable.

Nowadays, I take my Chinese born daughter Yun Shi to Bondi Beach with my Italian-American born wife (We have an Australia-USA-China free trade agreement in our family!) and she loves Bondi just like my Transylvanian grandfather. And by the way, Ms Gamboro, my grandfather did queue at the Bondi Icebergs, and he always used Rexona after a surf!

Tim Harcourt is the JW Nevile Fellow in Economics, Australian School of Business, UNSW and author of The Airport Economist.