Bigger Is Not Always Better

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Is growth always good? Is bigger always better? For some people, it seems the answer is "yes".

Take Treasurer Wayne Swan, for example. Last week he gave a speech at the launch of the Australian Institute for Population Ageing Research, a new Government-supported agency at the University of NSW.

There’s no doubt we need the long-term demographic research this institute will provide. The population figures Swan presented during his speech were fascinating — and also alarming.

"Over the next 40 years," he told the launch, "it is projected that the number of young people and the number of people of traditional working age will both increase by about 45 per cent. But here’s the thing: over the same 40 year period, the number of older people aged 65-84 years will more than double and the number of very old people aged 85 and over will increase more than four and a half times."

We knew all this beforehand, but it’s worth repeating. Australia’s population is rapidly ageing, as the huge demographic bulge made up of Australia’s baby boomers enters retirement.

Challenges? There are so many that most of us have no idea of their variety and scale. Older people can be extremely healthy, but, especially in Western countries, many diseases are inextricably linked with old age. It’s not just the obvious ones like cancer and cardiovascular illness: there’s also dementia, a devastating illness with no known cure that is exponentially more common after the age of 85.

The traditional Australian response to this problem — and indeed other perceived problems — has always been immigration. Remember "populate or perish"? This was a World War II slogan that led to Australia’s assisted immigration program in the late 1940s and 1950s. It gave us multiculturalism in the modern sense, and to this day cosmopolitan Melburnians look to the post-war migrants as the source of that city’s addiction to good food and coffee. We’ve run high levels of immigration ever since — in part because Australian society proved so adept at welcoming immigrants. By the end of the long boom of the Howard years, for instance, immigration levels had reached a quarter of a million a year.

Combine this with the "mini baby boom" currently underway among Australia’s 30-somethings, most of whom elected to have their children a few years later than their parents, and Australia’s population is growing rapidly. Current estimates suggest there will be 35 million Australians by the year 2049, or more than seven and a half million more than the last government estimate, contained in Peter Costello’s second Intergenerational Report of 2007. Our current population is around 21.5 million.

The extra babies and migrants will slow Australia’s ageing to some degree. But they won’t stop it. The result is that Australia will face the difficult challenge of a population that is simultaneously growing and ageing.

During his speech, Swan made much of the long-term challenges posed by these trends. "The larger projected population poses a whole raft of policy challenges and opportunities quite apart from the age structure," he said. "Careful environmental and infrastructure planning will be required to support this population. But when we get it right, population growth can be an important contributor to the overall economic wellbeing of Australians."

But will we get it right? Right now, in carbon emissions terms, Australia’s economy is one of the very dirtiest in the world. Let’s take the hypothetical example of a skilled migrant who moves here from France or Denmark. He or she will move from countries with nearly identical standards of living, healthcare and amenity. The difference is that in France, 80 per cent of their electricity is nuclear, while in Australia 75 per cent of our electricity is coal. For an immigrant from a poorer country in Asia or the Pacific, the resulting increase in carbon emissions will be even greater. Australia is actually worsening the world’s greenhouse problem, merely by importing people to our dirty, coal-driven economy.

Australia’s carbon-intensive infrastructure is just one of our problems. Will our major cities have enough water for all these extra people to drink? Melbourne is a good example of the problem: the city’s very large dams are smack in the middle of a region undergoing rapid and catastrophic drying. South-eastern Australia is in fact one of the most vulnerable regions in the world when it comes to climate change. The catchments for those dams are largely native forest, which is going to burn more frequently and dangerously as that drying trend continues.

The Brumby Government’s solution is to build an enormous desalination plant at Wonthaggi, which will top up dam levels with manufactured water. And, while the plant itself will be powered by a wind farm, in broader terms Victoria has no plans to retire its massively polluting brown coal power plants like Hazlewood in the La Trobe Valley. Whatever the benefit of the wind offset, the reality is that desalination is, in the aggregate, like burning coal to make water.

Let’s keep going. Where will all those extra people live? Australia’s housing shortage is well known and has been covered extensively here at newmatilda.com. High immigration may prop up housing demand in Australia’s major cities for a few more years, but there seems little doubt that eventually Australia will face a serious housing crisis, brought on either by record levels of unaffordability or by a devastating housing crash.

Then there’s public transport. The struggles of the NSW Government to get on with the nuts and bolts of actually building more train lines and making them run on time is hardly news anymore. But Sydney will continue to be Australia’s gateway city, and all those extra people will see the metropolis expand outwards in the south-west and north-west in ever greater and more costly sprawl.

And where will the money come from for all this extra infrastructure? A few years ago it was fashionable to suggest that the big corporations would build it through a series of public-private partnerships (PPPs). However, after the troubles of projects like Sydney’s Cross City Tunnel and Brisbane’s Airport Link, the PPP model has shown itself to be seriously flawed. In fact, the only credible long-term source of funds for big-picture urban infrastructure projects will be state and federal government spending. The Wonthaggi plant, for example, is operating under a state debt guarantee. More infrastructure will mean more government debt, or higher taxes, or most likely a combination of both.

Can Australia’s increasingly rickety federation survive the demographic and infrastructure challenges ahead of us? The struggles of states like NSW and Queensland to provide adequate infrastructure for their growing populations is already putting severe strain on their budgets. Queensland has borrowed heavily to build the extra infrastructure, losing its AAA rating. NSW decided not to build. In the long-term, the current arrangement where Canberra raises most of the taxes and the states spend most of the money looks increasingly unsustainable.

Despite all these challenges, Australia still doesn’t have a formal population policy, 15 years after Barry Jones chaired a House of Representatives Inquiry into Australia’s long-term population carrying capacity.

Swan says we need these extra people for the economic growth and extra taxes they will provide. And he is certainly correct in pointing out that in the long term, only economic growth can provide the wealth Australia needs to be able to service these extra responsibilities. But wealth can be squandered in all manner of ways: in profits for overseas corporations, in unsustainable infrastructure, in traffic congestion and unhealthy lifestyles, and on expensive joint strike fighters and high-tech submarines.

Will the Rudd Government have the courage to plan for these challenges? And will the Opposition in the Senate even let them? We’re 80 days out from Copenhagen and we still don’t have a price for carbon in this country. It’s not easy to be optimistic just now.

Ben Eltham

Ben Eltham is New Matilda's National Affairs Correspondent.

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