Infrastructure overrun by the population ponzi

Australia's population is growing rapidly because of high immigration rates

Australia’s high population growth requires rapid development of housing and infrastructure

Infrastructure in our major cities is at or over capacity. William Bourke, President of Sustainable Australia Party, claims that this is a politically engineered crisis Australia needs to address by lowering immigration rates.

Australia’s rapid population growth

NAB Chairman Ken Henry recently stated that Australia’s population is expected to grow by an astonishing 400,000 people every year, and added: “My observation in Sydney, in Melbourne, today is that people already think – with very good reason – that the ratio of population to infrastructure is too high.

“Australia will need to construct a new city every year as big as Canberra or Newcastle to accommodate the expanding number of people, he said. Or, every 5 years, Australia would need to build an entire new city from scratch for 2 million people; or an entire new city as big as Melbourne every decade.

“Without such action, there will be more congestion, longer commute times to work and increasing problems with housing affordability…”

With our news and political discourse often dominated by more trivial issues, it’s important for us to keep these big public policy priorities in mind and ask: Why is the government not providing the infrastructure necessary to maintain our economic productivity and living standards?

Infrastructure and congestion

Infrastructure underpins our economy. Recent Government budget papers state that:

“Congestion imposes a real and substantial economic and social cost on our communities. These costs include longer travel times, higher greenhouse gas emissions, higher vehicle operating costs and road trauma. The avoidable cost of congestion is estimated to rise to around $20 billion per year by 2020.”

This is a key reason for various Liberal and Labor governments endorsing increasing debt and deficit, and the sell-off of our public assets in order to fund all sorts of mega infrastructure projects. But can complex retro-fitting of infrastructure to our already built-up cities be a viable solution?

Despite the claims of urban infill advocates like the Greens party, much of our major city infrastructure – built rightly or wrongly for lower density – is now at or over capacity. You only need to read the latest reports about overcrowded roads, trains, buses, schools and hospitals to know this.

So rather than chasing our tail, we need to get to the bottom of one simple question: What is causing the infrastructure malaise?

Uneconomic growth

The increasingly obvious reason is that Australia’s rapid population growth has resulted in our cities reaching diseconomies of scale. Diseconomies of scale are the forces that cause governments or business to produce goods and services at increased per-unit costs, like roads, train lines, water, recreational areas, hospitals and schools.

As Macro Business economist Leith van Onselen puts it: “In already built-up cities like Sydney and Melbourne, which also happen to be the major magnets for new migrants, the cost of retrofitting new infrastructure to accommodate greater population densities can become prohibitively expensive because of the need for land buy-backs, tunnelling, as well as disruptions to existing infrastructure.

“We have seen these diseconomies of scale time and time again. For example, projects like Melbourne’s now defunct East West Road Link was expected to cost 18 billion, whereas Sydney’s North West Rail Link would cost $8 billion. That’s an astounding $350 million to $1 billion per kilometre.

“Hence, running a high immigration program becomes increasingly costly for existing residents. The huge infrastructure costs also force unpopular asset sales, increased debt borrowings and austerity – none of which is a desirable outcome.”

A Grattan Institute report entitled ‘Budget pressures on Australian governments’ adds weight to this analysis. It found that unprecedented infrastructure spending by states and territories is largely responsible for a $106 billion decline in their finances since 2006. The Grattan report shows that state and territory borrowing for capital expenditure over the last seven years drove their finances backwards from $37 billion in the black in 2006 to $69bn in debt in 2013. So the new infrastructure is not only unaffordable, it’s sending us deeper and deeper into debt. Salt is added to taxpayer wounds when we hear that expensive new road projects are predicted to be gridlocked within a decade.

Not only does urban infill overrun our infrastructure, it also reduces critical biodiversity and green space. As an example of this, Stonnington Council in Melbourne is considering buying back properties to create more parks and open space in its densified suburbs, at taxpayer expense.

