Population growth is in our long-term interest

Australia needs a substantial increase in its population if it is to thrive and stay relevant.

Australia map - population per square km

At dinner on Wednesday night in Sydney’s Randwick, on a pleasant summer evening, a friend and I were practically shooed out of a restaurant at about 9.30pm because the other six or seven patrons had already left. One has to marvel how extraordinarily early bars, restaurants and cafes close in Sydney — supposedly our big “global” city — if they bother opening at all during the week.

Complaining about excessive immigration in this country doesn’t make sense. Australia’s big five state capitals are the least densely populated in the developed world by a very large margin. And the rest of this vast country is basically uninhabited.

If Australia’s high population growth is sapping our quality of life, as former prime minister Tony Abbott suggested this week in a speech, then it’s because of pathetic planning by governments or the quality of the migrants themselves, not the number of people coming here.

Sure, our population growth rate is high: about 1.6 per cent a year, or 390,000 people (about half of it immigration). But that’s in part because our population is so small, especially relative to the available space, to begin with and Australia is such a desirable place to live.

In 2011, about 330sq km of London had a population density greater than 8000 people. In 2016 only 38sq km did in Sydney, 12sq km in Melbourne, and not one in our other cities. Even Christchurch and Auckland are more densely populated than Brisbane, Perth and Adelaide.

Environmental arguments against immigration can’t be taken too seriously, either. As the map from the Australian Bureau of Statistics shows, the human footprint on Australia is tiny.

Economics doesn’t have too much definitive to say about immigration. Some studies show it lifts workers’ wages and underpins innovation, others that it saps wages and fuels social discord. Rich and poor countries have had high and low populations and growth rates.

What we do know is that large, densely populated cities fuel innovation and creativity. They are where the hardest working and brightest people want to live. The great innovators and artists of history didn’t sprout in low-rise suburbia.

Concerted government efforts to encourage Sydney and Melbourne to grow more densely, to attract and retain the best, would do a lot more for our prosperity than shaving company tax a little over eight years. Australia without major world cities will lose its clout and dynamism.

In big cities, workers specialise, and there’s more competition among businesses. Denser populations make for more interesting friendships, relationships and networks. In short, they thrive because of the “benefits that come when firms and people locate near one another together in cities and industrial clusters”, writes Edward Glaeser, among the foremost urban economists. Transaction costs, as economists call them, plummet when we live close to each other.

“A central paradox of our time is that in cities, industrial agglomerations remain remarkably vital, despite ever easier movement of goods and knowledge across space,” he adds. Human interaction multiplies in big cities, increasing the likelihood of economic breakthroughs.

In any case, as The Australian editorialised this week, Australia simply isn’t taking its inevitable growth anywhere seriously enough.

As state governments trumpet their building booms, productivity in the construction sector is slowing or falling. It takes far too long and costs too much to build basic infrastructure, in part because excessive environmental regulations and nimbyism throttle development. Australia wouldn’t have had a hope of absorbing the immigration after World War II if we’d had half the rules we have now.

Voters are rightly angry about immigration because the amenities aren’t matching the population growth. Traffic congestion and soaring house prices are the result. While high house prices are part and parcel of large cities, inefficient transport need not be.

People want to live near the coast and inner-city amenities, but governments make it difficult. Take Sydney, where I live. It’s extraordinary that in the 12 months to November only 44 new dwellings were approved in leafy Woollahra in Sydney’s east, a micro­scopic percentage of the suburb’s population of about 59,000. Yet in far-flung Parramatta more than 4000 were approved. Apparently the importance of “maintaining the character of the area” matters a lot more depending on the socio-economic status of the residents.

Even in North Sydney, where high density would be considered the norm, only 393 dwellings were approved, compared with more than 2000 in Bankstown. How any Labor Party worth its name can tolerate such blatant discrimination against lower income people is beyond me. Yet putting the Aboriginal flag on the Harbour Bridge is seemingly a higher priority for NSW Labor.

Our state governments maintain tax structures that discourage higher density development. Shifting from stamp duty to land tax would encourage higher density because the burden of the tax would fall over more people.

Our population tripled to 1.2 million in the decade from 1851 as Victorian gold rush fever lured migrants from across the world. Those diggers would be shocked to know how small the country remains almost 170 years later. Ultimately, the appropriate pace of immigration can’t be decided by economic arguments. It is one’s vision for Australia 100 years from now that matters. Do you want Australia to be an influential, outward-looking nation with a few megacities that can hold their own globally?

As US military power wanes, it is in our security interest to have a larger population. By all means, let’s debate the composition of our immigration program and the quality of our infrastructure.

But it’s every bit as much in Australia’s long-term economic and political interests to have a significantly larger population as it was 50 years ago.