Prominent Australian entrepreneur, Dick Smith, has called for a national debate and plan on Australia’s population growth, in a speech yesterday to the National Press Club.
In the speech, Dick Smith argued that Australia’s rampant immigration program (see next chart) is eroding Australia’s standard of living by diluting Australia’s resources base, adding to congestion pressures, reducing housing affordability, amongst other things:
“The cake is a certain size, mainly coming from our mineral reserves and our primary production from farming, and double the population, I believe everyone’s worth half as much”.
Smith argues that endless population growth and immigration only benefits the capitalists – which get to enjoy an endless growth in their customer base – but leaves individual Australian’s living standards worse-off.
He also slammed Australia’s politicians, economists and media for ignoring the population issue, claiming that he has received minimal coverage from the press despite numerous requests, including to the ABC:
“It’s almost like a religious faith that growth, don’t even discuss it, it will just go on forever when it obviously can’t and I’m absolutely surprised at that”.
Smith blames Australia’s economic system – which requires endless growth in consumption and energy – for its growth fetish, and argues that it is “clearly not sustainable”. He calls for a new economic model based on improving living standards, and urges economists and government to pursue it:
“Don’t worry Australians, I’m not going to stop growth, but we all know we can’t have it forever so let’s get the best experts to tell us how we move to a slightly different system that’s sustainable.”
He admits, however, that the main political parties are unfortunately unlikely to discuss it:
“The Prime Minister wouldn’t be game to discuss it, because if he doubted growth for one instant he’d be attacked by anyone… I would suggest to him that he says, look, we all know we can’t have perpetual growth in the years of resources and energy.
Smith was followed on stage by Flight Centre chief, Graham “Skroo” Turner, who echoed Smith’s sentiments whilst emphasising the adverse environmental impacts of perpetual population growth. He also added that the whole argument around needing to boost immigration to mitigate an ageing population is a furphy, since immigrants age as well, hence they merely delay the ageing problem – a view shared by the Productivity Commission:
…several studies, including some undertaken by the Commission, indicate that policy-induced changes to Australia’s population are unlikely to significantly affect the ageing trends.
Improvements in longevity are the major cause of population ageing over the long run.
…substantial increases in the level of net overseas migration would have only modest effects on population ageing and the impacts would be temporary, since immigrants themselves age. The Commission has estimated that an increase in annual net migration from 150 000 to 300 000 would lower the proportion of those aged 65 or over by less than 3 percentage points by 2044-45. As an illustration ofthe challenge, the Commission showed that delaying an increase in the dependency ratio by 40 years would require a net migration-to-population ratio of 3 per cent per year, leading to a population of around 85 million by 2044-45.
It follows that, rather than seeking to mitigate the ageing of the population, policy should seek to influence the potential economic and other impacts.
Regular readers will know that I wholeheartedly share Smith’s and Turner’s views on population growth, which I have frequently described as one giant ponzi scheme (the “population ponzi”).
While expanding Australia’s population by more than 1 million people every three years is great for Australia’s business elites – who enjoy the fruits of an expanded market – it imposes real costs on the rest of us, who must endure increased costs of congestion, higher infrastructure costs, lower environmental amenity, and minimal (if any) uplift in material economic well-being.
The politicians love endless population growth because it juices headline GDP growth (but not per capita growth), marginally delays (but does not eliminate) the impact of an aging population, and appeases big business.
We should not forget that Australia is ruled by duopolies and oligopolies, which see a rising population as an easy way of selling more goods and services. Big business also receives, through immigration, access to lower cost workers. And there’s less need to become more efficient when your customer base is growing inexorably. Rather, just sit back and watch the profits flow.
Take, for example, Australia’s banks, which get the double bonus of not just having more consumers to sell debt to, but also extra demand for housing, which helps to support house prices and their loan collateral, especially given the urban consolidation policies operated by Australia’s states.
However, while the big end of town is the clear winner from rapid population growth, it doesn’t wear many of the costs. That is borne by you and I.
Further, as noted by Dick Smith, Australia earns its way in the world mainly by selling its fixed mineral resources (e.g. iron ore, coal, natural gas, and gold). More people means less resources per capita. A growing population also means that we must deplete our mineral resources faster, just to maintain a constant standard of living. Double the population and, other things equal, you halve per capita real wealth.
Let’s not forget that modelling by the Productivity Commission has found that immigration is neither beneficial for the economy or living standards, nor can it alleviate the impacts of an ageing population.
Again I ask: what is the end-game of Australia’s migration-based economic model? If all we are doing is growing for growth’s sake, pushing against infrastructure bottlenecks, diluting our fixed endowment of minerals resources, and failing to raise the living standards of the existing population, where does it lead?
High immigration and population growth is fine if it is part of a grand plan. Otherwise, it is not a genuine economic driver, but rather a way of creating the illusion of growth; of sliding backwards without anyone really noticing.
