Burke's population strategy needs nod to patchwork economy

LATER this year the federal Minister for Sustainable Population, Tony Burke, will release his report on a sustainable population strategy.

LATER this year, and possibly within a matter of weeks, the federal Minister for Sustainable Population, Tony Burke, will release his report on a sustainable population strategy for Australia. This strategy was commissioned prior to the last federal election.

 A debate surfaced early last year around the notion of a "big Australia" versus a "small Australia". Proponents of the former (including myself) argue that at least until the mid 2020s - in order to offset the impact of retiring baby boomers - Australia needs strong growth based on an average of 180,000 migrants a year.

The "small Australia" lobby argue that the migration intake should be immediately scaled back to 70,000 a year.

If the former was maintained for 40 years, the Australian population would reach 35 million by 2051; if the latter was to prevail, the mid-century population would be 29 million.

In the year ending March 2009, the Australian population increased by a record-breaking 472,000, including 320,000 migrants. New figures released by the Australian Bureau of Statistics last week show that in the year to September, the population increased by 346,000, including 186,000 migrants.

At the present time, say for the year ending in March, I estimate net growth at about 300,000, including 140,000 migrants.

At the time that former prime minister Kevin Rudd made his famous "I believe in a big Australia" speech, in October 2009, the nation's growth rate was already dropping. It continued to drop when Burke was appointed and it will still be dropping when the strategy is finally released.

Burke is faced with a dilemma. On the one hand he has to placate popular concern about the impacts of what many regard as excessive population growth - congestion and lack of affordable housing - while on the other hand he must grow the tax base and deliver skills and labour to shore up the nation's future prosperity.

The government, or at least Treasury, is (or should be) keenly aware of this dilemma. Indeed,

I am sure the recent push for greater labour force participation is part of an attempt to find a solution to an increasingly boomerless workforce.

But the cribbing of a few labour-force participation points is not going to deliver the necessary skills and workers into the locations that require them now, let alone in the boomer-challenged workplace of the future.

Submissions to Burke's strategy closed in mid-March. No doubt the strategy is close to being finalised. Julia Gillard and the cabinet have probably been briefed. Burke's staff are doubtless drafting trial press releases and role-playing media questions and answers now.

If not, they should be.

Here's a question to role-play: the Prime Minister said in June last year that she did not believe in a "big Australia". Surely your strategy was always going to reinforce her views? You've just been going through the motions, Mr Burke. Gillard told you the outcome she wanted when you were appointed.

What is your response?

Burke's dilemma is this: How can he balance the politics and the practicalities of population growth in a decade in which

baby boomers retreat from the workforce and from the tax base as net contributors?

Here's one way Burke could do it.

He could argue that Australia has progressed beyond a two-speed economy into a - new buzzword alert - patchwork economy.

There are parts of the nation in desperate need of labour and skills (such as the Pilbara and the Bowen and Surat basins) and other parts that are desperately congested and lacking in services (principally, the sensitive electorates of western Sydney).

Burke could announce a bold and visionary plan to channel migrant workers into areas where they are needed. At this point, Tony, I suggest you make gratuitous lump-in-the-throat patriotic references to the brave Balts, Italians and Greeks who "built the Snowy with their bare hands" from the Cooma frontier in the late 1940s.

This bold plan - lets call it the Burke Plan - would involve the creation of a new visa category that welcomes migrant workers, but which restricts their work activities to selected regions/postcodes for a set period of time.

In other words, we welcome new workers, but in order to access work (and therefore register as a PAYE taxpayer) they must work in an area of acute labour shortage for no less than three years.

Of course, these workers and their families are welcome to move about the country as they wish, but they will not be able to access work, welfare, education or Medicare in any other jurisdiction during this period. That's the deal. We welcome you to Australia, but we ask that you help us out by directing your labour during the first few years of citizenship into labour shortage areas.

This policy meets our practical need for skills and taxpayers and it alleviates population pressure in our major cities. Or at least it would alleviate these pressures for 3-5 years while the delivery of services and infrastructure in, say, western Sydney catches up.

And, best of all, it would allow the Prime Minister to save face given her statements of last June. Yes, Julia, you can believe in a Big Australia if the growth is directed to where it is needed. What we need is an articulated demographic strategy to meet the articulated labour needs of the Australian economy and continent.

Bernard Salt is a KPMG Partner

[e-mail]

Facebook.com/BernardSaltDemographer; twitter.com/bernardsalt