Population surges and we're struggling

A national milestone slipped past us last week: Australia is closer to having 24 million people than 23 million, according to the Australian Bureau of Statistics' population clock.

While we were busy wondering about which way Clive Palmer and Malcolm Turnbull spun the lazy susan and the future cost of university degrees that youths can avoid by dying, we ticked over the 23-and-a-half million mark without a murmur, having added an extra 500,000 residents in just 13 months.

By apparent coincidence, there were a couple of stories around over the weekend dealing with the growing population's impact on our key cities – try 8 million in Sydney and 9 million in Melbourne -  and what might be done to house them, but the speed of our growth and the immediate challenge remained under the radar.

My suspicion is that many, maybe most Australians still think our population is more like 22 million. In one way, there's nothing wrong with that – one of the very few pleasing aspects of Australian politics over the past couple of years is that population growth has quietly slipped off the radar. Both sides know that our aging demographic profile demands strong population growth at least until we boomers shuffle off – if we ever do.

Is Australia set up to cope with a rapidly expanding population? Picture: MICHAELLE SMITH

Is Australia set up to cope with a rapidly expanding population? Picture: MICHAELLE SMITH

But in another way, it's a seriously bad thing that we don't more broadly comprehend our size, where it is heading and the demands that will place upon us.

With the politicians not wanting to know about it, I gave myself the privilege of welcoming our 23 millionth Australian last year, congratulating him or her on winning life's lottery. The usual Doomsayers who don't understand our country's untapped capacities and our own resourcefulness had a whinge about sustainability, but the rest of us just kept growing regardless.

At our present population growth rate of 1.8 per cent, the wonder of compound interest means there will be nearly 10 per cent more of us in five years. OK, it's nine-point-something, but 10 per cent sounds better and is easier to work with. So there will be an extra two-and-a-third million or so people to house, transport, feed, clothe, educate, doctor and employ. It's an amazing task to grasp and a wonderful opportunity for business – and it's a more amazing challenge for our politicians.

The budget rhetoric about infrastructure indicates they aren't rising to that challenge. For a start, there's actually less federal money being spent on infrastructure in the new financial year – the relatively little bit of extra Federal cash doesn't flow until 2015-16.

And then it seems to be mainly going on mega road projects that are attempts to solve today's problems - or maybe yesterday's – not the new challenges that will be obvious well before WestConnex is finished. Indeed, some will be obvious before the jackhammers finally start in 14 months. It's instructive that Infrastructure Australia's priority list didn't get much billing in the budget – many of its recommendations don't sound nearly as flash.

The point is, we are already playing catch-up at a rate that won't catch up, especially if the Abbott/Hockey/IPA government continues to push its dangerous and flawed doctrine of competitive federalism. Flicking greater responsibilities onto state governments that are all heading towards financial cliffs won't end up building our future.

To make our growing Australia as enjoyable, functioning and successful as it should be and needs to be, a much bolder and broader vision is required. Instead, we're getting shrinkage.

On Wednesday, the ABS releases the March quarter national accounts. The Reserve Bank's statement on monetary policy last month and the median forecast of 27 private sector economists polled by Bloomberg last week is that March quarter GDP growth should come in at 0.9 per cent, making annual growth of 3.2 per cent. Yes folks, economic growth at or above trend, enough to lower the unemployment rate. We haven't had that for a bit.

But Joe Hockey's forecast is that it won't last, that real GDP growth will slow to just 2.5 per cent through the new financial year. Hockey likes to put the blame for that on the decline in resources construction – but the RBA always reminds us that the fiscal contraction by state and federal governments also is a key factor.

The RBA said before the budget that public demand growth was running at half of what has been average. Hockey's first budget says it will be pushed down to a quarter. More importantly, public investment as a percentage of the economy is running at its lowest level in three quarters of a century, if not longer.

With the infrastructure of our major cities groaning under their present load, a few big roads won't be solving many problems at all by the time they're finished and the population is substantially larger. For all levels of government, hurdles to smarter, better but denser housing remain the norm. The comfortably established in particular want the solutions to our problems to be solved somewhere else, and then pretend concern about where their children might be able to afford to live.

And that's just some of the hardware. As to the more vital software of how we need to be smarter, better skilled and healthier people to improve our quality of our more numerous lives, well that's being punted to the states too – states whose administration and political talent almost make our federal operatives look good.

Meeting our population challenge requires investment, sound investment that will pay handsome dividends that justify borrowing. Our under-investment in crucial hardware and software is a genuine emergency, if the government can understand that, not the manufactured nonsense surrounding our present federal deficit.

Michael Pascoe is a BusinessDay contributing editor.


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