A Greater Australia: Population, policies and governance - CEDA

IntroductionThe importance of good policiesImmigration brings advantages, but it also carries or accentuates some problems – likecrowding in the capital cities. Australians can gain from moderate levels of immigrationthat are supported by good settlement arrangements, and by an adaptable suiteof good social, environmental and economic policies – policies that are desirable,whatever the level of immigration, and whatever the size of the population. Fears ofcrowded Australian communities reflect fears of poor policies, since there are manyexamples of countries and communities that have prospered with large populationsand high population growth rates. The more flexible and adaptable the economy, andthe better our government policy settings, then the more likely the benefits of immigrationwill spread widely throughout the Australian population. (CEDA is of course notalone in its advocacy of better policies: the work of the Productivity Commission mustbe mentioned in this context.)Moreover, there needs to be a feedback loop – if the Australian political system cancope well with the growth in population, then a larger population becomes more desirable.However, if the political system cannot cope well with a growing population, ashas been widely asserted recently, then the rate of immigration should be lower.The “barriers” to improved wellbeing arise mainly from policy and institutional restrictions,and not, in particular, from deficient water volumes or any insoluble problemsof infrastructure provision. In particular, if we price infrastructure services fairly andefficiently, and facilitate the appropriate investment and associated finance, we cansustain and increase the average living standards of Australians.The economics of population growthBy 2050, the Australian population will have increased substantially, and could wellreach 40 million or more – barring catastrophes, and assuming a realistic rate of immigration– and it will be a significantly older population.As a practical matter, population policy in Australia boils down to immigration policy.The great bulk of immigrants to Australia are not admitted under family reunion orhumanitarian grounds, but chiefly for economic reasons: their presence should increasethe wellbeing of the existing Australian population. Who gains and who loses from economicimmigration is the focus of Chapter 4.1, by Jonathan Pincus and Judith Sloan.The standard case for admitting moderate levels of “economic” immigration to Australiacan be summed up this way: “economic” immigration greatly benefits the optionalimmigrants; it may bring overall benefits (or at worst does little harm) to the existingAustralian population generally; but some sections of the existing population can besignificantly disadvantaged, depending on how the related policies are handled.However, the case for a larger immigration program may be understated. Mosteconomic modelling of the effects of immigration ignores the possibility that a largerpopulation would itself raise productivity (through economies of scale and scope), andmay stimulate innovation. Countries with very low population growth can face majorchallenges and miss the flexibility from mobile injections of new migrant populationsand a growing natural-born workforce. The relative youth, experience and diversitybrought through immigration programs greatly enhances flexibility in a growing andchanging Australia, an Australia with current city and rural densities far below successfuland rich foreign economies.A Greater Australia: Population, Policies and Governance8