Mimicking populists will not ease cost of living or boost productivity, Mathias Cormann warns

Australia's chief economist, Mathias Cormann, has cautioned mainstream political parties against implementing populist policies like migration caps to tackle the cost of living crisis. Instead, the former minister and OECD head advocates for solutions that boost productivity, such as increasing housing supply, real wage growth, and energy costs.

Cormann will deliver a speech to the Centre for Independent Studies on Saturday, warning that attempts to emulate populist parties will only serve to reinforce their criticisms. He argues that mainstream parties that copy populist economics risk alienating their own voters while failing to address the concerns of those who support populism.

Cormann cites research from the OECD, which shows that in regions with higher migration rates, employment among Australian-born workers has actually increased, with no adverse impact on wages. He asserts that without immigration, Australia's working-age population would shrink as the aging population grows, leading to contradictions in promises to spend more on health, care, and defense.

While Cormann acknowledges the legitimacy of concerns about the migration intake, he emphasizes that the answer lies in addressing housing, infrastructure, services, and the composition of the migration intake. He dismisses tariffs and caps as ineffective measures that could harm farmers, miners, and builders, and insists that the only way out of the cost of living crisis is through long-term productivity growth.