State the obvious in big Australia debate

Published in The Newcastle Herald, 7 October 2010 (PDF)

Population policy requires a federation fix, writes Oliver Hartwich.

A week is a long time in politics, and 1½ months feels like an eternity. During the election campaign not a day passed without contributions to the “big” versus a “small” Australia debate. Now, just a few weeks later, politicians are giving their attention to questions like vote pairing and parliamentary reform.

Just because politicians have returned to their usual pastimes does not mean that the issue of population growth has gone away. The population keeps growing regardless, whether politicians are talking about it or not. Unfortunately, we are still waiting for a coherent strategy to deal with this development.

Any reasonable population policy needs to begin with a frank admission: the ability of policymakers to fine-tune the number of people living in Australia is limited. The decisive factors in determining population size are not levers politicians can easily pull.

How big a future Australia will be depends on three variables: fertility, life expectancy, and immigration. Governments around the world have been trying to influence fertility rates. Sometimes, as with China’s “one-child policy”, they try to decrease them. Other times, and with measures like the “baby bonus“, they try to increase them. However, most attempts, particularly on the pro family side, have had limited success. In the end, it is parents who decide how many children they want to have, not governments. Actually, this is also how it should be.

Our future life expectancy is another variable that governments cannot control. Progress in medical treatments or healthier lifestyles may well be supported by governments, but there is no way politicians could ever set a longevity target.

This leaves migration as the only lever over which politicians have at least some control. But even there, their power is limited. When we are talking about Australia’s migration intake, it is easy to forget that we are talking about net migration. There will always be people leaving the country that we can’t stop. Apart from that, there will always be family reunions, demands for skilled labour, and business migration. Not all of these can or should be strictly limited.

Given these circumstances, it is futile to set precise population targets. The best we can do is estimate likely outcomes given the most plausible assumptions about the factors mentioned. Doing this leads us to a figure somewhere around the 35 million people mark for the middle of the century.

Even if we somehow managed to drastically cut the migration intake as Dick Smith and other campaigners demand, Australia would still be heading towards a population of at least 29 million people as a result of its currently young, fertile and longer-living population.

Any honest debate about population therefore has to acknowledge two things: that population size cannot be planned, and that Australia’s population will continue to grow no matter what politicians promise.

This does not mean that Australia does not need a response to population growth. What we do not need are population targets, though. What we need instead is a strategy how to deal with the expected increases in population.

At the moment, there is a remarkable disconnect in population policy. On the one hand, the federal government reaps the benefits of an increasing population because most taxes flow to Canberra. On the other, most of the costs of population growth are borne by states and councils. It is they who have to provide hospitals, roads and schools for their new residents.

Dealing with population growth therefore requires tackling this imbalance between the Commonwealth and the states. This is even more necessary since Australia’s population growth is distributed unevenly.

Last year, the national population growth rate was 1.8 per cent. However, it was very different between the states and territories. While Tasmania only grew by 1.1 per cent, Queensland grew by 2.7 percent and Western Australia by 3.1 percent. There are good reasons to expect these different patterns to continue.

The task for population policy is to ensure that Australia’s boom regions like Perth and Brisbane receive their fair share of increases in tax revenue that result from our growing population. Ideally, the states should be rewarded for their population growth and not punished. This would also ensure that the resident population would support further increases in population and not fight them.

For Australia as a nation, population growth is an opportunity. Many other developed nations in Europe and Japan would love to swap their problems of population ageing and shrinking for our task of dealing with growth. But we need to ensure that our growth is properly managed. Fixing the relation between Canberra and the states is a necessary first step.