Invest now or population ponzi will choke us

By Leith van Onselen

Infrastructure Australia (IA) has once again warned that Australia’s economy and standard of living are under threat as strong population growth meets worsening infrastructure bottlenecks. From The International Business Times:

The main threat to Australia’s economic future is population growth outpacing infrastructure development, says Infrastructure Australia chairman Mark Birrell…

“Considered and well thought through infrastructure investment is going to be one of the most effective ways for us to achieve and deliver the qualities we want out of our economic growth,” he added.

Not acting would prove particularly costly given the increased infrastructure demands associated with population growth.

By 2031 the Australian population is expected to increase to over 30 million people from its current figure of 23.5 million, while congestion will come to cost $53.3 billion nationally and demand for public transport will double.

It is true that Australia faces crippling infrastructure bottlenecks and congestion – this is what happens when population growth is upped to Third World-levels, mostly via immigration (see next chart).

ScreenHunter_11552 Feb. 17 09.28

Meanwhile, real GDP per capita has fallen to levels not seen since the early-1980s recession:

ScreenHunter_11961 Mar. 09 15.27

As noted by Bob Carr last month:

Mr Carr said Australia had the highest rate of population growth of any developed country and that the growth was undermining policies by governments to make housing more affordable and to improve infrastructure. “It’s always never enough”…

The Australia Institute’s Richard Denniss was even more blunt in his assessment last year:

“Since the Sydney Olympics, Australia’s population has grown by the population of Sydney. Australia is one of the fastest growing countries in the developed world and our infrastructure isn’t keeping up. It isn’t keeping up now and hasn’t kept up for the last 10 years, and it’s not budgeted to keep up in the next 10″…

“If you were going to invite a hundred people to your house for a party, you would probably put the food and the chairs out before they arrive. But, what we have done for nearly 15 years now is we’ve significantly increased the rate of population growth and we are saying “we’ll build rail in the future… we’ll build the hospitals in the future”… What they [politicians] don’t say is that given that our population’s gonna grow by around 400,000 people this year, we are not building nearly enough hospitals and schools and roads to keep up with that…. [P]er person, the amount of infrastructure is declining. Per person, the amount of spending on health is declining”…

“If you want to double your population… you have to at least double your infrastructure to maintain people’s standard of living… We’re talking schools, we’re talking hospitals, we’re talking trains, we’re talking roads, we’re talking police”…

“Population growth costs a lot… If you double the number of citizens then you double the number of teachers and double the number of nurses. It’s pretty simple math. But of course, you don’t have to double them if you gradually plan to lower the number of services. If you are happy for us to gradually lower the number of services in our health system, our aged system, if you are happy for congestion to gradually get worse, if you are happy for the amount of green space per person to decline, then you can do what we do”.

So, one obvious solution to mitigate Australia’s infrastructure woes is to dramatically slow the rate of immigration.

The fact of the matter is that population growth costs a lot – either through massive infrastructure investment or, in the absence of such investment, via massive congestion, more expensive housing and overall lower amenity.

But like the frog that boils to death slowly, our politicians hope that we won’t notice, which is why they persist with third world level immigration in order to juice the economy. Their big business donors, too, love endless high immigration because they get to enjoy an ever growing customer base and are able to increase sales without becoming more efficient.

Meanwhile, the costs of this strategy fall on us and individual living standards continue to slide.

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Comments

  1. There are many Australians that are blinded to the pitfalls of our Population Ponzi as they stand to benefit from population growth. All they see is more clients, customers, buyers and renters of houses.
    They think that the money they make will be able to buy them out of the issues and problems that we and they will face.

    • @Prometheus69 so essentially we are importing welfare when GDP has been declining since 2001. When you compare population to the GDP measure it clearly indicates that several attempts have been made by Federal Governments to import people to boost GDP (through productivity) but this has spectacularly failed. What we are left with is an ineffective failed immigration policy that has been left to languish, unaltered while the privileged class play musical Prime Ministers to govern our country……pathetic to say the least and it is no wonder fringe and minor electoral parties are on the up and for good measure!

      • nexus789MEMBER

        Productivity is a meaningless concept if you are not competitive. We are not doing anything to address this in terms of an national strategy to create competitive products and services. The current innovation effort is bullcrap and will result in very little as have similar dullard programs in the US and UK.

      • @nexus789 +1 when I see the television advertisements for the ‘ideas boom’ I laugh at what poor language choice – our population has been conditioned to think only about ‘booms’…housing boom, mining boom, population boom and it goes on and on. We are fed this drivel from highly paid minions who have the intellect of a pea and clearly have not done enough research….that’s right we don’t have time to research any more as it is too expensive to do so in Australia.

