Population posturing

Yet this also holds on a more empirical level - more than 40 per cent of the increase in Australia’s GDP over the past four decades can be attributed to population growth (“Population growth, a mixed blessing”, On Line Opinion, May 3, 2010). The consequences for Australia’s economic future from a reduction in population growth are clear. As the IGR notes, even a moderately slower rate of growth and a population of 30 million in 2050 would produce a real GDP 17 per cent lower than with a population of 36 million. A slower rate of population growth will also increase the burden on working-age taxpayers. Already, the ratio of working age adults to adults over 65 who need to be supported is expected to fall from 5:1 today to 2.7:1 in 2050. A lower rate of growth which resulted in 30 million Australians would see that rate fall to 2.3:1 in 2050, imposing a much higher taxation burden on a smaller group of income-earning employees in the future.

That the Howard government was able to preside over a major increase in migration despite public concern is no accident. Other than xenophobic campaigning by some unions against foreign workers, and racially motivated attacks on migration early in Howard’s term in office from groups like One-Nation, population policy remained a relatively uncontested policy area in the political arena. Indeed, a bipartisan consensus was largely maintained for a strong growing population and ongoing immigration throughout the Howard years.

There are some policy areas where the general population holds strong views that are not shared by experts nor reflected in policy. Free trade is perhaps the most commonly cited instance. In Australia, a majority of voters routinely express protectionist attitudes, despite the fact that economists overwhelmingly believe that protectionism is economically damaging. By and large, Australia has enjoyed a bi-partisan consensus in support of more open trade, despite community concern (“The Politics of Protection: America and Australia Compared”, Policy, Spring 2008). The deregulation of the Australian economy that took place during the 1980s and 1990s, including floating the dollar, privatisation and deregulating the finance industry, were measures that rarely won voter approval. But to the Liberal Party’s great credit, it largely supported these reforms, particularly when John Howard was Opposition Leader in the 1980s. Howard knew that these reforms were important for Australia’s future and declined the opportunity to resort to populism.

Until recently, migration and population growth was in the same category. The Coalition’s decision to attack the Rudd government on population was probably good short term politics - it tapped into existing community concerns and it certainly caught the ALP off guard as evidenced by Rudd’s rushed appointment of Tony Burke as Population Minister.

But the Coalition is now in the unenviable position of advocating a policy direction which could lower Australia’s future GDP by up to 17 per cent. The party of smaller government and lower taxation is suggesting that an even bigger burden should fall on an even smaller number of working-age taxpayers to support Australians in retirement. Laying blame at the feet of migrants for Australia’s housing shortages, infrastructure bottlenecks and water scarcity also gives a free pass to the failure of successive State Labor Governments to invest in infrastructure and adequately supply the services their residents require.

The Coalition lost its lead as the better party to manage the economy in Newspoll for the first time in years of survey data in March 2010. Even when the Coalition lost power in 2007 it posted strong margins over the ALP on economic management, and it was rightly identified as one of the main strengths of the former government. Undoubtedly, the benefits of incumbency have boosted the ALP’s polling in this area, and Barnaby Joyce’s time as Shadow Finance Minister, which was criticised in the media, immediately preceded the poll. Newspoll has not asked this question since March, and the ALP’s recent period of bad polling may have reversed this finding. With their backs up against the wall, the Government is now trying to paint Tony Abbott as a risk to Australia’s future, and is continuing to characterise Abbott as reckless, irresponsible and disinterested in economics.

If the Coalition hopes to regain and maintain its long-held lead in this polling area, it should start by discarding its populist and economically dubious position on population. Even if migration and higher population - just like free trade, and other areas of economic liberalisation - are electorally unpopular, the Coalition should stand on principle and support what is best for the Australian economy, just as John Howard did.