Following the release last week of the ABS’ population data, which revealed that Victoria’s population surged by an Australian record 146,628 people in the 2016 calendar year, representing a population growth rate of 2.40%:
I published a detailed report entitled Victoria is a rat on the turbocharged immigration treadmill, which explained using data why Victorian living standards are sliding backwards despite the appearance that the Victorian economy is going strong.
On Saturday, Fairfax published an ‘investigation’ that reproduced (without attribution) the themes covered in my report questioning whether Victoria’s hyper population growth is benefiting ordinary citizens:
Andrews government insiders were rattled by census figures released this week showing record population growth in Victoria of 146,600 people – smashing budget forecasts by at least 20,000 people. This is expected to force changes to forecasts on spending on infrastructure and other services.
If it maintained its current growth rates, Melbourne would have a population of more than 10 million by the middle of the century – well in excess of current government forecast of 8 million…
The population growth has underpinned a seemingly buoyant state economy, with often strong “headline” economic growth, and state government coffers bulging with cash.
Yet, an Age analysis shows that, per capita, both the Victorian and Melbourne economies have gone backwards four times in the past eight years. On that measure, it is the worst performing state in Australia.
If Victoria had the low population growth of Germany, the economy would have experienced at least three recessions since the global financial crisis.
“The population growth has disguised the fact that Victoria has become a poor state,” said Saul Eslake, a former chief economist at ANZ. “Let me put it this way, economic growth that’s only driven by population growth is not really worth having, as it is not improving people’s living conditions.”
An Age analysis of Bureau of Statistics data shows income per person in Victoria rose just 0.8 per cent from mid-2008 until the end of the 2016 financial year (the most up-to-date annual figures). Australia as a whole grew more than 7 per cent…
Prominent economist and planner Marcus Spiller said the Victorian economy was heavily reliant on a growing population.
“The way we are generating jobs is to build houses,” he said. “If you asked someone in the state government what was driving the Victorian economy, they would mostly struggle to answer that question”…
Mr Eslake said the Victorian economy peaked in the early 2000s and has since been largely sustained by population growth…
Mr Eslake warned that transport and housing affordability were important issues, and the risk was that if livability declined, population would move elsewhere…
Responding to Fairfax’s report, Victorian Treasurer Tim Pallas played down the fact that ordinary Victorian’s living standards are being degraded by rabid population growth, committing to its ponzi economic model:
Victoria’s Treasurer says the state’s rapid population growth is a boon for its economy rather than a drain on its coffers…
On a per capita basis Victoria’s economy performs worse than battler states such as South Australia and Tasmania, it found.
Speaking at a housing development in Truganina, outer western Melbourne, on Saturday, Mr Pallas said the state’s economy was buoyant…
“The participation rate in the Victorian labour market is the highest it has ever been. That goes directly toward productivity. Additionally, while population growth is coming in, we have had the highest employment growth in the nation. In the last 12 months we have created more new jobs than the rest of the nation combined”…
Mr Eslake had said the state’s economy was being driven by the construction industry, which was in turn being driven by population growth – which may eventually be unsustainable.
“Economic growth driven only by population growth is not really worth having as it is not improving people’s living conditions,” he said.
Yet Mr Pallas rejected Mr Eslake’s assessment: “Not since Malthus have we ever heard a more stirring rendition of ‘Stop the world I want to get off’…
“To simply pretend the state government can turn off the tap of population growth is ludicrous.”
Opposition Leader Matthew Guy said the government needed to encourage more Melburnians to move to regional Victoria.
“We need to ease the squeeze on Melbourne’s huge population growth,” Mr Guy said. “Under Labor, we will continue to see a Melbourne that expands forever.”
It is true that the state government does not control Australia’s immigration intake – that is the responsibility of the federal government. However, there’s nothing to stop the state government from publicly lobbying the federal government to lower its 200,000 strong permanent migration program (see next chart) on the basis that it is crush-loading economic and social infrastructure in Melbourne, destroying amenity for its residents, and making housing less affordable.
That’s what a responsible state government would do. But this is Australia, where politicians rarely act in the best interests of their constituents.