        Your second comment below is A+ and hits the nail on the head. It does not take much to exercise vision, one only has to do so.

    • I agree completely BUT at the moment our regional towns are shrinking because even those born in these towns can’t see a future in staying put…they’re all off to Syd/Melb to make their fortune. trying to convince others to go in the reverse direction is a waste of time, not least because jobs in our regional towns always go to the locals first. To be honest there’s something very wrong with the job if they want an outsider to do it.
      As for any outsider shifting their business into regional parts of NSW, that’s also a bit of a pipe dream, it’s hard to lower your costs because everything entering and leaving NSW must directly or indirectly pay the Sydney tax. This tax hits you in a large variety of different guises,
      examples
      Huge premiums on early morning / evening flight costs (often 5 times the cost of midday flights) if you’re flying international and connecting through Sydney …you’ve got not no real choice you just pay the premium.
      Export/Import businesses pay for Sydney ports plus Aussie long haul transport a loose loose proposition for regional businesses.
      All even marginally Skilled labor wants and receives a country living hardship allowance.
      Regional Councils are very good at sneaking up behind you and absolutely reaming the outsider.
      Very few good regional schools, for instance take Coffs Harbour it has 5 high schools, 4 of which compete with Wilcannia to be the worst schools in NSW. the fifth one is better but still bottom 20% …guess what skilled labor sees this statistic and wants Private boarding school tuition paid before they’ll consider a regional move. (I haven’t checked in a while but wrt High Schools there’s not a single High school in NSW, outside Syd/Newcastle that is rated in the top 20%)

      In the end analysis Decentralization is a great idea but a lousy business/personal strategy.

      Probably the biggest single impediment to decentralization is the simple fact that you’re no longer on the Syd/Melb property ladder, and that my friend is where most of Australia’s wealth is generated.

      • Today's Empire Tomorrow's Ashes

        not least because jobs in our regional towns always go to the locals first. To be honest there’s something very wrong with the job if they want an outsider to do it.

        Not always the case. I’m proof of that in my current role.

        The second part of that statement is just bizarre. This is the best job I’ve ever had. Period.

        All even marginally Skilled labor wants and receives a country living hardship allowance.

        What? Examples. I’ve never seen this. If anything there’s a discount for lower cost of living.

        Regional Councils are very good at sneaking up behind you and absolutely reaming the outsider.

        Everyone, they ream everyone. As do most councils.

        Very few good regional schools, for instance take Coffs Harbour it has 5 high schools, 4 of which compete with Wilcannia to be the worst schools in NSW. the fifth one is better but still bottom 20% …guess what skilled labor sees this statistic and wants Private boarding school tuition paid before they’ll consider a regional move

        Tosh. Evidence of this? I know LOTS of ex Sydneysiders and Melbournites in this area and it’s never mentioned (having said that our schools are not that bad).

        In the end analysis Decentralization is a great idea but a lousy business/personal strategy.

        Depends on your point of view on life Bob. I might have given up circa 300k in the last few years in pay, and that has been HARD, the personal benefits are unparalleled. UNPARALLELED. As an ex Melbournite who watched a beautiful city become an utter, utter sh$thole to live in in a mere 10 years, I can tell you the benefits of regional living, FAR, FAR, FAR outweigh city living.

        Unless you aspire to the rat race, keeping up with the Joneses, expensive housing, congestion albeit with higher pay better restaurants and public transport, then we are miles ahead.

        I’ll take the whip birds, maggies, kookas every morning over the sound of trains, cars and other people.

        Probably the biggest single impediment to decentralization is the simple fact that you’re no longer on the Syd/Melb property ladder, and that my friend is where most of Australia’s wealth is generated.

        See point above. I honestly couldn’t care about that, and plenty of people don’t. If it were true on a wholesale level, everyone would live in a city.

        The Fed and State govts need to kick it off with $ on infrastructure then moving govt depts to regions.

      • My point in mentioning the poor public high schools in this region is to show some very easy ways that any government with a decentralisation agenda could dramatically increase the attractiveness of their region. Imagine Coffs created some sort of regional center of education excellence, it would cost less than $3M pa but could easily deliver a top 20% schooling experience. Suddenly one of the biggest negatives becomes a huge positive and it costs practically nothing….this one change would cost ess than 200 yards of highway.
        The fact that our governments are not focused on these easy fixes also speaks volumes because they simply dont want to create value outside Sydney.

