The right cause, but wrong effect

AGEING and immigration have been top order political issues in this country for some time.

But in the years to come their significance will become even greater and the policy implications of how to manage each issue will become even more far-reaching.

Not that long ago, Kevin Rudd declared he supports a "big Australia", meaning he is a fan of the intergenerational reports prediction that by 2050 our population could hit 35 million.

If it does it will do so because of high levels of immigration coupled with government encouragement for higher fertility rates to combat an ageing population.

But a rapidly increasing population brings challenges, and not all Australians are happy with the way it will change our lives.

Housing will need to become denser and cities will need to be larger. Property prices will continue to rise and competition for quality jobs will intensify.

Immigration means more multiculturalism, which not all Australians support.

And the resources boom that has made us wealthy through exports to emerging economies such as China's, will need to at least partially be redirected to satisfy domestic needs, which could reduce national prosperity.

None of this is necessarily a reason to oppose "a big Australia". Benefits of a larger population are also apparent. Evidence suggests larger countries compete more easily in a gloablised world and national security is certainly improved. But it is at least a reason to pause and think about the implications population growth and where it comes from will have.

Governments don't always take enough notice of the law of unintended consequences; the way decisions they take to address point A can have an impact on points B through to Z.

The White Australia Policy scarred our international reputation. The policy decision to remove Aboriginal children from their families now blurs what should and shouldn't be acceptable when responding to indigenous calls for special treatment.

In China, the one-child policy designed to combat population growth has left the society with a generation of boys outnumbering girls, not to mention the challenges of a more limited workforce that will have to support an ageing population.

Time and time again governments think that their policy decisions will solve problems but often they don't. Instead they cause other problems.

Recent efforts to increase fertility rates to combat ageing just might be an example of unintended consequences that do more harm than good.

Who can forget the former treasurer Peter Costello's request for parents to have three children: one for mum, one for dad and one for the country? The baby bonus and childcare assistance encouraged Australians to have more children and the national fertility rate increased.

But with the budget under fiscal pressure, some of that assistance has been cut and more cuts are likely to follow. With Labor in power, means-testing has been the mechanism used for the cutbacks. The recent fertility surge could turn into a population bubble that will not only be difficult to support fiscally while these new Australians are children in the short term but when they hit retirement age they may represent a similar cost burden the baby boomers are turning into.

It is hardly surprising the government is concerned about escalating costs attached to raising children; costs for families and the state.

At a time when healthcare costs are on the rise and the cohort of baby boomers is hitting retirement age, as a nation we are being burdened with extra costs for child care, schooling and with that aged care.

It may well be that the unintended consequence of attempts to increase fertility rates to combat ageing will be extra cost burdens at the youth end of government spending.

And with growing limitations on the budget, all that will happen is that families already under strain will be forced to carry the cost blowout as government assistance retracts.

This is where the debate over immigration levels regains its significance. Immigration, especially skilled immigration, is a cost-effective way of combating ageing without burdening the budget with long-term costs before the new citizens come of age. But it, of course, carries its own unintended consequences.

Skilled immigrants can walk straight into jobs that need filling and their tax dollars immediately contribute to the national wealth, so long as they aren't seen to be taking away job opportunities from other citizens. If that is perceived to be happening, anti-immigration forces with borrowed rhetoric and old-fashioned prejudices from the Pauline Hanson school of thought will come to the fore.

It makes for a divisive national debate, one we witnessed in the mid-1980s and the late 90s, that might be about to beset us again with the opposition looking to capitalise on concerns over the Prime Minister's strong support for a big Australia that would be facilitated in part by immigration.

A final factor that needs to be considered when aiming for higher fertility or immigration is the pressure it places on the environment and Australia's ability to meet greenhouse gas reduction targets. If we are serious about reducing emissions with the yardstick of year 2000 levels to work with, significant increases in population make doing so even harder because the per capita rate of emissions reductions needs to be even higher.

Whether we are talking about immigration or fertility rates, policies that promote population growth highlight the difficulties of our existing federal system.

The fact we have state governments with responsibility for the delivery of most services new citizens need, but a federal government that controls the purse strings as well as the policies that affect population size, means that if they don't co-operate the allocation of responsibilities doesn't work.

Federal politicians such as Rudd and Tony Abbott like to think the solution is to centralise powers in Canberra.

In reality giving states greater powers to collect the revenue they need to handle the challenges they face may be the better way to go. That is if we can improve the calibre of politicians choosing a career in state politics. Otherwise the law of unintended consequences might strike again.