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Thursday, April 12, 2012

Australia's population dilemma: Grow or Die

Australia has a problem: not enough people.  We enjoy a great quality of life, but it is maintained through taxes which provide infrastructure and social support, and high employment which boosts all other sectors.  Taxes and employment require one thing: an available and appropriately skilled workforce.  Some people may fear that their way of life will be eroded with an increased population, however, a lower population and aging workforce will erode our way of life and force us to work until the day we die.

Australia's population is currently estimated to be around 23,000,000. With a land mass of 7,682,300km2, Australia's population density is approximately 3 people per square kilometre. Compared with other western nations, this is extremely low.  The USA for instance has a population density of 32/km2 and the United Kingdom has 660/km2.  As of 30 September 2011, Australia's population growth rate is1.4%, down from 2.2% in 2008 (1).

Australia is facing an aging population because of low fertility rates and longer life expectancy.  As at 30 June 2007, the median age of Australia's population was 36.8 years.  The ABS estimates that by 2056, the median age will be between 41.9 and 45.2 years (2).  In 1970/71, 8% of the population was over the age of 65, by 2001/02, 13% was over 65 and it is estimated that by 2040 over 25% of the population will be over 65 (3). That is a lot of old age pensions.  In response to the aging population, the Howard government abolished the compulsory retirement age and changed superannuation laws in an effort to reduce the burden on public funds.  The Rudd government established the "Future Fund" to assist the Australian government to meet its superannuation liability.

The Australian Bureau of Statistics (ABS) estimates that Australia's population in 2056 will be between 30,900,000 and 42,500,000, and that by the year 2101, Australia's population will be between 33,700,000 and 62,200,200 (2).  These figures are based on assumptions which include the fertility rate between 1.6% and 2% and net immigration ranging between 140,000 and 220,000 persons per year, (note that as of 2011, there were 172,500 immigrants).

There are obviously pros and cons to an increased population and there is almost certainly a tipping point where high population becomes unsustainable. There are some who fear that a high population will erode their standard of living by contributing to higher unemployment, higher crime rates, denser suburban areas and drain government budgets through welfare, infrastructure, education, health, police and so on.   However, low population presents its own problems. Australia is a long way from reaching unsustainable levels of population.  If anything, it is in danger of having a population too low to sustain itself.  The aging workforce is obviously one of those areas.

Whilst Australia does have a lot of land, much of it is remote so the population tends to gather in the capital cities. Many of the inhabitants of rural and remote areas have been primary producers. Over the years, Australia's primary industries have been depleted as cheap produce is imported, resulting in many rural towns struggling as farms close down and their populations migrate to larger regional or metropolitan centres.  Contributing to this problem, Australia's exports are decreasing, while imports are increasing, with the obvious destructive effect on agriculture, as well as the manufacturing and retail sectors.  There is a benefit to the economy, for the government and the population to general, to develop, encourage and support agriculture and other primary industries.

Australia's retail sector is struggling because of a number of factors, such as lower consumer confidence following the Global Financial Crisis and high levels of consumer debt impacting disposable income.  An increased population will boost retail sales as people require food, clothing, motor vehicles, furniture and other commodities.  This increased demand on the retail sector will provide more job opportunities as retailers, new and existing, respond to consumer needs.

A larger population means more tax payers who are able to fund the creation and expansion of infrastructure. This in itself, creates employment opportunities, increasing the tax collected by government and increasing consumer demand on the retail and housing sectors and benefiting the construction, manufacturing and technology industries.

The fear of dense suburban areas is certainly one that has been realised in Melbourne and Sydney as local councils approve high density housing developments. Compare these poor examples of urban planning to Queensland, where the State Government developed Springfield Lakes, a city constructed south-west of Brisbane which was designer built to reduce housing density, minimise the requirement for car travel, optimise walking and cycling and encourage use of public transport.  One third of Springfield Lakes is dedicated to open space.

Australia has a huge amount of livable and currently uninhabited land. The development of this land, is possible and requires intelligent planning and the construction of all manner of infrastructure, not least of which is irrigation, presenting much opportunity for research, development, construction and maintenance.  Some argue that Australia is too arid, yet 62% of the continent is suitable for agriculture. (4)

The size of the country allows for a much larger population, however, governments need to do it responsibly and intelligently with a focus on sustainability and development and encouragement of primary, secondary and tertiary industries. With a greater labour pool, there must be a focus on education and development of a skilled workforce, including medical professionals, engineers and tradespeople.  With low population, there are fewer opportunities for skilling the workforce and less demand for their skills.

All levels of government should be striving to develop communities that provide a high quality of life.

Australia needs a higher population in order to maintain and ultimately improve its standard of living.

All references accessed 12 April 2012.

(1) Australian Bureau of Statistics, '3101.0 - Australian Demographic Statistics, Sep 2011'.

(2) Australian Bureau of Statistics, '3220.0 - Population Projections Australia, 2006 to 2101'.

(3) Australian Government, The Treasury, 'Australia's Demographic Challenges'.

(4) Australian Natural Resources Atlas, 'Land Use - Australia', Land use patterns in Australia.

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