      • CB
        “the simple fact that you’re no longer on the Syd/Melb property ladder, and that my friend is where most of Australia’s wealth is generated.”

        Might I suggest a small but important edit “…and that my friend is where most of Australia’s wealth is drained into”

      • Country yokels don’t do themselves any favours.

        Make land $6,000 per 1/4 acre, and people have the ability to fund this ‘education centre of excellence’ privately.

        Their advantage should be to arbitrage Sydney land prices, not trying their hardest to reach parity in land prices.

      • Thanks Rusty Penny. Country councils are absolute scoundrels for creating a shortage of residential land in country towns. At one stage Cobar was the exception. I think you could get a house block for $20k or so. I haven’t checked lately.

      • @RP sounds like a good idea BUT if the councils do this than they limit their rates because there’s a state govt rule that councils can charge a maximum of 1.5% of land value as rates….or so I’ve been told.
        So in the case of Coffs council they try to push residential land value to$200K to $300K / block because they need $3K per household to pay for the expenses related to the building of dams and water infrastructure that still need to be paid off.
        It is easy to argue that they didn’t need to spend as much as they did, and wouldn’t be in this situation if they’d spent less BUT refer to the comment that regional councils are absolute scoundrels and you’ll be well on your way to understanding the problem….and possibly also understanding why central gov’ts are sick of the funding drain that regional areas create, without ever delivering on the potential that they offer.

      • OK, how about this.

        Make the block of land $6,000… my levy is what.. $90 p.a.

        Council ‘needs’ $3,000 p.a. or more accurately the services they need.

        If my mortgage is $120k, instead of $520k, my repayments are much, much less. Discretionary spending is flush, eprhaps I can pay for ‘privatised’ garbage pick up.

        Heaven knows my behaviour towards garbage will change.

        Perhaps farm land that gets rezoned to R3, will have a levy applied so that all the unearned planning gain will pay towards amenity…..

        Imagine that, when reassigning the zoning, some of the gain is captured by the institute that arbitrarily created the wealth of a monopoly asset…

    • While sensible use of existing regional infrastructure is wise, at the end of the day, people living in regional centres still need food, water, housing, schools, hospitals and they still consume finite, non-renewable resources, probably at a faster rate than their city cousins.
      Here are policies, along with the rest of the platform, that will stabilise the situation. http://www.votesustainable.org.au/regional_rural_australia/

  2. I wonder how many people attributed the traffic jam all over Sydney yesterday morning that resulted from one accident on the Harbour Bridge to the lack of infrastructure and burgeoning population of Sydney?

    I was heading from the North Shore to Parramatta (i.e. away from the area of the accident and didn’t go near the bridge) and yet was sitting in traffic for 1 hour more than usual. In late to work as a result.

    If one accident (approx. 10kms away from where I was at the start of my journey) is all it takes to bring traffic to a standstill, how is Sydney in particular going to function going forward? Is this how people want to live?

    • Sydney is dying. When I first moved here 12 years ago, you could reasonably drive from Silverwater to CBD in 40-45 minutes – now in peak traffic its well over 1.5 hrs. And getting five to six minutes worse every year.

  3. Before the usual calls of more (taxation) and more ‘infrastructure’ – lets have a good look at who exactly is using this infrastructure or services and who is paying for it.

    When the penny drops that we have 2.3 million temporary visa guestworkers.
    And each one allowed in is costing the average australian at least $2,000 or more in additional tax, state and local govt charges, plus congestion, massive housing debt, rent impact, wages erosion, unemployment and homelessness..

    Then maybe the debate will shift to what sort of people are we allowing into Australia and what are we going to do about cleaning the temporary visa mess up.

  4. We’ll run out of water (actually we already have…desal plant about to be turned on in Melb) – better build a dam as part of that infrastructure initiative. Better yet, just ask 1 million people to go back home.

  5. “By 2031 the Australian population is expected to increase to over 30 million people from its current figure of 23.5 million”
    I call complete and utter bullshit. I know the demographics well and there is no way we will grow at 433,333 people per year over the next 15 years. Complete bullshit! Our last officiual number was growth by 317,100 for fark sake.
    http://www.abs.gov.au/ausstats/[email protected]/mf/3101.0

    Facts
    – Fewer births three years in a row, yep births are falling in absolute numbers.
    http://www.abs.gov.au/AUSSTATS/[email protected]/mf/3301.0
    – Fertility rates – ‘In 2014, Australia’s total fertility rate (TFR) was 1.8 babies per woman, a decrease from the 2013 TFR of 1.88 babies per woman, continuing the declining trend of the past five years. ‘
    – More deaths
    http://www.abs.gov.au/AUSSTATS/[email protected]/mf/3302.0

    “Natural Increase
    The preliminary estimate of natural increase for the year ended 30 June 2015 was 148,900 people, a decrease of 5.1%, or 8,100 people, compared with natural increase for the year ended 30 June 2014 (157,000 people).

