Time to Stabilize Australia’s Population

The Productivity Commission’s ongoing enquiry into migrant intake into Australia is a welcome opportunity to critically examine the contribution of immigration to Australia’s high population growth rate, which is adding immense pressure to infrastructure, environment impacts, and cost of living (eg housing costs). The contribution of immigration-fueled population growth to these issues is studiously ignored by the major political parties and also by the Greens — the latter are so pre-occupied with moral questions surrounding refugees and boat arrivals that they fail to recognize that there are equally important moral issues relating to overall population growth in this country and globally. Too often there is a reflex accusation that any concerns about immigration must be motivated by racism and xenophobia.  This accusation is used by some to try to shut down public debate so that the vested interests who are the main beneficiaries of the high immigration rate can continue to go about their business (eg rampant real estate development and speculation), unimpeded.

It is possible to make a cogent and compelling argument for reducing annual net overseas migration to Australia, and thereby stabilizing Australia’s population — without relying on a skerrick of racism or xenophobia. It is time those on the progressive side of politics looked more closely at these arguments rather than buying into the knee-jerk responses.

The submissions to the Productivity Commission enquiry are rich sources of argument and evidence on this matter. All the submissions are online and links to specific examples are given further along in this post. The purpose of this post is to give you the flavour of some of the important points covered.  I start with a few extracts from my own submission (but read on — there is even better material further along!):

In effect Australia’s immigration policy is a de facto population policy. This ‘policy’ is rarely discussed or debated because there is general consensus among Australia’s political and business elites that ongoing population growth is a good thing. It satisfies the self-interest (that is, greed) of business by providing an easy way to grow markets for goods and services, and impose discipline on the wages and conditions of the workforce via turning on the ‘tap’ of increased immigration. It satisfies the self-interest of politicians by providing an illusion of activity and growth, when in reality much of the ‘growth’ (for example, transport, health and education) is simply to (barely) catch up with the per capita needs of the numerically growing population. It is simply running faster just to stand still. And in recent decades, we are not even standing still, but going backwards in terms of relevant infrastructure.

This brief submission to the Commission’s enquiry simply wishes to reiterate the often-stated concerns about the way that our immigration policy is basically an autopilot setting for population policy. When an aircraft is set on autopilot and is heading directly towards a collision, then clearly it is time for humans to re-assert control. In this case – to continue the metaphor – the collision we are facing is with Australia’s fragile environment, limited water resources, limited arable land, deepening infrastructure deficits and compounding social stresses. We must no longer stay on autopilot. This submission urges the Commission to recommend a policy approach which pro-actively reduces our immigration intake to a level which will maintain a stable population in Australia over time, rather than an ever-increasing population which is the current default setting.

After two centuries of fossil-fuelled growth, the ‘developed’ societies appear to be entering a long phase of slow (or even near-zero) growth and increasing prospects for major disruptive events and systemic risk caused by climate change, energy and resource shortages, environmental destruction and geopolitical conflicts …. If Australia’s immigration-driven population growth continues at current trends, then our environment and lifestyle will continue to be incrementally degraded, with the risk of periodic disruptions due to local and global events. Based on experience to date in Australia, this continuing population growth would not at all be ‘smart’ or based on ‘best practice’ ecologically sustainable practices, but will haphazardly evolve out of the greedy scramble to exploit whatever land and resources are to hand.

Another submission is made by Sustainable Population Australia, a worthy organization of which I am proud to be a member. The SPA submission reinforces similar points about environmental impact made in my submission:

Quantifying Australia’s national carrying capacity is an exercise fraught with value judgements, but we can say that current trends are not favourable. Successive national “State of the Environment Reports” have recorded ongoing deterioration of all environmental indicators. Climate change threatens Australian primary production and urban water security to a greater extent than most developed countries. Doubling Australia’s population more than doubles the task of decarbonising the energy sector, and increases the vulnerability of urban systems to critical water shortages. Australia has already become a net importer of ‘groceries’ on the basis of trade balance – our population growth has annulled the net contribution to wealth that our agricultural exports once provided. If Australia’s population doubles while climate change intensifies, it is highly likely that Australia will become a net importer of food calories – i.e. we would have an absolute dependence on food imports. This is a highly vulnerable situation, given the increasing competition for internationally traded food commodities, and has the potential to generate disruptive civil unrest in response to food price fluctuations beyond the government’s capacity to control.

SPA also highlights another major issue in continuing population growth: the costs of, and the constantly lagging investment in, infrastructure required just to keep up with population growth:

SPA notes that Infrastructure Australia has recently identified the increasing population as a key driver for existing infrastructure deficits and congestion (particularly in capital cities) and the resultant challenge associated with providing new and renewed infrastructure to address this. In particular, Infrastructure Australia highlights that the national population increased by more than one million people since 2011 ….

SPA argues that this population increase, which is predominantly due to net overseas migration, has clearly not received commensurate investment in community infrastructure such as roads, public transport, urban planning, airports, etc. This deficit has resulted in declining urban amenity as evidenced by phenomena of overcrowding, increased traffic congestion, pollution, distressed public transport systems, broadening urbanisation, increased demand for essential government and social services, etc. When combined, these considerations contribute to lower levels of social capital and quality of life enjoyed by existing residents.

On this basis, SPA makes a reasoned case for stabilizing our population:

It is our view that Australia’s population already exceeds a sustainable level, given current behaviours, institutions and technologies, and in view of forecast constraints on energy supply as well as required constraints on greenhouse gas emissions. Such a view is in line with the consistent findings of the Australian Academy of Sciences (AAS). The prudent path therefore, is to seek a peak population at the lowest level that can be achieved while accommodating the freedoms, rights and obligations generally upheld by Australia. In 1994, the AAS anticipated that such a peak could be achieved at 23 million. Following the massive increase in immigration numbers from the mid-2000s, that milestone is passed. Given current demographic momentum, a peak in the range of 26-27 million would be an appropriate target.

Accordingly, SPA advocates that Australia’s immigration policy objectives specifically include the facilitation of a sustainable population level as its primary goal.

On the matters of the impacts of immigration-driven population growth on infrastructure costs, labour market issues and the ‘ageing population’ shibboleth, the submission by Dr Jane O’Sullivan is an absolute gem. Dr O’Sullivan is a published academic researcher who has done ground-breaking work on the real infrastructure costs that are generated by population growth. The following (long-ish) extract from her submission is a good overview:

[Dr O’Sullivan’s] analyses show that acquiring the durable assets to support population growth has historically cost around 6.5-7% of GDP per one percent population growth rate. Thus, if Australia’s growth is 1.7% p.a., around 11-12% of GDP is diverted to the task of acquiring infrastructure and other durable assets, merely to extend to the additional people the level of service already available to the existing population.

However, the recent doubling of Australia’s population growth rate led to a more than proportional increase in spending on Gross Fixed Capital Formation (GFCF).¹⁰ It appears that a number of factors increasingly compound the cost per added person, as growth rate increases. These factors include the diseconomies of density (requiring more elaborate infrastructure, like tunnels and desalination plants, to cope with high volumes of demand), the high cost of retrofitting already-built-up areas, the need to over-cater in expectation of future growth, and the inefficiency of removing still-functional assets to replace them with higher-capacity versions (for example, in densifying suburbs, when a house is demolished to make room for two, we get one additional house for the price of two).

Spending on GFCF from 2007 to 2013 was 8.5% of GDP greater than that during the four decades from 1964 to 2004. If this increase is attributed to the increase in population added annually, it would appear that durable assets have cost over $600,000 per person added (in 2013 dollars). It is not easy to estimate the impact on government expenses, as simultaneous privatisations have shifted part of the burden from public to private accounts. In general this has increased, not decreased, the cost of these facilities to Australians.

The direct impact on government fiscal balance is around a quarter of the total societal cost, and is well over $100,000 per added person. The indirect impact includes the diversion of household spending of consumption to mortgages (constraining economic activity generally), an increase in consumption of mostly-imported durables such as vehicles and furnishings (reducing balance of trade) and a reduction in saving capacity (ultimately increasing pension liability).

A fiscal burden of more than $100,000 per additional person, or tens of billions of dollars per year, is a huge cost for the government to omit from its balance sheet of costs and benefits of population growth. The cost single-handedly accounts for all increase in government debt since the escalation of population growth from 2004. The Grattan Institute reported “unprecedented infrastructure spending by states and territories is largely responsible for a $106 billion decline in their finances since 2006,” and “after a threefold increase in capital spending over the last 10 years, states are paying 3 per cent more of their revenues in interest and depreciation.”

These figures are based on what has actually been spent. It is evident that expenditure has not been enough, with congestion mounting in transport systems, hospitals, schools, prisons, housing and community facilities.

Dr O’Sullivan goes on to relentlessly unpick the (il)logic of many of the economic arguments of the immigration and population growth boosters — often with a wry sense of irony.  The submission also includes a thoughtful discussion of appropriate policies relating to permanent versus temporary migration (students, tourism, working holidays, temporary working visas), as well as an appropriate annual humanitarian refugee intake. A read of the whole submission is highly recommended.

Whether such reasoned analysis will have any impact upon the business and policy elites who blithely continue on their autopilot collision course, remains to be seen.

Note on the cassowary and photograph: For more background on the threat to the cassowary see page 6 of my submission and James Norman’s piece in The Saturday Paper. The photo at the top of this post was taken on about the 9th of December 2010 at about 5:45pm at Carmoo in Queensland. This is one of the locations that has the highest fatalities of cassowary on the Cassowary Coast. The photographer Jeff Larson says: “I just happened to be on my bike when this large female (she is still alive and kickin’) bolted across the road as a very noisy car came round the corner…it did slow, but did not stop to let bird cross. Speed limit on the curve is 80 and it is a residential area as well so from the point of many locals the speed should be 60, but we get no satisfaction from Dept. of Roads.”  To support cassowary conservation, visit the web site of the Community for Coastal and Cassowary Conservation.