While some advocate for population growth, the COVID-19 shutdown has proven some benefits to curbing social expansion, writes Hamish Burns.
AS SCHOOLS RE-OPEN and life returns to normal, we might ponder the benefits of life under lockdown — which parts we should try and hold onto and incorporate into our new normal.
For some, it is working from home, social exercising, or reconnecting with old friends on Zoom. I have enjoyed the transformation of our cities without congestion. Urban life under lockdown has been peaceful and spacious.
Melbourne traffic fell by 88% in March 2020, with an average time saving of 70% per trip. Sydney’s total traffic movements also fell significantly. However, with restrictions easing across the country, soon enough the peak hour crush will return. The Government mantra of “flattening the curve” will revert to the standard “jobs and growth”. Under the growth agenda, dealing with congestion can never mean “less people” but always “more roads”.
No one can predict with certainty what the recovery phase will look like. However, two things are evident — unemployment will surge and government debt will reach record levels. Unemployment likely hit 10.8% in May, with a 20% reduction in total hours worked predicted by the RBA. Worst-case predictions are for up to 26% unemployment. NSW ALP Senator Kristina Kenneally has suggested that Australians come first on the jobs front.
While Senator Kenneally’s comments have attracted criticism, the significant numbers of jobless must surely call into question the familiar business rhetoric of “skills shortages”. With unemployment set to double, the country is more likely to face a significant “labour surplus” rather than any skills shortage.
Employment is unlikely to fully “snap back” as the economy re-opens. Some job losses will be permanent, with many businesses entering administration during the pandemic. The longer-term trends of increased automation, offshoring and corporate downsizing are set to increase as businesses look to cut costs. We must question the rationality of continued migration-fuelled population growth amidst this significant jobs shortage (or labour surplus).
We are always told that population growth is good for the economy — but is it? The costs of growing the population by 400,000 a year are significant, yet rarely discussed. Analysis has shown that each additional person costs $500,000, of which a huge chunk is borne by the taxpayer.
Reducing our immigration program from the current 240,000 per annum to its long-term average of 70,000 per annum is an obvious solution to curb the chronic Federal Budget deficit. Our cash-strapped Treasury should be enthusiastic about this idea. This is a return to normality, in line with Australia’s former policy (pre-Howard) and the majority of OECD countries.
There is no shortage of groups advocating to expand Australia’s population via high immigration, including property developers, banks and universities. They warn us that financial ruin awaits, without more rampant immigration. The influential property developers squeal the loudest for population growth. Whilst their lobbyists promote “vibrancy” and “multiculturalism” of megacities, the true motivation is endless suburban subdivisions and high-rise densification.
These are harder to achieve with a more stable population. Not satisfied with the precipitous growth in Melbourne and Sydney’s population since 2004, they want at least 10 million jammed in. We shall enjoy all of the vibrancy and liveability of Bangkok.
There’s a clear conflict when an industry group obtains significant direct benefit from population growth yet avoids all of the associated indirect costs. The property developers and other members of the “population growth lobby” get to pocket billions from spawning urban sprawl (or churning out degrees for international students).
Meanwhile, the infrastructure burden falls on the taxpayer. It is a similar tale in mining, where companies can be gifted water rights or can dodge the collective billions in rehabilitation costs when the mine is closed. The result is artificially inflated profits and the true costs are someone else’s problem.
Centrist think tank, The Grattan Institute, has also favoured high immigration. They have bizarrely stated that ‘the population boom has had little impact on commuting’.
Grattan further supports high migration, asserting that it contributes 1% to GDP growth. This may sound important, yet permanent migration adds 1% a year to the population, so this does nothing for per capita GDP growth. Of course, GDP conveniently ignores trivial matters like government debt, environment and liveability.
Former ANZ Economist Saul Eslake says:
“Economic growth driven only by population growth is not really worth having as it is not improving people's living conditions.”
New Zealand has replaced GDP with a more diverse measure of progress, the “wellbeing budget”.
New Zealand Finance Minister Grant Robertson summed this up:
“Success is making New Zealand both a great place to make a living, and a great place to make a life.”
With a broader perspective community wellbeing, NZ Prime Minister Jacinda Adern has questioned the benefits of population growth and has promised reduced immigration.
As Australia emerges from the crisis, we should reflect on what changes we want for the future. Senator Kenneally’s viewpoint on reduced migration is logical, despite the cohort of vested interests crying foul over this proposal. The next curve we need to “flatten” is the population curve. This will mitigate the pending unemployment crisis and budget pressures and would help make our cities more liveable, too.
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