    Births
    The preliminary estimate of births for the year ended 30 June 2015 (304,000 births) decreased by 3,000 births from the year ended 30 June 2014 (307,000 births).

    Deaths
    The preliminary estimate of deaths for the year ended 30 June 2015 (155,100 deaths) increased by 5,000 deaths from the year ended 30 June 2014 (150,000 deaths).

    Net Overseas Migration

    For the year ended 30 June 2015, Australia’s preliminary net overseas migration (NOM) estimate was 168,200 people. This was 11.4% (21,600 people) lower than the net overseas migration estimated for the year ended 30 June 2014 (189,800 people).

    NOM arrivals increased by 0.8% (3,900 people) between the years ended 30 June 2014 (474,600 people) and 30 June 2015 (478,600 people).

    NOM departures increased by 9.0% (25,500 people) between the years ended 30 June 2014 (284,900 people) and 30 June 2015 (310,400 people).

    The preliminary net overseas migration estimate for the June quarter 2015 (28,500 people) was 14.6% (4,900 people) lower than the estimate for the June quarter 2014 (33,400 people).”

    • Yeah, it seems to be self correcting to an extent, people can’t afford to have children and we are become a less desirable place to migrate to. Still if we lower the bar enough, there are plenty of really poor uneducated people who would happily step up to a second rate aussie lifestyle.

      • Maybe or maybe not. Why would you wnat to come to one oif the most expensive cost of living countries on the home planet.
        Note that we did not fill the allowed quota last year for our NOM, so the door was open and we did not fill it.

  6. Interesting to note that the GDP growth noses over about a year after the whole Tampa crisis, or about when Howard used it as a cover to crank the immigrant intake up to 11.

    I also think a lot of Australians very much notice they are being boiled, they notice every time they are stuck in traffic or sardined into a peak hour train, but they haven’t been able to coherently identify the source, instead being misdirected into blaming refugees, gen Y or the Boomers etc.

  7. This is why Stop! The! Boats! is such a critical policy for Laboral. Reducing immigration would be a big vote winner with both our xenophobic population and those who recognise the population ponzi for what it is. But they need those people becase it helps them lie about how badly the economy is doing.
    Solution transfer blame for all the problems caused by our rapid immigration onto a tiny fraction (refugees) and demonise them then lock them out, get most of the votes without reducing immigration noticably. Winner.

  8. nexus789MEMBER

    Uncontrolled migration is a fail and will likely collapse living standards and create a large pool of idle labour. Controlled migration which is linked to a national plan to become competitive via ‘technology planning’ makes sense. Will never happen though as Australia’s politician are devoid of any vision and strategy. They current government is obsessed with neoliberal economic dogma that has failed everywhere else. No matter we are different so it must work here if we try it. All we will get is a continuation of the collapse of what remains of the producer economy. We have become consumer economy that relies on a steady stream of debt to survive.

    • This is a myth. Migration (Immigration) is very very controlled. There is no uncontrolled immigration.

      • Yes, ever since Howard, Immigration has been controlled upwards.
        All of the past projections for Australian population have proven to be too low. Population has been growing at a pace beyond all expectations and has never grown by this large a number before.
        Expanding by 1 million people every 3 years is madness.
        Who will stop this?

      • nexus789MEMBER

        I should have clarified.uncontrolled is when the human assets arriving do not match the skills needed within the economy.

      • Peter
        Nature will stop it when our deaths double and our natural growth falls off a cliff quite rapidly.
        Take out the 150K natural growth and you got what you want. That is going to happen,
        I do not support a big Australia, however I also do not support fear mongering based on inaccurate data and knowledge.

      • Its called the mining boom – like the gold rushes here in Oz in the 1800’s, people come… it (the boom) finishes, people leave, hopefully the good ones stay on…

  9. Have been in two traffic jams in Sydney this week, 5pm going through Macquarie Park heading to St Ives. Simple software change would at least alleviate the 3km bottle neck, by increasing through flow times. Worked in London, implemented by Ken Livingston. Probably the only good thing he did actually…

    Seriously, I wasting years in my car!!!

