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Population Stablisation: Australia 24 Million, Sydney 6 Million

Hon. Philip Ruddock Hon Philip Ruddock - Misiter for Immigration, Multicultural Affairs and Minister for Reconcilliation, Aboriginal and Torres Straight Islander Affairs

I have been asked to speak today on the subject of population stabilisation: Australia 24 million, Sydney 6 million.I welcome this invitation because it gives me the chance to reflect on two equally important aspects of the population debate in Australia: the total number of people who will be living in Australia in fifty years time; and where and how they will live.
I would first like to discuss the issue of Australia's total population. The figure of 24 million is approximately what the Australian Bureau of Statistics projects for the year 2050, assuming that net overseas migration continues at around current levels (after allowing for fluctuations in the economic cycle) and the fertility rate does not fall too much further. I have often said that most Australians would not find the prospect of a population of this size in fifty years time too alarming.

The most important feature of such a population is that it would be stable - not increasing and not decreasing - and no longer ageing. This would have a number of benefits:
  • a stable age structure would mean that although the population would be older, it would be sustainable in terms of expenditure on retirement income and health;

  • although the population would have ceased growing, there would still be scope for economic growth through improvements to productivity;

  • the labour force would remain large enough to support the increased number of older people; and

  • population stabilisation would provide the economic basis for improvements to the environment without further increasing the impact of population.

As Professor McDonald has shown, the only other way to reach a stable population within fifty years is through increasing the fertility rate to replacement level (2.1 children per woman) and having zero net overseas migration. Now I think there are two problems with this: no nation has ever succeeded in raising its fertility rate in such a fashion; and zero net migration would mean strictly curtailing the entry to Australia of spouses and children of Australians, New Zealanders, students and working holidaymakers and skilled migrants and temporary workers.

The alternatives to a stable population are, of course, a population that continues to grow, or a population that begins to shrink. There are problems with both.

A population that continues to grow strongly after 2050, as proposed by a number of groups, could present ongoing environmental problems and would be difficult to achieve without drastically lowering immigration standards. In contrast, a population that reaches stability by mid century, while still entailing further pressure on the environment, also offers possibly the best combination of environmental, economic and social sustainability. It is up to those who propose very much larger and ongoing population increases beyond 2050 to demonstrate convincingly that the environmental problems of faster and larger growth could and would be addressed. Because of rising international competition for skilled migrants, running a significantly higher immigration program for a long period would also mean diluting selection criteria. That would mean more migrants who were less skilled, older and with fewer English skills; this would quickly undermine community confidence in the migration program and reduce the undoubted economic benefits that skilled migration delivers at present.

In contrast to those who lobby for a larger population, some people argue that we should substantially cut net overseas migration now and not worry about a declining fertility rate. This, they argue, would deliver us a smaller population more quickly, and a better environment. Unfortunately a shrinking population is also an ageing population. This is precisely the prospect facing Japan and many European countries who are experiencing very low fertility rates and rapidly ageing populations as a result. These countries are caught in a demographic trap.

As I have mentioned, there are no examples of a nation successfully raising its fertility rate once it has fallen to the levels we see today in Italy, Spain and Japan. Immigration is not part of the fabric of these nations and therefore it is very difficult for them to countenance a large scale influx of migrants. In both areas - fertility and migration - Australia is at an advantage. Our fertility rate has not yet sunk to Japanese levels and we have a history and tradition of migration that could help us towards a demographic soft landing.

However, there are some serious downside risks. The fertility rate has been falling steadily for three decades and there are some signs that it will continue to do so. If it does, we will face some very significant problems in relation to population decline and ageing. Also, there are some indications of long term downward influences on net overseas migration which, if sustained, could make it more difficult to reach a stable population of around 24 million by mid-century.

Despite a long period of sustained economic growth, net overseas migration has averaged only a little over 85,000 in recent years compared with levels over 150,000 at the peak of the previous cycle. This suggests that lower net overseas migration may be a structural rather than a cyclical phenomenon.

Our greater focus on skilled, educated, English speaking migrants within the permanent migration program has contributed to this structural shift. What is more, there is a finite supply of these skilled migrants and we are on the cusp of a major intensification of competition for them from overseas countries. This international demand for skilled migrants will be driven by profound and sustained demographic pressures that will cut into the labour forces of many developed nations and force them to seek out new recruits from overseas.

The same demographic pressures will also see increasing international competition for many of our long term temporary visitors, who currently make up half the net overseas migration total. Many of these temporary entrants are associated with high demand industries such as information technology and accountancy, either as business visitors or as students who represent an important feeder group into our permanent skilled migration stream. Add to this the increasing attraction of working offshore for young skilled Australians and the recent changes to access to social security by New Zealand citizens and it is not difficult to see the dangers to our longer term levels of net overseas migration.

Unless we manage our economy and our environment well, and we continue to attract our share of highly skilled migrants, we could well see our net overseas migration drop in the way that it has in other places such as New Zealand. One of the keys to ensuring that net overseas migration does not fall below what we need to reach stabilisation is to make sure that the public is aware of the benefits of our current focus on skilled migrants.

And these benefits are very tangible: while researchers in the early 1990s found immigration to have a neutral impact on the economy, today it is clearly having a strongly positive impact; the government's emphasis on skilled migration will deliver $5.3 billion in improved living standards for australians by 2007-08; and the 2000-01 migration program will contribute an average $270 million per year over the next five years to the commonwealth budget bottom line; New migrants are doing better now than in the mid 1990s - labour force participation is up and unemployment is down. This reflects the focus on skill under this government as well as the strength of the economy.

