Mimicking populists will not ease cost of living or boost productivity, Mathias Cormann warns
Summary
Mathias Cormann, secretary general of the OECD and former Australian finance minister, warns against adopting populist policies like migration caps to fix the cost of living. He says the long-term solution is to boost productivity, which means producing more goods and services to lower costs and improve wages.Key Facts
- Populist policies such as migration caps are rising in popularity in Australia, partly due to concerns over housing and living costs.
- Cormann advises against copying populist economic ideas because this can make mainstream parties lose voters to both populists and centrists.
- He recommends focusing on increasing housing supply, improving infrastructure, and managing migration types rather than reducing overall migration.
- OECD research shows that more migrants arriving in an area corresponds with higher employment growth for Australian-born workers and no wage loss.
- Without migration, Australia’s working-age population would shrink as its population ages, creating challenges for health and care spending.
- Tariffs proposed by President Donald Trump and some Australian parties could raise costs for key industries and would not solve the cost of living issue.
- Cormann believes productivity growth is the only reliable way to lower living costs and increase real wages over time.
- He warns that quick fixes like tariffs, migration caps, or state banks will not work and may harm the economy.
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