    • Thanassis Veggos

      Seriously, before complaining about traffic people need to learn to drive first.
      – Learn the dimensions of your car FFS. Yes, your car fits in there, drive. If you think it doesn’t fit then stop buying commodores.
      – Dont panic when it rains, your car is not made of sugar. Just fkn drive, you’ll be fine.
      – Let people merge in front of you, it wont kill you.
      – See that “R” thing on that stick thing? It’s called reverse, learn to use it.
      – Do not slow down to look at that car on the side of the road, they’re just changing a tyre, get over it.
      – Tell your fkn govt to pull their thumb out and tune those friggin traffic lights, it’s a disgrace.

    • Jeremy Clarkson: You know in the run up to Euro 2004, a lot of people believed that David Beckham had done some practice and been…you know, training… and they’ve put flags on their cars to kinda show their support for the team. Cause we were in with a shout, we thought anyway… of winning. While everyone had flags on their cars, somebody has done some research on how much drag that created. I’m not joking…
      Richard Hammond: Yes?
      Jeremy: Yeah seriously, he said, ‘You’ll lose with two flags, four break-horsepower… uh, and that means that in the run up to the tournament, 4.5 million gallons of fuel was wasted by people flying flags. I actually know the man who did this survey, okay? I will spare him his blushes and wont say his names but I will tell you he has face hair. Okay? So, I’ve done a calculation of my own…if a mustache weighs two grams, and we think it does…
      Richard: Sounds fair enough.
      Jeremy: So, if you can get into a Ford Fiesta, you will increase its weight by 0.0000036 of a percent.
      Richard: With you…
      Jeremy: Which means you’ll increase its fuel consumption by, complicated equation here, by 0.000083 miles to the gallon. So over a year, normal mileage, your mustache is costing you an extra five pounds in fuel…
      Richard: Five pounds to run a mustache for a year?
      Jeremy: That is the kind of information you simply don’t get on any other shows.

    • With that kind of logic, man would have never left the squalor he was in… never found anything outside Africa, never gone to the moon…

      Thank God some people see a bigger picture than that…

      • Yeah, but when humans left Africa, there were only a couple of tens of thousands of us, maximum. Now we are adding 250,000 hungry mouths to the planet’s burden every day. Do you see a difference in today’s situation where we are 7.4 billion?
        Today, humans occupy 40% of the globe’s non ice covered land mass for their use, often to the exclusion of most other living forms. Just 200 years ago, wild animals made up 97% of the total mass of living vertebrates on the land, now humans, their pets and stock animals make up 97% and wild animals are reduced to just 3%. How can you not see that this is a disaster? We are witnessing the 6th great extinction on planet earth, not caused by a meteorite impact or some millennial geological or volcanic event, but caused by the impact on habitat, caused by humans,
        Humans must continue to grow in knowledge, but soon, it looks like their brains will be the cause of their demise. Plenty of other civilizations have risen in great confidence, driven by people who said that and faded away. Our generation must learn from those failures and not rely on a God, who has been so unreliable in the past.

  10. “The fact of the matter is that population growth costs a lot” – only in time spent sitting in traffic, frustration, cost of housing, longer lists waiting for healthcare etc. but it doesn’t have to cost a lot if you don’t add any infrastructure, and clearly that’s the way the government wants to go.

    As for a frog boiling slowly, we do notice, and have been noticing for a while, but we can’t do anything about it. It’s up to the powers-that-be to limit immigration numbers and that’s not something they are willing to do, especially when there’s a housing bubble to uphold. Meanwhile, we don’t get a say, except on forums like this.

    • There are stable population parties. Last time got 2% of the vote.

      We deserve what we’re getting because we’re collectively so dumb we deserve to be taken over.

      • Richard, yes there are, but let’s face facts – it will be ALP or LNP who will be governing us and when it comes to population growth, both parties are on the same side.

        Even if Labor does get in next time, what’s the chances that they’ll actually implement their proposed changes to Neg Gearing? There will be so much opposition that they’ll be forced to back down. Good on them for raising the issue, but all those years they were in power, all they did was grow the bubble.

  11. Leith, The main chart you have on AU Population growth is not really correct, as in 2006 the rules and methodology changed and even the ABS says it is inaccurate to compare pre 2006 to post 2006.

  12. But, but, how does government spending to build socially supportive infrastructure mesh with the Neoliberal Loon Pond’s desire to eliminate government? That sounds like….*gasp* [email protected]!!

    Oh wait, I know, get taxpayers to pay for it all, then criticise the government for its debt and force it to sell off said assets (super cheap) to Loon Pond members so they can live off the Rents.

    Got it.

    (Dear Loon Pond, wasn’t your magical Free Market supposed to fix these sorts of problems? Been 35+ years now and I’m still waiting…)