Put simply, growth in our particular cities has become uneconomic, and as a by-product, our international competitiveness is suffering. We are diverting more scarce economic capital into costly city-building infrastructure and high-rise apartments rather than investing in critical tradeable sectors like manufacturing and agribusiness; not to mention small business entrepreneurship.

Record immigration and the population ponzi

Driving all of this is what’s now known as the ‘population ponzi’ – the politically engineered underpinning of housing with ever more demand (mainly via high immigration, foreign buyers and investor tax concessions). This of course provides banks with more mortgage customers.

It’s no coincidence therefore that banks like the NAB demand taxpayer funding for mega infrastructure – effectively subsidies for property developers and the banks that finance them – rather than addressing the root cause of demand growth.

As the first step in securing an economically, environmentally and socially sustainable Australia, it’s time to lower annual permanent immigration from a record high of over 200,000 per year, back to the long term average of around 70,000 per year.

The immigration program must be run in the public interest, not just in the interests of the powerful few at the top of the wealth pile. In the end, even the wealthy elites and their children will be hurt by the direct impacts of high immigration on wage depression and skyrocketing house prices. As disposable income is squeezed, the whole economy slowly but surely grinds to a halt.

For the common good, including housing affordability, it’s time to deflate the population ponzi.

 

William Bourke

William Bourke, President of the Sustainable Australia Party

This article was originally published on Open Forum.

 

17 March 2017

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8 thoughts on “Infrastructure overrun by the population ponzi

  1. The comments by Kees Hulsman on the new Planning Act and draft SEQ Regional alignment are so relevant. The Regional Plan does not reveal among other things ; population and decline in population trend , koalas survival tools, and the glut in predicated units, residential land and industrial land via the Broad Hectares Studies, and subdivided , approved lands and Local Plans.

    The alignment of the State Planning Policy (SPP) Planning Act and SEQ Regional Plan and 4 other new Regulations puts so much land into CODE Approval with; no tree protection ,no public notification, no consultation , no objection or appeal . The quotes from DILGP that this plan is not about glut, this plan is not about CODE and this plan is not about land banking and this plan is not about low cost housing are ostrich extremes and just contribute to the size of the lost tribe of Elephants ostracised to , in between three levels of Government. Planners dabbling in economic and planning instruments;- fast tracking , CODE, City Deals etc. have arguably created social , fiscal and environmental conflicts they choose to ignore.

    The lack of treatment of Biodiversity as a multiple Measure that Matters (table 23)ignores the wider value sets and economic link with Tourism to the International Importance , Australian Importance, SEQ Importance and Moreton Bay/NSI Importance in the scientific significance of the McPherson Macleay Overlap . Other data is not in Brisbane or Canberra but in Museums, International data bases and elsewhere. An economic study on the starving of ; environment staffing , environment committees, environment grants and funding on fauna flora and marine is needed to protect biodiversity and habitat as intrinsic and economic investment. Viz chronic staff losses at CSIRO, DSITIA ,EHP ,RCC Environment Staff and the Federal Department of Environment, but also inertia/cutting of classification processes.
    It is little known that the Biodiversity Attributes of SEQ have similar but different metrics to the Wet Tropics, but with virtually limited to no protection on SEQ freehold and some littoral zones.
    The potential advantage of a Biosphere Reserve of Moreton Bay /NSI should be compared to Noosa and other international sites featuring a range of fiscal and other investments benefits.
    Wake up South East Queenslanders. Thanks to Kees and Matt

  2. The William Bourke paper has so many aspects and case studies , when some more are needed on BCC Tunnel losses and Build , Own , Operate and Transfer(BOOT) .
    The Auditor General balance sheets on DTMR/road Quangos , State Development Coordinator General . EDQ , Business Qld and Power and Water Quangos should be cross referenced against internal forward plans and State and Federal Infrastructure Plans. These are the agencies so difficult to get to the negotiating tables and impossible to get to Court . There are now also MOU s and tick and flicks to do the study later to avoid EISs or chop up the line or road into bits to avoid public scrutiny.
    Some communities have saved Old Growth, narrowed roads, diverted infrastructure and stopped arterial roads, powerlines and pipelines, but new techniques and opportunities need prospecting .

    Theresa

  3. Is Australia’s rapid population growth a major reason for the drafting of such appalling Planning legislation and practice as revealed by the Qld Planning Act and the SEQ Regional Plan? Real consultation to ensure that government, which is supposed to represent the people, develop policies that meet the needs of people as equitably as possible has been the standout casualty in this whole process. Government at all levels is failing to meet the people’s needs and is pandering to the few. Do we live in a corporate dictatorship that has the veneer of democracy? It certainly seems that way!

  4. William Bourke brings some much needed commonsense to the debate. Seriously, why would any raional person want never-ending population growth? Even the major beneficiaries of rapid population growth it are increasingly unable to fend off the resulting pressures..

    Let’s hope commonsense starts to prevail at the top and we change direction before we find ourselves up the proverbial creek without a paddle.

    Not only do we need to overhaul our immigration system such that it’s to the benefit of the public and isn’t applying relentless upward pressure on living costs (including housing, education, health, food, water, electricity, transport etc) but also, we need to have a major awareness such that the people living here also understand the perilous path we are on and larger families become of a thing of the past.

    A failure to truly address this while we still have time and capacity, means passing on a bigger problem to our children. What responsible, caring mum or dad wants that for their children?
    All of our natural critical resources are being rapidly depleted (water, farmland, ecosystems). The growing unrest at our economic woes (due to a blind adherence to reckless population growth) will pale in comparison to the fall-out when we can no longer feed ourselves or provide enough clean water.

    Is this seriously what we want or Australians going to start voting for the commonsense parties such as Sustainable Australia?

  5. A booming population creates easy profits for big business, the real estate developments, more borrowing for the banks, the big infrastructure projects, more supermarkets.
    The effect on the individual however is overwhelmingly negative: unaffordable housing, overcrowded roads, overloaded infrastructure, more pressure on the environment.
    A bigger Australia is not a better Australia, it’s worse, just look around you – the negative effects are there for all to see.
    So much common sense here from William and Sustainable Australia. We need to start voting for this party.

  6. Sustainable Australia is he only party willing to address the immigration fueled population issue in a calm and considered way.

    Rapid population growth is clearly reducing quality of life for Australians, especially in the big cities. Overcrowding of public transport, schools and hospitals is chronic, while demand driven housing costs are now ridiculous, up from 3-4 times average annual income 40 years ago to 14 times now in Sydney!

    Australia is already the most multicultural nation on the planet with about 50% of us either born overseas of with a parent that was born overseas. Lowing immigration will not change that, but it will enable the nation to catch up on provision of infrastructure. Even with zero net migration, Australia’s population would continue to expand for decades as births outnumber deaths.

    Great report!

  7. Dave is right.
    Let us measure what matters. Measure 12 DROs,including Ecosystem Services, full Biodiversity, Koala Habitat, Climate Change,Liveability , population and consultation . Should one expect funding or transparency or Agency delivery or publication in the SEQRP? . Please send in your Other Matters. Perhaps publish in the cloud or Offshore ?

  8. This argument needs to be aired everywhere. The major parties hide behind increasing GDP but it grows with more people….not smarter people or productivity gains. Neither party wants to advertise that their “growth n jobs” policies dont work but the swamping of the country with 2-3oo ooo immigrants makes the place look busy….

    Even in redlands 4 years of that rhetoric saw less jobs in 2016 than in 2012…an absolute failure of the Mayors rhetorical policies.

    Measures that really count like quality of life, livability and lifestyle really matter but probably are in decline …so GDP suits ALP, LNP, MSM, property development industry and so on.

    Strangely One Nation has picked up the unease in the community about rampant population growth…that might open the eyes of a few more.

    Otherwise, as a start, lets measure what matters

    r

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