Population: a big problem but easy to solve

Latest statistics show that Australia’s population is growing at a rate of more than a million every three years. This growth rate is being driven primarily by record rates of immigration and a relative young population, itself a product of rapid past immigration. Doubtless Peter Costello’s baby bonus has also made the situation worse by encouraging the increased fertility rates of Australian women.

At the present rate Australia will have a population of about 50 million by mid century and 100 million by the end of the century. If this sounds implausible, consider that at the end of World War II, just 64 years ago, Australia’s population was only 7.5 million, i.e. it has almost tripled in that time.

This population growth should be considered an economic and environmental problem of huge proportions. From the economic point of view, Australia relies mostly on mining and agriculture for its export earnings. These industries require a very small proportion of the population to operate (although it is true that due to inadequate training in the technical trades and engineering, they have suffered a temporary labour shortages in recent years).

The growing population in Australia will not increase exports of iron ore, coal or gold and will reduce our exports of food as we are forced to consume more of our output internally. The money that comes to Australia from the sales of our resources presently gets divided among 22 million Australians. When the population doubles the amount per capita will halve.

There are plenty of examples around the world where resource based economies, almost all of which do not rely on a large fraction of their population to produce the export income, are worse off with large populations. Compare the UK with Norway, both supposedly rich from North Sea oil. The UK, with a population of about 60 million, spent the income and will soon run out of oil. Norway, with less than five million people, could afford to save a huge proportion of its income in large government investment funds. Norway’s future is assured.

During the recent resources boom, Australian governments squandered the bulk of the tax revenues generated by the mining companies, at least partially, in building infrastructure for an unnecessary population explosion. As an example of this problem, consider the state of Queensland’s finances which are caught between falling resources income and the staggering costs of providing the infrastructure for a third-world rate of population growth.

In the post war period of immigration there were some sound reasons to expand Australia’s population. There was a genuine, if exaggerated, security concern which was a rational response to the near death experience that Australia encountered in World War II. There was also a concerted effort to expand Australia’s manufacturing industry which, it was argued, needed a larger population to make it viable. In the days of poor transport, we needed large internal markets.

All those factors have now changed. Manufacturing in Australia is on its knees and a growing population will not help. Mining, agriculture, tourism, and the education of foreign students are our biggest export earners and do not need a growing population.

From the environmental side, a growing population is an obvious problem. Currently we have water shortages of varying severity in all our big cities which would have been less acute if we had maintained our population at levels of 20 years ago. Melbourne would not have to contemplate encroaching into its green fringe or building a desalination plant if its population wasn’t growing. Finally, if you believe that C02 causes climate change, Australia’s population growth will make it almost impossible to achieve meaningful emission reductions. We have to reduce per-capita emissions by 50 per cent every 40 years just to keep our total emission at present levels.

Even though the problems of population growth are obvious, it is a political sacred cow that cannot be argued or debated. None of the major political parties will argue for lower immigration because they are scared of being labeled racist. Even the Greens who have a useful population policy are almost always silent on this issue. They should be arguing for lower immigration every time the Australian Bureau of Statistics population figures are released. There is also an unholy alliance between the right wing who want a growing population to feed our housing construction industry and the extreme left who want to allow the whole world to come to Australia on compassionate grounds.

The housing industry is the main beneficiary of high population growth. Every year we have to build a city the size of Canberra just to house our growth. Unfortunately this is not a productive activity, unlike building a factory, a mine, the scientific development of better farming practice, a medical breakthrough or an environmental improvement. House construction appears to be good for us because it employs people in the short term, but in the long run it will get us nowhere because it is not an investment in production. The reality is that Australia has too many people in the industry.

Although the housing industry has always been a big winner from our population policy, there is now another big player that has its snout in the immigration trough. That is our education sector. Presently, applicants who wish to migrate to Australia and have a qualification from an Australian institution get preferential treatment. This has spawned a massive industry in education which could only be described as an enormous immigration scam. In the lobby of a large Pitt Street building recently I noted that half the companies in the building were involved in either immigration advice, or education for foreign students. Many companies were doing both.