The main obstacles to Australia achieving a stable population of around 24 million by mid-century are, therefore, significant falls in the fertility rate and net overseas migration.

In addition we face problems if the labour force participation rate, especially in the older age groups continues to decline. It would be wise, therefore, for us to adopt a cautionary approach. We should: maintain our emphasis on skilled migrants, and adopt strategies for attracting them which keep us ahead of growing international competition; find out more about why the fertility rate is falling and, where possible, formulate policies which address this issue; encourage measures to increase labour force participation, especially of older workers who are now leaving the labour force in increasing numbers; and seek a better understanding of the links between population and the environment and how better to manage this relationship.

Now, if you accept that some further population increase to 2050 is both inevitable and desirable, particularly if it leads to a stable population, the next question is where the additional people should live. In looking at this issue, we should consider the relative economic, environmental and social impacts of alternative settlement patterns, as well as the tools we have to influence them.

Which brings me to the second part of my theme today - the prospect of a Sydney of 6 million people in 2050.

The first thing to note here may be bad news for some of you. According to the ABS projections, not only will Sydney have a slightly larger share of the national population in 2050, it will also still be growing quite strongly, even though nationally our population will have stabilised. This is due to an assumption by the ABS that Sydney will continue to attract the same proportion of migrants and long-term visitors as at present and that it continues to lose a smaller number of people through internal migration to other states.

To give you some of the bigger picture: the ABS also projects that the populations of Brisbane, Perth and Darwin will also continue to grow strongly beyond 2050, whereas Adelaide, Hobart and Canberra will decline in size. Melbourne's population, according to the projections, will level out; and the population of NSW excluding Sydney is projected to decline from 2.4 million to 2.2 million by 2050. Now I would like to emphasise strongly at this point that these are only projections, not predictions. A projection takes current trends, makes some reasonable assumptions about underlying factors, and then extrapolates them. Of course this a perfectly valid and useful thing to do. However, it is not at all certain that the future will be like the past.

So what could happen to change the ABS projections? One thing that could happen is that some of the migrants who now make Sydney their destination might be attracted to other states in the future. This could be because of lower house prices and less congestion in other cities. It could also be associated with the increasing efforts of states like South Australia and Tasmania as well as many regional centres, working with the commonwealth, to attract more migrants. Whereas the ABS projections have these states looking like depopulated backwaters, I do not believe that this will be the case, if their own efforts have anything to do with it.

These states are taking action now to attract more migrants, and the Commonwealth government is helping them. Together, we are encouraging a more balanced dispersal of Australia's migration intake by enhancing a range of state specific migration mechanisms. These mechanisms provide state and territory governments with greater influence over the level and composition of skilled and business migrants settling in their jurisdictions and to meet regional skill shortages. Although still small, the number of visas granted under these state specific mechanisms has tripled over the last four years. If these mechanisms continue to grow over the course of the next fifty years, they could take significant population pressure off Sydney - especially if they succeed in building a core of recently arrived skilled migrants in other states who establish businesses and attract similar migrants to follow them.

These efforts could well be assisted by more buoyant labour markets in other states, as populations begin to age and labour forces thin out at the same time as demand for a range of services increases. Within states, governments could take action to foster population growth outside the capital cities

Without wishing to speak for the NSW state government, I doubt that it is entirely happy with a projection that shows regional NSW shrinking considerably over the next fifty years; I also doubt that it has no plans or intentions to do something about this. Other influences towards de-centralisation could include communications, which have undergone such a revolution in recent years.

Improved transport could mean that more people could physically commute to the capitals, or work at a distance. When one considers that a lot of "back office" work these days does not even need to be conducted in the same country, the possibilities for decentralisation from the big cities to the regions begin to grow. Now, all these measures assume that a Sydney of 6 million people and still growing in 2050 is something to be avoided. But in terms of economic, social and environmental impact, some people see merit in the growth of global cities, including Sydney.

For example, Professor Kevin O'Connor of Monash University has said recently that, far from being weakened by new communications technologies, global cities will in fact grow and prosper in the new information economy. The reason, says Professor O'Connor, is that such cities provide a critical mass of services and skilled personnel, which in turn generates a culture of research and innovation. To quote professor O'Connor, "firms in these places shape much of what we watch, read, wear, eat and work within our daily life. Not coincidentally, these places also house the firms that finance and manage much of the activity that gets ideas from the minds of their creators to our table, wardrobe or office desk." He also makes the point that the rise of global cities is also stimulating innovative urban design and management. This raises the possibility that, if managed well, global cities could have a more benign environmental impact than more scattered patterns of settlement.

The challenge here would be to manage Sydney's inevitable growth to achieve economic, social and environmental goals. While there will be some continuing population pressures on Sydney, it is important to realise that good urban planning and infrastructure can help address such pressures. The way in which Sydney managed a greatly increased temporary population during the Olympics is testimony to its ability in this area.

I should also add that while it is often argued that increasing population levels in Sydney place greater pressure on infrastructure and air quality, population densities can also offer greater economies of scale for providing services such as public transport. On the other hand, while regional centres are generally subject to lower levels of environmental pressure than more dense urban areas, they also often have lower levels of environmental protection, such as tertiary treatment of sewerage.

These are issues that I understand other speakers today will be taking up, and I look forward to following the course of this important debate as it continues throughout Australia. Today is one step towards a better understanding of these issues and a good opportunity to hear the views of all three levels of government as well as those of some community groups. Like many aspects of the population debate, these matters are complex and inter-related. I have encouraged this debate and I look forward to the further development of our understanding of these important matters.
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