Population debate

The immigration / population debate raging at the moment – pretty much the central issue this federal election – is fascinating. It is such a complex issue with so many emotive components.

The inflationary pressures and hence interest rate rises that will result if this issue is not properly addressed will hurt all, particularly as interest rates and current high levels of immigration are key drivers of property prices.

Here are a couple of my thoughts:

  • Assumption: continued population growth isn’t sustainable due to the fixed environmental resources.  Should we therefore limit the globe’s, and Australia’s population growth to reduce the demand on the earth’s resources?   This would retard economic growth (unless we can dramatically increase productivity), and therefore reduce global wealth, limiting both our ability to invest in environmental solutions and reduce the speed with which those in developing nations transition out of poverty.   Interestingly population growth is actually seen to naturally decline as economic growth continues due to increased education, particularly in womem. Just contrast the US, UK and European population growth rates vs that of the developing world.
  • In my mind in addition to changing our consumption habits, we also need continued, sustainable population growth, which is crucial in supporting economic growth and prosperity. At the same time we should establish a price on carbon, forcing a reallocation of our resources towards developing innovative solutions to reduce this ‘new’ environmental cost. This will reduce our overall environmental footprint while at the same time continuing to increased global prosperity.
  • Put a price on environmental externalitiies however becomes difficult in a global context given the economic disparity and stages of development of the world’s nations. Developed countries such as Australia seeking to impose caps and restrictions on developing countries is fraught moral position.  This therefore squarely places the onus on the wealthy nations to act, to develop and invest in scaleable, environmental solutions , reducing their cost and increasing the pace with which the developing nations can adopt them.

Attention also currently centres around the level of immigration and whether Australia can sustain its current level of 1.9% pa (higher than India as an aside). Both political parties have announced policies limiting the number of immigrants, on the grounds that we don’t have infrastructure to support them (also to win over the rednecks in the marginal seats).

This however doesn’t sit well with me, because:

1.       We have a moral responsibilities to those less fortunate, especially in a global context, as one of the wealthiest countries in the world with only 22m people (versus China of 1,325m). Our intake of immigrants is also heavily skewed towards skilled immigrants (67% of the 169,000 immigrants allowed in during 2010/11) rather than those in need. This means in addition to not providing opportunities to those from developing nations (and the exponetial benefits this has, something like a third of Bangladesh’s GDP consists of money repatriated from overseas family members), we are also drawing on their most value resources – their educated, skilled people.

2.       We need all the people we can get, especially those from developing nations who want to make the most of this opportunity. We need them:

– To help build the infrastructure thanks to past government’s massive underinvestment in infrastructure and domestic productivity enablers;
– As approximately 5m baby boomers are leaving the workforce over next 10 – 15 years; and because
We have almost full employment and skilled labour shortages are forecast to continue  (skilled labour demand of 2.5% vs population growth over last ten years of 1.5%).

Some interesting discussions on the topic: